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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>As filed with the Securities and Exchange Commission
on&#160;January 16, 2025</b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>Registration No.&#160;333-</b>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>UNITED STATES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>SECURITIES AND EXCHANGE COMMISSION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Washington, D.C. 20549</b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FORM&#160;<ix:nonNumeric contextRef="c0" name="dei:DocumentType" id="ixv-48824">S-1</ix:nonNumeric></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>REGISTRATION STATEMENT</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>UNDER THE SECURITIES ACT OF 1933</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="font-size: 10pt; text-align: center"><ix:nonNumeric contextRef="c0" name="dei:EntityRegistrantName" id="ixv-65"><span style="font-size: 12pt"><b>DAMON&#160;INC.</b></span></ix:nonNumeric></td></tr> <tr style="vertical-align: top"> <td style="font-size: 10pt; text-align: center">(Exact name of registrant as specified in its charter)</td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: center; width: 32%"><ix:nonNumeric contextRef="c0" format="ixt-sec:edgarprovcountryen" name="dei:EntityIncorporationStateCountryCode" id="ixv-76"><b>British Columbia</b></ix:nonNumeric></td> <td style="padding-bottom: 1.5pt; width: 2%">&#160;</td> <td style="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: center; width: 32%"><b>3751</b></td> <td style="padding-bottom: 1.5pt; width: 2%">&#160;</td> <td style="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: center; width: 32%"><b>Not Applicable</b></td></tr> <tr style="vertical-align: top"> <td> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(State or jurisdiction of</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">incorporation or organization)</p></td> <td>&#160;</td> <td style="font-size: 10pt; text-align: center">(Primary Standard Industrial<br/>
Classification Code Number)</td> <td>&#160;</td> <td> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(I.R.S. Employer</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Identification No.)</p></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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  <tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: center"><b>704 Alexander Street, <br/>
Vancouver, British Columbia&#160;V6A&#160;1E3<br/>
(408)&#160;702-2167</b></td></tr>
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    <td style="font-size: 10pt; text-align: center">(Address and telephone number of registrant&#8217;s principal executive offices and principal place of business)</td></tr>
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    <td style="font-size: 10pt; text-align: center"><p style="margin-top: 0; margin-bottom: 0"><b>Dominique Kwong</b></p>
                                                    <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
                                                    <p style="margin-top: 0; margin-bottom: 0"><b>Interim Chief Executive Officer<br/> Damon Inc.<br/> 704 Alexander Street, <br/> Vancouver, British Columbia V6A 1E3<br/> (408) 702-2167</b></p></td>
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    <td>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b><i>Copy to:</i></b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;<b>Kevin Friedmann, Esq.</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Norton Rose Fulbright US LLP</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>1045 W. Fulton Market,</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Suite&#160;1200</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Chicago, IL 60607</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(312) 964-7763</b></p></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Name, address and telephone number of agent for
service)</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Approximate date of commencement
of proposed sale to the public:</b> As soon as practicable following the effective date of this Registration Statement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box: <span style="font-family: Times New Roman, Times, Serif">&#9746;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. <span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. <span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. <span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging
growth company. See the definitions of &#8220;large accelerated filer,&#8221; &#8220;accelerated filer,&#8221; &#8220;smaller reporting
company&#8221; and &#8220;emerging growth company&#8221; in Rule 12b-2 of the Exchange Act. (Check one)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="white-space: nowrap; font-size: 10pt; width: 30%">Large accelerated filer</td> <td style="white-space: nowrap; font-size: 10pt; width: 20%"><span style="font-family: Times New Roman, Times, Serif">&#9744;</span></td> <td style="white-space: nowrap; font-size: 10pt; width: 30%">Accelerated filer</td> <td style="white-space: nowrap; font-size: 10pt; width: 20%"><span style="font-family: Times New Roman, Times, Serif">&#9744;</span></td></tr> <tr style="vertical-align: top"> <td style="white-space: nowrap; font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory" id="ixv-48825">Non-accelerated filer</ix:nonNumeric></td> <td style="white-space: nowrap; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif">&#9746;</span></td> <td style="white-space: nowrap; font-size: 10pt">Smaller reporting company</td> <td style="white-space: nowrap; font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt-sec:boolballotbox" name="dei:EntitySmallBusiness" id="ixv-207"><span style="font-family: Times New Roman, Times, Serif">&#9746;</span></ix:nonNumeric></td></tr> <tr style="vertical-align: top"> <td colspan="2" style="white-space: nowrap">&#160;</td> <td style="white-space: nowrap; font-size: 10pt">Emerging growth company</td> <td style="white-space: nowrap; font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt-sec:boolballotbox" name="dei:EntityEmergingGrowthCompany" id="ixv-213"><span style="font-family: Times New Roman, Times, Serif">&#9746;</span></ix:nonNumeric></td></tr> </table><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. <ix:nonNumeric contextRef="c0" format="ixt-sec:boolballotbox" name="dei:EntityExTransitionPeriod" id="ixv-219"><span style="font-family: Times New Roman, Times, Serif">&#9744;</span></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>The Registrant hereby amends
this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.</b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="color: Red"><b>The information in
this preliminary prospectus is not complete and may be changed. These securities may not be sold by the selling securityholders until
the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus is not an
offer to sell these securities and we are not soliciting an offer to buy these securities in any state or jurisdiction where the offer
or sale is not permitted.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="color: Red">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="color: Red"><b>Preliminary Prospectus</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="color: Red">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="color: Red"><b>SUBJECT TO COMPLETION,
DATED JANUARY 16, 2025</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><img alt="" src="image_001.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">DAMON INC.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">RESALE OF UP TO
18,514,579 COMMON SHARES<br/>
BY THE SELLING SECURITYHOLDERS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus relates to
the resale by Streeterville Capital, LLC (&#8220;Streeterville&#8221;) of up to 18,000,000 of common shares, no par value (&#8220;common
shares&#8221;), of Damon Inc. (&#8220;Damon&#8221;, the &#8220;Company&#8221;), consisting of (i) 343,053 common shares issued to Streeterville
pursuant to a Securities Purchase Agreement, dated as of December 20, 2024 (the &#8220;Securities Purchase Agreement&#8221;), between
Damon and Streeterville, and (ii) 17,656,947 common shares potentially issuable to Streeterville in satisfaction of pre-paid purchase
balances outstanding from time to time under the Securities Purchase Agreement, subject to such limitation as may be required pursuant
to Nasdaq Listing Rule 5635(d) and a beneficial ownership limitation equal to 9.99% of the common shares outstanding from time to time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Securities Purchase
Agreement, the Company may issue and sell one or more pre-paid purchases (each, a &#8220;Pre-Paid Purchase&#8221;), in the aggregate purchase
amount of up to $10 million. Upon the terms and subject to the conditions of each Pre-Paid Purchase, Streeterville, at its sole discretion,
has the right, but not the obligation, to take delivery of common shares from the Company, and the Company will issue to Streeterville,
common shares in satisfaction of all or a portion of the outstanding balance of such Pre-Paid Purchase, but not exceeding the outstanding
balance of such Pre-Paid Purchase (the &#8220;Purchase Shares&#8221;). Any delivery of the 17,656,947 Purchase Shares registered for resale
pursuant to the registration statement of which this prospectus is a part will reduce the outstanding balance of any Pre-Paid Purchase
at a rate that will depend upon the timing of a delivery request by Streeterville and will fluctuate based on the trading price of our
common shares. The number of common shares that may actually be acquired by Streeterville pursuant to the Securities Purchase Agreement
is not currently known and is subject to satisfaction of certain conditions and other limitations, including the limitations specified
above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus also relates
to the resale from time to time of up to 514,579 common shares by Maxim Partners LLC (&#8220;Maxim&#8221;), which were issued to Maxim
pursuant to a Financial Advisory Agreement dated as of January 7, 2025 (the &#8220;Financial Advisory Agreement), between Maxim Group
LLC, an affiliate of Maxim, and the Company, in consideration of financial advisory services rendered to the Company by Maxim Group LLC
following the Company&#8217;s initial listing on the Nasdaq Global Market (&#8220;Nasdaq&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Streeterville and Maxim are
each referred to in this prospectus sometimes as a &#8220;Selling Securityholder&#8221;, or collectively as the &#8220;Selling Securityholders&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are not selling any of
our common shares under this prospectus, and we will not receive any of the proceeds from the sale of common shares by the Selling Securityholders.
We will bear all costs, expenses and fees in connection with the registration of the common shares. The Selling Securityholders will bear
all commissions and discounts, if any, attributable to their respective sales of the common shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our common shares are traded on Nasdaq under the ticker symbol &#8220;DMN.&#8221;
On January 15, 2025, the closing sale price of our common shares as reported by Nasdaq was $0.72 per share.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Investing in our
common shares involves risks that are described in the &#8220;Risk Factors&#8221; section beginning on page&#160;9 of this
prospectus.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Neither the Securities and
Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this prospectus
or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The date of this prospectus is &#160;&#160;&#160;&#160;&#160;&#160;, 2025.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>TABLE OF CONTENTS</b><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; padding-left: 9.25pt; width: 90%">&#160;</td>
    <td style="padding-bottom: 1.5pt; width: 1%">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-size: 10pt; text-align: center; width: 9%"><b>Page</b></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_001"><span style="text-transform: uppercase">ABOUT THIS PROSPECTUS</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">ii</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_002"><span style="text-transform: uppercase">TRADEMARKS, TRADE NAMES
    AND SERVICE MARKS</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">ii</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_003"><span style="text-transform: uppercase">MARKET AND INDUSTRY
    DATA</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">ii</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_004"><span style="text-transform: uppercase">SELECTED DEFINITIONS</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">iii</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_005"><span style="text-transform: uppercase">Cautionary Statement
    Regarding Forward-Looking Statements</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">v</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_006"><span style="text-transform: uppercase">PROSPECTUS SUMMARY</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">1</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_007"><span style="text-transform: uppercase">THE OFFERING</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">8</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_008"><span style="text-transform: uppercase">Risk Factors</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">9</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_009"><span style="text-transform: uppercase">USE OF PROCEEDS</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">48</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_010"><span style="text-transform: uppercase">DETERMINATION OF OFFERING
    PRICE</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">48</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_011"><span style="text-transform: uppercase">DIVIDEND POLICY</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">48</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_012"><span style="text-transform: uppercase">MARKET INFORMATION</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">48</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_013"><span style="text-transform: uppercase">Unaudited Pro Forma
    Condensed Combined Financial Information</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">49</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_014"><span style="text-transform: uppercase">Management&#8217;s Discussion
    and Analysis of Financial Condition and Results of Operations of DAMON (FORMERLY, GRAFITI HOLDING)</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">62</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_015"><span style="text-transform: uppercase">Management&#8217;s Discussion
    and Analysis of Financial Condition and Results of Operations of DAMON MOTORS</span></a></td>
    <td style="font-size: 10pt">&#160;</td>
    <td style="font-size: 10pt; text-align: center">80</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_016"><span style="text-transform: uppercase">BUSINESS</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">101</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_017"><span style="text-transform: uppercase">Management</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">117</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_018"><span style="text-transform: uppercase">Executive and Director
    Compensation</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">123</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_019"><span style="text-transform: uppercase">CERTAIN RELATIONSHIPS
    AND RELATED PARTY TRANSACTIONS</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">135</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_020"><span style="text-transform: uppercase">PRINCIPAL SHAREHOLDERS</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">138</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_021"><span style="text-transform: uppercase">Selling Securityholders</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">139</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_022"><span style="text-transform: uppercase">Description of Capital
    Stock</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">141</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_023"><span style="text-transform: uppercase">SECURITIES ACT RESTRICTIONS
    ON RESALE OF COMMON STOCK</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">144</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_024"><span style="text-transform: uppercase">PLAN OF DISTRIBUTION</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">145</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_025"><span style="text-transform: uppercase">LEGAL MATTERS</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">148</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_026"><span style="text-transform: uppercase">EXPERTS</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">148</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_027"><span style="text-transform: uppercase">Where You Can Find More
    Information</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">148</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt"><a href="#a_028"><span style="text-transform: uppercase">INDEX TO CONSOLIDATED
    FINANCIAL STATEMENTS</span></a></td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">F-1</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="text-transform: uppercase">&#160;</span></p><div>

</div><div><a id="a_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="text-transform: uppercase"><b>ABOUT
THIS PROSPECTUS</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should rely only on the
information contained in this prospectus or in any applicable prospectus supplement prepared by us or on our behalf. Neither we nor the
Selling Securityholders have authorized anyone to provide any information or to make any representations other than those contained in
this prospectus, any accompanying prospectus supplement or any free writing prospectus we have prepared. We and the Selling Securityholders
take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This
prospectus is an offer to sell only the securities offered hereby and only under circumstances and in jurisdictions where it is lawful
to do so. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this
prospectus, any applicable prospectus supplement or any related free writing prospectus. This prospectus is not an offer to sell securities,
and it is not soliciting an offer to buy securities, in any jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus or any prospectus supplement is accurate only as of the date on the front of those documents
only, regardless of the time of delivery of this prospectus or any applicable prospectus supplement, or any sale of a security. Our business,
financial condition, results of operations and prospects may have changed since those dates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus is part of
a registration statement on Form S-1 that we filed with the SEC using the &#8220;shelf&#8221; registration process. Under this shelf registration
process, the Selling Securityholders hereunder may, from time to time, sell the securities offered by them described in this prospectus.
We will not receive any proceeds from the sale by such Selling Securityholders of the common shares offered by them described in this
prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A prospectus supplement may
also add, update or change information included in this prospectus. Any statement contained in this prospectus will be deemed to be modified
or superseded for purposes of this prospectus to the extent that a statement contained in such prospectus supplement modifies or supersedes
such statement. Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement
so superseded will be deemed not to constitute a part of this prospectus. You should rely only on the information contained in this prospectus,
any applicable prospectus supplement or any related free writing prospectus. See &#8220;<i>Where You Can Find More Information</i>.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus contains summaries
of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete
information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to
herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus
is a part, and you may obtain copies of those documents as described in the section entitled under &#8220;<i>Where You Can Find More Information</i>.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As used in this prospectus,
unless otherwise indicated or the context otherwise requires, references to &#8220;we,&#8221; &#8220;us,&#8221; &#8220;our,&#8221; the
&#8220;Company,&#8221; &#8220;Registrant,&#8221; and &#8220;Damon&#8221; refer to Damon Inc. and its subsidiaries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_002"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">TRADEMARKS, TRADE
NAMES AND SERVICE MARKS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We own and have rights to
trademarks, trade names and service marks used in connection with the operation of our business. Other trademarks, trade names and service
marks appearing in this prospectus are the property of their respective owners. Solely for convenience, trademarks and trade names referred
to in this prospectus may appear without the <span style="font-size: 10pt"><sup>&#174;</sup></span> or &#8482; symbols, but such references
are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its
rights to these trademarks and trade names. We do not intend our use or display of other companies&#8217; trade names, trademarks or service
marks to imply a relationship with, or endorsement or sponsorship of them by, any other companies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_003"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">MARKET AND INDUSTRY
DATA</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus contains statistical
data, estimates and information concerning our industries, including market positions and the size and growth rates of the markets in
which we participate, that are based on independent industry publications and reports or other publicly available information, as well
as other information based on our internal sources. Although our management believes the market and industry data included in this prospectus
are reliable and are based on reasonable assumptions, this data involves many assumptions and limitations, and you are cautioned not to
give undue weight to these estimates. Management has not independently verified the accuracy or completeness of the data contained in
these industry publications and reports. The industries in which we operate are subject to a high degree of uncertainty and risk due to
a variety of factors, including those described in the section titled &#8220;<i>Risk Factors</i>&#8221; and &#8220;<i>Cautionary Statement
Regarding Forward-Looking Statements</i>.&#8221; These and other factors could cause results to differ materially from those expressed
in these publications and reports.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_004"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">SELECTED DEFINITIONS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">When used in this prospectus,
unless the context otherwise requires:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Articles<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the existing articles of the Company currently in effect;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>BCBCA<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the British Columbia Business Corporations Act;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Board<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the board of directors of the Company;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Business Combination<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the amalgamation of Merger Sub with and into Damon Motors, with Damon Motors surviving the amalgamation as a wholly owned subsidiary
of the Company and the other transactions contemplated by the Business Combination Agreement;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Business Combination Agreement<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the Business Combination Agreement, dated as of October 23, 2023, among Damon Motors, Merger Sub, Parent and the Company, as
amended;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Charter<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the existing certificate of incorporation and Notice of Articles of the Company currently in effect;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Closing<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the closing of the Business Combination;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>common shares<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to common shares of the Company, no par value per share;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">&#8220;Company&#8221; refers to Damon Inc., a British Columbia corporation. The Company was named &#8220;Grafiti
Holding Inc.&#8221; prior to the Closing, and changed its corporate name to &#8220;Damon Inc.&#8221; following the Closing.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Damon<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the Company under the name <span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Damon Inc.<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Damon Motors<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to Damon Motors Inc., a British Columbia corporation, which became a wholly-owned subsidiary of the Company upon the Closing;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Distribution<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to distribution of Grafiti Holding<span style="font-family: Times New Roman, Times, Serif">&#8217;</span>s common shares by the
Trust for the benefit of the holders of Parent stock and other Parent securities on a certain record date on a pro rata, one for one basis,
as described in the Separation and Distribution Agreement and our registration statement on Form 10-12B declared effective by the Commission
on November 12, 2024;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Exchange Act<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the Securities Exchange Act of 1934, as amended;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>GAAP<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to accounting principles generally accepted in the United States of America;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Grafiti Limited Business<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the business conducted by Grafiti Limited and its direct and indirect subsidiaries, including the business related to the provision
of a comprehensive set of data analytics and statistical visualization solutions for engineers and scientists;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Grafiti Holding<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the Company under the name <span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Grafiti Holding Inc.<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
prior to the Closing;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Grafiti Limited<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to Grafiti Limited, a United Kingdom limited company, previously named Inpixon Limited;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>JOBS Act<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the Jumpstart Our Business Startups Act of 2012;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Merger Sub<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to 1444842 B.C. Ltd., a British Columbia corporation;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Page; Sequence: 5; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: LowerRoman; Name: PageNo -->iii<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Nasdaq<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to The Nasdaq Global Market;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Shareholders<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the shareholders of the Company;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">&#8220;Solutions Divestiture&#8221; refers to the divestiture of any business lines and other assets and
liabilities of the Parent that were not associated with its real time location services and analytics business, including its Shoom, SAVES
and Game Your Game lines of business and investment securities, as applicable by any lawful means, including a sale to one or more third
parties, spin off, plan of arrangement, merger, reorganization, or any combination of the foregoing, which was required as a condition
for the consummation of the merger transaction between XTI Aircraft Company and Parent, pursuant to the Agreement and Plan of Merger,
dated as of July 24, 2023, among XTI, Parent, and Superfly Merger Sub, Inc.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Parent<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to XTI Aerospace, Inc. a Nevada corporation, previously named Inpixon;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Registration Rights Agreement<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the Registration Rights Agreement, dated as of December 20, 2024, between Damon and Streeterville;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Sarbanes-Oxley Act<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the Sarbanes-Oxley Act of 2002;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>SEC<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
or <span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Commission<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the United States Securities and Exchange Commission;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Securities Act<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the Securities Act of 1933, as amended;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Securities Purchase Agreement<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the Securities Purchase Agreement, dated as of December 20, 2024, between Damon and Streeterville;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Separation<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to a series of transactions by Parent and certain of Parent&#8217;s subsidiaries as result of which Parent<span style="font-family: Times New Roman, Times, Serif">&#8217;</span>s
Grafiti Limited Business was held by Grafiti Holding and was separated from the remainder of Parent<span style="font-family: Times New Roman, Times, Serif">&#8217;</span>s
businesses, on the terms and subject to the conditions of the Separation and Distribution Agreement;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Separation and Distribution Agreement<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the Separation and Distribution Agreement, dated as of October 23, 2023, between Parent and the Company;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Streeterville<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to Streeterville Capital, LLC, a Utah limited liability company;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;</span>Trust<span style="font-family: Times New Roman, Times, Serif">&#8221;</span>
refers to the Grafiti Holding Inc. Liquidating Trust.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_005"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">Cautionary Statement
Regarding Forward-Looking Statements</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus, each prospectus
supplement and the information incorporated by reference in this prospectus and each prospectus supplement, contain &#8220;forward-looking
statements&#8221; within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and as defined in the United
States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such
as &#8220;may,&#8221; &#8220;will,&#8221; &#8220;should,&#8221; &#8220;could,&#8221; &#8220;expects,&#8221; &#8220;plans,&#8221; &#8220;intends,&#8221;
&#8220;anticipates,&#8221; &#8220;believes,&#8221; &#8220;estimates,&#8221; &#8220;predicts,&#8221; &#8220;potential,&#8221; or &#8220;continue,&#8221;
or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements
about our market opportunity, our strategies, ability to improve and expand our capabilities, competition, expected activities and expenditures
as we pursue our business plan, the adequacy of our available cash resources, regulatory compliance, plans for future growth and future
operations, the size of our addressable market, market trends, and the effectiveness of the Company&#8217;s internal control over financial
reporting. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance, or achievements. Actual results may differ materially from the projections discussed in these
forward-looking statements. The economic environment within which we operate could materially affect our actual results. Forward-looking
statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These risks and other factors
include, but are not limited to, those listed under &#8220;<i>Risk Factors</i>.&#8221; Additional factors that could materially affect
these forward-looking statements and/or projections include, among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(i) the risk that the price
of common shares of Damon may be volatile due to a variety of factors, including changes in the highly competitive industries in which
Damon operates, variations in performance across competitors, changes in laws, regulations, and technologies that may impose additional
costs and compliance burdens on Damon&#8217;s operations, global supply chain disruptions and shortages, and macro-economic and social
environments affecting Damon&#8217;s businesses;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(ii) the inability to implement
Damon&#8217;s business plans, forecasts, and other expectations, or identify and realize additional opportunities;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(iii) the risk that Damon
has not achieved sales and production capacity at a mass-production facility, and that Damon and its current and future collaborators
may be unable to successfully develop and market Damon&#8217;s motorcycles or solutions, or may experience significant delays in doing
so;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(iv) the risk that Damon may
never achieve or sustain profitability;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(v) the risk that Damon may
be unable to raise additional capital on acceptable terms to finance its operations and remain a going concern;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(vi) the risk that Damon continues
to experience difficulties in expanding its operations or, if its operations are expanded, managing its growth;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(vii) any adverse changes
in U.S. or Canadian general economic, business, market, financial, political, or legal conditions, including as a consequence of the ongoing
uncertainties relating to inflation and interest rates;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(viii) any inability to successfully
and economically manufacture and distribute Damon&#8217;s motorcycles at scale;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(ix) reliance on key management
and any inability to attract and/or retain key personnel;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(x) any inability to raise
additional funds to meet its capital requirements and pursue its growth strategy when and in the amounts needed;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(xi) any inability to secure
adequate insurance coverage or a potential increase in insurance costs;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(xii) the
risk of potential litigation resulting in the diversion of management&#8217;s time and attention and the Company&#8217;s resources needed to address
any such litigation that may arise; and</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(xiii) any
inability to secure adequate insurance coverage or a potential increase in insurance costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Management has included projections
and estimates in this prospectus, which are based primarily on management&#8217;s experience in the industry, assessments of our results
of operations, discussions and negotiations with third parties, and a review of information filed by our competitors with the SEC or otherwise
publicly available.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You are cautioned that any
such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results
may differ materially from those projected in the forward-looking statements as a result of various factors. We caution readers not to
place undue reliance on any such forward-looking statements, which speak only as at the date made. Except as required by law, we disclaim
any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements
or to reflect the occurrence of anticipated or unanticipated events.</p><div>

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<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p>

<a id="a_006"></a><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">PROSPECTUS SUMMARY</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>This summary highlights
selected information that is presented in greater detail elsewhere, or incorporated by reference, in this prospectus. It does not contain
all of the information that may be important to you and your investment decision. Before investing in our securities, you should carefully
read this entire prospectus, the applicable prospectus supplement and any related free writing prospectus,&#160;including the matters
set forth under the section captioned &#8220;Risk Factors&#8221; and the financial statements and related notes and other information
that we incorporate by reference herein. Each of the risk factors could adversely affect our business, operating results and financial
conditions, as well as adversely affect the value of an investment in our securities.</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Corporate History</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Spin-Off</p>

<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We were incorporated under
the laws of British Columbia, Canada on October 17, 2023. Through our wholly-owned subsidiary Grafiti Limited which was transferred to
us on December 26, 2023 by our former parent company, XTI Aerospace Inc., we operate a business in the United Kingdom (&#8220;UK&#8221;)
providing a comprehensive set of data analytics and statistical visualization solutions for engineers and scientists. On December 27,
2023 (the &#8220;record date&#8221;), we were spun off by the Parent, by means of a transfer of all of our then outstanding common shares
held by the Parent (the &#8220;spinoff shares&#8221;) to the Grafiti Holding Inc. Liquidating Trust, to be held for the benefit of holders
of the Parent&#8217;s common stock, preferred stock and those outstanding warrants that were contractually entitled to participate in
the distribution (collectively, the &#8220;participating securityholders&#8221;), on a pro rata basis as of the record date. As described
in further detail in our registration statement on Form 10-12B filed in connection with the spinoff and declared effective by the Commission
on November 12, 2024 (the &#8220;Form 10&#8221;), for U.S. federal income tax purposes we believe that the transfer by the Parent of the
spinoff shares to the trust was treated as a taxable distribution by the Parent to the participating securityholders of the spinoff shares
on the record date and the subsequent transfer by the participating securityholders of the spinoff shares to the Trust on the same date.
The Trust held the spinoff shares until the effective date of the Form 10-12B registration statement on November 12, 2024, promptly following
which the trust delivered the spinoff shares to the participating securityholders, as beneficiaries of the trust, pro rata in accordance
with their ownership of shares or underlying shares of the Parent&#8217;s common stock as of the record date.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Business Combination and Related
Transactions</p>

<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 13, 2024, we completed
a business combination transaction with Damon Motors, a motorcycle manufacturing company that aims to transform the motorcycle industry
by building a smart and technologically advanced motorcycle, resulting in Damon Motors becoming our wholly-owned subsidiary. Upon completion
of the Business Combination with Damon Motors, we changed our corporate name to &#8220;Damon Inc.&#8221; For further information about
these transactions, please refer to the current report on Form 8-K filed by the us with the SEC on November 18, 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The rights of holders of our
common shares are governed by our Charter, our Articles, and the BCBCA. For more details, please refer to the section titled &#8220;<i>Description
of Capital Stock</i>.&#8221; The Company&#8217;s common shares commenced trading on Nasdaq on November 18, 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Business Combination was
accounted for using the acquisition method (as a reverse acquisition), with goodwill and other identifiable intangible assets recorded
in accordance with accounting principles generally accepted in the United States, as applicable. Under this method of accounting, Grafiti
Holding is treated as the &#8220;acquired&#8221; company for financial reporting purposes. Damon Motors was determined to be the accounting
acquirer because after the Business Combination, Damon Motors will control the Board of Directors, management of the combined company,
and the preexisting shareholders of Damon Motors have majority voting rights of the combined company. For accounting purposes, the acquirer
is the entity that has obtained control of another entity and, thus, consummated a business combination.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

</div><div>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Overview of Our Business</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Motorcycle Development and Manufacturing
Business Through Damon Motors</p>

<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We, through our wholly-owned
subsidiary Damon Motors and its subsidiaries, design and produce motorcycles aimed at transforming the motorcycle industry by building
a smart and technologically advanced motorcycle. Damon Motors is developing the technology and investing in the capabilities to lead the
industry transformation in the high-performance electric motorcycle market. With decades of combined management and engineering experience
across the team&#8217;s careers, and a commitment to low carbon personal mobility solutions, Damon Motors is introducing existing enthusiasts
to high-performance electric products while bringing new riders to the motorcycle community with first of its kind advances in zero emissions
motorcycle performance, safety, connectivity and AI.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Founded in 2017, Damon Motors
started reimagining the future of motorcycling by means of advanced safety design, electric vehicle powertrain technology and user experience.
In 2019, Damon Motors took its first alpha prototype motorcycles and safety systems into the field to test the concept. In 2021, Damon
Motors expanded its operations and expertise with an R&amp;D facility in San Rafael, California to accelerate the engineering and development
of its HyperDrive platform drive unit and the HyperSport motorcycle. Through core technology advancements, Damon Motors electric motorcycles
are in prototype phase of product validation.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors&#8217;s electric
vehicles are developed with a set of proprietary design principles that elevate the brand, deliver differentiated riding experiences and
bring emotion to electric propulsion. The initial product portfolio of motorcycle models will be built upon and utilize a single powertrain
platform called HyperDrive&#8482;. As a patented, monocoque-constructed battery-chassis, HyperDrive houses a proprietary 150 kW 6-phase
liquid cooled IPM motor-gearbox and proprietary electronics. This platform approach establishes a capital-efficient path to grow the product
line to meet a wide range of future segments and price points, while also supporting a wide range of future motorcycle models and power
sizes that share as much as 85 percent common parts. By using the frame of the battery as the motorcycle&#8217;s chassis, HyperDrive also
achieves valuable weight and cost reduction advantages. With 150 kW of power at its disposal, HyperDrive has been specifically designed
to compete with the performance of market leaders in the high-performance motorcycle market, whether internal combustion or electric.
Thanks to the energy modularity designed into it, HyperDrive-based motorcycles can be detuned in power, energy and thus cost to support
500 &#8211; 1500cc power equivalent classes of motorcycles in both the North American and European markets, with price points ranging
from $20,000 - $80,000.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The HyperDrive platform is
contrasted by the smaller, less powerful and lower cost HyperLite platform, currently in its early design phase. HyperLite will be developed
using a very similar design architecture as HyperDrive, enabling the production of a range of light weight, low to medium cost motorcycles
and scooters with milder levels of horsepower that are more common in overseas and developing markets. With these two platforms paired
with Damon Motors&#8217;s three patented cornerstone technologies, CoPilot&#8482;, Shift&#8482; and its AI-enabled cloud platform. Damon
Motors&#8217;s long-term objective is to build a premium, high-tech, electric motorcycle company that rivals the largest incumbents in
both profit and annual volume, by providing a technologically enhanced riding experience that is not currently available from other manufacturers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">CoPilot provides a novel rider
assistance and warning system integrated into the motorcycle. Shift allows the handlebars and foot pegs to mechatronically adjust on the
fly, addressing issues of ergonomic comfort and allowing users to select different riding positions for changing conditions such as a
lower, more aerodynamic position for highway use or a more upright position for urban use. Its AI-enabled cloud will collect environmental
and situational data that, paired with over-the-air software updates, can drive a continual loop of collision warning improvements, with
an aim to further reduce accident probability over time.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The commercial production
of Damon Motors&#8217;s motorcycles is expected to commence after passing various internal and external tests and undergoing a self-certification
process required for US-bound vehicle homologation. These tests include: the completion of Damon Motors&#8217;s ride quality and long-term
durability testing, completion of FCC Title 47 certification for the onboard charger, completion of UN 38.3 battery testing, completion
of Damon Motors&#8217;s internal battery testing, extreme temperature operation verification, brake testing per FMVSS, and an internal
and external review of FMVSS compliance with Damon Motors engineering subcontractor TUV of Germany.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

</div><div>

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<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our SAVES Distribution Business Through
Grafiti Limited</p>

<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We, through our wholly-owned
subsidiary Grafiti Limited, distribute in the UK and certain other European countries data analytics and visualization software products
referred to as &#8220;SAVES&#8221; primarily for scientists and engineers. Grafiti Limited&#8217;s products can be downloaded to a user&#8217;s
desktop. These products help scientific research in the health and life sciences domain in the discovery of new drugs, in the study of
the efficacy of established drugs and therapies, and in epidemic propagation research, among other applications. Engineers use our products
for a multitude of applications which include, but are not limited to, conducting surface modelling analysis and curve fitting in order
to design new engineering processes, studying signal attenuation and propagation in radio engineering. Potential automobile and motorcycle
applications could include surface panel design for aerodynamics, aesthetic symmetry, and calculated asymmetry among others. We believe
the Grafiti Limited regression analysis product could also be used for predicting vehicle sharing demand and pricing trends in various
markets based on a wide range of variables.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Grafiti Limited&#8217;s strategy
is to build a broader, long term customer base by increasing its sales of Grafiti Limited&#8217;s product offerings which will include
cloud and Macintosh compatible data analytics and statistical visualization software products. We believe this will enable the Grafiti
Limited business to focus on generating more recurring revenues in the future.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Grafiti Limited was formed
by the Parent on May 13, 2020 as a distribution arm for its SAVES products in the UK market and part of the European market.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><b>Summary Risk Factors</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business is subject to
numerous risks and uncertainties, including those highlighted in the section titled &#8220;<i>Risk Factors</i>,&#8221; that represent
challenges that we face in connection with the successful implementation of our strategy and the growth of our business. In particular,
the following risks, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could
cause a decline in the price of our common shares and result in a loss of all or a portion of your investment:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Sales of a substantial number of our securities in the public
market by the Selling Securityholders and/or by our existing securityholders could cause the price of our common shares to fall.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">The Selling Securityholders may purchase common shares at
a price below the current trading price of the shares, and may experience a positive rate of return based on the current trading price.
Future investors in the Company may not experience a similar rate of return.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">We may be required to make cash payments or issue a substantial
number of common shares under the Securities Purchase Agreement, which could reduce the amount of cash available to fund our operations
or dilute the ownership percentage held by our investors.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; font-size: 10pt">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify">Our common shares are listed on Nasdaq, but we cannot guarantee that we will be able to satisfy the applicable listing standards going forward.</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon is an early-stage company with a limited operating history
and a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon&#8217;s success will depend on its ability to economically
produce its vehicles at scale, and its ability to produce vehicles of sufficient quality and appeal to customers on schedule and at a
scale that is unproven.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">To carry out its proposed business plan, Damon will require
a significant amount of capital and it may be unable to reduce and adequately control the costs associated with operating its business.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon does not currently have arrangements in place that will
allow it to fully execute its business plan and may experience significant delays in the design, manufacture, finance, regulatory approval,
launch, transportation and delivery of its motorcycles.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon may not be able to accurately estimate the supply and
demand for its vehicles, which could result in a variety of inefficiencies in its business and hinder its ability to generate revenue.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->3<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><div style="padding-right: 5.4pt; padding-left: 5.4pt; border: Black 1.5pt solid; width: 98%">

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon has received only a limited number of reservations for
its vehicles, all of which may be cancelled and are fully refundable, and there is no assurance that such reservations will be converted
into sales.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">If Damon fails to manage future growth effectively, it may
not be able to produce, market, service and sell (or lease) its motorcycles successfully.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon&#8217;s business and prospects depend significantly
on its ability to build its brand and service its motorcycles. Damon may not succeed in continuing to establish, maintain and strengthen
the Damon brand, and its brand and reputation could be harmed by negative publicity regarding its company or products.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">The motorcycle market is highly competitive, and Damon may
not be successful in competing in this industry, which may depend upon consumer&#8217;s willingness to adopt electric motorcycles.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon may be adversely affected by the complexity, uncertainties
and changes in automotive or internet related Canadian regulations or similar regulations of any countries it is selling motorcycles
into.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon is dependent on its suppliers, some of which are single
or limited source suppliers, and the inability of these suppliers to deliver necessary components of Damon&#8217;s vehicles at prices
and volumes acceptable to Damon would have a material adverse effect on its business, financial condition, operating results and prospects.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon depends on certain key personnel, and its success will
depend on its continued ability to retain and attract qualified management, technical and vehicle engineering and sales personnel.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon is and will be dependent on its manufacturing facilities
and complex machinery.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Dependence on a single licensor for our SAVES products and
potential adverse changes to terms could negatively impact our financial condition and results of operations.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Global economic conditions, including inflation and any other
financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially
and adversely affect Damon&#8217;s business, financial condition, results of operations and prospects.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon&#8217;s risk management efforts may not be effective
which could result in unforeseen losses.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon is subject to risks related to customer credit.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon&#8217;s sales and operating results may fluctuate from
quarter-to-quarter and from year-to-year as they are affected, among other things, by the seasonal nature of Damon&#8217;s products,
fluctuation in Damon&#8217;s operating costs and prevailing market conditions.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; font-size: 10pt">&#160;</td>
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon&#8217;s patent applications may not result in issued
patents, which may have a material adverse effect on its ability to prevent others from interfering with the commercialization of Damon&#8217;s
products.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon may need to defend itself against patent or trademark
infringement claims, which may be time-consuming and would cause Damon to incur substantial costs.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Our international business exposes us to geo-political and
economic factors, trade tariffs, legal and regulatory requirements, fluctuations in exchange rates, public health and other risks associated
with doing business in foreign countries.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

</div><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->4<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><div style="padding-right: 5.4pt; padding-left: 5.4pt; border: Black 1.5pt solid; width: 98%">

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p>

<p style="margin-top: 0; margin-bottom: 0"></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">The lack of availability, reduction or elimination of government
and economic incentives or government policies which are favorable for electric vehicles and Canadian produced vehicles could have a
material adverse effect on Damon&#8217;s business, financial condition, operating results and prospects.</td>
</tr></table>
<p style="margin-top: 0; margin-bottom: 0">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">The construction and operation of Damon&#8217;s assembly facility
in San Rafael, or other assembly facilities that Damon may seek to establish in the future, are or will be subject to regulatory approvals,
and may be subject to delays, cost overruns or may not produce expected benefits.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon&#8217;s vehicles are subject to motor vehicle standards
and the failure to satisfy such mandated safety standards would have a material adverse effect on Damon&#8217;s business, financial condition,
operating results and prospects.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Failure of information security and privacy concerns could
subject Damon to penalties, damage its reputation and brand, and harm its business, financial condition, operating results and prospects.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Damon may become subject to product liability claims and recalls,
which could harm Damon&#8217;s financial condition and liquidity if it is not able to successfully defend or insure against such claims.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">The growth of our SAVES distribution business is dependent
on increasing sales to our existing customers and obtaining new customers.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Defects, errors, or vulnerabilities in our SAVES products
or services that we sell or the failure of such products or services to prevent a security breach, could harm our reputation and adversely
affect our results of operations.</td>
</tr></table>

<p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Corporate Information</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our principal executive offices
are located at 704 Alexander Street, Vancouver, British Columbia, Canada, and our telephone number is (408) 702-2167. Our website address
is <i>https://damon.com/</i>. The information contained on, or that can be accessed through, our website is not incorporated by reference
in this prospectus and should not be considered to be part of this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">December 2024 Securities Purchase Agreement</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 20, 2024, we entered
into a Securities Purchase Agreement with Streeterville Capital, LLC. Under the agreement, the Company agreed to issue and sell to Streeterville
one or more pre-paid purchases at an aggregate purchase price of up to $10,000,000 (the &#8220;Total Commitment Amount&#8221;) for the
purchase of the Company&#8217;s common shares. As consideration for Streeterville&#8217;s commitment, the Company also agreed to issue
343,053 common shares to Streeterville (the &#8220;Commitment Shares&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each pre-paid purchase includes
an original issue discount of 7% and accrues interest at an annual rate of 8%. For the initial pre-paid purchase, which closed on December
20, 2024 (the &#8220;Initial Closing Date&#8221;), Streeterville paid $2,000,000, creating in an initial principal balance of $2,140,000.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Securities
Purchase Agreement and a registration rights agreement entered into on the same date, the Company agreed to file a registration statement
on Form S-1 under the Securities Act, to register the resale of 18,000,000 common shares, including the Commitment Shares and common shares
issuable pursuant to the pre-paid purchases (the &#8220;Registration Statement&#8221;). The registration statement of which this prospectus
is a part has been filed to satisfy such obligation. If the Registration Statement is not declared effective within 60 days of the Initial
Closing Date, the outstanding balance of the pre-paid purchase will automatically increase by 2%, with further increases of 2% for each
subsequent 30-day period that the Registration Statement remains ineffective. If the Registration Statement is declared effective within
90 days of the Initial Closing Date and no default has occurred, and if requested by the Company, Streeterville will fund $1,000,000 for
a second pre-paid purchase.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->5<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><div style="padding-right: 5.4pt; padding-left: 5.4pt; border: Black 1.5pt solid; width: 98%">

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Within a committed two-year
period, and subject to certain specified conditions, the Company may request the issuance of additional pre-paid purchases to Streeterville,
with each purchase amount no less than $250,000, provided that the total outstanding balance of all pre-paid purchases does not exceed
$3,000,000.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The proceeds from the pre-paid
purchases are expected to be used for working capital and other corporate purposes. However, $100,000 from the initial pre-paid purchase
funding, and 15% of the funding from subsequent pre-paid purchases, shall be used to repay the indebtedness under the secured promissory
note issued to Streeterville in June 2024 with an original principal amount of $6,470,000.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following the funding of each
pre-paid purchase, Streeterville has the right, but not the obligation, to purchase from the Company its common shares not exceeding (i)
the outstanding balance of the funded amount, and (ii) 9.99% beneficial ownership of the Company&#8217;s outstanding common shares. The
purchase price of the common shares will be the lower of (i) $1.50 or (ii) 90% of the lowest daily VWAP during the ten consecutive trading
days immediately prior to the purchase notice date, but not less than the floor price, which is equal to 20% of the &#8220;Minimum Price&#8221;
as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing. Under the Securities Purchase Agreement, the Company agrees
to seek shareholder approval for the issuance of common shares up to the Total Commitment Amount (the &#8220;Required Shareholder Approval&#8221;).
Until such approval is obtained, the Company will not request additional pre-paid purchases that may cause the total amount of common
shares issuable to exceed the limits set under Nasdaq Listing Rule 5635(d) (the &#8220;Exchange Cap&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The outstanding pre-paid purchases,
unless reduced by the Company&#8217;s sale of common shares to Streeterville as described, will remain outstanding and may be repaid in
cash at the Company&#8217;s option. There is no maturity date for the outstanding balance of the pre-paid purchases. However, if the Company
fails to obtain the Required Shareholder Approval at its initial shareholder meeting, any remaining outstanding balance above the Exchange
Cap must be repaid in cash. Additionally, if certain triggering events occur, including (a) the VWAP of the Company&#8217;s common shares
falling below the floor price for at least five trading days within a seven-trading-day period, or (b) the Company having issued 75% of
the shares under the Exchange Cap, the Company must make monthly cash repayments of $350,000 in principal plus any accrued unpaid interest
until the outstanding balance is fully repaid or the triggering event conditions are resolved. In an event of default as specified in
the pre-paid purchase, Streeterville may accelerate repayment, requiring the outstanding balance to become immediately due, with a 10%
increase to the principal and interest accruing at a rate of 18% per annum.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Financial Advisory Agreement with Maxim</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify"><span style="font-weight: normal">On
January 7, 2025, we entered into a Financial Advisory Agreement with Maxim Group LLC (together with its affiliates and subsidiaries, &#8220;Maxim&#8221;).
Pursuant to this agreement, Maxim has been appointed to provide advisory services to the Company, including consultation on capital raising
matters such as a private placement of equity or equity-linked securities. As compensation for past advisory services following the listing
of the Company on Nasdaq, the Company has issued 514,579 common shares to Maxim Partners LLC, with piggyback registration rights. Maxim&#8217;s
engagement will terminate 90 days from the execution date.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">&#160;</p>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify"></p><div>

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</div><div style="padding-right: 5.4pt; padding-left: 5.4pt; border: Black 1.5pt solid; width: 98%">

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">&#160;</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Emerging Growth Company</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is an &#8220;emerging
growth company,&#8221; as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, Damon is eligible to take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not &#8220;emerging
growth companies&#8221; including, but not limited to, not being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any
golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less
active trading market for our securities and the prices of our securities may be more volatile.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, Section 107 of
the JOBS Act also provides that an &#8220;emerging growth company&#8221; can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an &#8220;emerging
growth company&#8221; can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
Damon intends to take advantage of the benefits of this extended transition period.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon will remain an emerging
growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the
initial public offering of our securities, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds
$700 million as of the end of the prior fiscal year&#8217;s second fiscal quarter; and (2) the date on which we have issued more than
$1.00 billion in non-convertible debt securities during the prior three-year period. References herein to &#8220;emerging growth company&#8221;
have the meaning associated with it in the JOBS Act.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Smaller Reporting Company</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is a &#8220;smaller
reporting company&#8221; as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. Damon will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of its common equity held by non-affiliates exceeds
$700 million as of the prior September 30th or (2) the market value of its common equity exceeds $250 million and its annual revenues
exceeds $100 million during such fiscal year.</p>

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<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p>

<a id="a_007"></a><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">THE OFFERING</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="font-size: 10pt">Common shares offered by the Selling Securityholders</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: justify">18,514,579 common shares, 17,656,947 of which are issuable to Streeterville from time to time in satisfaction of Pre-Paid Purchases under the Securities Purchase Agreement</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="font-size: 10pt">Common shares outstanding prior to this offering</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: justify">22,030,884 common shares (as of the date of this filing)</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="font-size: 10pt">Use of proceeds</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: justify">We will not receive any proceeds from the sale of common shares by the Selling Securityholders pursuant to this prospectus.</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="font-size: 10pt">Risk factors</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: justify">You should carefully read the section titled &#8220;<i>Risk Factors</i>&#8221; beginning on page 9 <span style="font-size: 10pt">&#160;</span>and the other information included in this prospectus for a discussion of factors you should consider carefully before deciding to invest in our common shares.</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="font-size: 10pt">Nasdaq symbol for our common shares</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: justify">&#8220;DMN&#8221;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_008"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">RISK FACTORS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should carefully consider
the risks and uncertainties described below and the other information in this prospectus before making an investment in our common shares.
Our business, financial condition, results of operations, or prospects could be materially and adversely affected if any of these risks
occurs, and as a result, the market price of our common shares could decline and you could lose all or part of your investment. This prospectus
also contains forward-looking statements that involve risks and uncertainties. See &#8220;<i>Cautionary Statement Regarding Forward-Looking
Statements</i>.&#8221; Our actual results could differ materially and adversely from those anticipated in these forward-looking statements
as a result of certain factors, including those set forth below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Risks Related to this Offering by the Selling Securityholders</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Sales of a substantial number of our
securities in the public market by the Selling Securityholders and/or by our existing securityholders could cause the price of our common
shares to fall.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
can sell, under this prospectus, up to 18,514,579 common shares constituting approximately 84% of our issued and outstanding common shares
as of this filing, consisting of (a) up to 343,053 common shares issued in a private placement to Streeterville (the &#8220;Commitment
Shares&#8221;), (b) up to 17,656,947 common shares (the &#8220;Purchase Shares&#8221;) issuable to Streeterville under the pre-paid purchases
consummated pursuant to the Securities Purchase Agreement, and (c) up to 514,579 common shares issued in a private placement to Maxim
(the &#8220;Maxim Shares&#8221;). The sale of all or a portion of the securities being offered in this prospectus could result in a significant
decline in the public trading price of our securities. Despite such a decline in the public trading price, the Selling Securityholders
may still experience a positive rate of return on the securities they purchased, given that the Commitment Shares and the Maxim Shares
were issued to the Selling Securityholders for non-cash consideration, and due to the price at which Purchase Shares may be sold and issued
to Streeterville under the Securities Purchase Agreement. See &#8220;<i>The Selling Securityholders may purchase common shares at a price
below the current trading price of the shares, and may experience a positive rate of return based on the current trading price. Future
investors in the Company may not experience a similar rate of return.</i>&#8221; below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sales of a substantial number
of our common shares in the public market by the Selling Securityholders and/or by our other existing securityholders, or the perception
that those sales might occur, could depress the market price of our common shares and could impair our ability to raise capital through
the sale of additional equity securities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Selling Securityholders have acquired
and may purchase common shares at a price below the current trading price of the shares, and may experience a positive rate of return
based on the current trading price. Future investors in the Company may not experience a similar rate of return.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Securities Purchase
Agreement, following the funding of each Pre-Paid Purchase, Streeterville has the right, but not the obligation, to purchase from the
Company its common shares not exceeding (i) the outstanding balance of the funded amount, and (ii) 9.99% beneficial ownership of the Company&#8217;s
outstanding common shares. The purchase price of the common shares will be the lower of (i) $1.50 or (ii) 90% of the lowest daily VWAP
during the ten consecutive trading days immediately prior to the purchase notice date, but not less than the floor price, which is equal
to 20% of the &#8220;Minimum Price&#8221; as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing of the Pre-Paid
Purchase. Under the Securities Purchase Agreement, the Company has agreed to seek shareholder approval for the issuance of common shares
for up to the total commitment amount of up to $10 million of Pre-Paid Purchases (the &#8220;Required Shareholder Approval&#8221;). Until
such approval is obtained, the Company will not request additional Pre-Paid Purchases that may cause the total amount of common shares
issuable to exceed the limits set under Nasdaq Listing Rule 5635(d) (the &#8220;Exchange Cap&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus relates to
the offer and resale from time to time by the Selling Securityholders of up to 18,514,579 common shares constituting approximately 84%
of our issued and outstanding common shares as of the date of this prospectus, consisting of (a) up to 343,053 common shares issued in
a private placement to Streeterville, (b) up to 17,656,947 common shares issuable to Streeterville under the pre-paid purchases consummated
pursuant to the Securities Purchase Agreement, and (c) up to 514,579 common shares issued in a private placement to Maxim.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Due to the pricing mechanism
explained above, Streeterville may acquire our common shares at a price below, or even substantially below, the current trading price
once the Required Shareholder Approval is obtained. Additionally, the Commitment Shares and the Maxim Shares were issued to the Selling
Securityholders for non-cash consideration. These factors may create an economic incentive for the Selling Securityholders to sell promptly
after the effectiveness of the registration statement to which this prospectus is a part, which could put downward pressure on the market
price of our shares. As a result, other investors may experience dilution or a decline in the value of their holdings, and future investors
in the Company may face a less favorable investment opportunity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Public securityholders who
have or will purchase our common shares at current trading price may not be able to experience the same positive rates of return on securities
they purchase, due to the low price at which the Selling Securityholders may purchase our common shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Risks Relating to the Transactions under the Securities Purchase
Agreement</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We may be required to make cash payments
or issue a substantial number of common shares under the Securities Purchase Agreement, which could reduce the amount of cash available
to fund our operations or dilute the ownership percentage held by our investors.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to the terms and conditions
in the Securities Purchase Agreement, the Company may issue and sell up to $10,000,000 of Pre-Paid Purchases of its common shares within
a committed two-year period. As part of this agreement, the Company has issued 343,053 common shares to Streeterville as consideration
for its commitment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Securities Purchase
Agreement, following the funding of each Pre-Paid Purchase, Streeterville has the right, but not the obligation, to purchase from the
Company its common shares not exceeding (i) the outstanding balance of the funded amount, and (ii) 9.99% beneficial ownership of the Company&#8217;s
outstanding common shares. The purchase price of the common shares will be the lower of (i) $1.50 or (ii) 90% of the lowest daily VWAP
during the ten consecutive trading days immediately prior to the purchase notice date, but not less than the floor price, which is equal
to 20% of the &#8220;Minimum Price&#8221; as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing of the Pre-Paid
Purchase. Under the Securities Purchase Agreement, the Company has agreed to seek shareholder approval for the issuance of common shares
for up to the total commitment amount of up to $10 million of Pre-Paid Purchases. Until such approval is obtained, the Company will not
request additional Pre-Paid Purchases that may cause the total amount of common shares issuable to exceed the limits set under Nasdaq
Listing Rule 5635(d) (the &#8220;Exchange Cap&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each pre-paid purchase accrues
interest at an annual rate of 8% and includes an original issue discount of 7%. If the registration statement on Form S-1, to which this
prospectus is a part, is not declared effective within 60 days of December 20, 2024, i.e., February 18, 2025, the outstanding balance
of the pre-paid purchase will automatically increase by 2%, with further increases of 2% for each subsequent 30-day period that the registration
statement remains ineffective.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the Company fails to obtain
the Required Shareholder Approval at its initial shareholder meeting, any remaining outstanding balance above the Exchange Cap must be
repaid in cash. Additionally, if certain triggering events occur, including (a) the VWAP of the Company&#8217;s common shares falling
below the floor price for at least five trading days within a seven-trading-day period, or (b) the Company having issued 75% of the shares
under the Exchange Cap, the Company must make monthly cash repayments of $350,000 in principal plus any accrued unpaid interest until
the outstanding balance is fully repaid or the triggering event conditions are resolved. Additionally, if the Company fails to meet certain
conditions under the Securities Purchase Agreement, it may be required to make cash payments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If Streeterville exercises
its right to purchase common shares under the Pre-Paid Purchases, the shares may be issued at a price significantly below the prevailing
market price. This could lead to substantial dilution of other investors&#8217; ownership percentages and potentially decrease the value
of their investment. This dilution, combined with the potential for downward pressure on the Company&#8217;s share price if the Selling
Securityholders promptly sell the shares in the open market, could reduce the market value of the Company&#8217;s common shares and adversely
affect its ability to raise additional capital on favorable terms.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, the cash payment
obligations under the Securities Purchase Agreement, if triggered, could significantly reduce the cash available to fund the Company&#8217;s
operations or make necessary investments. This would adversely affect the Company&#8217;s financial condition and limit its ability to
pursue growth opportunities, adversely affecting its business prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Risks Relating to Our Business</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has incurred significant
costs associated with the Business Combination and will continue to incur significant costs associated with operating as a public reporting
company.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has incurred substantial,
non-recurring costs related to the consummation of the Business Combination and expects to continue incurring significant expenses as
it operates as a public reporting company. These costs include legal, financial advisory, accounting and auditing, banking, and consulting
fees, as well as expenses for regulatory filings, SEC fees, printing, and mailing. Additionally, the Company may incur further costs to
retain key employees and engage new employees to support its transition to operating as a public reporting entity. These expenses are
either the responsibility of the party incurring them during the Business Combination or will be paid by the Company following the Closing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon is an early-stage company with
a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future. There is no guarantee
that Damon will achieve or sustain profitability.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon has incurred losses
since its inception and expects to continue to incur operating and net losses each quarter until such time as it achieves sufficient sales
and production capacity at an assembly facility, which is not expected until 2026. Even if Damon is able to successfully develop, produce
and sell its vehicles, there can be no assurance that they will be commercially successful. Damon&#8217;s potential profitability is dependent
upon the successful development, production, commercialization and acceptance of its vehicles, which has not yet occurred, and may never
occur.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Prior to the Closing, Damon
(formerly Grafiti Holding) incurred a net loss of approximately US$1.3 million for the fiscal year ended June 30, 2024 and approximately
US$1.6 million during the quarter ended September 30, 2024, and had an accumulated deficit of approximately US$3.3 million as of September
30, 2024. Damon Motors incurred a net loss of approximately US$34.0 million for the fiscal year ended June 30, 2024 and approximately
$7.4 million during the quarter ended September 30, 2024, and had an accumulated deficit of approximately $148.0 million as of September
30, 2024. Following the Closing, we anticipate continuing to generate a significant loss for the current fiscal year, due to the factors
discussed below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon expects to continue
to incur significant expenditures in connection with the execution of its business strategy, including, without limitation, as a result
of: continuing to design and develop and beginning to manufacture its existing and planned vehicles; equipping and expanding its pilot,
support research and development and mass-production manufacturing facilities to produce its vehicles in California, and potentially in
international locations, and subsequently ramping-up production capacity at such facilities; building up inventories of parts and components
for its vehicles; developing or securing motorcycle charging partnerships; expanding its design, research, development, maintenance and
repair capabilities; increasing its sales and marketing activities and developing its distribution infrastructure; designing and implementing
a show room network; expanding its general and administrative functions to support its growing operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because it will incur the
costs and expenses from these efforts before it receives any incremental revenues with respect thereto, Damon&#8217;s losses in future
periods may be significant. In addition, Damon may find that these efforts are more expensive than currently anticipated, including by
reason of delays in product development and commercialization, or that these efforts may not result in revenues, which would further increase
its losses. Damon&#8217;s ability to produce revenues will depend, in part, on its ability to finalize and begin commercial start of production
of its HyperSport vehicle, which is not expected to occur until 2026.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Management does not expect
its SAVES distribution business to greatly expand. The Company&#8217;s ability to generate positive cash flow from operations in this
business is dependent upon sustaining certain cost reductions and generating sufficient revenues. Our ability to achieve profitability
with respect to the SAVES distribution business is more challenging when sales slow due to adverse economic conditions, notwithstanding
our cost reduction efforts, because our cost reduction efforts may not be sufficient to offset declining gross profit.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the reasons discussed
above, there is no guarantee that Damon will reach profitability in the near term or at all, which could materially and adversely affect
its business, financial condition, and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon has a limited operating history
which makes it difficult to evaluate its future business prospects and may increase investment risk.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s limited operating
history makes evaluating its business and future prospects difficult. Damon Motors began operations in 2017 and has not yet begun mass
production or the commercial delivery of its first motorcycle. If Damon does not successfully address these risks, its business, financial
condition, operating results and prospects will be materially and adversely harmed. Damon has a very limited operating history, and as
it attempts to transition from research and development activities to production and sales, it is difficult, if not impossible, to forecast
its future results, and management has limited insight into trends that may emerge and affect its business. Damon intends to derive a
substantial portion of its revenue from the sale of its electric motorcycles, none of which have reached commercialization stage to date.
If actual results differ materially from management&#8217;s estimates in future periods, Damon&#8217;s business, financial condition,
operating results and prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is currently in concept
phase of second vehicle, the HyperFighter, which is scheduled for delivery in 2028. Damon&#8217;s motorcycles require significant investment
prior to commercial introduction and may never be successfully developed, produced, commercialized or accepted. There are no assurances
that Damon will be able to successfully develop its models in a timely manner, or secure future business from recreational customers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon has encountered, and
expects to continue to encounter, risks and uncertainties frequently experienced by early-stage companies in rapidly changing markets,
including risks related to its ability to, among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">design and produce safe, reliable and quality vehicles on an ongoing basis;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">build a well-recognized and respected brand;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">establish and expand its customer base;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">continue to make significant investments in research, development, manufacturing, marketing and sales;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">successfully market its vehicles and its other services;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">properly price its services and successfully anticipate the take-rate and usage of such services by users;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">improve and maintain its operational efficiency;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">maintain a reliable, secure, high-performance and scalable technology infrastructure;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">hire, integrate, retain and motivate professional and technical talent, including key members of management;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">anticipate and adapt to changing market conditions, including technological developments and changes in
competitive landscape; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">navigate an evolving and complex regulatory environment.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If Damon fails to address
any or all of these risks and challenges, its business, financial condition, operating results and prospects may be materially adversely
affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon will initially depend on revenue
generated from a single model of vehicle and in the foreseeable future will be significantly dependent on a limited number of models.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s motorcycle business
will initially depend substantially on the sales and success of its HyperSport motorcycles, which will be its only volume manufactured
vehicle in the market for an extended period of time, and in the foreseeable future will be significantly dependent on a limited number
of vehicles. Damon will rely on sales from the HyperSport motorcycles, among other sources of financing, for the capital that will be
required to develop and commercialize those subsequent models. To the extent that (i) production of Damon&#8217;s motorcycles is delayed,
interrupted or reduced, (ii) Damon&#8217;s product variety and motorcycles do not meet customer expectations or do not align with projected
timelines, cost and volume targets, or (iii) any of Damon&#8217;s vehicles are not well-received by the market for any reason, Damon&#8217;s
revenue and cash flow would be adversely affected. In any such case, Damon may need to seek additional financing earlier than it expects,
which financing may not be available to it in a timely manner and on commercially reasonable terms, or at all, and Damon&#8217;s business,
financial condition, operating results and prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s success will depend
on its ability to economically produce its vehicles at scale, and its ability to produce vehicles of sufficient quality and appeal to
customers on schedule and at a scale that is unproven.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s business success
will depend in large part on its ability to economically produce, market and sell its motorcycles at sufficient capacity to meet the demands
of its customers. Damon will need to scale its production capacity in order to successfully implement its business strategy, and plans
to do so in the future by, among other things, completing the development and ramp-up of capacity at an assembly facility in San Rafael,
California. Damon has no experience in mass-production of its motorcycles. Damon does not know whether it will be able to develop efficient,
automated, low-cost production capabilities and processes, or whether it will be able to secure reliable sources of supply from suppliers
and manufacturers, in each case that will enable it to meet the quality, price, engineering, design and production standards, as well
as the production volumes, required to successfully mass market its motorcycles and meet its business objectives and customer needs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Even if Damon is successful
in developing mass-production capability and processes and can reliably source supplies in sufficient volume, it does not know whether
it will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond its control,
such as problems with suppliers and manufacturers, or in time to meet the commercialization schedules of future vehicles or to satisfy
the requirements of its customers. Damon&#8217;s ability to effectively reduce its cost structure over time is limited by the fixed nature
of many of its planned expenses in the near-term, and its ability to reduce long-term expenses is constrained by its need to continue
investment in its business strategy.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If Damon fails to develop
and scale such mass-production capability and processes within its projected costs and timelines, Damon&#8217;s business, financial condition,
operating results and prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon may be unable to reduce and
adequately control the costs associated with operating its business.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon will require significant
capital to develop and grow its business and it expects to incur significant costs which will impact its profitability, including research
and development expenses as new models are rolled out and existing models improved, raw material procurement costs, selling and distribution
expenses as it builds its brand and markets its vehicles and general and administrative expenses as it scales its operations. In addition,
Damon may incur significant costs in connection with its services and honoring its commitments under its service and warranty packages.
Damon&#8217;s ability to become profitable in the future will not only depend on its ability to successfully market its vehicles and other
products and services, but also its ability to control its costs. If Damon is unable to design, manufacture, market, sell and distribute
and service its vehicles and services in a cost-efficient manner, its business, financial condition, operating results and prospects may
be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To carry out its proposed business
plan to develop, manufacture, sell and service electric motorcycles, Damon will require a significant amount of capital.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s capital expenditures
will continue to be significant in the foreseeable future as it expands its business and its level of capital expenditures will be significantly
affected by customer demand for its products and services. The fact that Damon has a limited operating history means it has limited historical
data on the demand for its products and services. As a result, its future capital requirements are uncertain and actual capital requirements
may be materially different from those it currently anticipates. Damon expects that it will ultimately need to seek additional equity
or debt financing to finance its capital expenditures, though the timing or amount of any such capital expenditures cannot be predicted
with certainty at this time. The sale of additional equity or equity-linked securities would dilute Damon&#8217;s shareholders, while
the incurrence of indebtedness would result in increased debt service obligations and covenants that potentially restrict its operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is no assurance that
such additional financings will be available to Damon in a timely manner or on terms that are favorable, or at all. Damon&#8217;s ability
to obtain the necessary financing to carry out its business plan is subject to a number of factors, including general market conditions
and investor acceptance of its business plan. These factors may cause the timing, amount, terms and conditions of such financing to be
unattractive or unavailable to Damon. If Damon is unable to secure sufficient financing if and when needed or desired, it may have to
significantly reduce its spending, delay or cancel its planned activities or substantially change its current corporate structure and
its business, financial condition, operating results and prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon may experience significant delays
in the design, manufacture, finance, regulatory approval, launch, transportation and delivery of its motorcycles.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s business will
depend in large part on its ability to execute on its plans to design, manufacture, finance, obtain regulatory approval for, launch, transport
and deliver its vehicles, and any delay associated therewith could materially adversely affect Damon&#8217;s business, financial condition,
operating results and prospects, and could cause liquidity constraints and reputational damage.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Vehicle manufacturers often
experience delays in the design, manufacture and commercial launch of new products. Damon has no experience to date in high volume manufacturing
of its vehicles. Even if it is successful in developing high-volume manufacturing capability and processes and in reliably sourcing its
component supply, Damon cannot guarantee that it will be able to do so in a manner that avoids significant delays and cost overruns or
in time to meet its vehicle commercialization schedules or in satisfaction of customer expectations or requirements. Further, Damon will
also rely on third-party suppliers for the provision and development of the key components and materials used in its vehicles. To the
extent Damon&#8217;s suppliers experience any delays in providing it with or developing necessary components, it could experience delays
in delivering on its timelines. Further, prior to mass production of its vehicles, Damon will need such vehicles to be fully designed,
engineered and approved for sale according to differing requirements, including, but not limited to, regulatory requirements, in the different
jurisdictions in which it intends to commercialize them.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon does not currently have arrangements
in place that will allow it to fully execute its business plan.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To sell its motorcycles as
envisioned, Damon will need to enter into agreements and arrangements that are not currently in place. These include entering into manufacturing
agreements for Damon&#8217;s current and future electric motorcycles not yet in development and acquiring additional manufacturing capability,
arranging for the transportation of HyperSport motorcycles, and obtaining battery and other essential supplies in the quantities that
Damon requires. If Damon is unable to enter into such agreements or is only able to do so on terms that are unfavorable, Damon may not
be able to fully carry out its business plans as currently contemplated or at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If Damon is unable to design, develop,
manufacture and sell new electric motorcycles and services that address additional market opportunities, its business, financial condition,
operating results and prospects may suffer.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon may not be able to successfully
design, develop, manufacture and sell new electric motorcycles and services, address new market segments or develop a significantly broader
customer base. To date, Damon has focused its business on the development and sale of the HyperSport Premier and HyperSport HS motorcycles,
which have targeted mainly affluent super sport motorcycle market. Damon will need to address additional markets and expand its customer
demographic to further grow its business. If Damon fails to address additional market opportunities, its business, financial condition,
operating results and prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon may not be able to accurately
estimate the supply and demand for its vehicles, which could result in a variety of inefficiencies in its business and hinder its ability
to generate revenue. If Damon fails to accurately predict its manufacturing requirements, Damon could incur additional costs or experience
delays.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It is difficult for management
to predict Damon&#8217;s future revenues and appropriately budget for its expenses, and management has limited insight into trends that
may emerge and affect Damon&#8217;s business. Damon will be required to provide forecasts of its demand to its suppliers several months
prior to the scheduled delivery of vehicles to its prospective customers. Currently, there is no historical basis for making judgments
about the demand for Damon&#8217;s vehicles or its ability to design, develop, manufacture and sell vehicles, or its profitability in
the future. If Damon overestimates its requirements, its suppliers may have excess inventory, which indirectly would increase its costs.
If Damon underestimates its requirements, its suppliers may have inadequate inventory, which could interrupt manufacturing of its vehicles
and result in delays in deliveries and revenues or negatively impact its ongoing relationships with its suppliers. In addition, lead times
for materials and components that its suppliers order may vary significantly and depend on factors such as the specific supplier, contract
terms and demand for each component at a given time. If Damon fails to order sufficient quantities of product components in a timely manner,
the delivery of vehicles to its customers could be delayed, and its business, financial condition, operating results and prospects may
be materially adversely affected.</p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon has received only a limited
number of reservations for its vehicles, all of which may be cancelled and are fully refundable, and there is no assurance that such reservations
will be converted into sales.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of September 30, 2024,
Damon had unfulfilled reservations for more than 3,297 HyperSport and HyperFighter motorcycles, which were placed with fully refundable
deposits. Damon&#8217;s customers may cancel their reservations without penalty and for any reason until they place an order for their
motorcycle, at which point the deposit becomes non-refundable and the customer is required to pay an additional non-refundable deposit.
Damon has experienced cancellations in the past, and further customers may cancel their reservations for many reasons outside of its control,
including changes in government subsidies and economic incentives. The potentially long wait from the time a reservation is made until
the time the vehicle is delivered could also impact user decisions on whether to ultimately make a purchase, due to potential changes
in preferences, competitive developments and other factors. In addition, any further delays in the expected start of production of the
HyperSport line of motorcycles or other upcoming models could result in significant reservation cancellations. No assurance can be given
that reservations will not be cancelled and will ultimately result in the final purchase, delivery and sale or lease of motorcycles. Accordingly,
the number of reservations has significant limitations as a measure of demand for Damon&#8217;s products, including demand for particular
body styles, models or trim levels, or for future motorcycle sales.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If Damon fails to manage future growth
effectively, it may not be able to produce, market, service and sell (or lease) its motorcycles successfully.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon plans to expand its
operations in the near future in connection with the planned production of its motorcycles, which will require it to hire and train new
personnel, accurately forecast production and revenue, control expenses and investments in anticipation of expanded operations, establish
new or expand current design, production and sales and service facilities, implement and enhance administrative infrastructure, systems
and processes, address new markets and establish international operations. If Damon fails to efficiently manage its growth, its business,
financial condition, operating results and prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon expects to experience
significant and rapid growth in the scope and complexity of its business, which may place a significant strain on Damon&#8217;s senior
management team and its financial and other resources. Such growth, if experienced, may expose Damon to greater costs and other risks
associated with growth and expansion. Damon may be required to hire a broad range of additional employees, including other support personnel,
among others, in order to successfully advance its operations. Damon may be unsuccessful in these efforts or may be unable to project
accurately the rate or timing of these increases.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s ability to manage
its growth effectively will require Damon to continue to improve its operations, to improve financial and management information systems,
and to train, motivate, and manage future employees. This growth may place a strain on Damon&#8217;s management and operational resources.
The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions
necessary to effectively service and manage Damon&#8217;s business, or the failure to manage growth effectively, could have a materially
adverse effect on Damon&#8217;s business, financial condition, and results of operations. In addition, difficulties in effectively managing
the budgeting, forecasting, and other process control issues presented by such a rapid expansion could harm Damon&#8217;s business, financial
condition, and results of operations.</p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon has very limited experience
servicing its motorcycles. If it is unable to address the service requirements of its future customers, Damon&#8217;s business may be
materially and adversely affected.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon has limited experience
in servicing its motorcycles, and it expects to be required to increase its servicing capabilities as it scales its operations and continues
to grow, including by building Damon experience centers in the U.S. and Canada. Servicing electric vehicles is different than servicing
vehicles with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques. Although
Damon believes the experience it has gained developing and operating prototypes of its motorcycles positions it well to service its motorcycles
and future products, Damon has no after-sale experience of maintaining and servicing motorcycles for its customers at scale, and there
is no guarantee Damon will be able to do so. There can be no assurance that Damon&#8217;s service arrangements will adequately address
the service requirements of Damon&#8217;s customers to their satisfaction, or that Damon and its partners will have sufficient resources
to timely meet ongoing service requirements at scale. In addition, Damon anticipates the level and quality of the services it plans to
provide its customers will have a direct impact on the success of its brand, reputation and ongoing sales. Failure to address the servicing
requirements of its customers could harm Damon&#8217;s reputation or materially adversely affect its business, financial condition, operating
results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s customers will
also depend on Damon&#8217;s customer support team to resolve technical and operational issues relating to the software integrated in
its vehicles. Damon&#8217;s ability to provide effective customer support is largely dependent on its ability to attract, train and retain
qualified personnel with experience in supporting customers on platforms such as Damon&#8217;s platform. As it continues to grow, additional
pressure may be placed on Damon&#8217;s customer support team, and Damon may be unable to respond quickly enough to accommodate short-term
increases in customer demand for technical support. Damon may also be unable to modify the future scope and delivery of its technical
support to compete with changes in the technical support provided by its competitors. Increased customer demand for support, without corresponding
revenue, could increase costs and negatively affect Damon&#8217;s results of operation. If Damon is unable to successfully address the
servicing requirements of its customers or establish a market perception that it maintains high-quality support, it may be subject to
claims from its customers, including for breach of warranties, loss of revenue or damages, and its business, financial condition, operating
results and prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s motorcycles may not
perform in line with customer expectations.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s vehicles, including
the HyperSport line of motorcycles, may not perform in line with customers&#8217; expectations. For example, Damon&#8217;s vehicles may
not have the durability or longevity of other vehicles in the market and may not be as easy and convenient to repair as other vehicles
in the market. Any product defects or any other failure of Damon&#8217;s vehicles to perform as expected could harm its reputation and
result in adverse publicity, harm to the Damon brand and reputation, lost revenue, delivery delays, product recalls, product liability
claims, significant warranty and other expenses, and could have a material adverse impact on Damon&#8217;s business, financial condition,
operating results and prospects. Additionally, problems and defects experienced by other electric consumer vehicles could by association
have a negative impact on perception and customer demand for Damon&#8217;s vehicles.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Further, Damon&#8217;s vehicles
may contain defects in components, software, design and manufacture that may cause them not to perform as expected or that may require
repairs, recalls or design changes, any of which would require significant financial and other resources to successfully navigate and
resolve. Damon initially plans to deliver its vehicles without CoPilot ADAS, and thereafter to deliver its vehicles with CoPilot ADAS
with limited functionality, with the goal to activate additional features over time. There is no guarantee that the CoPilot ADAS will
ultimately perform in line with expectations. Damon&#8217;s vehicles use a substantial amount of software code to operate and software
products are inherently complex and often contain defects and errors when first introduced. Efforts to remedy any issues Damon observes
in its products could significantly distract management&#8217;s attention from other important business objectives, may not be timely,
may hamper production or may not be to the satisfaction of its customers. Further, while extensive internal testing has been performed
on Damon&#8217;s vehicles&#8217; software and hardware systems, Damon&#8217;s limited operating history and limited field data reduce
its ability to evaluate and predict the long-term quality, reliability, durability and performance characteristics of its vehicles. There
can be no assurance that Damon will be able to detect and resolve any defects in its vehicles prior to their sale to customers. If any
of Damon&#8217;s vehicles fail to perform as expected, deliveries may have to be delayed, product recalls initiated and servicing or updates
under warranty provided at Damon&#8217;s expense, which could adversely affect Damon&#8217;s brand in its target markets and its business,
financial condition, operating results and prospects may be materially adversely affected.</p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Sales will depend in part on Damon&#8217;s
ability to establish and maintain confidence in its business prospects among customers, analysts and others within its industry.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Consumers may be less likely
to purchase Damon&#8217;s products if they do not believe that its business will succeed or that its operations, including service and
customer support operations, will continue for many years. Similarly, suppliers and other third parties will be less likely to invest
time and resources in developing business relationships with Damon if they are not convinced that its business will succeed. Accordingly,
to build, maintain and grow its business, Damon must establish and maintain confidence among customers, suppliers, analysts and other
parties with respect to its liquidity and business prospects. Maintaining such confidence may be particularly difficult as a result of
many factors, including Damon&#8217;s limited operating history, others&#8217; unfamiliarity with its products, uncertainty regarding
the future of electric vehicles, any prior or future delays in scaling production, delivery and service operations to meet demand, competition
and Damon&#8217;s production and sales performance compared with market expectations. Some of these factors are outside of Damon&#8217;s
control, and any negative perceptions about Damon&#8217;s business prospects, even if exaggerated or unfounded, would likely harm its
business and make it more difficult to raise additional capital in the future. In addition, a significant number of new electric vehicle
companies have recently entered the automotive industry, which is an industry that has historically been associated with significant barriers
to entry and a high rate of failure. If these new entrants or other manufacturers of electric vehicles go out of business, produce vehicles
that do not perform as expected or otherwise fail to meet expectations, such failures may have the effect of increasing scrutiny of others
in the industry, including Damon, and further challenging customer, supplier and analyst confidence in Damon&#8217;s business prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s business and prospects
depend significantly on its ability to build its brand. Damon may not succeed in continuing to establish, maintain and strengthen the
Damon brand, and its brand and reputation could be harmed by negative publicity regarding its company or products.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s business and
prospects are heavily dependent on its ability to develop, maintain and strengthen the &#8220;Damon&#8221; brand. If Damon fails to establish,
maintain and strengthen its brand, it may lose the opportunity to build a critical mass of customers. Promoting and positioning the &#8220;Damon&#8221;
brand will likely depend significantly on Damon&#8217;s ability to provide high quality vehicles and services and engage with its customers
as intended and Damon has limited experience in these areas. In addition, Damon expects that its ability to develop, maintain and strengthen
the &#8220;Damon&#8221; brand will also depend heavily on the success of its user development and branding efforts. Such efforts mainly
include building a community of online and offline users engaged with Damon through its mobile application and Damon stores as well as
other branding initiatives and events. Such efforts may be non-traditional and may not achieve the desired results. To promote the &#8220;Damon&#8221;
brand, Damon may be required to change its user development and branding practices, which could result in substantially increased expenses,
including the need to use traditional media such as television, radio and print. If Damon does not develop and maintain a strong brand,
its business, financial condition, operating results and prospects may be materially and adversely impacted.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, if incidents
with Damon&#8217;s business, vehicles or services occur or are perceived to have occurred, whether or not such incidents are Damon&#8217;s
fault, Damon could be subject to adverse publicity. In particular, given the popularity of social media, posts and opinions regarding
Damon, whether true or not, could quickly proliferate and harm consumer perceptions and confidence in the &#8220;Damon&#8221; brand. Further,
there is the risk of potential adverse publicity related to Damon&#8217;s manufacturing or other partners, whether or not such publicity
is related to their collaboration with Damon. Damon&#8217;s ability to successfully position its brand could also be adversely affected
by perceptions about the quality of its partners&#8217; vehicles. In addition, from time-to-time, Damon&#8217;s vehicles are evaluated
and reviewed by third parties. Any negative reviews or reviews which compare Damon unfavorably to competitors could adversely affect consumer
perception about Damon&#8217;s vehicles.</p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The motorcycle market is highly competitive,
and Damon may not be successful in competing in this industry.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The motorcycle market is highly
competitive, and Damon expects it will become even more so in the future. Currently, Damon&#8217;s principal competition for its vehicles
comes principally from manufacturers of motorcycles with internal combustion engines powered by gasoline, including in the premium and
other segments of its business. Damon cannot assure that customers will choose its vehicles over those of its competitors&#8217; internal
combustion-engine motorcycles. Although Damon intends to strategically enter into the market in the premium electric vehicle segment,
it similarly expects this segment will become more competitive in the future as additional competitors enter into it, both from established
brands and new entrants from various regions of the globe.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Many of Damon&#8217;s current
and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than Damon and
may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their
products. Based on publicly available information, a number of Damon&#8217;s competitors already have displayed prototype electric motorcycles
and have announced target availability and production timelines, while others have launched pilot programs or full commercial offerings
in certain markets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Notably, Damon expects competition
in its industry to intensify in the future in light of increased demand and regulatory push for alternative fuel vehicles, continuing
globalization and consolidation in the worldwide motorcycle industry. Factors affecting competition include, among others, product quality
and features, innovation and development time, pricing, reliability, safety, fuel and energy economy, customer service (including breadth
of service network) and financing terms. Damon&#8217;s ability to successfully compete in the motorcycle industry will be fundamental
to its future success in existing and new markets and its market share. There can be no assurance that Damon will be able to compete successfully
in the markets in which it operates. If Damon&#8217;s competitors introduce new models or services that successfully compete with or surpass
the quality, price, performance or availability of Damon&#8217;s vehicles or services, Damon may be unable to satisfy existing customers
or attract new customers at the prices and levels that would allow it to generate attractive rates of return on its investment. Increased
competition could result in lower vehicle unit sales, price reductions and revenue shortfalls, loss of customers and loss of market share,
which may materially adversely affect Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There may be unanticipated obstacles
to the execution of Damon&#8217;s business model.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s business plans
may change significantly. Damon&#8217;s business model is capital intensive. Damon believes that its chosen activities and strategies
are achievable in light of current economic and legal conditions with the skills, background, and knowledge of Damon&#8217;s principals
and advisors. Damon&#8217;s management reserves the right to make significant modifications to its stated strategies depending on future
events.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s proposed plan
of operation and prospects will depend largely upon its ability to successfully establish Damon&#8217;s presence in a timely fashion,
retain and continue to hire skilled management, technical, marketing, and other personnel, and attract and retain significant numbers
of quality business partners and corporate clients. There can be no assurance that Damon will be able to successfully implement its business
plan or develop or maintain future business relationships, or that unanticipated expenses, problems or technical difficulties which would
result in material delays in implementation will not occur.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Demand in the motorcycle industry
is highly volatile.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Volatility of demand in the
motorcycle industry may materially and adversely affect Damon&#8217;s business, financial condition, operating results and prospects.
The markets in which Damon will be competing have been subject to considerable volatility in demand in recent periods. Demand for motorcycle
sales depends to a large extent on general, economic, political and social conditions in a given market and the introduction of new motorcycles
and technologies. As a new start-up manufacturer, Damon will have fewer financial resources than more established motorcycle manufacturers
to withstand changes in the market and disruptions in demand.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->18<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s ability to generate
meaningful product revenue will depend upon consumer&#8217;s willingness to adopt electric motorcycles.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s growth will
greatly depend upon the adoption by consumers of, and Damon is subject to an elevated risk of any reduced demand for, alternative fuel
motorcycles in general and electric motorcycles in particular. If the market for electric motorcycles does not develop as expected or
develops more slowly than expected, Damon&#8217;s business, financial condition, operating results and prospects may be materially adversely
affected. The market for alternative fuel motorcycles is relatively new, rapidly evolving, characterized by rapidly changing technologies,
price competition, additional competitors, evolving government regulation and industry standards, frequent new motorcycle announcements
and changing consumer demands and behaviors. Factors that may influence the adoption of alternative fuel motorcycles, and specifically
electric motorcycles, include:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">perceptions about electric motorcycle quality, safety (in particular with respect to lithium-ion battery
packs), design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric
motorcycles;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">perceptions about motorcycle safety in general, in particular safety issues that may be attributed to
the use of advanced technology, including motorcycle electronics and braking systems;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the limited range over which electric motorcycles may be driven on a single battery charge;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the decline of an electric motorcycle&#8217;s range resulting from deterioration over time in the battery&#8217;s
ability to hold a charge or short-term declines resulting from adverse weather conditions;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">concerns about electric grid capacity and reliability, which could derail Damon&#8217;s efforts to promote
electric motorcycles as a practical solution to motorcycles which require gasoline;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the availability of alternative fuel motorcycles, including plug-in hybrid electric motorcycles;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">improvements in the fuel economy of the internal combustion engine;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the availability of service for electric motorcycles;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the environmental consciousness of consumers;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">volatility in the cost of oil and gasoline;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">access to charging stations, standardization of electric motorcycle charging systems and consumers&#8217;
perceptions about convenience and cost to charge an electric motorcycle;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the availability of tax and other governmental incentives to purchase and operate electric motorcycles
or future regulation requiring increased use of nonpolluting motorcycles;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">perceptions about and the actual cost of alternative fuel; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">macroeconomic factors.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The influence of any of the
factors described above may cause current or potential customers not to purchase Damon&#8217;s electric motorcycles, which would materially
adversely affect Damon&#8217;s business, operating results, financial condition and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The transportation industry has significant
barriers to entry that Damon must overcome in order to manufacture and sell its electric motorcycles at scale.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The transportation industry
is characterized by significant barriers to entry, including large capital requirements, investment costs of developing, designing, manufacturing
and distributing vehicles, long lead times to bring vehicles to market from the concept and design stage, the need for specialized design
and development expertise, regulatory requirements, establishing a brand name and image and the need to establish sales and service locations.
Since Damon is focused on electric motorcycles, it faces a variety of added challenges to entry that a traditional motorcycle manufacturer
would not encounter, including additional costs of developing and producing an electric powertrain that has comparable performance to
a traditional internal combustion engine in terms of range and power, inexperience with servicing electric vehicles, regulations associated
with the transport of batteries, the need to establish or provide access to sufficient charging locations and unproven high-volume customer
demand for fully electric motorcycles. If Damon is not able to overcome these barriers, its business, financial condition, operating results
and prospects may be materially adversely affected, and its ability to grow its business may be harmed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s planned distribution
model is different from the predominant current distribution model for motorcycle manufacturers, which makes evaluating its business,
financial condition, operating results and prospects difficult.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s planned distribution
model is not common in the automotive industry today, particularly in North America. Damon plans to conduct vehicle sales directly to
customers rather than through dealerships, primarily through Damon&#8217;s website, subject to obtaining applicable dealer licenses and
equivalent permits in such jurisdictions. Further, generally all Damon vehicles will be made to order. This model of vehicle distribution
is relatively new and unproven, and subjects Damon to substantial risk as it requires, in the aggregate, significant expenditures and
provides for slower expansion of distribution and sales systems than may be possible by utilizing the traditional dealer franchise system.
For example, Damon may not be able to utilize long established sales channels developed through a franchise system to increase its sales
volume. Moreover, Damon will be competing with companies with well established distribution channels. Damon&#8217;s success will depend
in large part on Damon&#8217;s ability to effectively develop its own sales channels and marketing strategies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Implementing such distribution
model is subject to numerous significant challenges, including obtaining licenses or equivalent permits and approvals from government
authorities, and there is no assurance that Damon will be able to obtain such licenses, permits and approvals. Further, there are substantial
automotive franchise laws in place in many jurisdictions around the world and Damon may be exposed to significant franchise dealer litigation
risks.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If Damon&#8217;s direct sales
and leasing model does not develop as expected or develops more slowly than expected, it may be required to modify or abandon its sales
and leasing model, which could materially and adversely affect its business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s marketing programs may
not be successful.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon believes its brand is
critical to its business. Damon will incur costs and expend other resources in its marketing efforts to raise brand awareness and attract
and retain customers. These initiatives may not be successful, resulting in expenses incurred without the benefit of revenues or growth.
Additionally, most, if not all, of Damon&#8217;s competitors have greater financial resources, which enable them to spend significantly
more than Damon is able to on marketing and advertising. Should Damon&#8217;s competitors increase spending on marketing and advertising
or Damon&#8217;s marketing funds decrease for any reason, or should its advertising and promotions be less effective than its competitors,
there could be a material adverse effect on Damon&#8217;s results of operations and financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon is dependent on its suppliers,
some of which are single or limited source suppliers, and the inability of these suppliers to deliver necessary components of Damon&#8217;s
vehicles at prices and volumes acceptable to Damon would have a material adverse effect on its business, financial condition, operating
results and prospects.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is dependent on third-party
suppliers and manufacturers to supply and manufacture parts and components, sub-assemblies and assemblies included in its vehicles, and
it expects to continue to rely on third parties to supply and manufacture such parts and components, sub-assemblies and assemblies in
the future. While Damon obtains parts and components, sub-assemblies and assemblies from multiple sources whenever possible, some of the
parts and components, sub-assemblies and assemblies used in its vehicles are purchased from a single source.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon intends to mitigate
supply chain risk by entering into long-term supply agreements with key manufacturers and suppliers where appropriate, including where
there is a single source supplier, but has not secured such long-term supply agreements to date, and there can be no assurance that it
will be able to do so on terms that are acceptable to Damon, or at all. Further, the supplier agreements Damon may enter into with key
suppliers in the future may contain provisions where such agreements can be terminated in various circumstances, including potentially
without cause. While Damon believes that it may be able to establish alternate supply relationships and can obtain or potentially engineer
replacement components for some of its single source components, it may be unable to do so in the short-term or at all, or at prices,
volumes or quality levels that are acceptable to it. Changes in business conditions, pandemics, governmental changes, political conflict
and other factors beyond Damon&#8217;s control, or that it does not presently anticipate, could affect its ability to receive components
from its suppliers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any disruption in the supply
of parts and components, sub-assemblies and assemblies, whether or not from a single source supplier, could temporarily disrupt manufacturing
of Damon&#8217;s vehicles until an alternative supplier is able to supply the required material. Changes in business conditions, unforeseen
circumstances, governmental changes, and other factors beyond Damon&#8217;s control or which it does not presently anticipate, could also
affect Damon&#8217;s suppliers&#8217; ability to deliver components to Damon on a timely basis and ultimately, Damon&#8217;s ability to
economically produce and distribute its vehicles.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In particular, Damon&#8217;s
vehicles contain electronics, microprocessors control modules, and other computer chips. As a result of the supply chain disruptions commencing
with the ongoing COVID-19 pandemic, there has been a surge in demand for semiconductor microchips, which led to a worldwide supply shortage
at the end of 2020 and into 2022 in the transportation industry. Damon is dependent on its suppliers to deliver many components that contain
these microchips, and a shortage of microchips could disrupt Damon&#8217;s operations and its ability to timely deliver vehicles to customers.
Damon is closely monitoring the availability of these components, assessing the supply chain and production impacts and seeking potential
alternatives.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Also, if any of Damon&#8217;s
suppliers become economically distressed or go bankrupt, Damon may be required to provide substantial financial support or take other
measures to ensure supplies of components or materials, which could increase its costs, affect its liquidity or cause production disruptions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The inability of any of Damon&#8217;s
suppliers to deliver necessary parts and components, sub-assemblies and assemblies according to Damon&#8217;s schedule and at prices,
volumes or quality levels acceptable to Damon, Damon&#8217;s inability to efficiently manage these parts and components, sub-assemblies
and assemblies, or the termination or interruption of any material supply arrangement could materially adversely affect Damon&#8217;s
business, financial condition, operating results or prospects. Further, as the scale of Damon&#8217;s vehicle production increases, Damon
will need to accurately forecast, purchase, warehouse and transport components to its manufacturing facilities and servicing locations
internationally and at much higher volumes. If it is unable to accurately match the timing and quantities of component purchases to its
actual needs or successfully implement automation, inventory management and other systems to accommodate the increased complexity in its
supply chain, Damon may incur unexpected production disruption, storage, transportation and write-off costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any of the foregoing may materially
adversely affect Damon&#8217;s business, financial condition, operating results or prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If Damon&#8217;s suppliers fail to
use ethical business practices and comply with applicable laws and regulations, Damon&#8217;s brand image could be harmed due to negative
publicity.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s core values,
which include developing high quality electric motorcycles while operating with integrity, are an important component of the Damon brand
image, which makes Damon&#8217;s reputation sensitive to allegations of unethical business practices. Damon does not control its suppliers
or their business practices. Accordingly, there is no assurance of compliance on the part of Damon&#8217;s suppliers with ethical business
practices, such as environmental responsibilities, fair wage practices, and compliance with child labor laws, among others. A lack of
demonstrated compliance could lead Damon to seek alternative suppliers, which could increase its costs and results in delayed delivery
of its products, product shortages or other disruptions of its operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Violation of labor or other
laws by Damon&#8217;s suppliers or the divergence of a supplier&#8217;s labor or other practices from those generally accepted as ethical
in the markets in which Damon operates could also attract negative publicity for Damon and its brand. If Damon, or other manufacturers
in the industry in which Damon operates, encounters similar problems in the future, the Damon brand and Damon&#8217;s business, financial
condition, operating results and prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon could experience cost increases
or disruptions in supply of raw materials or other components used in its vehicles.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon incurs significant costs
related to procuring raw materials required to manufacture and assembling its vehicles. Damon uses various raw materials in its vehicles
including aluminum, steel, carbon fiber, non-ferrous metals such as copper, lithium, nickel, and cobalt. The prices for these raw materials
fluctuate depending on factors beyond Damon&#8217;s control including market conditions and global demand for these materials and could
adversely affect Damon&#8217;s business, financial condition, operating results and prospects. Damon&#8217;s business will also depend
on the continued supply of battery cells for its vehicles. Battery cell manufacturers may refuse to supply electric vehicle manufacturers
to the extent they determine that their vehicles are not sufficiently safe. Damon is exposed to multiple risks related to availability
and pricing of quality lithium-ion battery cells. These risks include:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the inability or unwillingness of current battery cell manufacturers to build or operate battery cell
manufacturing plants to supply the numbers of lithium-ion cells required to support the growth of the electric or plug-in hybrid vehicle
industry as demand for such cells increases;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">disruption in the supply of cells due to quality issues or recalls by the battery cell manufacturers;
and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">an increase in the cost or decrease in the availability of raw materials used in battery cells, such as
lithium, nickel, cobalt, used in lithium-ion cells.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Further, currency fluctuations,
tariffs or shortages in petroleum and other economic or political conditions may result in significant increases in freight charges and
raw material costs. Substantial increases in the prices for Damon&#8217;s raw materials or components would increase its operating costs
and could reduce its margins. In addition, a growth in popularity of electric vehicles without a significant expansion in battery cell
production capacity could result in shortages which would result in increased materials costs to Damon, and its business, financial condition,
operating results and prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Increased freight and shipping costs
or disruptions in transportation and shipping infrastructure could materially adversely affect Damon&#8217;s business, financial condition,
operating results and prospects.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon intends to utilize air,
sea and ground freight via third-party freight services for the transportation of supplies to its facilities and assembled vehicles to
its customers. Adverse fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation
and shipping infrastructure at important shipping and delivery points for Damon&#8217;s products, as well as for parts and components,
sub-assemblies and assemblies used in Damon&#8217;s vehicles could materially adversely affect Damon&#8217;s business, financial condition,
operating results and prospects. For example, delivery delays or increases in transportation costs (including through increased energy
costs, increased carrier rates or driver wages as a result of driver shortages, a decrease in transportation capacity, or work stoppages
or slowdowns) could significantly decrease Damon&#8217;s ability to make vehicle sales and earn revenues. Labor shortages or work stoppages
in the transportation industry or long-term disruptions to the national and international transportation infrastructure that lead to delays
or interruptions of deliveries or which would necessitate Damon securing alternative shipping suppliers could also increase Damon&#8217;s
costs or otherwise materially adversely affect its business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon depends on certain key personnel,
and its success will depend on its continued ability to retain and attract qualified management, technical and vehicle engineering and
sales personnel.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s success will
depend on the efforts, abilities, continued service and performance of Damon&#8217;s senior management team and key management, technical,
vehicle engineering and sales personnel, and in particular from Dom Kwong, interim Chief Executive Officer, Bal Bhullar, Chief Financial
Officer, and Derrek Dorresteyn, Chief Technology Officer. A number of these key employees have significant experience in the motorcycle
and electric vehicle manufacturing industry. If any key personnel were to terminate their employment with, or cease providing services
to, Damon, the risks described in this section may be heightened and Damon may have difficulty or may not be able to locate and hire a
suitable replacement. Damon has not obtained any &#8220;key person&#8221; insurance on certain key personnel at this time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s directors and executive
officers may have other business interests and obligations to other entities.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None of Damon&#8217;s directors
or officers will be required to manage Damon as their sole and exclusive function and they may have other business interests and may engage
in other activities in addition to those relating to Damon, provided that such activities do not compete with the business of Damon or
otherwise breach their agreements with Damon. Damon is dependent on its directors and officers to successfully operate Damon. Their other
business interests and activities could divert time and attention from operating Damon&#8217;s business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Potential conflicts of interest
may arise in the course of Damon&#8217;s operations involving any member of management&#8217;s interest, or an affiliate company&#8217;s
interest, as well as their respective interests in other potential unrelated activities. While Damon does have processes and procedures
in place to identify, analyze or monitor conflicts of interest, there is no assurance that such processes and procedures will identify
or disclose every conflict of interest that may arise.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s business may be adversely
affected by labor and union activities.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although none of Damon&#8217;s
employees are currently represented by a labor union, it is common throughout the motorcycle industry generally for many employees at
motorcycle companies to belong to a union, which can result in higher employee costs and increased risk of work stoppages. Damon also
directly and indirectly depends upon other companies with unionized work forces, such as parts suppliers and trucking and freight companies.
If a work stoppage occurs within Damon&#8217;s business or that of Damon&#8217;s key suppliers, it could delay the manufacture and sale
of Damon&#8217;s electric motorcycles and may have a material adverse effect on Damon&#8217;s business, financial condition, operating
results and prospects. Additionally, if Damon expands its business to include full in-house manufacturing of motorcycles, Damon&#8217;s
employees might join or form a labor union and Damon may be required to become a union signatory.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon has undergone recent
reductions in force and may undergo additional reductions in force in the future. However, any headcount reduction may not result in anticipated
cost savings and could have negative or unanticipated impacts on Damon&#8217;s business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To reduce operating expenses,
Damon reduced its headcount, approximately 50% in early 2023 to late 2024 and Damon may seek to undergo additional workforce restructurings
in the future. Damon may not realize the anticipated benefits, savings and improvements in its cost structure from such restructurings
because of unforeseen difficulties, delays or unexpected costs. In particular, headcount reductions could lead to disruptions to operations,
material delays in research and development, attrition beyond planned layoffs and increased challenges to hire and retain qualified personnel.
If Damon is unable to realize the expected operational efficiencies and cost savings from past or future restructurings, Damon&#8217;s
operating results and financial condition would be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon is or may be subject to risks
associated with strategic alliances and acquisitions.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon has entered into and
may in the future enter into strategic alliances, including joint ventures or minority equity investments, with various third parties
to further Damon&#8217;s business purpose from time-to-time. These alliances could subject Damon to a number of risks, including risks
associated with sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic
alliances, any of which may materially and adversely affect its business. Damon may have limited ability to monitor or control the actions
of these third parties and, to the extent any of these strategic third parties suffer negative publicity or harm to their reputation from
events relating to their business, Damon may also suffer negative publicity or harm to its reputation by virtue of its association with
any such third party.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, although Damon
does not have any current acquisition plans, if appropriate opportunities arise, Damon may acquire additional assets, products, technologies
or businesses that are complementary to its existing business. In addition to a potential requirement for shareholder approval, Damon
may also have to obtain approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable
laws and regulations, which could result in increased delay and costs, and may derail its business strategy if Damon fails to do so. Further,
past and future acquisitions and the subsequent integration of new assets and businesses into Damon (including the Business Combination)
may require significant attention from Damon&#8217;s management and could result in a diversion of resources from its existing business,
which in turn could have an adverse effect on Damon&#8217;s business operations. Acquired assets or businesses may not generate the expected
financial results. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities,
the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential
unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We may not be able to successfully
integrate the business and operations of entities that we have acquired or may acquire in the future into our ongoing business operations,
which may result in our inability to fully realize the intended benefits of these acquisitions, or may disrupt our current operations,
which could have a material adverse effect on our business, financial position and results of operations.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Integrating the technology
and operations acquired in connection with the Business Combination and any potential future acquisitions involves complex operational,
technological and personnel-related challenges, which are time-consuming and expensive and may disrupt our ongoing business operations.
Furthermore, integration involves a number of risks, including, but not limited to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">difficulties or complications in combining the companies&#8217; operations;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">differences in controls, procedures and policies, regulatory standards and business cultures among the
combined companies;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the diversion of management&#8217;s attention from our ongoing core business operations;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">increased exposure to certain governmental regulations and compliance requirements;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the potential increase in operating costs;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the potential loss of key personnel;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the potential loss of key customers or suppliers who choose not to do business with the combined business;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">difficulties or delays in consolidating the acquired companies&#8217; technology platforms, including
implementing systems designed to maintain effective disclosure controls and procedures and internal control over financial reporting for
the combined company and enable the Company to continue to comply with U.S. GAAP and applicable U.S. securities laws and regulations;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">unanticipated costs to successfully integrate operations, technologies, personnel of acquired businesses
and other assumed contingent liabilities;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">difficulty comparing financial reports due to differing financial or internal reporting systems;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">making any necessary modifications to internal financial control standards to comply with the Sarbanes-Oxley
Act of 2002 and the rules and regulations promulgated thereunder; or</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">possible tax costs or inefficiencies associated with integrating the operations of the combined company.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These factors could cause
us to not fully realize the anticipated financial or strategic benefits of future acquisitions which could have a material adverse effect
on our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Even if we are able to successfully
operate the acquired businesses, we may not be able to realize the revenue and other synergies and growth that we anticipate from these
acquisitions in the time frame that we currently expect, and the costs of achieving these benefits may be higher than what we currently
expect, because of certain risks:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the possibility that the acquisition may not further our business strategy as we expected;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the possibility that we may not be able to expand the reach and customer base for the acquired companies&#8217;
current and future products as expected;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the possibility that we may have entered a market with no prior experience and may not succeed in the
manner expected; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the possibility that the carrying amounts of goodwill and other purchased intangible assets may not be
recoverable.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of these risks,
the acquisitions and integration may not contribute to our earnings as expected, we may not achieve expected revenue synergies or return
on invested capital when expected, or at all, and we may not achieve the other anticipated strategic and financial benefits of such acquisitions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Manufacturing in collaboration with
partners is subject to risks.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon has agreed to a partnership
with Auteco, for the manufacturer of a lower-cost global electric motorcycle (HyperLite) in the future. Damon intends to be paid by Auteco
for each vehicle it assembles and sells on a per-vehicle basis monthly for the first five years of production. In addition, Damon has
established a strategic partnership with Indika Energy for manufacturing, licensing and distribution in Indonesia, with the ability to
expand that partnership to all of Southeast Asia. Damon may enter into similar with third party manufacturers in the future for its vehicles.
Collaboration with third parties for the manufacturing of vehicles is subject to risks with respect to operations that are outside Damon&#8217;s
control. Damon could experience delays to the extent its partners do not meet agreed upon timelines or experience capacity constraints.
There is a risk of potential disputes with manufacturing partners, and Damon could be affected by adverse publicity related to its partners
whether or not such publicity is related to their collaboration with Damon. Damon&#8217;s ability to successfully build a premium brand
could also be adversely affected by perceptions about the quality of its manufacturing partners&#8217; vehicles. In addition, although
Damon is involved in each step of the supply chain and manufacturing process, given Damon&#8217;s reliance on its partners to meet Damon&#8217;s
quality standards, there can be no assurance that Damon will be able to successfully maintain such quality standards if outsourced manufacturing
is adopted.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon may be unable to enter
into new agreements or extend existing agreements with third-party manufacturing partners on terms and conditions acceptable to Damon
and therefore may need to contract with other third parties or significantly add to its own production capacity. There can be no assurance
that in such an event Damon would be able to partner with other third parties or establish or expand its own production capacity to meet
its needs on acceptable terms or at all. The expense and time required to complete any transition, and to assure that vehicles manufactured
at facilities of new third-party partners comply with Damon&#8217;s quality standards and regulatory requirements, may be greater than
anticipated. The occurrence of any of the foregoing may materially adversely affect Damon&#8217;s business, financial condition, operating
results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Manufacturing at Damon&#8217;s leased
facility presents inherent risk.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is currently developing
its battery and motorcycle assembly lines at its leased facility in San Rafael, California, in the greater San Francisco area. While Damon
expects to be ready for initial production in 2026, there can be no assurance that Damon will be able to complete the build-out on schedule
and within budget, and more generally that Damon will be able to establish and expand production capacity to satisfy current reservations
or future anticipated demand. This risk extends to supply chain and manufacturing quality risk, which could lead to lower volumes or lower
quality than expected by customers. Further, if Damon is able to scale its manufacturing to meet demand, Damon may need to lease a larger
facility, and there is no guarantee that Damon will be able to do so on terms satisfactory to Damon.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The delivery of HyperSport
and subsequent motorcycles to Damon&#8217;s future customers and the revenue derived therefrom depends on Damon&#8217;s ability to source
and fulfill the required vehicle manufacturing capacity, and it will depend on the ability of a future lessor to build and outfit future
manufacturing facility. A future lessor&#8217;s ability to fulfill its obligations is outside of Damon&#8217;s control and depends on
a variety of factors including the lessor&#8217;s operations, financial condition and geopolitical and economic risks. If a future lessor
is unable to fulfill its obligations or is only able to partially fulfill its obligations, Damon will not be able to manufacture and sell
its HyperSport and other motorcycles in the volumes anticipated within the timeframe that Damon anticipates, if at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon is and will be dependent on
its manufacturing facilities. If one or more of its current or future manufacturing facilities become inoperable, capacity constrained
or if operations are disrupted, its business, financial condition, operating results and prospects may be materially adversely affected.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s future revenue
will be dependent on its manufacturing facilities. To the extent that Damon experiences any operational risk including, among other things,
natural or man-made disasters, including earthquakes, flooding, fire and power outages, or by health epidemics or pandemics, and labor
work force and work stoppages, resulting in any of its current or future manufacturing facilities becoming inoperable or capacity constrained,
Damon will be required to make capital expenditures even though it may not have available resources at such time. Additionally, there
is no guarantee that the proceeds available from Damon&#8217;s insurance policies would be sufficient to cover such capital expenditures.
As a result, Damon&#8217;s insurance coverage and available resources may prove to be inadequate for events that may cause any of its
current or future manufacturing facilities to become inoperable or capacity constrained, or any significant disruption to its operations.
Any disruption in Damon&#8217;s manufacturing processes could result in delivery delays, scheduling problems, increased costs, or production
interruption, which, in turn, may result in its customers deciding to purchase products from its competitors. Damon is and will be dependent
on its current and future manufacturing facilities which will in the future require a high degree of capital expenditures. If Damon&#8217;s
current or future assembly facilities becomes inoperative, capacity constrained or if operations are disrupted, its business, financial
condition, operating results and prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon relies on complex machinery
for its operations, and production of its vehicles involves a significant degree of risk and uncertainty in terms of operational performance,
safety, security and costs.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon relies heavily on complex
machinery for its operations and its production will involve a significant degree of uncertainty and risk in terms of operational performance,
safety, security, and costs. Damon&#8217;s contemplated and its partners&#8217; manufacturing facilities make use of large-scale machinery
combining many components. The manufacturing plant components are likely to suffer unexpected malfunctions from time-to-time and will
depend on repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of the manufacturing
facility components may significantly affect operational efficiency. Operational performance and costs can be difficult to predict and
are often influenced by factors outside of Damon&#8217;s control, including, but not limited to, scarcity of natural resources, environmental
hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining
governmental permits, damages or defects in electronic systems, industrial accidents, pandemics, fire, seismic activity, and natural disasters.
There is no guarantee that adverse events will not occur in the future, or that Damon will be able to contain such events without damage
or delay. Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment,
damage to manufacturing facilities, vehicles, supplies, tools and materials, monetary losses, delays and unanticipated fluctuations in
production, environmental damage, administrative fines, increased insurance costs, and potential legal liabilities, all which could have
a material adverse effect on Damon&#8217;s business, financial condition, operating results or prospects. Although Damon generally carries
insurance to cover such operational risks, there is no assurance that such insurance coverage will be sufficient to cover potential costs
and liabilities arising therefrom. A loss that is uninsured or exceeds policy limits may require Damon to pay substantial amounts, which
could adversely affect Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s business may be negatively
impacted by depreciation of equipment.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon expects to continue
to invest significantly in what it believes is state of the art tooling, machinery and other manufacturing equipment for the product lines
where the HyperSport and subsequent HyperDrive powertrain platforms based vehicles are manufactured/assembled, and Damon will depreciate
the cost of such equipment over its expected useful life. Additionally, Damon expects manufacturing partners will be investing in their
production lines in support of Damon&#8217;s vehicle delivery goals. However, manufacturing technology may evolve rapidly, and Damon or
its partners may decide to update its manufacturing process with cutting-edge equipment more quickly than expected. Moreover, as Damon
ramps the commercial production of its vehicles, Damon&#8217;s experience may cause it to discontinue the use of already installed equipment
in favor of different or additional equipment. The useful life of any equipment that would be retired early as a result would be shortened,
causing the depreciation on such equipment to be accelerated, and to the extent such equipment is owned by us, Damon&#8217;s results of
operations could be negatively impacted.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Misconduct by employees of Damon or
third-party service providers could cause significant losses to Damon.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Misconduct by employees of
Damon or third-party service providers could cause significant losses to Damon. Losses could also result from actions by third party service
providers, including, without limitation, failing to recognize trades and misappropriating assets. In addition, employees and third-party
service providers may improperly use or disclose confidential information, which could result in litigation or serious financial harm,
including limiting Damon&#8217;s business prospects or future marketing activities. No assurances can be given that the due diligence
performed by Damon will identify or prevent any such misconduct.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Dependence on a single licensor for
our SAVES products and potential adverse changes to terms could negatively impact our financial condition and results of operations.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All of our revenues from the
SAVES distribution business have been derived from the sale of product licenses we purchase from the licensor. The Parent acquired an
exclusive license to use, market, distribute, and develop the SAVES products pursuant to an exclusive software license and distribution
agreement, by and among the Parent, Cranes Software International Ltd. and Systat Software, Inc., as amended on June 30, 2020 and February
22, 2021, and has licensed the SAVES products to us. In connection with the spin out and as reported in the current report on Form 8-K
filed by the Parent on February 23, 2024, the Parent sold 100% of the equity interest in Grafiti LLC, then a wholly-owned subsidiary of
the Parent which holds the exclusive license to develop and sell the SAVES products, along with other assets and businesses, to an entity
controlled by Nadir Ali, the former Chief Executive Officer and former sole director of the Company prior to the consummation of the Business
Combination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As the licensor, Grafiti LLC
has and its successors will have significant negotiating power over us and rapid, significant, or adverse changes in sales terms and conditions,
such as competitive pricing as well as reducing the level of purchase discounts and rebates this or any new vendor makes available to
us, may reduce the profit we can earn on these vendors&#8217; products and result in loss of revenue and profitability. Our gross profit
could be negatively impacted if we are unable to pass through the impact of these changes to our distributors, resellers and customers.
Additionally, significant changes in vendor payment terms or payment arrangements could negatively impact our liquidity and financial
condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our competitors in the technology
distribution industry can take more market share by reducing prices on our most profitable vendor products, causing us to reduce prices
on such products.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The technology distribution
industry is characterized by intense competition, based primarily on product availability, credit terms and availability, price, effectiveness
of information systems and e-commerce tools, speed of delivery, ability to tailor specific solutions to customer needs, quality and depth
of product lines and training, service and support. Our customers are not required to purchase any specific volume of products from us
and may move business if pricing is reduced by competitors, resulting in lower sales. As a result, we must be extremely flexible in determining
when to reduce prices to maintain market share and sales volumes and when to allow our sales volumes to decline to maintain our desired
level of profitability for our products. We compete with a variety of regional, national and international distributors and resellers,
some of which may have greater financial resources than us. Many of our competitors compete principally on the basis of price and may
have lower costs or accept lower selling prices than we do and, therefore, we may need to reduce our prices. In addition, vendors may
choose to market their products directly to end-users, rather than through distributors such as us, and this could adversely affect our
business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our competitiveness in the technology
distribution industry depends significantly on our ability to keep pace with the rapid changes in our industry. Failure by us to anticipate
and meet our customers&#8217; technological needs could adversely affect our competitiveness and growth prospects.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We operate and compete in
the technology distribution industry which is characterized by rapid technological innovation, changing customer needs, evolving industry
standards and frequent introductions of new products, product enhancements, services and distribution methods. Our success depends on
our ability to develop expertise with these new products, product enhancements, services and distribution methods and to implement solutions
that anticipate and respond to rapid changes in technology, the industry, and customer needs. The introduction of new products, product
enhancements and distribution methods could decrease demand for current products or render them obsolete. Sales of products and services
can be dependent on demand for specific product categories, and any change in demand for or supply of such products could have a material
adverse effect on our net sales if we fail to adapt to such changes in a timely manner.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We offer one vendor&#8217;s
product offerings and are dependent on our customers demand for this vendor&#8217;s products. There can be no assurances that consumer
or commercial demand for our future products will meet, or even approach, our expectations. In addition, our pricing and marketing strategies
may not be successful. Lack of customer demand, a change in marketing strategy and changes to our pricing models could dramatically alter
our financial results. Unless we are able to release location based products that meet a significant market demand, we will not be able
to improve our financial condition or the results of our future operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The growth of our SAVES distribution
business is dependent on increasing sales to our existing customers and obtaining new customers, which, if unsuccessful, could limit our
financial performance.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to increase revenues
from existing customers by identifying additional opportunities to sell more of our products and services and our ability to obtain new
customers depends on a number of factors, including our ability to offer high quality products and services at competitive prices, meeting
customers&#8217; needs and expectations, the strength of our competitors and the capabilities of our sales and marketing departments.
If we are not able to continue to increase sales of our products and services to existing customers or to obtain new customers in the
future, we may not be able to increase our revenues and could suffer a decrease in revenues as well.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If our SAVES products fail to satisfy
customer demands or to achieve increased market acceptance, our results of operations, financial condition and growth prospects could
be materially adversely affected.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The market acceptance of our
products are critical to our continued success. Demand for our SAVES products is affected by a number of factors beyond our control, including
continued market acceptance, the timing of development and release of new products by competitors, technological change, and growth or
decline in the statistical analytics and visualization market. If we are unable to continue to meet customer demands or to achieve more
widespread market acceptance of our products, our business operations, financial results and growth prospects will be materially and adversely
affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Defects, errors, or vulnerabilities
in our SAVES products or services that we sell or the failure of such products or services to prevent a security breach, could harm our
reputation and adversely affect our results of operations.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because the SAVES products
we sell are complex, they have contained and may contain software design errors or software bugs that are not detected until after their
commercial release and deployment by customers. Defects may cause such products to be vulnerable to security attacks, cause them to fail
to help secure information or temporarily interrupt customers&#8217; networking traffic. Because the techniques used by hackers to access
sensitive information change frequently and generally are not recognized until launched against a target, we may be unable to anticipate
these techniques and provide a solution in time to protect customers&#8217; data. In addition, defects or errors in our subscription updates
or products could result in a failure to effectively update customers&#8217; products and thereby leave customers vulnerable to advanced
persistent threats (APTs) or security attacks.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any defects, errors or vulnerabilities
in the products we sell could result in:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">expenditure of significant financial and product development resources in efforts to analyze, correct,
eliminate, or work-around errors or defects or to address and eliminate vulnerabilities;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">delayed or lost revenue;</td></tr></table><div>

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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">loss of existing or potential customers or partners;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">increased warranty claims compared with historical experience, or increased cost of servicing warranty
claims, either of which would adversely affect gross margins; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">litigation, regulatory inquiries, or investigations that may be costly and harm our reputation</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our SAVES business relies on a limited
number of key customers, the importance of which may vary dramatically from year to year, and a loss of one or more of these key customers
may adversely affect our operating results.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the year ended June 30, 2024, Grafiti Limited had one customer
that accounted for 11% of revenue and during the year ended June 30, 2023, Grafiti Limited had one customer that accounted for 16% of
revenue. During the quarter ended September 30, 2024, Grafiti Limited has two customers that accounted for a total of 30% of revenue.
Each of these customers may or may not continue to be a significant contributor to revenue from our SAVES business in 2025. No customer
accounted for more than 10% of our gross revenue from the SAVES business during the fiscal year ended June 30, 2022. The loss of a significant
amount of business from one of our major customers could materially and adversely affect our results of operations until such time, if
ever, as we are able to replace the lost business. Significant customers or projects in any one period may not continue to be significant
customers or projects in other periods. To the extent that we are dependent on any single customer, we are subject to the risks faced
by that customer to the extent that such risks impede the customer&#8217;s ability to stay in business and make timely payments to us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A delay in the completion of our customers&#8217;
budget processes could delay purchases of our SAVES products and services and have an adverse effect on our business, operating results
and financial condition.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We rely on our customers to
purchase products and services from us to maintain and increase our earnings, however, customer purchases are frequently subject to budget
constraints, multiple approvals, and unplanned administrative, processing and other delays. If sales expected from a specific customer
are not realized when anticipated or at all, our results could fall short of public expectations and our business, operating results and
financial condition could be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If we cannot collect our receivables
or if payment is delayed, our SAVES distribution business may be adversely affected by our inability to generate cash flow, provide working
capital or continue our business operations.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our SAVES distribution business
depends on our ability to successfully obtain payment from our customers of the amounts they owe us for products received from us and
any work performed by us. The timely collection of our receivables allows us to generate cash flow, provide working capital and continue
our business operations. Our customers may fail to pay or delay the payment of invoices for a number of reasons, including financial difficulties
resulting from macroeconomic conditions or lack of an approved budget. An extended delay or default in payment relating to a significant
account will have a material and adverse effect on the aging schedule and turnover days of our accounts receivable. If we are unable to
timely collect our receivables from our customers for any reason, our business and financial condition could be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If our SAVES products fail to satisfy
customer demands or to achieve increased market acceptance, our results of operations, financial condition and growth prospects could
be materially adversely affected.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The market acceptance of our
SAVES products are critical to our continued success. Demand for our products is affected by a number of factors beyond our control, including
continued market acceptance, the timing of development and release of new products by competitors, technological change, and growth or
decline in the statistical analytics and visualization market. If we are unable to continue to meet customer demands or to achieve more
widespread market acceptance of our products, our business operations, financial results and growth prospects will be materially and adversely
affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Defects, errors, or vulnerabilities
in the SAVES products or services that we sell or the failure of such products or services to prevent a security breach, could harm our
reputation and adversely affect our results of operations.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because the SAVES products
we sell are complex, they have contained and may contain software design errors or software bugs that are not detected until after their
commercial release and deployment by customers. Defects may cause such products to be vulnerable to security attacks, cause them to fail
to help secure information or temporarily interrupt customers&#8217; networking traffic. Because the techniques used by hackers to access
sensitive information change frequently and generally are not recognized until launched against a target, we may be unable to anticipate
these techniques and provide a solution in time to protect customers&#8217; data. In addition, defects or errors in our subscription updates
or products could result in a failure to effectively update customers&#8217; products and thereby leave customers vulnerable to advanced
persistent threats (APTs) or security attacks.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any defects, errors or vulnerabilities
in the products we sell could result in:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">expenditure of significant financial and product development resources in efforts to analyze, correct,
eliminate, or work-around errors or defects or to address and eliminate vulnerabilities;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">delayed or lost revenue;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">loss of existing or potential customers or partners;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">increased warranty claims compared with historical experience, or increased cost of servicing warranty
claims, either of which would adversely affect gross margins; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">litigation, regulatory inquiries, or investigations that may be costly and harm our reputation</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Insurance and contractual protections
related to our SAVES distribution business may not always cover lost revenue, increased expenses or liquidated damages payments, which
could adversely affect our financial results.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although we maintain insurance
and intend to obtain warranties from suppliers, obligate subcontractors to meet certain performance levels and attempt, where feasible,
to pass risks we cannot control to our customers, the proceeds of such insurance or the warranties, performance guarantees or risk sharing
arrangements may not be adequate to cover lost revenue, increased expenses or liquidated damages payments that may be required in the
future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Risks Related to Economic Conditions</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Global economic conditions, including
inflation, could materially adversely impact demand for Damon&#8217;s products and services.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s operations and
performance depend significantly on economic conditions. Motorcycles are generally considered discretionary items for consumers. Many
factors impact discretionary spending, including general economic conditions, inflation, unemployment, credit markets and consumer confidence
in future economic conditions. Global economic conditions continue to be uncertain, particularly in light of high inflation and recent
instability in the U.S. banking system. Consumer purchases of discretionary items tend to be suppressed during recessionary periods when
disposable income is lower, or during periods of economic instability or uncertainty when consumer confidence is low, which may make potential
customers more likely to forgo or to postpone purchasing Damon&#8217;s vehicles, or to purchase less expensive product offerings, which
may be less profitable to Damon.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Any financial or economic crisis,
or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially and adversely affect Damon&#8217;s
business, financial condition, results of operations and prospects.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The global financial markets
experienced significant disruptions in 2008 and the Canadian, United States, European and other economies went into recession. The recovery
from the lows of 2008 and 2009 was uneven and the global financial markets are facing new challenges, including and supply chain shortages
or disruptions, and future potential economic slowdowns. It is unclear whether these challenges will be contained and what effects they
each may have. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies that have
been adopted by the central banks and financial authorities of some of the world&#8217;s leading economies. Economic conditions in China
are sensitive to global economic conditions. Recently there have been signs that the rate of China&#8217;s economic growth is declining.
Any prolonged slowdown in China&#8217;s economic development might lead to tighter credit markets, increased market volatility, sudden
drops in business and consumer confidence and dramatic changes in business and consumer behaviors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sales of high-end and luxury
consumer products, such as Damon&#8217;s performance electric motorcycles, depend in part on discretionary consumer spending and are even
more exposed to adverse changes in general economic conditions. In response to their perceived uncertainty in economic conditions, consumers
might delay, reduce or cancel purchases of Damon&#8217;s electric vehicles and Damon&#8217;s business, financial condition, operating
results and prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon faces risks related to natural
disasters, health epidemics and other outbreaks, which could significantly disrupt its operations.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s business could
be adversely affected by the effects of local or global outbreaks, and epidemics or pandemics. Damon&#8217;s business operations could
be disrupted if any of its employees are suspected of having contracted any contagious and virulent viruses or other diseases, since it
could require its employees to be quarantined or its offices to be disinfected. In addition, to the extent that any such outbreak, epidemic
or pandemic would have detrimental effects on general economic conditions Damon&#8217;s business, financial condition, operating results
or prospects may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s headquarters
and Damon-operated locations, as well as certain of Damon&#8217;s vendors and customers, are located in areas which have been and could
be subject to natural disasters such as floods, hurricanes, tornadoes, fires or earthquakes. Adverse weather conditions or other extreme
changes in the weather, including resulting electrical and technological failures, may disrupt Damon&#8217;s business and may adversely
affect Damon&#8217;s ability to continue its operations. These events also could have indirect consequences such as increases in the costs
of insurance if they result in significant loss of property or other insurable damage. Any of these factors, or any combination thereof,
could adversely affect Damon&#8217;s operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although Damon has data hosted
in offsite locations, Damon&#8217;s backup system does not capture data on a real-time basis and Damon may be unable to recover certain
data if a server fails. Damon cannot assure that any backup systems will be adequate to protect it from the effects of fire, floods, typhoons,
earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events. Any of the foregoing
events may give rise to interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause
the loss or corruption of data or malfunctions of software or hardware as well as adversely affect Damon&#8217;s ability to provide services
on its platform.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s risk management efforts
may not be effective which could result in unforeseen losses.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon could incur substantial
losses and its business operations could be disrupted if Damon is unable to effectively identify, manage, monitor, and mitigate financial
risks, such as credit risk, interest rate risk, prepayment risk, liquidity risk, and other market-related risks, as well as operational
risks related to its business, assets and liabilities. Damon&#8217;s risk management policies, procedures, and techniques, including its
scoring methodology, may not be sufficient to identify all of the risks Damon is exposed to, mitigate the risks Damon has identified or
identify additional risks to which Damon may become subject in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon is subject to risks related
to customer credit.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon has partnered to offer
leasing and financing of its vehicles to potential customers within the U.S. and is working to establish partnerships outside the U.S.
through other third-party financing partners, Damon currently has no agreements in place with any potential financing partners. Damon
cannot provide any assurance that such third-party financing partners would be able or willing to provide such services on terms acceptable
to Damon or its customers, or to provide such services at all. Further, because Damon has not yet sold any vehicles and no secondary market
for its vehicles exists, the future resale value of its vehicles is difficult to predict, and the possibility that resale values could
be lower than expected increases the difficulty of providing leasing terms that appeal to potential customers through such third-party
financing partners. Damon believes that the ability to offer attractive leasing and financing options is particularly relevant to customers
in the luxury motorsport vehicle segments in which Damon will compete, and if Damon is unable to offer its customers an attractive option
to finance the purchase of or lease HyperSport motorcycles or planned future models, such failure could substantially reduce the pool
of potential customers and decrease demand for Damon&#8217;s vehicles.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Further, offering leasing
and financing alternatives to customers could expose Damon to risks commonly associated with the extension of consumer credit. Competitive
pressure and challenging markets could increase credit risk through leases and loans to financially weak customers, extended payment terms,
and leases and loans into new and immature markets, and any such credit risk could be further heightened in light of the economic uncertainty
and any economic recession or other downturn, including by reason of a disease outbreak, such as the COVID-19 pandemic. If Damon is unable
to provide leasing and financing arrangements that appeal to potential customers, or if the provision of such arrangements exposes it
to excessive consumer credit risk, Damon&#8217;s business, financial condition, operating results and prospects may be materially adversely
affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Motorcycle retail sales depend heavily
on affordable interest rates and availability of credit for financing and a substantial increase in interest rates could materially and
adversely affect Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In certain regions, including
North America and Europe, financing for new vehicle sales was available at relatively low interest rates in recent years due to, among
other things, expansive government monetary policies. Interest rates began to rise sharply in early 2022, and market rates for new vehicle
financing have increased as well. Higher interest rates make Damon&#8217;s vehicles less affordable to customers and could steer customers
to less expensive vehicles that would be less profitable for Damon compared to premium vehicles. Additionally, if consumer interest rates
remain high or increase further, or if financial service providers further tighten lending standards or restrict their lending to certain
classes of credit, customers may not desire or be able to obtain financing to purchase or lease Damon&#8217;s vehicles.</p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Fluctuations in exchange rates could
have a material and adverse effect on Damon&#8217;s results of operations.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon reports its financial
results in U.S. dollars and anticipates that a material portion of its sales and operating costs will be realized in currencies other
than the U.S. dollar. If the value of any of said currencies depreciates relative to the U.S. dollar, Damon&#8217;s foreign currency revenue
will decrease when translated to U.S. dollar for reporting purposes. Alternatively, if the value of any of these currencies appreciates
relative to the U.S. dollar, Damon&#8217;s operating costs will increase when translated to U.S. dollar for reporting purposes. Although
these risks may sometimes be naturally hedged by a match in Damon&#8217;s sales and operating costs denominated in the same currency,
fluctuations in foreign currency exchange rates could create discrepancies between Damon&#8217;s sales and its operating costs in a given
currency which may have a material adverse effect on Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Fluctuations in foreign currency
exchange rates could also have a material adverse effect on the relative competitive position of Damon&#8217;s products in markets where
they face competition from manufacturers who are less affected by such fluctuations in exchange rates. The value of the U.S. dollar against
the Canadian dollar and other currencies is affected by changes in various political and economic conditions. It is difficult to predict
how market forces or government policy may impact the exchange rate between U.S. dollars and other currencies in the future. Changes in
currency exchange rates can have impacts on the costs of imported goods for motorcycle assembly, and it can change the relative value
or demand for motorcycles abroad.</p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s sales and operating
results may fluctuate from quarter-to-quarter and from year-to-year as they are affected, among other things, by the seasonal nature of
Damon&#8217;s products, fluctuation in Damon&#8217;s operating costs and prevailing market conditions.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s future sales
and operating results may experience substantial fluctuations from quarter-to-quarter and year-to-year. It is anticipated that sales for
motorcycles in the principal markets in which Damon operates will be highest in spring and summer. In addition, Damon&#8217;s revenues
and operating costs will fluctuate from period-to-period with the pace at which it increases its production capacity and designs, develops
and produces new vehicles. As a result of these fluctuations in revenues and expenses, along with other factors that are beyond Damon&#8217;s
control, including general economic conditions, changes in consumer preferences, weather conditions, vehicle sales mix, changes in the
cost or availability of raw materials or labor, discretionary spending habits and currency exchange rate fluctuations, Damon may not be
able to accurately predict its quarterly and annual sales and operating results, which are likely to fluctuate significantly from period-to-period.
Sales and operating results in any period should not be considered indicative of the results to be expected for any future period.</p><div>

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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Risks Related to Technology</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s motorcycles rely on
software and hardware that is highly technical, and if these systems contain errors, bugs or vulnerabilities, or if Damon is unsuccessful
in addressing or mitigating technical limitations in its systems, its business, financial condition, operating results and prospects could
be materially adversely affected.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s vehicles rely
on software and hardware, including software and hardware developed or maintained by third parties, that is highly technical and complex
and will require modification and updates over the life of the vehicles. In addition, the performance of the software solutions included
in Damon&#8217;s vehicles depends on the ability of such software and hardware to store, retrieve, process and manage immense amounts
of data. Damon&#8217;s software and hardware may contain errors, bugs or vulnerabilities, and its systems are subject to certain technical
limitations that may compromise Damon&#8217;s ability to meet its objectives. Some errors, bugs or vulnerabilities inherently may be difficult
to detect and may only be discovered after the code has been released for external or internal use. Errors, bugs, vulnerabilities, design
defects or technical limitations may be found within Damon&#8217;s software and hardware. Although Damon attempts to remedy any issues
it observes in its vehicles and software as effectively and rapidly as possible, such efforts may not be timely, may hamper production
or may not be to the satisfaction of Damon&#8217;s customers. Additionally, if Damon is able to deploy updates to the software addressing
any issues, but such updates cannot or are not installed by its customers, such customers&#8217; software will be subject to these vulnerabilities
until they install such updates. If Damon is unable to prevent or effectively remedy errors, bugs, vulnerabilities or defects in its software
and hardware, Damon may suffer damage to its reputation, loss of customers, loss of revenue or liability for damages, any of which may
materially adversely affect Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There are complex software and technology
systems that need to be developed by Damon and in coordination with vendors and suppliers to reach production for its vehicles, and there
can be no assurance such systems will be successfully developed or integrated.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s vehicles and
operations will use a substantial amount of complex third-party and in-house software and hardware. The development and integration of
such advanced technologies are inherently complex, and Damon will need to coordinate with its vendors and suppliers to reach production
for its vehicles. Defects and errors may be revealed over time and Damon&#8217;s control over the performance of third-party services
and systems may be limited. Thus, Damon&#8217;s potential inability to develop and integrate the necessary software and technology systems
may harm its competitive position.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon relies on third-party
suppliers to develop a number of emerging technologies for use in its products, including battery technology and the use of different
battery cell chemistries. Certain of these technologies and chemistries are not today, and may not ever be, commercially viable. There
can be no assurances that Damon&#8217;s suppliers will be able to meet the technological requirements, production timing, and volume requirements
to support Damon&#8217;s business plan. In addition, the technology may not comply with the cost, performance useful life and warranty
characteristics that are anticipated. As a result, Damon&#8217;s business plan could be significantly impacted, and Damon may incur significant
liabilities under warranty claims which may materially adversely affect Damon&#8217;s business, financial condition, operating results
and prospects.</p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s industry and its technology
are rapidly evolving and may be subject to unforeseen changes. Developments in alternative technologies or improvements in the internal
combustion engine may materially and adversely affect the demand for its electric vehicles.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon will operate in the
electric vehicle industry, which is rapidly evolving and may not develop as anticipated. The regulatory framework governing the industry
is currently uncertain and may remain uncertain for the foreseeable future. As the industry in which Damon operates and Damon&#8217;s
business develop, Damon may need to modify its business model or change its vehicles and services. These changes may be costly and may
not achieve expected results, which could have a material adverse effect on Damon&#8217;s business, financial condition, operating results
and prospects.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Further, Damon may be unable
to keep up with changes in electric vehicle technology or alternatives to electricity as a fuel source and, as a result, its competitiveness
may suffer. Damon&#8217;s research and development efforts may not be sufficient to adapt to changes in electric vehicle technology. As
technologies change, Damon plans to upgrade or adapt its vehicles and introduce new models in order to continue to provide vehicles with
the latest technology, in particular safety technology and battery technology, which could involve substantial costs and lower its return
on investment for existing vehicles. There can be no assurance that Damon will be able to compete effectively with alternative vehicles
or source and integrate the latest technology into its vehicles, against the backdrop of Damon&#8217;s rapidly evolving industry. Even
if Damon is able to keep pace with changes in technology and develop new models, Damon is subject to the risk that its prior models will
become obsolete more quickly than expected, potentially reducing its return on investment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Developments in alternative
technologies, such as advanced diesel, ethanol, fuel cells or compressed natural gas, or improvements in the fuel economy of the internal
combustion engine, may materially and adversely affect Damon&#8217;s business, financial condition, operating results and prospects in
ways not currently anticipated. For example, relatively inexpensive fuel, such as compressed natural gas, may emerge as consumers&#8217;
preferred alternative to petroleum-based propulsion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon may face challenges providing
charging solutions.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Demand for Damon&#8217;s vehicles
will depend in part on the availability of charging infrastructure. While the prevalence of charging stations has been increasing, charging
station locations are significantly less widespread than gas stations. Some potential customers may choose not to purchase an electric
vehicle because of the lack of a more widespread service network or charging infrastructure at the time of sale. Although Damon intends
to offer the ability to use alternative current and direct current charging infrastructure, allowing customers to use existing charging
infrastructure and standards to charge their motorcycles, Damon has very limited experience in the actual provision of charging solutions
to customers and providing these services is subject to challenges, which include dependence on existing charging networks and installation
providers in appropriate areas. Damon&#8217;s ability to generate customer loyalty and grow its business could be impaired by a lack of
satisfactory access to charging infrastructure. To the extent Damon is unable to meet customer expectations or experiences difficulties
in providing charging solutions, demand for its vehicles may suffer, and Damon&#8217;s business, financial condition, operating results
and prospects may be materially and adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If Damon were to pursue development
of a proprietary charging solution, Damon would face significant challenges and barriers, including successfully navigating the complex
logistics of rolling out a network and teams in appropriate areas, resolving issues related to inadequate capacity or overcapacity in
certain areas, addressing security risks and risks of damage to vehicles, securing agreements with third-party providers to roll out and
support a network of charging solutions in appropriate areas, obtaining any required permits and land use rights and filings, and providing
sufficient financial resources to successfully roll out the proprietary charging solution, which could require diverting such resources
from Damon&#8217;s other important business initiatives. In addition, Damon&#8217;s limited experience in providing charging solutions
could contribute to additional unanticipated challenges that would hinder its ability to provide such solutions or make the provision
of such solutions costlier than anticipated.</p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The range of Damon&#8217;s electric
motorcycles on a single charge decline over time, which may negatively influence potential customers&#8217; decisions whether to purchase
its motorcycles.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The battery life and range
of Damon&#8217;s motorcycles may vary or decline over time, like other vehicles that use current battery technology, including due to
factors outside of Damon&#8217;s control. Factors such as rider behaviour, usage, speed, terrain, time and stress patterns may also impact
the battery&#8217;s ability to hold a charge, which may decrease Damon&#8217;s motorcycles&#8217; range before needing to recharge or
could require Damon to limit vehicles&#8217; battery charging capacity, including via over-the-air or other software updates, for safety
reasons or to protect battery capacity, which could further decrease Damon&#8217;s vehicles&#8217; range between charges. Such decreases
in or limitations of battery capacity and therefore range, whether imposed by deterioration, software limitations or otherwise, could
also lead to customer complaints or warranty claims, including claims that prior knowledge of such decreases or limitations would have
affected customers&#8217; purchasing decisions. In addition, Damon cannot guarantee that battery life and range deterioration will not
be greater than what is currently anticipated, nor that Damon will be able to improve the performance of its battery packs, or increase
its vehicles&#8217; range, in the future. Any deterioration above the expected level could affect Damon&#8217;s reputation or could materially
adversely affect its business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s vehicles make use of
lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The battery packs that Damon
produces make use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke
and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. While the battery pack has been designed to
passively contain any single cell&#8217;s release of energy without spreading to neighboring cells, a field or testing failure of Damon&#8217;s
vehicles or other battery packs that it produces could occur, which could result in bodily injury or death and could subject Damon to
lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive. Also, negative public perceptions
regarding the suitability of lithium-ion cells for automotive applications or any future incident involving lithium-ion cells such as
a vehicle or other fire, even if such incident does not involve Damon&#8217;s vehicles, could materially adversely affect Damon&#8217;s
business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, once Damon begins
mass manufacturing of its vehicles, it will be required to store a significant number of lithium-ion cells at its facilities. While safety
procedures related to the handling of the cells have been implemented, any mishandling of battery cells, or safety issue or fire related
to cells, may cause damage, injury and disruption to the operation of its facilities. Such damage or injury could lead to adverse publicity
and potentially a safety recall.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon may be subject to risks associated
with assisted driving technology.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s vehicles are
being designed to offer some assisted driving functionality through Damon&#8217;s CoPilot ADAS, including forward crash warning functionalities.
Through research and development, Damon plans to continue to update and improve its assisted driving technology. Assisted driving technologies
are subject to risks and there have been accidents and fatalities associated with such technologies. The safety of such technologies depends
in part on driver interactions, and drivers may not be accustomed to using or adapting to such technologies. To the extent accidents associated
with Damon&#8217;s assisted driving systems occur, Damon could be subject to liability, negative publicity, government scrutiny, and further
regulation. Moreover, any incidents related to assisted driving systems of Damon&#8217;s competitors could adversely affect the perceived
safety and adoption of Damon&#8217;s vehicles and assisted driving technology more broadly. Any of the foregoing could materially and
adversely affect Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Risks Related to Intellectual Property</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s patent applications
may not result in issued patents, which may have a material adverse effect on its ability to prevent others from interfering with the
commercialization of Damon&#8217;s products.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The registration and enforcement
of patents involves complex legal and factual questions, and the breadth and effectiveness of patented claims is uncertain. Damon cannot
be certain that it is the first to file patent applications on the inventions it wishes to protect, nor can it be certain that its pending
patent applications will result in issued patents or that any of its issued patents will afford sufficient protection against someone
creating competing products, or as a defensive portfolio against a competitor who claims that Damon is infringing such competitor&#8217;s
patents. In addition, patent applications filed in foreign countries are subject to laws, rules and procedures that may differ from those
of applicable in Canada or the U.S., and thus there is no certainty that foreign patent applications, if any, will result in issued patents
in those foreign jurisdictions or that such patents can be effectively enforced, even if they relate to patents issued in Canada or the
U.S.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon may need to defend itself against
patent or trademark infringement claims, which may be time-consuming and would cause Damon to incur substantial costs.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Companies, organizations or
individuals, including Damon&#8217;s competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent,
limit or interfere with Damon&#8217;s ability to make, use, develop, sell or market its motorcycles or components, which could make it
more difficult for Damon to operate its business. From time-to-time, Damon may receive communications from third parties that allege its
products are covered by their patents or trademarks or other intellectual property rights. Companies holding patents or other intellectual
property rights may bring suits alleging infringement of such rights or otherwise assert their rights.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, various &#8220;non-practicing
entities&#8221; that own patents and other intellectual property rights often attempt to aggressively assert their rights in order to
extract value from technology companies. Furthermore, from time-to-time Damon may introduce or acquire new products and services, including
in areas where Damon historically has not competed, which could increase Damon&#8217;s exposure to patent and other intellectual property
claims from competitors and non-practicing entities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon may receive notice letters
from patent holders alleging that certain of its products and services infringe their patent rights. Defending patent and other intellectual
property litigation is costly and can impose a significant burden on management and employees, and there can be no assurances that favourable
final outcomes will be obtained in all cases. In addition, plaintiffs may seek, and Damon may become subject to, preliminary or provisional
rulings in the course of any such litigation, including potential preliminary injunctions requiring Damon to cease some or all of its
operations. Damon may decide to settle such lawsuits and disputes on terms that are unfavorable to it. Similarly, if any litigation to
which Damon is a party is resolved adversely, Damon may be subject to an unfavorable judgment that may not be reversed upon appeal. The
terms of such a settlement or judgment may require Damon to cease some or all of its operations or pay substantial amounts to the other
party. In addition, Damon may have to seek a license to continue practices found to be in violation of a third party&#8217;s rights, which
may not be available on reasonable terms, or at all, and may significantly increase Damon&#8217;s operating costs and expenses. As a result,
Damon may also be required to develop alternative non-infringing technology or practices or discontinue the practices. The development
of alternative non-infringing technology or practices could require significant effort and expense or may not be feasible. Damon&#8217;s
business, financial condition, and results of operations could be adversely affected as a result of an unfavorable resolution of the disputes
and litigation referred to above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If Damon is determined to
have infringed upon a third party&#8217;s intellectual property rights, Damon may be required to do things that include one or more of
the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">cease making, using, selling or offering to sell processes, goods or services that incorporate or use
the third-party intellectual property;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">pay substantial damages;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">seek a license from the holder of the infringed intellectual property right, which license may not be
available on reasonable terms or at all;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">redesign its motorcycles or other goods or services to avoid infringing the third-party intellectual property;
or</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">establish and maintain alternative branding for its products and services.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event of a successful
claim of infringement against Damon and its failure or inability to obtain a license to the infringed technology or other intellectual
property right, its business, financial condition, operating results and prospects may be materially adversely affected. In addition,
any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management
attention.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->36<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Risks Related to Regulation and
Taxation</span></p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our international business exposes
us to geo-political and economic factors, legal and regulatory requirements, public health and other risks associated with doing business
in foreign countries.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently provide, and
plan to continue providing, our products and services to customers internationally. These risks differ from and potentially may be greater
than those associated with our domestic business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our international business
is sensitive to changes in the priorities and budgets of international customers and geo-political uncertainties, which may be driven
by changes in threat environments and potentially volatile worldwide economic conditions, various regional and local economic and political
factors, risks and uncertainties, as well as Canadian, U.S., and UK foreign policy.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our international sales are
also subject to local government laws, regulations and procurement policies and practices, which may differ from the UK Government regulations,
including regulations relating to import-export control, investments, foreign exchange controls and repatriation of earnings, as well
as to varying currency, geo-political and economic risks. Our international contracts may include industrial cooperation agreements requiring
specific in-country purchases, manufacturing agreements or financial support obligations, known as offset obligations, and provide for
penalties if we fail to meet such requirements. Our international contracts may also be subject to termination at the customer&#8217;s
convenience or for default based on performance, and may be subject to funding risks. We also are exposed to risks associated with using
foreign representatives and consultants for international sales and operations and teaming with international subcontractors, partners
and suppliers in connection with international programs. As a result of these factors, we could experience award and funding delays on
international programs and could incur losses on such programs, which could negatively affect our results of operations and financial
condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are also subject to a number
of other risks including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the absence in some jurisdictions of effective laws to protect our intellectual property rights;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">multiple and possibly overlapping and conflicting tax laws;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">restrictions on movement of cash;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the burdens of complying with a variety of national and local laws;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">political instability;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">currency fluctuations;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">longer payment cycles;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">restrictions on the import and export of certain technologies;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">price controls or restrictions on exchange of foreign currencies; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">trade barriers.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, our international
operations (or those of our business partners) could be subject to natural disasters such as earthquakes, tsunamis, flooding, typhoons
and volcanic eruptions that disrupt manufacturing or other operations. There may be conflict or uncertainty in the countries in which
we operate, including public health issues (for example, an outbreak of a contagious disease such as 2019-Novel Coronavirus (2019-nCoV),
avian influenza, measles or Ebola), safety issues, natural disasters, fire, disruptions of service from utilities, nuclear power plant
accidents or general economic or political factors. For example, as a result of the Coronavirus outbreak, our ability to source internal
connection cables for certain of our sensors has been delayed, which will require us to source these components from other vendors at
a higher price that may result in an increase in our costs to produce our products In the event our customers are materially impacted
by these events, it may impact anticipated orders and planned shipments for our products. With respect to political factors, the United
Kingdom&#8217;s 2016 referendum, commonly referred to as &#8220;Brexit,&#8221; has created economic and political uncertainty in the European
Union. Also, the European Union&#8217;s General Data Protection Regulation imposes significant new requirements on how we collect, process
and transfer personal data, as well as significant fines for non-compliance. Any of the above risks, should they occur, could result in
an increase in the cost of components, production delays, general business interruptions, delays from difficulties in obtaining export
licenses for certain technology, tariffs and other barriers and restrictions, longer payment cycles, increased taxes, restrictions on
the repatriation of funds and the burdens of complying with a variety of foreign laws, any of which could ultimately have a material adverse
effect on our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The lack of availability, reduction
or elimination of government and economic incentives or government policies which are favorable for electric vehicles and Canadian produced
vehicles could have a material adverse effect on Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any reduction, elimination
or discriminatory application of government subsidies and economic incentives because of policy changes, the reduced need for such subsidies
and incentives due to the perceived success of electric motorcycles, fiscal tightening or other reasons may result in the diminished competitiveness
of the alternative fuel motorcycle industry generally or Damon&#8217;s electric motorcycles in particular. This could materially adversely
affect the growth of the alternative fuel motorcycle markets and Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s vehicles also
benefit from government policies including tariffs on imported motorcycles to both Europe and the U.S. However, trade dynamics can change
quickly between regions, and this advantage could become a disadvantage with new regulations or duties. Additionally, the amount of subsidies
provided for purchasers of certain new energy motorcycles in various regions (both at national and local levels) could be reduced in the
future, increasing the net cost experienced by customers. These policies are subject to change and are beyond Damon&#8217;s control. There
is no assurance that any changes would be favourable to Damon&#8217;s business. Any of the foregoing could materially adversely affect
Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s business could be adversely
affected by trade tariffs or other trade barriers.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon plans to initially build
Damon motorcycles in California and will be shipping those motorcycles globally. It is not clear what impact changes to tariffs may have
or what actions other governments may take in the future. In the future, tariffs could potentially impact Damon&#8217;s raw material prices.
In addition, changes in tariffs could have a material adverse effect on global economic conditions and the stability of global financial
markets. Any of these factors could have a material adverse effect on Damon&#8217;s business, financial condition, operating results and
prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The construction and operation of
Damon&#8217;s assembly facility in San Rafael, or other assembly facilities that Damon may seek to establish in the future, are or will
be subject to regulatory approvals, and may be subject to delays, cost overruns or may not produce expected benefits.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s leased manufacturing
facility in San Rafael, California is subject to broad and strict government supervision and approval procedures, including, but not limited
to, the project approvals and filings, construction land and project planning approval, environment protection approval, pollution discharge
permits, work safety approvals, fire protection approvals, and the completion of inspection and acceptance by relevant authorities. As
a result, Damon may be subject to administrative uncertainty regarding the construction within a specified time frame, fines or the suspension
of work. Damon may face similar challenges with respect to any additional facilities it seeks to establish in the future to scale manufacturing
capacity or otherwise. Any of the foregoing may have a material adverse impact on Damon&#8217;s business, financial condition, operating
results or prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->38<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s vehicles are subject
to motor vehicle standards and the failure to satisfy such mandated safety standards would have a material adverse effect on Damon&#8217;s
business, financial condition, operating results and prospects.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All vehicles sold must comply
with various standards of the market where the vehicles were sold. Rigorous testing and the use of approved materials and equipment are
among the requirements for achieving such standards. Vehicles must pass various tests and undergo a certification process, before receiving
delivery from the factory, being sold, or being used in any commercial activity, and such certification is also subject to periodic renewal.
Damon expects to begin the process of obtaining certifications for the HyperSport in 2025/2026. If Damon&#8217;s certification efforts
fail, or a certified vehicle has a defect resulting in quality or safety accidents, or consistent failure of compliance with certification
requirements is discovered, the approval can be withheld, suspended or even revoked. With effect from the date of revocation or during
suspension of certification, any vehicle that fails to satisfy the requirements for certification may not continue to be delivered, sold,
exported or used in any commercial activity. Failure by Damon to have the HyperSport or any future model electric vehicle satisfy motor
vehicle standards would have a material adverse effect on Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon is subject to anti-corruption,
anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and noncompliance with such laws can subject Damon
to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which
could materially adversely affect Damon&#8217;s business, results of operations, financial condition and reputation.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is subject to anti-corruption,
anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which
Damon conducts activities, including the U.S. Foreign Corrupt Practices Act (&#8220;FCPA&#8221;), the Corruption of Foreign Public Officials
Act (Canada) (&#8220;CFPOA&#8221;), the U.K. Bribery Act 2010 and other similar anti-corruption, anti-bribery, anti-money laundering,
financial and economic sanctions, laws and regulations. The FCPA, the CFPOA and the U.K. Bribery Act 2010 prohibit Damon and its officers,
directors, employees and business partners acting on Damon&#8217;s behalf, including agents, from corruptly offering, promising, authorizing
or providing anything of value to a &#8220;foreign official&#8221; for the purposes of influencing official decisions or obtaining or
retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts
that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. The
UK Bribery Act also prohibits non-governmental &#8220;commercial&#8221; bribery and soliciting or accepting bribes. A violation of these
laws or regulations could harm the Damon brand and adversely affect Damon&#8217;s business, financial condition, operating results and
prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon has direct or indirect
interactions with officials and employees of government agencies and state-owned affiliated entities in the ordinary course of business.
These interactions subject Damon to an increased level of compliance-related concerns. Damon is in the process of implementing policies
and procedures designed to ensure compliance by it and its directors, officers, employees, representatives, consultants, agents and business
partners with applicable anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations.
However, Damon&#8217;s policies and procedures may not be sufficient, and its directors, officers, employees, representatives, consultants,
agents, and business partners could engage in improper conduct for which Damon may be held responsible.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Non-compliance with anti-corruption,
anti-bribery, anti-money laundering or financial and economic sanctions laws and regulations could subject Damon to whistleblower complaints,
adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures
and legal expenses, all of which could harm the Damon brand and materially adversely affect Damon&#8217;s business, financial condition,
operating results and prospects. In addition, changes in economic sanctions laws in the future could adversely impact Damon&#8217;s business
and investments in Damon&#8217;s securities.</p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon is subject to numerous environmental,
health and safety laws and any breach of such laws may have a material adverse effect on Damon&#8217;s business, financial condition,
operating results and prospects.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is subject to numerous
environmental, health and safety laws, including statutes, regulations, bylaws and other legal requirements. These laws relate to the
generation, use, handling, storage, transportation and disposal of regulated substances, including hazardous substances (such as batteries),
dangerous goods and waste, emissions or discharges into soil, water and air, including noise and odors (which could result in remediation
obligations), and occupational health and safety matters, including indoor air quality. These legal requirements vary by location and
can arise under federal, provincial, state or municipal laws. Any breach of such laws, regulations, directives or requirements would have
a material adverse effect on Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon may be adversely affected by
the complexity, uncertainties and changes in automotive or internet related Canadian regulations or similar regulations of any countries
it is selling motorcycles into.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon operates in the motorcycle
and internet industry, both of which are extensively regulated by various governments. Regulations on vehicle homologation requirements
may change over time, and potentially diverge in various regions, driving the need for increased vehicle variants, or discontinuation
(temporary or permanent) of existing vehicle models.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, Damon&#8217;s
mobile applications are also regulated by various regulations, for example there are regulations related to the collection and sharing
of data. If Damon&#8217;s mobile applications were found to be violating the regulations, Damon may be subject to administrative penalties,
including warning, service suspension or removal of Damon&#8217;s mobile applications from the relevant mobile application store, which
may materially adversely affect Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Risks Related to Cybersecurity and Privacy</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s inability to leverage
vehicle and customer data could impact the servicing of its products, its software algorithms and impact research and development.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon will rely on data collected
from the use of its vehicles, including vehicle data and data related to battery usage statistics. Damon will use this data in connection
with the servicing and normal course software updates of its products, its software algorithms and the research, development and analysis
of its motorcycles. Damon&#8217;s inability to obtain this data or the necessary rights to use this data or Damon&#8217;s inability to
properly analyze or use this data could result in Damon&#8217;s inability to adequately service its vehicles or delay or otherwise negatively
impact its research and development efforts. Any of the foregoing could materially adversely affect Damon&#8217;s business, financial
condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Failure of information security and
privacy concerns could subject Damon to penalties, damage its reputation and brand, and harm its business, financial condition, operating
results and prospects.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon faces significant challenges
with respect to information security and privacy, including the storage, transmission and sharing of confidential information. Damon collects,
transmits and stores confidential and private information of its customers, such as personal information, including names, accounts, user
IDs and passwords, and payment or transaction related information. In certain jurisdictions, Damon is also subject to certain laws and
regulations, such as &#8220;Right to Repair&#8221; laws, which require Damon to provide third-party access to its network or vehicle systems.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is required by the laws
of its various operating regions to ensure the confidentiality, integrity, availability and authenticity of the information of its customers
and suppliers, which is also essential to maintaining their confidence in its vehicles and services. Damon intends to implement strict
information security policies and deploy advanced measures to implement the policies, including, among others, advanced encryption technologies.
However, advances in technology, an increased level of sophistication and diversity of Damon&#8217;s vehicles and services, an increased
level of expertise of hackers, new discoveries in the field of cryptography or others can still result in a compromise or breach of the
measures that are used by Damon. If Damon is unable to protect its systems, and hence the information stored in its systems, from unauthorized
access, use, disclosure, disruption, modification or destruction, such problems or security breaches could cause a loss, give rise to
Damon&#8217;s liabilities to the owners of confidential information or even subject Damon to fines and penalties. In addition, complying
with various laws and regulations could cause Damon to incur substantial costs or require Damon to change its business practices, including
its data practices, in a manner adverse to its business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Any unauthorized control or manipulation
of Damon&#8217;s vehicles&#8217; systems could result in loss of confidence in Damon and its vehicles and harm its business.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s vehicles contain
complex information technology systems and built-in data connectivity to accept and install periodic remote updates to improve or update
functionality. Damon has designed, implemented and tested security measures intended to prevent unauthorized access to its information
technology networks and its vehicles and related systems. However, hackers may attempt to gain unauthorized access to modify, alter and
use such networks, vehicles and systems to gain control of or to change Damon&#8217;s solutions&#8217; functionality, user interface and
performance characteristics, or to gain access to data stored in or generated by the vehicles. Future vulnerabilities could be identified
and Damon&#8217;s efforts to remediate such vulnerabilities may not be successful. Any unauthorized access to or control of Damon&#8217;s
vehicles, or any loss of customer data, could result in legal claims or proceedings and remediation of such problems could result in significant,
unplanned capital expenditures. In addition, regardless of their veracity, reports of unauthorized access to its technology systems or
data, as well as other factors that may result in the perception that Damon&#8217;s vehicles, technology systems or data are capable of
being &#8220;hacked,&#8221; could materially adversely affect Damon&#8217;s brand and its business, financial conditions, operating results
and prospects.</p><div>


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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon is subject to information technology
and cybersecurity risks to operational systems, security systems, infrastructure, integrated software in its motorcycles and customer
data processed by it, and any material failure, weakness, interruption, cyber event, incident or breach of security could prevent Damon
from effectively operating its business, harm its reputation or materially adversely affect its business, financial condition, operating
results and prospects.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is at risk for interruptions,
outages and breaches of: (i) operational systems, including business, financial, accounting, product development, data processing or production
processes, owned by it or its third-party vendors or suppliers; (ii) facility security systems, owned by it or its third-party vendors
or suppliers; (iii) transmission control modules or other in-product technology, owned by it or its third-party vendors or suppliers;
(iv) the integrated software in Damon&#8217;s vehicles; or (v) customer or driver data that Damon processes or Damon&#8217;s third-party
vendors or suppliers process on its behalf. Such cyber incidents could materially disrupt operational systems; result in loss of intellectual
property, trade secrets or other proprietary or competitively sensitive information; compromise certain information of customers, employees,
suppliers or others; jeopardize the security of Damon&#8217;s facilities; or affect the performance of transmission control modules or
other in-product technology and the integrated software in Damon&#8217;s vehicles. A cyber incident could be caused by disasters, insiders
(through inadvertence or with malicious intent) or malicious third parties (including nation-states or nation-state supported actors)
using sophisticated, targeted methods to circumvent firewalls, encryption and other security defences, including hacking, fraud, trickery,
social engineering or other forms of deception. The techniques used by cyber attackers change frequently and may be difficult to detect
for long periods of time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although Damon maintains information
technology measures designed to protect it against intellectual property theft, data breaches and other cyber incidents, such measures
will require updates and improvements, and there is no guarantee that such measures will be adequate to detect, prevent or mitigate cyber
incidents. Any implementation, maintenance, segregation and improvement of Damon&#8217;s systems may require significant management time,
support and cost. Moreover, there are inherent risks associated with developing, improving, expanding and updating current systems, including
the disruption of Damon&#8217;s data management, procurement, production execution, finance, supply chain and sales and service processes.
These risks may affect Damon&#8217;s ability to manage its data and inventory, procure parts or supplies or produce, sell, deliver and
service its vehicles, adequately protect its intellectual property or achieve and maintain compliance with, or realize available benefits
under, applicable laws, regulations and contracts. Damon cannot be sure that these systems upon which it relies, including those of its
third-party vendors or suppliers, will be effectively implemented, maintained or expanded as planned. If Damon does not successfully implement,
maintain or expand these systems as planned, its operations may be disrupted, Damon&#8217;s ability to accurately and timely report its
financial results could be impaired, and deficiencies may arise in Damon&#8217;s internal control over financial reporting, which may
impact Damon&#8217;s ability to certify its financial results. Moreover, Damon&#8217;s proprietary information or intellectual property
could be compromised or misappropriated, and its reputation may be adversely affected. If these systems do not operate as expected, Damon
may be required to expend significant resources to make corrections or find alternative sources for performing these functions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A significant cyber incident
could impact Damon&#8217;s manufacturing capacity or production capability, harm its reputation, cause Damon to breach its contractual
arrangements with other parties or subject Damon to regulatory actions or litigation, any of which could materially adversely affect its
business, financial condition, operating results or prospects. In addition, Damon&#8217;s insurance coverage for cyberattacks may not
be sufficient to cover all the losses it may experience as a result of a cyber incident.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon also collects, uses,
discloses, stores, transmits and otherwise processes customer and employee and others&#8217; data as part of its business and operations,
which may include personal data or confidential or proprietary information. Damon uses its vehicles&#8217; electronic systems to log information
about each vehicle&#8217;s use, such as charge time, battery usage, mileage and rider behavior, in order to aid it in vehicle diagnostics,
repair and maintenance, as well as to help it customize and optimize the riding experience. Damon&#8217;s users may object to the use
of this data, which may harm Damon&#8217;s business. Damon also works with partners and third-party service providers or vendors that
may in the course of their business relationship with Damon collect, store and process such data on Damon&#8217;s behalf and in connection
with Damon&#8217;s vehicles and services. There can be no assurance that any security measures that Damon or its third-party service providers,
vendors, or suppliers have implemented will be effective against current or future security threats. While Damon has developed systems
and processes designed to protect the availability, integrity, confidentiality and security of Damon&#8217;s, Damon&#8217;s customers&#8217;,
and employees&#8217; and others&#8217; data, such security measures or those of its third-party service providers, vendors or suppliers
could fail and result in unauthorized access to or disclosure, acquisition, encryption, modification, misuse, loss, destruction or other
compromise of such data. If a compromise of such data were to occur, Damon may become liable under its contracts with other parties and
under applicable law for damages and incur penalties and other costs to respond to, investigate and remedy such an incident. Laws in all
50 states of the U.S., in Canada and in Europe require Damon to provide notice to individuals, customers, regulators, credit reporting
agencies and others when certain sensitive information has been compromised as a result of a security breach or where a security breach
creates a real risk of significant harm to an individual. Such laws are inconsistent and compliance if there is a widespread data breach
could be costly. Depending on the facts and circumstances of such an incident, these damages, penalties, fines and costs could be significant.
Any such event could harm Damon&#8217;s reputation and result in litigation against it, or otherwise materially adversely affect its business,
financial condition, operating results and prospects.</p><div>


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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Risks Related to Litigation, Product Warranty and Recalls</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Adverse judgments or settlements in legal
proceedings, including those that may arise relating to the Business Combination, could materially harm our business, financial condition,
operating results, and cash flows.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may be a party to claims
that arise from time to time in the ordinary course of our business, which may include those related to, for example, contracts, sub-contracts,
protection of confidential information or trade secrets, adversary proceedings arising from customer bankruptcies, employment of our workforce
and immigration requirements, or compliance with any of a wide array of state and federal statutes, rules, and regulations that pertain
to different aspects of our business. In addition, we may deem it advisable to initiate expensive litigation to protect our business interests.
We also face litigation risk related to the Business Combination. Business combinations often give rise to claims and legal proceedings,
including shareholder lawsuits. Any shareholder claims or lawsuits alleging inadequate disclosure, breach of fiduciary duty, adequacy
of consideration or other claims in connection with the Business Combination could lead to costly litigation and diversion of management&#8217;s
time and attention from our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, while we maintain
insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject
to various exclusions as well as deductibles and caps on amounts of coverage. Even if we believe a claim is covered by insurance, insurers
may dispute our entitlement to coverage for a variety of potential reasons, which may affect the timing and, if the insurers prevail,
the amount of our available insurance coverage for a particular claim.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is a risk that we will not be successful or otherwise be able
to satisfactorily resolve any such claims or litigation. In addition, litigation and other legal claims are subject to inherent uncertainties.
Those uncertainties include, but are not limited to, litigation costs and attorneys&#8217; fees, unpredictable judicial or jury decisions,
and the differing laws and judicial proclivities regarding damage awards among the jurisdictions in which we operate. Unexpected outcomes
in such legal proceedings, or changes in management's evaluation or predictions of the likely outcomes of such proceedings (possibly resulting
in changes in established reserves), could have a material adverse effect on our business, financial condition, results of operations,
and cash flows.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon may become subject to product
liability claims, which could harm Damon&#8217;s financial condition and liquidity if it is not able to successfully defend or insure
against such claims.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon may become subject to
product liability claims, which could harm Damon&#8217;s business, financial condition, operating results and prospects. The motorcycle
industry experiences significant product liability claims and Damon faces inherent risk of exposure to claims if its motorcycles do not
perform as expected or malfunction resulting in personal injury or death. Damon&#8217;s risks in this area are particularly pronounced
given the limited field experience of its motorcycles. A successful product liability claim against Damon could require it to pay a substantial
monetary award. Moreover, a product liability claim could generate substantial negative publicity about Damon&#8217;s motorcycles and
business and inhibit or prevent commercialization of other future motorcycle candidates which could harm the Damon brand and have a material
and adverse effect Damon&#8217;s business, financial condition, operating results and prospects. Damon plans to seek adequate product
liability insurance for all its motorcycles, but any such insurance might not be sufficient to cover all potential product liability claims
and may not be available on terms satisfactory to Damon. Any lawsuit seeking significant monetary damages either in excess of such liability
coverage, or outside of such liability coverage, may harm the Damon brand and have a material adverse effect on Damon&#8217;s business,
financial condition, operating results and prospects. Damon may not be able to secure additional product liability insurance coverage
on commercially acceptable terms or at reasonable costs when needed, particularly if it faces liability for its products and is forced
to make a claim under its product liability insurance policy(ies).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s warranty reserves may
be insufficient to cover future warranty claims which could adversely affect its business, financial condition, operating results and
prospects.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As Damon&#8217;s vehicles
enter production, Damon will need to maintain warranty reserves to cover warranty-related claims. If Damon&#8217;s warranty reserves are
inadequate to cover future warranty claims on its vehicles, Damon&#8217;s business, financial condition, operating results and prospects
could be materially and adversely affected. Damon expects to record and adjust warranty reserves based on changes in estimated costs and
actual warranty costs. However, Damon has limited operating experience with its vehicles, and therefore no experience with warranty claims
for these vehicles or with estimating warranty reserves, which renders necessary reserves hard to predict. In the future, Damon may become
subject to significant and unexpected warranty expenses. There can be no assurances that then-existing warranty reserves will be sufficient
to cover all claims.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon may be compelled to undertake
product recalls or take other actions, which could adversely affect its brand image and financial performance.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If Damon&#8217;s vehicles
are subject to recalls in the future, Damon may be subject to adverse publicity, damage to its brand and liability for costs. In the future,
Damon may at various times, voluntarily or involuntarily, initiate a recall if any of its vehicles, including any systems or parts sourced
from its suppliers, prove to be defective or noncompliant with applicable laws and regulations. Such recalls, whether voluntary or involuntary
or caused by systems or components engineered or manufactured by Damon or its suppliers, could involve significant expense and could materially
adversely affect the Damon brand image in the target markets of Damon, as well as Damon&#8217;s business, financial condition, operating
results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon Motors is currently involved
in a dispute with the lessor of Damon Motors&#8217;s former manufacturing facility in Surrey, British Columbia.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In April 2023, Damon Motors
received a notice of default from a property management company related to Damon Motors&#8217;s lease of a facility in Surrey, British
Columbia. Damon Motors had planned to commence its initial manufacturing at the facility before relocating operations to its new facility
in San Rafael, California. The notice of default asserts a breach of the lease and seeks approximately CAD$4.3 million in damages, in
addition to accruing interest and other costs. Damon Motors executed a settlement agreement effective on June 30, 2023, whereby it subsequently
settled the amount owing with an issuance of convertible notes and instalments of cash payments. Should Damon Motors default under the
terms of the settlement agreement, Damon Motors could be forced to pay a substantial monetary sum to the property management company and
may also suffer reputational or other harm.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors was in compliance
with the settlement and has agreed with the lessor to extend the terms of the agreement on any further payments as follows (a) 1/3 of
the remaining settlement amount on or before the date that is thirty days following completion of the Business Combination; (b) 1/3 of
the remaining settlement amount on or before the date that is sixty days following completion of the Business Combination; and (c) 1/3
of the remaining settlement amount on or before the date that is ninety days following completion of the Business Combination. Damon Motors
has not yet made any of the three scheduled payments under the agreement. The parties are negotiating ways to mitigate damages to the
lessor and reduce Damon Motors&#8217; liability; however, there is no guarantee that a resolution will be reached soon or at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Risks Related to Ownership of Our Common Shares</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are eligible to be treated as an
&#8220;emerging growth company&#8221; as defined in the Jumpstart Our Business Startups Act of 2012, and we cannot be certain if the reduced
disclosure requirements applicable to emerging growth companies will make our common shares less attractive to investors.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an &#8220;emerging
growth company&#8221;, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be
an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public
companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, (2) reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved. In addition, as an emerging growth company, we are only required to
provide two years of audited financial statements and two years of selected financial data in this prospectus. We could be an emerging
growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value
of our common shares held by non-affiliates exceeds $700.0 million as of any June 30 before that time or if we have total annual gross
revenue of $1.07 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company
as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any three-year period before that
time, we would cease to be an emerging growth company immediately. Even after we no longer qualify as an emerging growth company, we may
still qualify as a &#8220;smaller reporting company&#8221; which would allow us to take advantage of many of the same exemptions from
disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, not being required to provide selected financial data in the registration statements and periodic reports that we file with the SEC,
and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if
investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares
less attractive as a result, and if our common shares become publicly traded, such trading market may be less active than it otherwise
could be if we were not to take advantage of such exemptions, and our share price may be more volatile.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our independent registered
public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until
the later of our second annual report or the first annual report required to be filed with the SEC following the date we are no longer
an &#8220;emerging growth company&#8221; as defined in the JOBS Act. We cannot assure you that there will not be material weaknesses or
significant deficiencies in our internal controls in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the JOBS Act, emerging
growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.
We have irrevocably elected to take advantage of this extended transition period, and therefore, our financial statements may not be comparable
to those of companies that comply with such new or revised accounting standards.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We do not intend to pay cash dividends
to our shareholders.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not intend to pay cash
dividends to our shareholders. We currently intend to retain any future earnings for funding growth and, therefore, do not expect to pay
any cash dividends in the foreseeable future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indemnification of our officers and
directors may cause us to use corporate resources to the detriment of our shareholders.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Articles eliminate the
personal liability of our directors for monetary damages arising from a breach of their fiduciary duty as directors to the fullest extent
permitted by British Columbia law. This limitation does not affect the availability of equitable remedies, such as injunctive relief or
rescission. Until October 17, 2028, our Articles require us to indemnify our directors and officers to the fullest extent permitted by
British Columbia law, including in circumstances in which indemnification is otherwise discretionary under British Columbia law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under British Columbia law,
we may indemnify our directors or officers or other persons who were, are or are threatened to be made a named defendant or respondent
in a proceeding because the person is or was our director, officer, employee or agent, if we determine that the person:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">conducted himself or herself in good faith, reasonably believed, in the case of conduct in his or her
official capacity as our director or officer, that his or her conduct was in our best interests, and, in all other cases, that his or
her conduct was at least not opposed to our best interests; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">in the case of any criminal proceeding, had no reasonable cause to believe that his or her conduct was
unlawful.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These persons may be indemnified
against expenses, including attorneys&#8217; fees, judgments, fines, excise taxes and amounts paid in settlement, actually and reasonably
incurred by the person in connection with the proceeding. If the person is found liable to the corporation, no indemnification will be
made unless the court in which the action was brought determines that the person is fairly and reasonably entitled to indemnity in an
amount that the court will establish.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->44<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If we fail to establish and maintain
an effective system of internal controls, we may not be able to report our financial results accurately or prevent fraud. Any inability
to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our
common shares.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective internal controls
are necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent
fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business
and reputation with investors may be harmed. Notwithstanding our diligence, certain internal controls deficiencies may not be detected.
As a result, any internal control deficiencies may adversely affect our financial condition, results of operations and access to capital.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Reporting company compliance may make
it more difficult to attract and retain officers and directors.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Sarbanes-Oxley Act and
rules implemented by the SEC have required changes in corporate governance practices of public companies. As a reporting company, these
rules and regulations will increase our compliance costs and make certain activities more time consuming and costly. As a reporting company,
these rules and regulations may make it more difficult and expensive for us to maintain our director and officer liability insurance and
we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive
officers, and to maintain insurance at reasonable rates, or at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our share price may be volatile.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our common shares have only recently become publicly traded, the market
price of our common shares is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of
which are beyond our control, including the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">our ability to execute our business plan;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">changes in our industry;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">competitive pricing pressures;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">our ability to obtain working capital financing;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">additions or departures of key personnel;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">sales of our common shares;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">operating results that fall below expectations;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">regulatory developments;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">economic and other external factors;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">period-to-period fluctuations in our financial results;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">our inability to develop or acquire new or needed technologies or successfully integrate acquired businesses;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the public&#8217;s response to press releases or other public announcements by us or third parties, including
filings with the SEC;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">changes in financial estimates or ratings by any securities analysts who follow our common shares, our
failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common shares;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the development and sustainability of an active trading market for our common shares; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">any future sales of our common shares by our officers, directors and significant shareholders.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the securities
markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of
publicly traded companies. These market fluctuations may also materially and adversely affect the market price of our common shares, if
our common shares become publicly traded.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There may be future sales or other
dilution of our equity, which may adversely affect the market price of our common shares.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are generally not restricted
from issuing additional common shares, including any securities that are convertible into or exchangeable for, or that represent the right
to receive, common shares. The market price of our common shares could decline as a result of sales of common shares or securities that
are convertible into or exchangeable for, or that represent the right to receive, common shares or the perception that such sales could
occur.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to the Business Combination,
there was no prior market for our common shares and an active trading market for such securities may not develop or be sustained, which
may cause our shares to trade at a discount and make it difficult to sell the shares.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Prior to the Business Combination,
there was not a public trading market for our common shares. We cannot predict the extent to which investor interest in our Company will
lead to the development of, or sustain, an active trading market or how liquid that market might be. An active public market for our common
shares may not develop or be sustained, which would make it difficult for our shareholders to sell their common shares at a price that
is attractive to them, or at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If securities or industry analysts
do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume
could decline.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The trading market for our
common shares will depend, in part, on the research and reports that securities or industry analysts publish about us or our business.
We do not have any control over these analysts or the content that they publish about us. If our financial performance fails to meet analyst
estimates or one or more of the analysts who cover us downgrade our common shares or change their opinion of our common shares, our share
price would likely decline.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our common shares are listed on Nasdaq,
but we cannot guarantee that we will be able to satisfy the applicable listing standards going forward.</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Nasdaq Stock Market LLC
requires listed companies to comply with certain standards in order to remain listed. On January 7, 2025, we received a letter from the
Nasdaq staff providing notification that, for the previous 30 consecutive business days, the Company&#8217;s Market Value of Listed Securities
(&#8220;MVLS&#8221;) was below the minimum of $50 million required for continued listing on The Nasdaq Global Market pursuant to Nasdaq
Listing Rule 5450(b)(2)(A) (the &#8220;MVLS Requirement&#8221;). The notice has no immediate impact on the listing of the Company&#8217;s
securities on The Nasdaq Global Market at this time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In accordance with Nasdaq
Listing Rule 5810(c)(3)(C), the Company has been provided an initial period of 180 calendar days, or until July 7, 2025, to regain compliance
with the MVLS Requirement. To regain compliance, the MVLS of the Company&#8217;s common shares must be $50 million or more for a minimum
of 10 consecutive business days at any time before July 7, 2025. During this period, the Company&#8217;s securities will continue to trade
on The Nasdaq Global Market.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the Company does not regain
compliance with the MVLS Requirement by July 7, 2025, Nasdaq will provide a written notification to the Company that our common shares
are subject to delisting. At that time, the Company may appeal the Staff&#8217;s delisting determination to a Hearings Panel (the &#8220;Panel&#8221;).
However, there can be no assurance that, if the Company receives a delisting notice and appeals the delisting determination to the Panel,
such appeal would be successful.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company intends to monitor
its MVLS between now and July 7, 2025, and may, if appropriate, evaluate available options to resolve the deficiency under the MVLS Requirement
and regain compliance with the MVLS Requirement. Additionally, the Company may consider applying to transfer the listing of its securities
to The Nasdaq Capital Market (provided that it then satisfies the requirements for continued listing on that market). However, there can
be no assurance that the Company will be able to regain or maintain compliance with Nasdaq listing criteria.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Delisting from the Nasdaq
Global Market or any Nasdaq market could make trading our common shares more difficult for investors, potentially leading to declines
in our share price and liquidity. In addition, without a Nasdaq market listing, 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 and the trading volume
and liquidity of our shares could decline. Delisting from Nasdaq could 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 transaction
consideration or the value accorded our common shares by other parties. Further, if we are delisted, we would also incur additional costs
under state blue sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity
of our common shares and the ability of our shareholders to sell our common shares in the secondary market. We cannot assure you that
our common shares, if delisted from Nasdaq, will be listed on another national securities exchange or quoted on an over-the counter quotation
system. If our common shares are delisted, they may come within the definition of &#8220;penny stock&#8221; as defined in 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_009"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">USE OF PROCEEDS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All of the common shares offered
by the Selling Securityholders will be sold by them for their respective accounts. We will not receive any of the proceeds from these
sales.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
will pay any underwriting fees, discounts, selling commissions, stock transfer taxes and certain legal expenses incurred by such Selling
Securityholders in disposing of their common shares, and we will bear all other costs, fees and expenses incurred in effecting the registration
of such securities covered by this prospectus, including, without limitation, all registration and filing fees, Nasdaq listing fees and
fees and expenses of our counsel and our independent registered public accountants.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_010"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">DETERMINATION OF
OFFERING PRICE</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We cannot currently determine
the price or prices at which our common shares may be sold by the Selling Securityholders under this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_011"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">DIVIDEND POLICY</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have never declared or
paid any cash dividends on our common shares to date and do not intend to pay cash dividends. We anticipate that we will retain all available
funds and any future earnings, if any, for use in the operation of our business and do not anticipate paying cash dividends in the foreseeable
future. In addition, future debt instruments may materially restrict our ability to pay dividends on our common shares. Payment of future
cash dividends, if any, will be at the discretion of the board of directors after taking into account various factors, including our financial
condition, operating results, current and anticipated cash needs, the requirements of then-existing debt instruments and other factors
the board of directors deems relevant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_012"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">MARKET INFORMATION</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our common shares are listed on Nasdaq under the symbols &#8220;DMN.&#8221;
As of January&#160;15, 2025, there were approximately 482 holders of record of our common shares. This includes Cede &amp; Co., which
holds shares on behalf of the beneficial owners of the Company&#8217;s common shares. Because brokers and other institutions hold many
of our shares on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these record holders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_013"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">UNAUDITED PRO FORMA
CONDENSED COMBINED AND CONSOLIDATED COMBINED<br/>
FINANCIAL INFORMATION</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following unaudited pro
forma condensed combined and consolidated financial information presents the combination of the financial information of the Company and
subsidiaries (also referred to as &#8220;Grafiti&#8221; or &#8220;Pubco&#8221; in this unaudited pro forma condensed combined and consolidated
financial information) and Damon Motors adjusted to give effect to the Business Combination and related transactions. The following unaudited
pro forma condensed combined and consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X.
Defined terms included below have the same meaning as terms defined and included elsewhere in this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The historical financial information
of Damon Motors was derived from the unaudited condensed consolidated financial statements of Damon Motors as of and for the three months
ended September 30, 2024, and the audited consolidated financial statements of Damon Motors as of and for the year ended June 30, 2024,
included in our filings with the SEC. The historical financial information of Grafiti consists of carve-out financial statements of Grafiti
limited (&#8220;Grafiti UK&#8221;), as Grafiti is the parent non-operating holding company of Grafiti UK, and the operations of Grafiti
following the carve-out from XTI (defined below). The unaudited pro forma financial information has been prepared utilizing the unaudited
carve-out financial statements of Grafiti UK, adjusted to reflect the equity structure of Grafiti and the reorganization as a result of
the spin-off of Grafiti from XTI Aerospace, Inc., (&#8220;XTI&#8221;, formerly named Inpixon) for all operating results prior to December
27, 2023, as incorporated in the financial statements of Grafiti as of and for the year ended June 30, 2024. The historical financial
information of Grafiti was derived from the unaudited condensed consolidated financial statements of Grafiti as of and for the three months
ended September 30, 2024, and the audited consolidated financial statements of Grafiti as of and for the year ended June 30, 2024, included
in our filings with the SEC. The unaudited pro forma financial information has been prepared on a basis consistent with the financial
statements of Damon Motors and Grafiti, respectively. This information should be read together with the financial statements of Damon
Motors and related notes as well as the financial statements of Grafiti and related notes, the section titled <i>&#8220;Management&#8217;s
Discussion and Analysis of Financial Condition and Results of Operations of Damon (Formerly, Grafiti Holding),</i>&#8221; &#8220;<i>&#8220;Management&#8217;s
Discussion and Analysis of Financial Condition and Results of Operations of Damon Motors&#8221;</i> and other information included in
this prospectus, as applicable. The unaudited pro forma condensed combined and consolidated financial information is prepared using the
reporting currency of the United States Dollar.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Business Combination was
accounted for using the acquisition method (as a reverse acquisition), with goodwill and other identifiable intangible assets recorded
in accordance with accounting principles generally accepted in the United States (&#8220;US GAAP&#8221; or &#8220;GAAP&#8221;), as applicable.
Under this method of accounting, Grafiti is treated as the &#8220;acquired&#8221; company for financial reporting purposes. Damon Motors
was determined to be the accounting acquirer because after the Business Combination, Damon Motors will control the Board of Directors,
management of the combined company, and the preexisting shareholders of Damon Motors have majority voting rights of the combined company.
For accounting purposes, the acquirer is the entity that has obtained control of another entity and, thus, consummated a business combination.
Under the acquisition method of accounting (as a reverse acquisition), Damon Motors&#8217;s assets and liabilities were recorded at carrying
value and the assets and liabilities associated with Grafiti were recorded at estimated fair value as of the acquisition date. The excess
of the purchase price over the estimated fair values of the net assets acquired, if applicable, was recognized as goodwill. Significant
estimates and assumptions were used in determining the preliminary purchase price allocation reflected in the unaudited pro forma condensed
combined and consolidated financial statements. The process of valuing the net assets of Grafiti immediately prior to the Business Combination
for purposes of presentation within this unaudited pro forma condensed combined and consolidated financial information is preliminary.
As the unaudited pro forma condensed combined and consolidated financial statements have been prepared based on these preliminary estimates,
the final amounts recorded may differ materially from the information presented.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The unaudited pro forma condensed
combined and consolidated balance sheet as of September 30, 2024 combines the historical balance sheets of Damon Motors and Grafiti on
a pro forma basis as if the Business Combination and related transactions had been consummated on September 30, 2024. The unaudited pro
forma condensed combined and consolidated statement of operations for the three months ended September 30, 2024, and for the year ended
June 30, 2024 gives pro forma effect to the Business Combination and related transactions as if they had occurred on July 1, 2023, the
beginning of the earliest period presented.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These unaudited pro forma
condensed combined and consolidated financial statements are for informational purposes only. They do not purport to indicate the results
that would have been obtained had the Business Combination and related transactions actually been completed on the assumed date or for
the period presented, or which may be realized in the future. The pro forma adjustments are based on the information currently available
and the assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. Actual results may differ
materially from the assumptions within the accompanying unaudited pro forma condensed combined and consolidated financial information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Description of the Spin-Off</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 23, 2023, XTI and
Grafiti entered into a Separation &amp; Distribution Agreement pursuant to which XTI contributed the assets and liabilities of Grafiti
UK, a wholly owned subsidiary of XTI, to the then newly formed XTI wholly owned subsidiary Grafiti. Following this contribution, all outstanding
common shares of Grafiti owned by XTI were transferred to a newly-created liquidating trust, titled the Grafiti Holding Inc. Liquidating
Trust (the &#8220;Trust&#8221;) which holds the Grafiti common shares for the benefit of the participating XTI shareholders and certain
other XTI security holders of record as of December 27, 2023 (the &#8220;Record Date&#8221;) who are hereby entitled to participate in
the spin-off distribution of Grafiti common shares following the effectiveness of the Form 10-12B registration statement which was declared
effective by the U.S. Securities and Exchange Commission on November 12, 2024. On November 12, 2024, prior to the closing of the Business
Combination, <span style="font-size: 10pt">&#160;</span>the Trust Shares were delivered to participating Parent securityholders, on a
pro rata at a ratio of 1 for 50 resulting in the distribution of 3,536,746 Trust Shares to participating Parent securityholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Description of the Business Combination Agreement</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 23, 2023, a Business
Combination Agreement was entered into among XTI, Grafiti, 1444842 B.C. Ltd., a British Columbia corporation and a newly formed wholly-owned
subsidiary of Grafiti (&#8220;Amalco Sub&#8221;), and Damon Motors, pursuant to which Damon Motors combined and merged with Amalco Sub
with Damon Motors continuing as the surviving entity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The historical operations
of Damon Motors and Grafiti are the continued operations of Pubco, however, the historical operations of Grafiti will not form a material
part of Pubco&#8217;s business. The surviving entity was renamed Damon Inc., and was approved for Direct Listing on the Nasdaq Global
Market. The common shares of Damon Inc. are expected to begin trading under the ticker symbol &#8220;DMN&#8221; on the Nasdaq Global Market
on November 18, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Business Combination
Agreement, each share of Damon Motors common and preferred stock issued and outstanding immediately prior to the Effective Time were automatically
converted into becoming the right to receive a number of Pubco common shares (the &#8220;Consideration&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Business Combination
Agreement, each warrant to purchase the common and preferred stock of Damon Motors at the consummation of the Business Combination ceased
to represent a right to acquire shares of Damon Motors common and preferred stock and are assumed to be converted into warrants to purchase
the common shares of Pubco.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following the consummation
of the Business Combination, the holders of the historical outstanding capital stock of Damon Motors now own approximately 77.8% of the
outstanding capital stock of Pubco and approximately 81.5% on a fully diluted basis. Following the consummation of the Business Combination,
the holders of the historical outstanding capital stock of Grafiti now own approximately 22.2% of the outstanding capital stock of Pubco
and approximately 18.5% on a fully dilutive basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>XTI Aerospace Inc. Convertible Note</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Immediately following the
execution of the Business Combination Agreement, XTI Aerospace Inc. purchased a convertible note from Damon Motors in an aggregate principal
amount of $3,000,000 (the &#8220;Bridge Note&#8221;) together with the Bridge Note Warrant (as defined below) pursuant to a private placement,
for a purchase price of $3,000,000. The Bridge Note has a 12% annual interest rate, payable in arrears on the maturity date of June 15,
2024. On June 15, 2024, Damon extended the maturity date of the Bridge Note to September 30, 2024. On September 11, 2024, Damon Motors
further extended the maturity date of the Bridge Note to October 31, 2024, subject to an additional tolling period of 30 days upon notice
by Damon Motors to the note holders, which was provided by Damon Motors on October 31, 2024, anticipating that the Business Combination
was going to be consummated in mid-November. The agreement states that the full principal balance and interest on the Bridge Note will
automatically convert into common shares of Damon Motors upon the public listing of Damon Motors or a successor issuer thereof on a national
securities exchange (a &#8220;Public Company Event&#8221;). The number of shares issued upon conversion due to a Public Company Event
will equal the quotient obtained by dividing (x) the outstanding principal and unpaid accrued interest on the date of a Public Company
Event (or within ten trading days of a direct listing), if any, by (y) the lesser of the then applicable conversion price or public company
event conversion price. The Bridge Note contains customary covenants relating to Damon Motors&#8217;s financials and operations. XTI received
a five-year warrant to purchase 1,096,321 Damon Motors common shares in connection with the Bridge Note (&#8220;Bridge Note Warrant&#8221;)
at an exercise price of $2.7364 as defined by the Bridge Note Warrant, in each case subject to adjustments for dividends, splits and subsequent
equity sales by Damon Motors. The Bridge Note Warrant contains a cashless exercise option if the warrant shares are not covered by an
effective registration statement within 180 days following the consummation of the Public Company Event, and also a full ratchet price
protection feature. Following the consummation of the Business Combination, the Bridge Note was converted into Pubco common shares upon
its consummation and the Bridge Note Warrant became exercisable for Pubco common shares. As of September 30, 2024, the Bridge Note is
included within the Convertible Notes balance on Damon Motors&#8217;s historical balance sheet. The unaudited pro forma condensed combined
and consolidated financial statements include a pro forma adjustment for the conversion of these notes, as well as the Third Party Bridge
Notes and Warrants discussed below, to common equity of Pubco at the close of the Business Combination in adjustment D in Note 4.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Third Party Bridge Notes and Warrants</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors has issued convertible
promissory notes of an aggregate principal amount of $25,189,772 with a fair value of $46,533,359 (&#8220;Third Party Bridge Notes&#8221;)
and 6,061,918 warrants (&#8220;Third Party Bridge Note Warrants&#8221;) from third parties, inclusive of the Bridge Note from XTI. The
Third Party Bridge Notes have terms consistent with the Bridge Note from XTI. The Third Party Bridge Notes have an interest rate of 12%
per annum, payable in arrears on maturity, one year after the issuance date. Any principal which is not paid when due shall bear interest
at the rate of the lesser of (i) 16% per annum and (ii) the maximum amount permitted by the applicable law from the due date thereof until
the same is paid. The Third Party Bridge Notes have the same terms and conversions as all of the Company&#8217;s convertible notes issued
subsequent to June 2023 which are also outstanding as of September 30, 2024 for Damon Motors. Each warrant related to the Third Party
Bridge Note Warrants is exercisable anytime for 1 common share of Damon Motors at an exercise price of $2.7364, which is equal to the
quotient of the valuation cap of $125,000,000 and the diluted capitalization on the closing date of the Third Party Bridge Notes. The
holder of the common share warrants can exercise the warrant either fully or partially at any time from issuance date until its expiry,
5 years from issuance date. The terms and conditions for the warrants issued subsequent to September 30, 2024, are the same as those issued
by Damon Motors during the three months ended September 30, 2024, and during the year ended June 30, 2024. Following the consummation
of the Business Combination, the Third Party Bridge Notes were converted into Pubco common shares upon its consummation and the Third
Party Bridge Note Warrants became exercisable for Pubco common shares. Of the Third Party Bridge Notes and Warrants, an aggregate principal
amount of $24,639,772 in notes with a fair value of $46,294,751 and 5,860,925 warrants were issued prior to September 30, 2024. The unaudited
pro forma condensed combined and consolidated financial statements include a pro forma adjustment for additional convertible promissory
notes with aggregate gross proceeds of $550,000 and 200,993 of associated common share purchase warrants which were issued subsequent
to September 30, 2024 (see adjustment <b>A</b> in Note 4).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Grafiti Promissory Note - Streeterville Capital, LLC</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 26, 2024, Grafiti
and Streeterville Capital, LLC (&#8220;Streeterville&#8221;) entered into a promissory note agreement (the &#8220;Grafiti Promissory Note&#8221;)
for an amount up to $6,470,000 bearing an interest rate of 10% per annum and due 18 months after the issue date. In connection with the
close of the Business Combination, Streeterville will pay an aggregate amount of $5,000,000 in consideration for the Promissory Note of
which $1,300,000 was sent directly to Grafiti, $550,000 was sent directly to Damon Motors (see <i>&#8216;Grafiti Holding Note - Damon
Motors Inc.&#8217;</i> below) and $3,500,000 was initially sent to an escrow account. Of the remaining $1,470,000 under the Promissory
Note, $1,450,000 relates to original issue discount (&#8220;OID&#8221;) and $20,000 relates to issuance costs to cover legal, accounting,
due diligence, monitoring and other transaction costs. Streeterville will be unconditionally obligated to release to Pubco the amount
held in escrow upon completion of the certain Business Combination Agreement, and listing of the combined company on a national securities
exchange. On September 18, 2024, Grafiti and Streeterville executed an amendment to the escrow agreement that allows for the release of
funds at the discretion of the investor even if the funding conditions have not been satisfied. On September 23, 2024, an additional $350,000
was released to Grafiti from the escrow account, of which $200,000 was loaned to Damon Motors on that date and will eliminate along with
the remainder of the promissory note accounted for within the pro forma adjustment J in Note 4. As of September 30, 2024, Grafiti included
the amount of proceeds received from Streeterville (amount not held in escrow) in its &#8216;Long-term debt, net&#8217; financial statement
line item, net of the pro rated OID and issuance costs, at an amount of $1,974,316. The unaudited pro forma condensed combined and consolidated
financial statements include a pro forma adjustment for the $3,150,000 remaining in escrow as of September 30, 2024 which will soon be
released to the combined Company following the consummation of the merger (see adjustment <b>C</b> in Note 4).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Grafiti Holding Note - Damon Motors Inc.</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 26, 2024, concurrent
with the Grafiti and Streeterville Capital, LLC promissory note described above, Grafiti Holding purchased from Damon Motors the Grafiti
Holding Note with an original principal amount of $350,000 (the &#8220;Grafiti Holding Note&#8221;). In accordance with the terms of the
Grafiti Holding Note, Grafiti Holding must loan to Damon Motors, at Damon Motors&#8217;s request, additional funds up to an aggregate
principal amount, including the original principal amount, of $1,000,000. The Grafiti Holding Note accrues interest at a rate of 10% per
year. The debt and accrued and unpaid interest is due and payable the earlier of (a) December 31, 2024, (b) when declared due and payable
by Grafiti upon the occurrence of an event of default, or (c) within three business days following termination of the Business Combination
Agreement. Concurrent with the original principal amount provided to Damon Motors, Grafiti also loaned an additional $200,000 to Damon
Motors on June 28, 2024. On July 3, 2024, Damon Motors received an additional loan under the note in the aggregate amount of $396,000.
On September 25, 2024, Damon Motors and Grafiti amended the note agreement to increase the maximum aggregate principal amount able to
be funded from $1,000,000 to $1,150,000. On the same date, Grafiti loaned Damon Motors an additional $200,000. As of September 30, 2024,
the principal balance of the Grafiti Holding Note was $1,146,000 with interest accrued of $24,614.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The aggregate amount of $1,170,614
is included on the Damon Motors September 30, 2024 balance sheet within the &#8216;Current portion of debt&#8217; financial statement
line item. Grafiti carried the loan receivable from Damon Motors in connection with this agreement on its September 30, 2024 balance sheet
at an amount of $907,897, which is net of the allowance for credit losses of $238,103, and recorded the related loan interest receivable
of $24,614 within the &#8216;Prepaid expenses and other current assets&#8217; financial statement line item. The unaudited pro forma condensed
combined and consolidated financial statements include a pro forma adjustment for the elimination of the proceeds loaned from Grafiti
to Damon Motors, inclusive of the interest accrued through September 30, 2024, to account for the impact of this agreement following the
close of the Business Combination (see adjustment J in Note 4).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Third Party Subordinate Promissory Notes</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 5, 2024, and August
11, 2024, Damon Motors issued promissory notes to arms-length parties both with principal amounts of $364,650 (CAD$500,000). The August
5, 2024, note is secured against future Scientific Research and Experimental Development (&#8220;SR&amp;ED&#8221;) tax credit refunds
expected to be received from 2024 year-end tax returns for 2024 submitted to the Canadian Revenue Authority (&#8220;CRA&#8221;). The August
11, 2024, note is secured against substantially all of the assets of Damon Motors and ranks pari passu with the note issued on August
6, 2024, and both promissory notes issued in August are ranked in subordination to the Promissory Note agreement entered into with Streeterville.
Both promissory notes (the &#8220;Subordinate Promissory Notes&#8221;) accrue interest at a rate of 3% per month and mature on or before
November 15, 2024. These notes are included within the &#8216;Current portion of debt&#8217; in Damon Motors&#8217;s historical balance
sheet and remain in the unaudited pro forma condensed combined and consolidated financial statements as of September 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Third Party Short-Term Promissory Note</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 9, 2024, the Company
issued a promissory note to arms-length parties with a principal amount of $200,000, net of the OID of $12,500. The note accrues interest
at a rate of 12% per annum and shall become due and payable in full on the earlier of (i) 60 days from the funds are advanced; or (ii)
five (5) business days following the completion of the liquidity event. The liquidity event refers to the consummation of the Business
Combination with Grafiti, following which Damon Motors will become a wholly owned subsidiary of Grafiti and Grafiti&#8217;s securities
will become listed and trading on the Nasdaq, as discussed above. The unaudited pro forma condensed combined and consolidated financial
statements include a pro forma adjustment for these additional promissory notes issued with aggregate proceeds of $200,000, net of issuance
costs of $12,500 (see adjustments B and BB, respectively, in Note 4).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED
BALANCE SHEET<br/>
AS OF SEPTEMBER 30, 2024</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Grafiti</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(Historical)</b></p></td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Subsequent Financing Transactions</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Transaction Accounting Adjustments</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Pro Forma Combined</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold">Assets</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in">Current Assets</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 34%">Cash</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">175,292</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">113,549</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">550,000</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%; font-weight: bold">&#160;</td>
    <td style="width: 2%; font-weight: bold; text-align: center">A</td><td style="width: 1%">&#160;</td>
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    <td style="width: 2%; font-weight: bold; text-align: center">C</td><td style="width: 1%">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">200,000</td><td style="text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: center">B</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(650,000</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: center">G</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">55,865</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">55,865</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Note receivable, net of $238,103 allowance for credit losses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">907,897</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(907,897</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: center">J</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,004,022</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,240,389</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,233,377</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">127,309</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">127,309</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">2,276</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">2,216,491</td><td style="text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">2,216,491</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">265</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">265</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: center; padding-bottom: 4pt">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="text-align: center; padding-bottom: 4pt">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">$</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,500,000</td><td style="text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: center">G</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">476,404</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">476,404</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">363,640</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">363,640</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">7,329</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">7,329</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(71,590,087</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">743,637</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(743,637</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


</div><!-- Field: Page; Sequence: 60; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->53<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED
STATEMENT OF OPERATIONS<br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(129,535</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(125,535</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">125,535</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(144,094</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(144,094</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(4,657,388</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,657,388</td><td style="text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(854,846</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(16,500</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">755,494</td><td style="text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(353,227</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(6,375</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


</div><!-- Field: Page; Sequence: 61; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->54<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED
STATEMENT OF OPERATIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEAR ENDED JUNE 30, 2024</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(42,297</td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">6,414,308</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">108,568</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(108,568</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(235,871</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(235,871</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,593,521</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">11,484,372</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,414,432</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,339,043</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(11,484,372</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,414,432</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(17,237,847</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(18,424,992</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">18,424,992</td><td style="text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(785,377</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(785,377</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(9,314</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(3,273,507</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(66,000</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,859,574</td><td style="text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,451,247</td><td style="text-align: left">)</td></tr>
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(25,500</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(609,000</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(33,968,248</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(104,000</td><td style="text-align: left">)</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">14,946,134</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(20,474,471</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Income tax provision</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 62; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->55<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">NOTES TO UNAUDITED
PRO FORMA CONDENSED COMBINED AND CONSOLIDATED<br/>
FINANCIAL INFORMATION</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Note 1. Basis of Presentation</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The unaudited pro forma condensed
combined and consolidated financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings,
or cost savings that may be associated with the spin-off and the Business Combination. The unaudited pro forma condensed combined and
consolidated financial information is not necessarily indicative of what the actual results of operations and financial position would
have been had the spin-off and the Business Combination and related transactions taken place on the dates indicated, nor are they indicative
of the future consolidated results of operations or financial position of the post-combination company. They should be read in conjunction
with the historical financial statements and notes thereto of Damon Motors and Grafiti.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unaudited Pro Forma Condensed Combined
and Consolidated Balance Sheet &amp; Unaudited Pro Forma Pro Forma Condensed Combined and Consolidated Statement of Operations</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The historical financial information
of Damon Motors was derived from the unaudited condensed consolidated financial statements of Damon Motors as of and for the three months
ended September 30, 2024, and the audited consolidated financial statements of Damon Motors as of and for the year ended June 30, 2024,
included elsewhere in this prospectus. The historical financial information of Grafiti consists of the carve-out financial statements
of Grafiti UK, as Grafiti is the parent non-operating holding company of Grafiti UK and the operations of Grafiti following the carve-out
from XTI on December 27, 2023, and was derived from the unaudited condensed consolidated financial statements of Grafiti as of and for
the three months ended September 30, 2024, and the audited financial statements of Grafiti as of and for the year ended June 30, 2024,
included elsewhere in this prospectus. See Note 4 for further information regarding the pro forma adjustments contemplated in calculating
the unaudited pro forma condensed combined and consolidated balance sheet as of September 30, 2024, and unaudited pro forma condensed
combined and consolidated statement of operations for the three months ended September 30, 2024, and for the year ended June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Note 2. Accounting Policies and Reclassifications</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following the consummation
of the Business Combination, management will now perform a comprehensive review of the two entities&#8217; accounting policies. As a result
of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have
a material impact on the financial statements of Pubco. Based on its initial analysis, management did not identify any differences that
would have a material impact on the unaudited pro forma condensed combined and consolidated financial information. As a result, the unaudited
pro forma condensed combined and consolidated financial information does not assume any differences in accounting policies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 3. Estimated Purchase Price Consideration</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Estimated purchase price of
$337,090 related to the Business Combination is comprised of the following components:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left; padding-bottom: 1.5pt">Equity consideration</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The estimated fair value of
common shares of $337,090 included in the total equity consideration is based on the income and market approach valuation methods. The
valuation takes the average value of the discounted cash flow analysis under the income approach, guideline trading multiples under the
market approach, and guideline transaction multiples under the market approach.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Business Combination is
considered a reverse acquisition. As such, the acquisition-date fair value of the consideration transferred is calculated based on the
number of equity interests Damon Motors would have had to issue to shareholders of Grafiti to obtain the same ownership interest in Pubco.
Any excess of the consideration transferred was allocated to goodwill as shown in adjustment I.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 63; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->56<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 4. <i>Adjustments to Unaudited Pro Forma
Condensed Combined and Consolidated Financial Information</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The unaudited pro forma condensed
combined and consolidated financial information has been prepared to illustrate the effect of the Business Combination and related transactions
and has been prepared for informational purposes only.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following unaudited pro
forma condensed combined and consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X. The
unaudited pro forma condensed combined and consolidated financial information has been prepared to illustrate the effect of the Business
Combination and related transactions and has been prepared for informational purposes only. The Company includes subsequent financing
transactions and transaction accounting adjustments in the unaudited pro forma condensed combined and consolidated financial information
as if they had occurred as of September 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The pro forma basic and diluted
earnings per share amounts presented in the unaudited pro forma condensed combined and consolidated statement of operations are based
upon the number of Pubco Common shares outstanding, assuming the Business Combination and related transactions occurred on July 1, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="text-align: justify; font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Adjustments related to Subsequent Financing Transactions of Grafiti
and Damon Motors to Unaudited Pro Forma Condensed Combined and Consolidated Balance Sheet</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The pro forma adjustments
for subsequent financing transactions represent significant transactions completed by Grafiti and Damon Motors subsequent to September
30, 2024 as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A. To account for Damon Motors&#8217;s
issuance of convertible promissory notes that were issued with an aggregate total of 200,993 warrant shares on October 8, 2024 and October
18, 2024, and aggregate gross proceeds received of $550,000. The convertible notes consist of funding from certain investors who were
issued common share purchase warrants to subscribe for and purchase Damon Motors common shares that were entered into subsequent to September
30, 2024, and were determined to be equity-classified warrants. The convertible notes are expected to be converted to equity at the close
of the Business Combination and are subsequently accounted for within the pro forma adjustment in <b>Note D</b>. At inception, the proceeds
were allocated between the convertible notes issued and the associated warrants based on the residual method. The fair value of the warrants
was determined to be $311,392 which was recorded within the &#8216;Additional paid-in capital&#8217; financial statement line item, and
the residual of $238,608 was allocated to the value of the convertible notes and recorded within the &#8216;Convertible notes&#8217; financial
statement line item.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">B. To record proceeds received,
net of issuance costs of $12,500, from the promissory note issued by Damon Motors on October 9, 2024 in the amount of $200,000. The note
accrues interest at a rate of 12% per annum and becomes due and payable in full on the earlier of (i) 60 days from the funds are advanced;
or (ii) five (5) business days following the completion of the liquidity event<sup>1</sup> (see <b>Note BB</b>).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Transaction Accounting Adjustments to Unaudited Pro Forma Condensed
Combined and Consolidated Balance Sheet</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The transaction accounting
adjustments included in the unaudited pro forma condensed combined and consolidated balance sheet as of September 30, 2024 are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">C. To record proceeds of $3,150,000,
net of the pro rated OID, for Grafiti in connection with the Grafiti Promissory Note dated June 26, 2024, whereby $3,500,000 of the initial
principal amount was placed into escrow to be released to PubCo at the close of the Business Combination. On September 18, 2024, Grafiti
and Streeterville executed an amendment to the escrow agreement that allows for the release of funds at the discretion of the investor
even if the funding conditions have not been satisfied. On September 23, 2024, $350,000 of the amount held in escrow was released to Grafiti,
of which $200,000 was loaned to Damon Motors on that date and will eliminate along with the remainder of the promissory note accounted
for within the pro forma adjustment in Note J. The note bears interest at an annual rate of 10% and the note shall be due 18 months after
the close of the Business Combination. The $1,850,000 of aggregate proceeds to-date were received by Grafiti prior to September 30, 2024,
and therefore the related obligation is included in the &#8216;Long-term debt&#8217; financial statement line item on Grafiti&#8217;s
September 30, 2024 balance sheet at an amount of $1,974,316, which is net of the unamortized pro rated OID and issuance costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 25%"><div style="font-size: 1pt; border-top: Black 1.5pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><sup>1</sup></td><td style="text-align: justify">A liquidity event is defined as the business combination with
Grafiti Holding Inc (&#8220;Grafiti&#8221;), following which Damon Motors will become a wholly owned subsidiary of Grafiti and Grafiti&#8217;s
securities will become listed and trading on the Nasdaq.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">D. To convert all of Damon
Motors&#8217;s convertible notes outstanding as of September 30, 2024 and those related to subsequent financing transactions described
above, inclusive of $755,494 of accrued interest thereon (see adjustment in Note FF), and the related warrants issued to common equity
of Pubco at the close of the Business Combination, which had a total fair value of $46,533,359 when aggregated as of September 30, 2024.
The previously incurred losses recognized for these instruments due to their change in fair value for both the three months ended September
30, 2024, and year ended June 30, 2024, is accounted for within the pro forma adjustment in Note DD.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">E. To convert all of Grafiti&#8217;s
common shares of $1,371,115 to common equity of Pubco at the close of the Business Combination, which is inclusive of the $627,478 of
share-based compensation expense recorded to Additional paid-in capital of Grafiti for its stock options which were granted on June 11,
2024 and were exercised on various dates between August 21, 2024 and September 4, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">F. To convert all Damon Motors&#8217;s
Preferred Shares of $71,590,087 to common equity of Pubco at the close of the Business Combination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">G. Represents the amount of
total estimated transaction costs expected which were expensed at the close of the Business Combination of $4,507,000, of which $357,000
and $4,150,000 was estimated to have been incurred by Grafiti and Damon Motors in connection with the Business Combination, respectively.
These costs are inclusive of costs related to the transaction (advisory, banking, printing, legal and accounting fees, as well as employee
incentive amounts incurred in connection to the Business Combination).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Grafiti estimated transaction
costs of $357,000 to be incurred subsequent to September 30, 2024 will be paid upon the agreed upon payment terms with the third parties
and the adjustment is recorded within &#8216;Accounts payable and accrued liabilities&#8217;. Damon Motors&#8217;s estimated transaction
costs of $200,000 to be incurred subsequent to September 30, 2024 will be paid upon the agreed upon payment terms with the third parties
and the adjustment is recorded within &#8216;Accounts payable and accrued liabilities&#8217;;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">$1,300,000 in costs are expected
to be paid in registered securities in three installments starting 90 days following the close of the Business Combination and the adjustment
is recorded within &#8216;Accounts payable and accrued liabilities&#8217;; $1,000,000 in costs are expected to be paid in cash thirteen
months following the close of the Business Combination which is recorded within &#8216;Other non-current liabilities&#8217; financial
statement line item; $1,000,000 in costs were paid at the close of the Business Combination related to equity issuances of which the adjustment
is recorded in &#8216;Common Shares without par value&#8217; and costs for advisory fees of $650,000 that was paid immediately upon close
of the Business Combination for which the adjustment is recorded within &#8216;Cash&#8217;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">H. Reflects the eliminations
of Grafiti&#8217;s historical accumulated deficit and accumulated other comprehensive loss as an adjustment to additional paid-in capital
as part of the reverse acquisition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">I. Represents adjustments
for the estimated preliminary purchase price allocation for the Business Combination. The preliminary calculation of total consideration
is presented below as if the Business Combination was consummated on September 30, 2024:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Fair Value</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left; padding-bottom: 4pt">Total consideration</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">337,090</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Assets acquired:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Cash and cash equivalents</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">175,292</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Accounts receivable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">55,865</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Note receivable, net of $238,103 allowance for credit losses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">907,897</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">Prepaid expenses and other current assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">101,335</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Property and equipment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,276</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Other assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">265</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Customer list</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">80,000</td><td style="text-align: left">&#160;</td></tr>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,216,491</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Total assets acquired</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,539,421</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Liabilities assumed:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">Accounts payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">972,125</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accrued liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">104,513</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Deferred revenue</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">151,377</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt">Fair value of debt assumed</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,974,316</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
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    <td style="text-align: left; padding-bottom: 1.5pt">Total liabilities assumed</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,202,331</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
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    <td style="text-align: left; padding-bottom: 4pt">Estimated fair value of net assets acquired</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Business
Combination, the Company will recognize approximately $80,000 of identifiable intangible assets and $2,216,491 of goodwill, which represents
the excess purchase price over fair value of identifiable net assets acquired, pursuant to the preliminary purchase price allocation.
Goodwill will not be amortized, but instead will be tested for impairment at least annually or more frequently if certain indicators are
present. In the event that the value of goodwill or other intangible assets have become impaired, an accounting charge for impairment
during the period in which the determination is made may be recognized. The goodwill is not anticipated to be deductible for tax purposes.
In addition, the Company recorded an adjustment to common shares of $2,296,491 to reflect the value of the consideration for the transaction
pursuant to the additional goodwill and intangible assets identified in the preliminary purchase price allocation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Below is a summary of intangible
assets identified and acquired in the Business Combination based on the preliminary purchase price allocation:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left; padding-bottom: 1.5pt">Customer list</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
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    <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">80,000</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt; text-align: right">&#160;</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">J. Reflects the intercompany
elimination of the promissory note secured by Damon Motors from Grafiti, in connection with the Grafiti Promissory Note, following the
close of the Business Combination. As of September 30, 2024, Damon Motors had received $1,170,614, inclusive of the interest accrued,
from Grafiti in connection with the promissory note agreement dated June 26, 2024. As of September 30, 2024, Grafiti carried a loan receivable
of $907,897, net of the allowance for credit losses of $238,103, and interest receivable of $24,614 included in the &#8216;Prepaid expenses
and other current assets&#8217; financial statement line item, in connection with this agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->59<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Adjustments related to Subsequent Financing Transactions of Grafiti
and Damon Motors to Unaudited Pro Forma Condensed Combined and Consolidated Statements of Operations</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The adjustments related to
subsequent financing transactions of Grafiti and Damon Motors included in the unaudited pro forma condensed combined and consolidated
statements of operations for the year ended June 30, 2024 and for the three months ended September 30, 2024 are as follows:</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">AA. To record interest incurred
for the three months ended September 30, 2024, on Damon Motors convertible promissory notes issued subsequent to September 30, 2024 disclosed
in adjustment A for an amount of $16,500 assuming the convertible promissory notes had been issued on July 1, 2023. Additionally, to record
interest incurred for the year ended June 30, 2024 on Damon Motors convertible promissory notes issued subsequent to September 30, 2024
disclosed in adjustment A for an amount of $66,000 assuming the convertible promissory notes had been issued on July 1, 2023. This incremental
interest expense is also eliminated with the previously incurred interest expense included in Damon Motors&#8217;s consolidated statement
of operations for the year ended June 30, 2024, through adjustment FF.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">BB. To record interest incurred
for the three months ended September 30, 2024 on Damon Motors promissory notes issued subsequent to September 30, 2024 disclosed in adjustment
<b>B </b>for an amount of $6,375, assuming the promissory notes had been issued on July 1, 2023. Additionally, to record interest incurred
for the year ended June 30, 2024 on Damon Motors promissory notes disclosed in adjustment <b>B</b> for an amount of $25,500, and the related
issuance costs of $12,500, assuming the promissory notes had been issued on July 1, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Transaction Accounting Adjustments to Unaudited Pro Forma Condensed
Combined and Consolidated Statement of Operations</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The transaction accounting
adjustments included in the unaudited pro forma condensed combined and consolidated statement of operations for the year ended June 30,
2024 and for the three months ended September 30, 2024 are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">CC. Reflects the estimated
transaction costs of $4,507,000 to be expensed as if incurred on July 1, 2023, the date the Business Combination occurred for the purposes
of the unaudited pro forma condensed combined and consolidated statement of operations. This is a non-recurring item. Below represents
a summary of the transaction costs associated with the Business Combination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>Grafiti Transaction Costs:</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left; padding-bottom: 1.5pt">Third party fees (legal, accounting, investment, etc.)</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
    <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">357,000</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 9.25pt">Estimated Grafiti transaction costs</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">357,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Damon Motors Transaction Costs:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Third party fees (legal, accounting, investment, etc.)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,500,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Advisory Fees</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">650,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 9.25pt">Estimated Damon Motors transaction costs</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,150,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt; padding-left: 9.25pt">Total Estimated Transaction Costs</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,507,000</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None of the transaction costs
above have been incurred as of September 30, 2024. As such, $4,507,000 was expensed on the unaudited pro forma condensed consolidated
statement of operations for the year ended June 30, 2024. These costs will not affect the Company&#8217;s income statement beyond 12 months
after the acquisition date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">DD. Represents adjustment
to remove the loss due to the change in fair value related to Damon Motors&#8217;s convertible notes and SAFE financial liabilities, as
these instruments are assumed to have been converted into common equity as if the Business Combination had taken place on July 1, 2023.
For the year ended June 30, 2024, Damon Motors recorded a loss of $13,011,887, a loss of $592,543 for their convertible notes and SAFE
financial liabilities, and a loss of $4,820,562 on warrant liabilities, respectively, for a total adjustment of $18,424,992. For the three
months ended September 30, 2024, an adjustment for the loss incurred of $4,657,388 was also presented as the related instruments are assumed
to have been converted into common equity as if the Business Combination had taken place on July 1, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">EE. Represents incremental
adjustments to record amortization of intangible assets acquired as if the Business Combination had taken place on July 1, 2023. The following
table is a summary of information related to certain intangible assets acquired, including information used to calculate the amortization
expense for each period presented:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Fair Value</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left; padding-bottom: 1.5pt">Customer list</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
    <td style="width: 1%; padding-bottom: 1.5pt; text-align: left">$</td><td style="width: 9%; padding-bottom: 1.5pt; text-align: right">80,000</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
    <td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 9%; padding-bottom: 1.5pt; text-align: center">5</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
    <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">4,000</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
    <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">16,000</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt">Total amortization expense</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt; text-align: right">&#160;</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt; text-align: right">&#160;</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,000</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">16,000</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">FF. Represents adjustment
to eliminate interest expense on the convertible notes outlined in adjustment A and adjustment AA for the three months ended September
30, 2024 and for the year ended June 30, 2024 of $755,494 and $1,859,574, respectively, as these instruments are assumed to have been
converted into common equity as if the Business Combination had taken place on July 1, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">GG. Represents adjustment
to record: (1) the amortization of the unamortized prorated debt discount and issuance costs of $152,250; and (2) the interest incurred
of $78,750 related to the amount held in escrow to be released to Pubco upon completion of the certain Business Combination Agreement,
and listing of the combined company on a national securities exchange under the terms of the Grafiti Promissory Note with Streeterville
LLC as outlined in adjustment C for the three months ended September 30, 2024. Additionally, adjustment GG represents adjustment to record:
(1) the amortization of the unamortized prorated debt discount and issuance costs of $609,000; and (2) the interest incurred of $315,000
related to the amount held in escrow to be released to Pubco upon completion of the certain Business Combination Agreement, and listing
of the combined company on a national securities exchange under the terms of the Grafiti Promissory Note with Streeterville LLC as outlined
in adjustment C for the year ended June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">HH. Represents an adjustment
to eliminate the current expected credit loss provision recorded for the Grafiti Promissory Note loaned to Damon Motors outlined in Adjustment
<b>J</b> in the amounts of $129,535 and $108,568 for the three months ended September 30, 2024 and for the year ended June 30, 2024, respectively,
as this financing will become an intercompany loan upon closing of the Business Combination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Note 5. Net Loss per Share</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net loss per share was calculated
using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination
and the related transactions, assuming the shares were outstanding since July 1, 2023. As the Business Combination and the related transactions
are being reflected as if they had occurred at the beginning of the earliest period presented, the calculation of weighted average shares
outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Business Combination and related
transactions have been outstanding for the entirety of all periods presented.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The unaudited pro forma condensed
combined and consolidated financial information has been prepared for the three months ended September 30, 2024 and for the year ended
June 30, 2024:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><b>Three Months Ended<br/> September 30,<br/> 2024<span style="font-size: 10pt"><sup>(1)</sup></span></b></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><b>Year Ended<br/> June 30,<br/> 2024<span style="font-size: 10pt"><sup>(1)</sup></span></b></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Pro forma net loss</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(3,692,173</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(20,474,471</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>Weighted average shares outstanding - basic and diluted</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">20,767,746</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">20,767,746</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Pro forma net loss per share - basic and diluted</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(0.18</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(0.99</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-style: italic; text-align: left"><i>Excluded securities:<span style="font-size: 10pt"><sup>(2)(3)</sup></span></i></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Options</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,942,161</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,942,161</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>Warrants</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,186,498</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,186,498</td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="font-size: 10pt; width: 0.25in"><span style="font-size: 10pt"><i><sup>(1)</sup></i></span></td>
    <td style="font-size: 10pt; text-align: justify"><i>Pro forma net loss per share includes the related pro forma adjustments as referred to within the section &#8220;Unaudited Pro Forma Condensed Combined and Consolidated Financial Information.&#8221;</i></td></tr>
  <tr style="vertical-align: top">
    <td style="font-size: 10pt"><span style="font-size: 10pt"><i><sup>(2)</sup></i></span></td>
    <td style="font-size: 10pt; text-align: justify"><i>The potentially dilutive outstanding securities were excluded from the computation of pro forma net loss per share, basic and diluted, because their effect would have been anti-dilutive.</i></td></tr>
  <tr style="vertical-align: top">
    <td style="font-size: 10pt"><span style="font-size: 10pt"><i><sup>(3)</sup></i></span></td>
    <td style="font-size: 10pt; text-align: justify"><i>The potentially dilutive outstanding securities of Damon Motors to be exchanged for securities of Pubco are adjusted to reflect the exchange ratio associated with the Business Combination.</i></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->61<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_014"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="text-transform: uppercase"><b>Management&#8217;s
Discussion and Analysis of Financial Condition<br/>
and Results of Operations OF Damon (FOrMERLY, GRAFITI HOLDING)</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following discussion
and analysis of the financial condition and results of operations should be read in conjunction with the accompanying interim unaudited
condensed consolidated financial statements of Damon (formerly, Grafiti Holding) as of September 30, 2024, consolidated financial statements
of Grafiti Holding for the fiscal years ended June 30, 2024, 2023 and 2022, and related notes included elsewhere in this prospectus. Some
of the information contained in this discussion and analysis or set forth elsewhere, including information with respect to its plans and
strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions.
You should read the &#8220;Cautionary Statement Regarding Forward-Looking Statements&#8221; and &#8220;Risk Factors&#8221; for a discussion
of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless otherwise indicated
herein, the following management&#8217;s discussion and analysis provides information concerning the consolidated financial condition
and results of operations of Grafiti Holding and its subsidiaries prior to the Closing of Business Combination.</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">References to &#8220;Fiscal
2024,&#8221; &#8220;Fiscal 2023&#8221; and &#8220;Fiscal 2022&#8221; are to Grafiti Holding&#8217;s fiscal years ended June 30, 2024,
2023 and 2022, respectively.</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>Overview of Our Business</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b><i>Our Motorcycle Development and Manufacturing
Business Through Damon Motors</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We, through our wholly-owned
subsidiary Damon Motors and its subsidiaries, design and produce motorcycles aimed at transforming the motorcycle industry by building
a smart and technologically advanced motorcycle. Damon Motors is developing the technology and investing in the capabilities to lead the
industry transformation in the high-performance electric motorcycle market. With decades of combined management and engineering experience
across the team&#8217;s careers, and a commitment to low carbon personal mobility solutions, Damon Motors is introducing existing enthusiasts
to high-performance electric products while bringing new riders to the motorcycle community with first of its kind advances in zero emissions
motorcycle performance, safety, connectivity and AI.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Founded in 2017, Damon Motors
started reimagining the future of motorcycling by means of advanced safety design, electric vehicle powertrain technology and user experience.
In 2019, Damon Motors took its first alpha prototype motorcycles and safety systems into the field to test the concept. In 2021, Damon
Motors expanded its operations and expertise with an R&amp;D facility in San Rafael, California to accelerate the engineering and development
of its HyperDrive platform drive unit and the HyperSport motorcycle. Through core technology advancements, Damon Motors electric motorcycles
are in prototype phase of product validation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors&#8217;s electric
vehicles are developed with a set of proprietary design principles that elevate the brand, deliver differentiated riding experiences and
bring emotion to electric propulsion. The initial product portfolio of motorcycle models will be built upon and utilize a single powertrain
platform called HyperDrive&#8482;. As a patented, monocoque-constructed battery-chassis, HyperDrive houses a proprietary 150 kW 6-phase
liquid cooled IPM motor-gearbox and proprietary electronics. This platform approach establishes a capital-efficient path to grow the product
line to meet a wide range of future segments and price points, while also supporting a wide range of future motorcycle models and power
sizes that share as much as 85 percent common parts. By using the frame of the battery as the motorcycle&#8217;s chassis, HyperDrive also
achieves valuable weight and cost reduction advantages. With 150 kW of power at its disposal, HyperDrive has been specifically designed
to compete with the performance of market leaders in the high-performance motorcycle market, whether internal combustion or electric.
Thanks to the energy modularity designed into it, HyperDrive-based motorcycles can be detuned in power, energy and thus cost to support
500 &#8211; 1500cc power equivalent classes of motorcycles in both the North American and European markets, with price points ranging
from $20,000 - $80,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The HyperDrive platform is
contrasted by the smaller, less powerful and lower cost HyperLite platform, currently in its early design phase. HyperLite will be developed
using a very similar design architecture as HyperDrive, enabling the production of a range of light weight, low to medium cost motorcycles
and scooters with milder levels of horsepower that are more common in overseas and developing markets. With these two platforms paired
with Damon Motors&#8217;s three patented cornerstone technologies, CoPilot&#8482;, Shift&#8482; and its AI-enabled cloud platform. Damon
Motors&#8217;s long-term objective is to build a premium, high-tech, electric motorcycle company that rivals the largest incumbents in
both profit and annual volume, by providing a technologically enhanced riding experience that is not currently available from other manufacturers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">CoPilot provides a novel rider
assistance and warning system integrated into the motorcycle. Shift allows the handlebars and foot pegs to mechatronically adjust on the
fly, addressing issues of ergonomic comfort and allowing users to select different riding positions for changing conditions such as a
lower, more aerodynamic position for highway use or a more upright position for urban use. Its AI-enabled cloud will collect environmental
and situational data that, paired with over-the-air software updates, can drive a continual loop of collision warning improvements, with
an aim to further reduce accident probability over time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The commercial production
of Damon Motors&#8217;s motorcycles is expected to commence after passing various internal and external tests and undergoing a self-certification
process required for US-bound vehicle homologation. These tests include: the completion of Damon Motors&#8217;s ride quality and long-term
durability testing, completion of FCC Title 47 certification for the onboard charger, completion of UN 38.3 battery testing, completion
of Damon Motors&#8217;s internal battery testing, extreme temperature operation verification, brake testing per FMVSS, and an internal
and external review of FMVSS compliance with Damon Motors engineering subcontractor TUV of Germany.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our SAVES Distribution Business Through
Grafiti Limited</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We, through our wholly-owned
subsidiary Grafiti Limited, distribute in the UK and certain other European countries data analytics and visualization software products
referred to as &#8220;SAVES&#8221; primarily for scientists and engineers. Grafiti Limited&#8217;s products can be downloaded to a user&#8217;s
desktop. These products help scientific research in the health and life sciences domain in the discovery of new drugs, in the study of
the efficacy of established drugs and therapies, and in epidemic propagation research, among other applications. Engineers use our products
for a multitude of applications which include, but are not limited to, conducting surface modelling analysis and curve fitting in order
to design new engineering processes, studying signal attenuation and propagation in radio engineering. Potential automobile and motorcycle
applications could include surface panel design for aerodynamics, aesthetic symmetry, and calculated asymmetry among others. We believe
the Grafiti Limited regression analysis product could also be used for predicting vehicle sharing demand and pricing trends in various
markets based on a wide range of variables.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Grafiti Limited&#8217;s strategy
is to build a broader, long term customer base by increasing its sales of Grafiti Limited&#8217;s product offerings which will include
cloud and Macintosh compatible data analytics and statistical visualization software products. We believe this will enable the Grafiti
Limited business to focus on generating more recurring revenues in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Grafiti Limited was formed
by the Parent on May 13, 2020 as a distribution arm for its SAVES products in the UK market and part of the European market.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Recent Events</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Trust Shares Distribution in connection
with Spin-Off of Grafiti Holding</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 23, 2023, Parent
and Grafiti Holding entered into a Separation and Distribution Agreement, pursuant to which all of the outstanding shares of Grafiti Limited
were transferred to Grafiti Holding, such that on December 26, 2023, Grafiti Limited became a wholly-owned subsidiary of Grafiti Holding.
Grafiti Limited was formed by the Parent on May 13, 2020 as a distribution arm for its SAVES products in the United Kingdom market and
part of the European market. Following the reorganization, and in connection with the spin-off of Grafiti Holding from Parent, on December
27, 2023 (the &#8220;record date&#8221;), all of the outstanding common shares of the Company (the &#8220;Trust Shares&#8221;) were transferred
to the Trust, to be held for the benefit of holders of the Parent&#8217;s common stock, preferred stock and those outstanding warrants
that are contractually entitled to participate in the distribution, on a pro rata basis as of the record date (collectively, the &#8220;participating
Parent securityholders&#8221;). On November 12, 2024, the Trust Shares were delivered to participating Parent securityholders, on a pro
rata at a ratio of 1 for 50 resulting in the distribution of 3,536,746 Trust Shares to participating Parent securityholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Completion of Business Combination</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 23, 2023, the Company,
Parent, Damon Motors, and 1444842 B.C. LTD (&#8220;Amalco Sub&#8221;) entered into a Business Combination Agreement (as amended by the
First Amendment to the Business Combination Agreement dated June 18, 2024 and the Second Amendment to the Business Combination Agreement
dated September 26, 2024, the &#8220;Damon Business Combination Agreement&#8221;). On November 13, 2024, Damon Motors and Amalco Sub amalgamated
to continue as a wholly owned subsidiary of the Company (the &#8220;Amalgamation&#8221;). Following the Amalgamation, the Company was
renamed &#8220;Damon Inc.&#8221; (also referred to herein as the &#8220;combined company&#8221;). Pursuant to the Plan of Arrangement
under the laws of British Columbia, as contemplated in the Damon Business Combination Agreement, securityholders of Damon Motors exchanged
their securities of Damon Motors for amalgamation consideration consisting of:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(i) 14,764,803 common shares
of the Company, also known as &#8220;Subordinate Voting Shares,&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(ii) 1,391,181 multiple voting
shares of the Company, which are convertible into common shares of the Company on a 1 for 1 basis, issued to Jay Giraud, the combined
company&#8217;s CEO and director at the Closing, and its controlled entity,</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(iii) warrants to purchase
2,186,498 common shares of the Company at an exercise price of $7.81 per share, with terms substantially similar to those of Damon Motors&#8217;s
warrants, issued to former Damon Motors warrant holders, and</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(iv) options to purchase 1,942,127
common shares at exercise prices between $0.57 and $12.73, issued to former Damon Motors optionholders under the Company&#8217;s equity
incentive plans.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The exchanges are based on
an exchange ratio determined according to the formula in the Damon Business Combination Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The combined company commenced
trading on the Nasdaq Global Market on November 18, 2024, under the symbol &#8220;DMN&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of the closing
of the Business Combination, a change in control of the Company has occurred, and Damon Motors became a wholly owned subsidiary of the
Company. Following the issuance of the amalgamation consideration pursuant to the Plan of Arrangement, the Company&#8217;s security holders
immediately prior to the effective time of the Amalgamation (the &#8220;Effective Time&#8221;) retained beneficial ownership of approximately
18% of the outstanding common shares of the Company on a fully-diluted basis and Damon Motors security holders immediately prior to the
Effective Time acquired beneficial ownership of common shares amounting to approximately 82% of the outstanding common shares of the Company
on a fully-diluted basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following the resignation
of Jay Giraud from all officer and director positions with the Company as of December 4, 2024, all the multiple voting shares held by
Mr. Giraud and his wholly-owned company were converted automatically into common shares on a one-for-one basis. After giving effect to
the conversion and as of the date of this filing, the Company has 22,030,884 common shares outstanding, with no multiple voting shares
remaining outstanding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Creation of Multiple Voting Shares
and Adoption of Amended Articles</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Prior to the Effective Time,
on November 12, 2024, the Company&#8217;s shareholders authorized amendments to the Company&#8217;s articles. These amendments included,
among other things, the creation of a class of Multiple Voting Shares and the establishment of the rights and restrictions applicable
to the Multiple Voting Shares and common shares. On the same date, the Company filed a Notice of Alteration with the Registrar of Companies
for the Province of British Columbia to amend its Notice of Articles to reflect the creation of the Multiple Voting Shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Financing Agreements</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Streeterville June 2024 Note &#8211;
Amended Security Agreements</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 13, 2024, prior
to the closing of the Business Combination, (a) the Company entered into an amendment to the Security Agreement, dated June 26, 2024 between
the Company and Streeterville Capital LLC delivered in connection with the a secured promissory note in an aggregate original principal
amount of $6,470,000 (the &#8220;Streeterville Note&#8221;) issued to Streeterville Capital, LLC (&#8220;Streeterville&#8221;), whereby
the Company granted to Streeterville a security interest in all right, title, interest, claims and demands to its assets, and (b) Damon
Motors entered into a security agreement with Streeterville, whereby Damon Motors granted to Streeterville a security interest in all
right, title, interest, claims and demands to its assets, and (c) Damon Motors entered into an IP security agreement with Streeterville,
whereby Damon Motors granted to Streeterville a security interest in certain of its intellectual property. Streeterville&#8217;s security
over the Company&#8217;s assets ranks pari passu with the security granted under the November 2024 Debt Financing (as described in greater
detail below) pursuant to an intercreditor agreement dated as of November 13, 2024 (the &#8220;Intercreditor Agreement&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">November 2024 Debt Financing</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">East-West</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 13, 2024, the
Company and East West Utah limited liability company, an affiliate of Streeterville, entered into a note purchase agreement, pursuant
to which the Company agreed to sell, and East West agreed to purchase, a secured promissory note in an aggregate original principal amount
of $8,385,000 (the &#8220;East West Note&#8221;) (the &#8220;East West Financing&#8221;). The East West Note carries an original issue
discount of $1,885,000. For as long as the East West funding conditions (as defined in the East West Note) are satisfied on each applicable
funding date (unless waived by East West), the proceeds from the East West Note will be funded in tranches in accordance with the following
schedule: (a) $2,000,000 on January 31, 2025, (b) $1,500,000 on April 30, 2025, (c) $1,500,000 on July 31, 2025, and (d) $1,500,000 on
September 30, 2025.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For each $1.00 in funds the
Company raises in the sale of any of its equity shares in a financing for the purpose of raising capital as part of any public offering
of its equity securities pursuant to a registration statement, at East West&#8217;s sole election, East West may reduce its next funding
obligation by $0.50. The East West Note will mature on the date that is 18 months from issuance of the initial tranche of funding thereunder.
For each $1.00 funded by lender under the East West Note, an additional $0.29 in original issue discount will be added to the outstanding
balance. It bears interest at 10% per annum, which will increase to 22% or the maximum permitted by applicable law upon the occurrence
of an event of default (as defined in the East West Note). In such an event, East West may declare the outstanding balance, multiplied
by 110%, immediately due. Upon a change of control, the balance, multiplied by 110%, will also become due.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Beginning on the date that
is the earlier of (i) thirteen months from the closing date of the Business Combination and (ii) January 1, 2026, East West shall have
the right to require the Company to redeem up to an aggregate of one sixth of the initial principal balance of the East West Note plus
any interest accrued thereunder each month (each monthly exercise, a &#8220;East West Monthly Redemption Amount&#8221;) by providing written
notice to the Company, provided however that if East West does not exercise the East West Monthly Redemption Amount in a corresponding
month, then such East West Monthly Redemption Amount shall be available for East West to redeem in any future month in addition to such
future month&#8217;s East West Monthly Redemption Amount.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the East
West Financing, Damon Motors Corporation, a Delaware corporation and a wholly-owned subsidiary of Damon (the &#8220;Damon Motors Subsidiary&#8221;),
and Damon Motors each entered into a guaranty, dated as of November 13, 2024, whereby Damon Motors and the Damon Motors Subsidiary guaranteed
the performance of the Company&#8217;s obligations under the East West Note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span>Additionally,
the Company&#8217;s obligations under the East West Note are secured. On November 13, 2024, prior to the closing of the Business Combination,
(a) Damon entered a security agreement with East West whereby Damon granted to East West a security interest in all right, title, interest,
claims and demands to its assets, and (b) Damon Motors entered into a security agreement with East West whereby Damon Motors granted to
East West a security interest in all right, title, interest, claims and demands to its assets, and (c) Damon Motors entered into an IP
security agreement with East West whereby Damon Motors granted to East West a security interest in certain of its intellectual property.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span>Braebeacon</span></p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span>On
November 13, 2024, the Company and Braebeacon Holdings Inc. (&#8220;BHI&#8221;) entered into a note purchase agreement (the &#8220;BHI
Note Purchase Agreement&#8221;) pursuant to which the Company agreed to sell, and BHI agreed to purchase, a secured promissory note in
an aggregate original principal amount of $8,385,000&#160;(the &#8220;BHI Note&#8221;) (the &#8220;BHI Financing&#8221;; together with
the East West Financing, the &#8220;November 2024 Debt Financing&#8221;). The BHI Note carries an original issue discount of $1,885,000.
For as long as the BHI funding conditions (as defined in the BHI Note) are satisfied on each applicable funding date (unless waived by
BHI, the proceeds from the BHI Note will be funded in tranches in accordance with the following schedule: (a) $2,000,000&#160;on January
31, 2025, (b) $1,500,000&#160;on April 30, 2025, (c) $1,500,000&#160;on July 31, 2025, and (d) $1,500,000&#160;on September 30, 2025.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span>Each
$1.00&#160;in funds the Company raises in the sale of any of its equity shares in a financing for the purpose of raising capital as part
of any public offering of its securities pursuant to a registration statement, at BHI&#8217;s sole election, BHI may reduce its next funding
obligation by $0.50. For each $1.00&#160;funded by Lender under the BHI Note, an additional $0.29&#160;in original issue discount will
be added to the outstanding balance. The BHI Note will mature on&#160;18&#160;months from issuance of the initial tranche of funding thereunder.
It bears interest at&#160;10% per annum, which will increase to&#160;22% or the maximum permitted by applicable law upon the occurrence
of an event of default (as defined in the BHI Note). In such an event, BHI may declare the outstanding balance, multiplied by 110%, immediately
due. Upon a change of control, the balance, multiplied by 110%, will also become due.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span>Beginning
on the date that is the earlier of (i) thirteen months from the closing date of the Business Combination and (ii) January 1, 2026, BHI
shall have the right to require the Company to redeem up to an aggregate of one sixth of the initial principal balance of the BHI Note
plus any interest accrued thereunder each month (each monthly exercise, a &#8220;BHI Monthly Redemption Amount&#8221;) by providing written
notice to the Company, provided however that if BHI does not exercise the BHI Monthly Redemption Amount in a corresponding month, then
such BHI Monthly Redemption Amount shall be available for BHI to redeem in any future month in addition to such future month&#8217;s BHI
Monthly Redemption Amount.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span>In
connection with the BHI Financing, the Damon Motors Subsidiary and Damon Motors, each entered into a guaranty, dated as of November 13,
2024, whereby Damon Motors and the Damon Motors Subsidiary guaranteed the performance of the Company&#8217;s obligations under the BHI
Note.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span>Additionally,
the Company&#8217;s obligations under the BHI Note are secured. On November 13, 2024, prior to the closing of the Business Combination,
(a) Damon entered a security agreement with BHI whereby Damon granted to BHI a security interest in all right, title, interest, claims
and demands to its assets, and (b) Damon Motors entered into a security agreement with BHI whereby Damon Motors granted to BHI a security
interest in all right, title, interest, claims and demands to its assets, and (c) Damon Motors entered into an IP security agreement with
BHI whereby Damon Motors granted to BHI a security interest in certain of its intellectual property.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span>Pursuant
to the Intercreditor Agreement, each of Streeterville, East West and BHI have agreed to rank pari passu in connection with the above noted
financing transactions.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>December 2024 Securities Purchase Agreement</i></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 20, 2024, we entered
into a Securities Purchase Agreement with Streeterville Capital, LLC. Under the agreement, the Company agreed to issue and sell to Streeterville
one or more pre-paid purchases at an aggregate purchase price of up to $10,000,000 for the purchase of the Company&#8217;s common shares.
As consideration for Streeterville&#8217;s commitment, the Company also agreed to issue 343,053 common shares to Streeterville.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each pre-paid purchase includes
an original issue discount of 7% and accrues interest at an annual rate of 8%. For the initial pre-paid purchase, which closed on December
20, 2024, Streeterville paid $2,000,000, creating in an initial principal balance of $2,140,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Securities
Purchase Agreement and a registration rights agreement entered into on the same date, the Company agreed to file a registration statement
on Form S-1 under the Securities Act, to register the resale of 18,000,000 common shares, including the Commitment Shares and common shares
issuable pursuant to the pre-paid purchases (the &#8220;Registration Statement&#8221;). If the Registration Statement is not declared
effective within 60 days of the Initial Closing Date, the outstanding balance of the pre-paid purchase will automatically increase by
2%, with further increases of 2% for each subsequent 30-day period that the Registration Statement remains ineffective. If the Registration
Statement is declared effective within 90 days of the Initial Closing Date and no default has occurred, and if requested by the Company,
Streeterville will fund $1,000,000 for a second pre-paid purchase.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Within a committed two-year
period, and subject to certain specified conditions, the Company may request the issuance of additional pre-paid purchases to Streeterville,
with each purchase amount no less than $250,000, provided that the total outstanding balance of all pre-paid purchases does not exceed
$3,000,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The proceeds from the pre-paid
purchases are expected to be used for working capital and other corporate purposes. However, $100,000 from the initial pre-paid purchase
funding, and 15% of the funding from subsequent pre-paid purchases, shall be used to repay the indebtedness under the secured promissory
note issued to Streeterville in June 2024 with an original principal amount of $6,470,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following the funding of each
pre-paid purchase, Streeterville has the right, but not the obligation, to purchase from the Company its common shares not exceeding (i)
the outstanding balance of the funded amount, and (ii) 9.99% beneficial ownership of the Company&#8217;s outstanding common shares. The
purchase price of the common shares will be the lower of (i) $1.50 or (ii) 90% of the lowest daily VWAP during the ten consecutive trading
days immediately prior to the purchase notice date, but not less than the floor price, which is equal to 20% of the &#8220;Minimum Price&#8221;
as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing. Under the Securities Purchase Agreement, the Company agrees
to seek shareholder approval for the issuance of common shares up to the Total Commitment Amount (the &#8220;Required Shareholder Approval&#8221;).
Until such approval is obtained, the Company will not request additional pre-paid purchases that may cause the total amount of common
shares issuable to exceed the limits set under Nasdaq Listing Rule 5635(d).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The outstanding pre-paid purchases,
unless reduced by the Company&#8217;s sale of common shares to Streeterville as described, will remain outstanding and may be repaid in
cash at the Company&#8217;s option. There is no maturity date for the outstanding balance of the pre-paid purchases. However, if the Company
fails to obtain the Required Shareholder Approval at its initial shareholder meeting, any remaining outstanding balance above the Exchange
Cap must be repaid in cash. Additionally, if certain triggering events occur, including (a) the VWAP of the Company&#8217;s common shares
falling below the floor price for at least five trading days within a seven-trading-day period, or (b) the Company having issued 75% of
the shares under the Exchange Cap, the Company must make monthly cash repayments of $350,000 in principal plus any accrued unpaid interest
until the outstanding balance is fully repaid or the triggering event conditions are resolved. In an event of default as specified in
the pre-paid purchase, Streeterville may accelerate repayment, requiring the outstanding balance to become immediately due, with a 10%
increase to the principal and interest accruing at a rate of 18% per annum.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Critical Accounting Estimates</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our financial statements are
prepared in accordance with U.S. Generally Accepted Accounting Principles. Our discussion and analysis of its financial condition and
operating results require us to make judgments, assumptions and estimates that affect the amounts reported. We base our estimates on historical
experience, current trends, and various other assumptions we believe to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and liabilities. We believe that the following accounting estimates
are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult,
subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Revenue Recognition</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company recognizes revenue
when control of the promised products or services is transferred to its customers, in an amount that reflects the consideration the Company
expects to be entitled to in exchange for those products or services. Our licenses are sold as perpetual or term licenses and the arrangements
may include maintenance services which are accounted for as separate performance obligations. In determining how revenue should be recognized,
a five-step process is used, which requires judgment and estimates within the revenue recognition process. The most critical judgements
required in applying ASC 606 <i>Revenue Recognition from Customers</i>, and our revenue recognition policy relate to the determination
of distinct performance obligations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">Revenue from licenses for on-premises software is recognized at a point in time when the software is made
available to the customer.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">Software as a service revenue is recognized over time over the service period using a time-based measure,
as the Company is providing continuous service and the customer simultaneously receives and consumes the benefits provided by the Company&#8217;s
performance as the services are performed.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We also consider whether an
arrangement has any discounts, material rights, or specified future upgrades that may represent additional performance obligations. Discounts
have not historically been significant, but we continue to monitor and evaluate these estimates based on historical experience, anticipated
performance, and our best judgment. Renewals or extensions of licenses are evaluated as distinct licenses (i.e., a distinct good or service),
and revenue attributed to the distinct service cannot be recognized until (1) the entity provides the distinct license (or makes the license
available) to the customer and (2) the customer is able to use and benefit from the distinct license. If any of these judgments were to
change it could cause a material increase or decrease in the amount of revenue we report in a particular period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Long-Lived Assets - Impairment Assessments</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Long-lived assets are grouped
for recognition and measurement of impairment at the lowest level for which identifiable cash flows are largely independent of the cash
flows of other assets. The impairment test for long-lived assets requires us to assess the recoverability of our long-lived assets by
comparing their net carrying value to the sum of undiscounted estimated future cash flows directly associated with and arising from our
use and eventual disposition of the assets. If the net carrying value of a group of long-lived assets exceeds the sum of related undiscounted
estimated future cash flows, we would be required to record an impairment charge equal to the excess, if any, of net carrying value over
fair value.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">When assessing the recoverability
of our long-lived assets, which include property and equipment, we make assumptions regarding estimated future cash flows and other factors.
Some of these assumptions involve a high degree of judgment and bear a significant impact on the assessment conclusions. Included among
these assumptions are estimating undiscounted future cash flows, including the projection of comparable sales, operating expenses, capital
requirements for maintaining property and equipment and residual value of asset groups. We formulate estimates from historical experience
and assumptions of future performance, based on business plans and forecasts, recent economic and business trends, and competitive conditions.
In the event that our estimates or related assumptions change in the future, we may be required to record an impairment charge.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We evaluate the remaining
useful lives of long-lived assets whenever events or circumstances indicate that a revision to the remaining period of amortization is
warranted. Such events or circumstances may include (but are not limited to): the effects of obsolescence, demand, competition, and/or
other economic factors including the stability of the industry in which we operate, known technological advances, legislative actions,
or changes in the regulatory environment. If the estimated remaining useful lives change, the remaining carrying amount of the long-lived
assets would be amortized prospectively over that revised remaining useful life. We have determined that there were no events or circumstances
during the years ended June 30, 2024, 2023 or 2022, which would indicate a revision to the remaining amortization period related to any
of our long-lived assets. Accordingly, we believe that the current estimated useful lives of long-lived assets reflect the period over
which they are expected to contribute to future cash flows and are therefore deemed appropriate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on its assessments,
the Company has not recorded any impairment of long-lived assets during the years ended June 30, 2024, 2023 and 2022 or the three months
ended September 30, 2024 and 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred Income Taxes</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In accordance with ASC 740
&#8220;Income Taxes&#8221; (&#8220;ASC 740&#8221;), management routinely evaluates the likelihood of the realization of its income tax
benefits and the recognition of its deferred tax assets. In evaluating the need for any valuation allowance, management will assess whether
it is more likely than not that some portion, or all, of the deferred tax asset may not be realized on a jurisdictional basis. Ultimately,
the realization of deferred tax assets is dependent upon the generation of future taxable income during those periods in which temporary
differences become deductible and/or tax credits and tax loss carry-forwards can be utilized. In performing its analyses, management considers
both positive and negative evidence including historical financial performance, previous earnings patterns, future earnings forecasts,
tax planning strategies, economic and business trends and the potential realization of net operating loss carry-forwards within a reasonable
timeframe. To this end, management considered (i) that we have had historical losses in the prior years and cannot anticipate generating
a sufficient level of future profits in order to realize the benefits of our deferred tax asset; (ii) tax planning strategies; and (iii)
the adequacy of future income as of June 30, 2024, June 30, 2023 and June 30, 2022, based upon certain economic conditions and historical
losses through June 30, 2024, June 30, 2023 and June 30, 2022. After consideration of these factors, management deemed it appropriate
to establish a full valuation allowance with respect to the deferred tax assets for the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A liability for &#8220;unrecognized
tax benefits&#8221; is recorded for any tax benefits claimed in the Company&#8217;s tax filings that do not meet these recognition and
measurement standards. As of June 30, 2024, June 30, 2023 and June 30, 2022, no liability for unrecognized tax benefits was required to
be reported. The guidance also discusses the classification of related interest and penalties on income taxes. The Company&#8217;s policy
is to record interest and penalties on uncertain tax positions as a component of income tax expense. No interest or penalties were recorded
during the years ended June 30, 2024, 2023 and 2022 or the three months ended September 30, 2024 and 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: left">RESULTS OF OPERATIONS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: left">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Three Months Ended September 30, 2024
compared to the Three Months Ended September 30, 2023</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
selected consolidated financial data as a percentage of our revenue and the percentage of period-over-period change:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">100</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">$</td><td style="text-align: right">(1,564,540</td><td style="text-align: left">)</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Revenues</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Revenues for the three months
ended September 30, 2024 were $101,969 compared to $97,908 for the comparable period in the prior year for an increase of $4,061, or approximately
4% and relatively flat over the two periods.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Gross Margin</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cost of revenues for the three
months ended September 30, 2024 were $39,647 compared to $23,805 for the comparable period in the prior year for an increase of $15,842
due to the higher revenues during the period and due to the revised terms of the technology licensing arrangement post the spin-off.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The gross profit margin for
the three months ended September 30, 2024 was 61% compared to 76% for the three months ended September 30, 2023. This lower margin in
the three months ended September 30, 2024 is due to the revised terms of the technology licensing arrangement post the spin-off.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Operating Expenses</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Operating expenses for the
three months ended September 30, 2024 were $1,482,768 and $77,795 for the comparable period ended September 30, 2023 for an increase of
$1,404,973 primarily due to $1,085,297 of accounting, legal and other costs of the pending business combination with Damon Motors, $129,535
provision for credit losses on the promissory note Damon Motors issued to the Company in June 2024 (the &#8220;Damon Motors Note Issued
to Damon&#8221;) and $169,701 of other professional fees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Other Income/(Expense)</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other income and expense for
the three months ended September 30, 2024 were $144,094 compared to $- for the comparable period in the prior year. The $144,094 increase
is due to the interest, debt discount and monitoring fee expense of the Streeterville Note that was entered into in June 2024 offset by
the interest income accrual from the Damon Motors Note Issued to Damon.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->70<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Year Ended June 30, 2024 compared
to the Year Ended June 30, 2023 and Year Ended June 30, 2023 compared to the Year Ended June 30, 2022</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
selected consolidated financial data as a percentage of our revenue and the percentage of period-over-period change:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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2024&#160;-&#160;2023</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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2023&#160;-&#160;2022</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">(73,828</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(63,867</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(1,265,215</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,714</td><td style="text-align: left">)%</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Revenues</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fiscal 2024 compared to Fiscal 2023</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Revenues for the year ended
June 30, 2024 were $336,562 compared to $391,848 for the comparable period in the prior year for a decrease of $55,286, or approximately
14%. This decrease is primarily attributable to budget cuts in the UK universities&#8217; customer bases and some delays in orders as
we transitioned from Inpixon to Grafiti.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fiscal 2023 compared to Fiscal 2022</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Revenues for the year ended
June 30, 2023 were $391,848 compared to $456,076 for the comparable period in the prior year for a decrease of $64,228, or approximately
14%. This decrease is primarily attributable to the loss of a sales manager during the year ended June 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Gross Margin</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fiscal 2024 compared to Fiscal 2023</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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ended June 30, 2024 were $82,084 compared to $95,220 for the comparable period in the prior year. This decrease in cost of revenues was
due to the lower sales in the fiscal year 2024 period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The gross profit margin for
the year ended June 30, 2024 was 76% which was consistent with the gross margin of the fiscal year ended June 30, 2023 of 76%.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fiscal 2023 compared to Fiscal 2022</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cost of revenues for the year
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The gross profit margin for
the year ended June 30, 2023 was 76% compared to 79% for the year ended June 30, 2022. This lower margin was primarily due to the lower
revenue during the year ended June 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Operating Expenses</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fiscal 2024 compared to Fiscal 2023</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Operating expenses for the
year ended June 30, 2024 were $1,593,521 and $370,456 for the comparable period ended June 30, 2023 for an increase of $1,223,065 which
was due to $280,789 of costs of the Damon transaction, $108,568 provision for credit losses and $627,478 of stock based compensation charges.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fiscal 2023 compared to Fiscal 2022</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Operating expenses for the
year ended June 30, 2023 were $370,456 and $424,444 for the comparable period ended June 30, 2022. This decrease of $53,988 was primarily
attributable to decreased rent due to the movement to a shared office space, decreased salaries due to the reduction in sales staff and
advertising in the year ended June 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Other Expense</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other expense for the year
ended June 30, 2024 was $9,314 and primarily consisted of interest expense on the Streeterville debt which was entered into in June 2024.
There was no other expense in the years ended June 30, 2023 and 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Non-GAAP Financial information</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">EBITDA and Adjusted EBITDA</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">EBITDA is defined as net income
(loss) before interest, provision for (benefit from) income taxes, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA
plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">EBITDA for the three months
ended September 30, 2024 was a loss of $1,420,193 compared to a loss of $3,476 for the prior year period. Adjusted EBITDA for the three
months ended September 30, 2024 was a loss of $334,896 compared to a loss of $3,476 for the prior year period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table presents
a reconciliation of net loss attributable to shareholders of the Company, which is our GAAP operating performance measure, to EBITDA and
Adjusted EBITDA for the three months ended September 30, 2024 and 2023:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(3,476</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,085,297</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(334,896</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(3,476</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">EBITDA for the year ended
June 30, 2024 was a loss of $1,338,348 compared to a loss of $72,582 for the year ended June 30, 2023. Adjusted EBITDA for the year ended
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table presents
a reconciliation of the net loss of Grafiti Holding, which is our GAAP operating performance measure, to EBITDA and Adjusted EBITDA for
the years ended June 30, 2024, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: justify">Net loss attributable to common shareholders</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,348,357</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(73,828</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(63,867</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; padding-left: 9.25pt">Interest expense, net</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">9,314</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 9.25pt">Depreciation and amortization</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">EBITDA</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,338,348</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(72,582</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(62,548</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-style: italic; text-align: justify">Adjusted for:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">Non-recurring one-time charges:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-left: 9.25pt">Acquisition transaction/financing costs</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">280,789</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">627,478</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-bottom: 4pt">Adjusted EBITDA</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(430,081</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(72,582</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(62,548</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We rely on EBITDA and Adjusted
EBITDA, which are non-GAAP financial measures for the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">To review and assess the operating performance of our Company as permitted by ASC Topic 280, Segment Reporting;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">To compare our current operating results with corresponding periods and with the operating results of
other companies in our industry;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">As a basis for allocating resources to various projects;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">As a measure to evaluate potential economic outcomes of acquisitions, operational alternatives and strategic
decisions; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">To evaluate internally the performance of our personnel.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have presented EBITDA and
Adjusted EBITDA above because we believe they convey useful information to investors regarding our operating results. We believe they
provide an additional way for investors to view our operations, when considered with both our GAAP results and the reconciliation to net
income (loss). By including this information, we can provide investors with a more complete understanding of our business. Specifically,
we present EBITDA and Adjusted EBITDA as supplemental disclosure because of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">We believe EBITDA and Adjusted EBITDA are useful tools for investors to assess the operating performance
of our business without the effect of interest, income taxes, depreciation and amortization.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">We believe that it is useful to provide to investors with standard operating metrics used by management
to evaluate our operating performance; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">We believe that the use of EBITDA and Adjusted EBITDA is helpful to compare our results to other companies.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Even though we believe EBITDA
and Adjusted EBITDA are useful for investors, they have limitations as an analytical tool. Thus, we strongly urge investors not to consider
this metric in isolation or as a substitute for net income (loss) or consolidated statement of operations data prepared in accordance
with GAAP. Some of these limitations include the fact that:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">Neither EBITDA nor Adjusted EBITDA reflects our cash expenditures or future requirements for capital expenditures
or contractual commitments;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->73<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">Neither EBITDA nor Adjusted EBITDA reflects changes in, or cash requirements for, our working capital
needs;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized
will often have to be replaced in the future, and neither EBITDA nor Adjusted EBITDA reflects any cash requirements for such replacements;
and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">Neither EBITDA nor Adjusted EBITDA reflects income or other taxes or the cash requirements to make any
tax payments</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because of these limitations,
neither EBITDA nor Adjusted EBITDA should be considered a measure of discretionary cash available to us to invest in the growth of our
business or as a measure of performance in compliance with GAAP. We compensate for these limitations by relying primarily on our GAAP
results and providing EBITDA and Adjusted EBITDA only as supplemental information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Liquidity and Capital Resources as of September 30, 2024</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current capital resources
and operating results as of and for the three months ended September 30, 2024, consist of:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">an overall working capital surplus of $12,374;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">cash of $175,292;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">net cash used in operating activities for the three months ended September 30, 2024 of $799,535.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The breakdown of our overall
working capital surplus is as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; border-bottom: Black 1.5pt solid">Working Capital</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%">Cash</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">175,292</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">175,292</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Accounts receivable, net / accounts payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">55,865</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">972,125</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(916,260</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Notes receivable net of allowance for credit losses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">907,897</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">907,897</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Accrued liabilities</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For further discussion on
the Company&#8217;s liquidity and ability to continue as a going concern, please see the discussion under Financial Obligations and Requirements
below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-style: normal">Contractual
Obligations and Commitments</span></p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Contractual obligations are
cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. Our contractual obligations
consist of an operating lease. As of September 30, 2024, the total obligation for operating leases was $2,520, which is expected to be
paid in the next twelve months.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Financial Obligations and Requirements</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in operating
activities during the three months ended September 30, 2024 of $799,535 consists of a net loss of $1,564,540 offset by non-cash adjustments
of approximately $273,882 plus net cash changes in operating assets and liabilities of approximately $491,123. As the Company was part
of Inpixon group of companies prior to December 27, 2023, the Company was dependent upon Inpixon for all of its working capital and financing
requirements as Inpixon uses a centralized approach to cash management and financing of its operations. This arrangement is not reflective
of the way the Company would have financed its operations had the Company been a standalone public company during the periods presented.
Prior to December 27, 2023, financial transactions relating to the Company are accounted for through Shareholders&#8217; Equity. As a
result of the spin-off of the Company from Inpixon, the Company no longer participates in Parent&#8217;s corporate-wide cash management
and financing approach, and therefore the Company&#8217;s ability to fund operating needs will depend on the Company&#8217;s ability to
generate positive cash flows from operations, and on the Company&#8217;s ability to obtain debt financing on acceptable terms or to issue
additional equity or equity-linked securities as needed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 81; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->74<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Management&#8217;s plans to
address the uncertainty that the Company will continue as a going concern include the business combination that occurred on November 13,
2024 as described above as well as obtaining associated debt and equity financing. On November 13, 2024, the Company secured a commitment
for additional financing in the aggregate amount of $13,000,000 under the November 2024 Debt Financing, and on November 20, 2024 the remaining
$3,150,000 of the funds placed in escrow under the Streeterville Note were released to the Company, which has increased the Company&#8217;s
available source of funding and, accordingly, it is expected that the Company will have sufficient working capital and available funds
to continue operations for at least twelve months following the date of this filing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Liquidity and Capital Resources as
of September 30, 2024 Compared with September 30, 2023</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company&#8217;s net cash
flows used in and provided by operating, investing and financing activities for the three months ended September 30, 2024 and 2023 and
certain balances as of the end of those periods are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(799,535</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(596,000</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Cash flows from Operating Activities
for the three months ended September 30, 2024</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in operating
activities during the three months ended September 30, 2024 was approximately $799,535. The cash flows related to the three months ended
September 30, 2024 consisted of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: justify">Net loss</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,564,540</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The non-cash income and expense
of $273,882 consisted primarily of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The net change in operating
assets and liabilities aggregated $491,123 and consisted primarily of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="vertical-align: bottom">
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: right">(9,058</td>
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  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: right">(1,288</td>
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    <td style="padding-bottom: 1.5pt; font-size: 10pt; text-align: justify">Decrease in deferred revenue</td></tr>
  <tr style="vertical-align: bottom">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Cash flows from Operating Activities
for the three months ended September 30, 2023</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash provided by operating
activities during three months ended September 30, 2023 was $57,285. The cash flows related to the three months ended September 30, 2023
consisted of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: justify">Net loss</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The non-cash income and expense
of $216 consisted primarily of depreciation and amortization expenses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The net change in operating
assets and liabilities aggregated approximately $60,761 and consisted primarily of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">&#160;</td><td style="text-align: right">(149</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">&#160;</td><td style="text-align: right">958</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Cash Flows from Investing Activities
for the three months ended September 30, 2024 and 2023</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash flows used in investing
activities during the three months ended September 30, 2024 was $596,000 for a loan to Damon Motors. There were no net cash flows provided
by or used in investing activities during the three months ended September 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Cash Flows from Financing Activities
for the three months ended September 30, 2024 and 2023</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash flows provided by
financing activities during the three months ended September 30, 2024 was $414,335 which includes $350,000 of proceeds from a note payable
and $64,335 of cash received from the exercise of stock options. Net cash flows provided by financing activities during the three months
ended September 30, 2023 was $32,193 from an investment by Inpixon.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Liquidity and Capital Resources as
of June 30, 2024 Compared With June 30, 2023 and June 30, 2022</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt 0; text-align: justify">The Company&#8217;s net cash flows used in operating,
investing and financing activities for the years ended June 30, 2024, 2023 and 2022 and certain balances as of the end of those periods
are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: justify">Net cash used in operating activities</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(129,551</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(75,616</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(154,813</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">Net cash used in investing activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(552,871</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Net cash provided by financing activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,567,330</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">166,471</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">177,053</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(248</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(16,541</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-bottom: 4pt">Net increase in cash</td><td style="padding-bottom: 4pt">&#160;</td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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June 30,<br/> 2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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 June 30,<br/> 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: justify; padding-bottom: 4pt">Cash</td><td style="width: 1%; padding-bottom: 4pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,050,245</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Operating Activities for the year
ended June 30, 2024</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">Net cash used in operating activities during the
year ended June 30, 2024 was $129,551. The cash flows related to the year ended June 30, 2024 consisted of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: justify">Net loss</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,348,357</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(129,551</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">The non-cash income and expense of $740,563 consisted
primarily of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">695</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,941</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,620</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">&#160;</td><td style="text-align: right">(548</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">&#160;</td><td style="text-align: right">(5,492</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">The net cash for the change in operating assets
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">&#160;</td><td style="text-align: right">(68,496</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Operating Activities for the year
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">Net cash used in operating activities during the
years ended June 30, 2023 was approximately $75,616. The cash flows related to the year ended June 30, 2023 consisted of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; padding-bottom: 4pt">Net cash used in operating activities</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(75,616</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">The net cash for the change in operating assets
and liabilities aggregated $3,034 and consisted primarily of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,625</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">&#160;</td><td style="text-align: right">31,607</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Operating Activities for the year
ended June 30, 2022</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">Net cash used in operating activities during the
years ended June 30, 2022 was $154,813. The cash flows related to the year ended June 30, 2022 consisted of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: justify">Net loss</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(63,867</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(154,813</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">The non-cash income and expense of $9,495 consisted
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">The net cash for the change in operating assets
and liabilities aggregated $100,441 and consisted primarily of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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    <td style="text-align: justify">Decrease in prepaid expenses, other current assets and other assets</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,379</td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(18,368</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">&#160;</td><td style="text-align: right">(8,259</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: justify">Decrease in operating lease liabilities</td></tr>
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    <td style="text-align: justify; padding-bottom: 1.5pt">Decrease in deferred revenue</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(100,441</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Investing Activities as of June
30, 2024, 2023, and 2022</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">Net cash flows used in investing activities during
the year ended June 30, 2024 was $552,871 which consisted of a loan to Damon for $550,000 and an investment in property and equipment
of $2,871. There were no cash flows from investing activities during the years ended June 30, 2023 and 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><span style="text-decoration:underline">Cash Flows from Financing Activities
as of June 30, 2024, 2023 and 2022</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">Net cash flows provided by financing activities
during the year ended June 30, 2024 was $1,567,330 which consisted of proceeds from a note payable of $1,500,000 and $67,330 from an investment
by Inpixon. Net cash flows provided by financing activities during the years ended June 30, 2023 and 2022 were $166,471 and 177,053, respectively,
which were investments by Inpixon.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Off-Balance Sheet Arrangements</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not have any off-balance
sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange
traded contracts.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Recently Issued Accounting Standards</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For a discussion of recently
issued accounting pronouncements, please see Note 3 to the Company&#8217;s condensed consolidated financial statements as of September
30, 2024, which are included in this prospectus beginning on page F-92.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_015"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="text-transform: uppercase"><b>Management&#8217;s
Discussion and Analysis of Financial Condition<br/>
and Results of Operations OF DaMON MOTORS</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>The following discussion
and analysis of the financial condition and results of operations of Damon Motors should be read in conjunction with the accompanying
interim unaudited condensed consolidated financial statements of Damon Motors as of September 30, 2024, consolidated financial statements
of Damon Motors for the fiscal years ended June 30, 2024, 2023 and 2022, and related notes included elsewhere in this prospectus. Some
of the information contained in this discussion and analysis or set forth elsewhere, including information with respect to its plans and
strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions.
You should read the &#8220;Cautionary Statement Regarding Forward-Looking Statements&#8221; and &#8220;Risk Factors&#8221; for a discussion
of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Unless otherwise indicated
herein, the following management&#8217;s discussion and analysis (the &#8220;MD&amp;A&#8221;) provides information concerning the consolidated
financial condition and results of operations of Damon Motors and its subsidiaries prior to the Closing of Business Combination.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>All references to &#8220;Fiscal
2025&#8221; are to Damon Motors&#8217;s fiscal year ending June 30, 2025. &#8220;Fiscal 2024,&#8221; &#8220;Fiscal 2023&#8221; and &#8220;Fiscal
2022&#8221; are to Damon Motors&#8217;s fiscal years ended June 30, 2024, 2023 and 2022, respectively. &#8220;Q1 2025&#8221; refers to
three months period ended September 30, 2024 and &#8220;Q1 2024&#8221; refers to three months period ended September 30, 2023.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Overview of business and recent events</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Overview of Damon Motors&#8217;s Business
and the Business Combination</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors is a motorcycle
manufacturing company aiming to building a smart and technologically advanced motorcycle with zero emissions while still maintain performance
and safety while also incorporating connectivity and artificial intelligence.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Founded in 2017, Damon Motors
started reimagining the future of motorcycling by means of advanced safety design, electric vehicle powertrain technology and user experience.
In 2019, Damon Motors took its first alpha prototype motorcycles and safety systems into the field to test the concept. In 2021, Damon
Motors expanded its operations and expertise with an R&amp;D facility in San Rafael, California to accelerate the engineering and development
of its HyperDrive platform drive unit and the HyperSport motorcycle. Through core technology advancements, Damon Motors electric motorcycles
are in prototype phase of product validation. Damon Motors does not expect any material changes to its business will occur during the
current financial period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See the &#8220;Recent Events&#8221;
section in &#8220;<i>Management&#8217;s Discussion and Analysis of the Financial Condition and Results of Operations of Damon (formerly
Grafiti Holding)</i>&#8221; for information regarding the completion of the Business Combination and related financing and other transactions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Amendment agreement with Joseph Gunnar</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 28, 2024, Damon Motors entered into an amendment to the letter
of agreement amending certain terms in the original engagement agreement dated September 25, 2023. In the amended agreement, in lieu of
the compensation described in Section 3 of the original agreement, Peikin, as assignee of Joseph Gunnar, shall receive from the company
a one-time fee of $1,000,000 in cash due and payable on the thirteen (13) month anniversary of the closing (the &#8220;Closing&#8221;)
of the reverse merger; and the company shall also issue to Peikin, as assignee of Joseph Gunnar, the following amounts, any of which may
be paid in securities (i.e., common stock of the post-merger Damon public company), with each issuance further made pursuant to a resale
registration statement to be filed within (10) days of each payment date based on the payment schedule below:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0%"/>
    <td style="font-size: 10pt; width: 0.5in">(a)</td>
    <td style="font-size: 10pt; text-align: justify">$600,000 on the 90-day anniversary of the Closing;</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0%"/>
    <td style="font-size: 10pt; width: 0.5in">(b)</td>
    <td style="font-size: 10pt; text-align: justify">$400,000 on the 180-day anniversary of the Closing; and</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0%"/>
    <td style="font-size: 10pt; width: 0.5in">(c)</td>
    <td style="font-size: 10pt; text-align: justify">$300,000 on the 270-day anniversary of the Closing.</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 87; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The total of $2,300,000, of
which up to $1,300,000 may potentially be paid in securities as set forth above to Peikin shall fully satisfy all obligations of the company
to Joseph Gunnar, which obligations Joseph Gunnar has assigned to Peikin. The number of shares to calculate the USD value on each of the
three (3) issuances shall be calculated based on the Nasdaq Market Price, which is the lower of the consolidated closing bid price for
the business day immediately preceding each date that any one (1) of the three (3) issuances are due and payable OR the average of the
consolidated closing bid price of the post-merger Damon public company&#8217;s common stock for the five (5) trading days immediately
preceding each date that any one (1) of the three (3) issuances are due and payable. Joseph Gunnar and Peikin, each respectively, and
collectively, reserve all rights with respect to compensation described in Section 3 of the original agreement if any one or more of such issuances/remittances
are not timely made.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Financing </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From July 1, 2024 to September
30, 2024, Damon Motors raised the following funds to finance Damon Motors&#8217;s operation :</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">issuance of $555,000 convertible promissory notes and 202,820
common share purchase warrants to arms-length parties.</td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">issuance of additional $596,000 senior secured promissory
note bringing the total aggregate principal amount owing of $1,146,000.</td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">issuance of two tranches of promissory note to arms-length
parties with principal amount of $729,299 (CAD$1,000,000) secured against future Canadian Scientific Research &amp; Development (&#8220;SR&amp;ED&#8221;)
tax credit refund.</td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From October 1, 2024 to reporting
date, Damon Motors continue to raise funds to finance Damon Motors&#8217;s operation as follows :</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">on October 8, 2024, Damon Motors issued $500,000 convertible
promissory notes and 182,721 common share purchase warrants to arms-length parties.</td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">on October 9, 2024, Damon Motors issued promissory note to
arms-length parties and received proceeds of $200,000, which is net of set-up fee of $12,500. The note accrues interest at a rate of
12% per annum.</td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">on October 18, 2024, Damon Motors issued $50,000 convertible
promissory notes and 18,272 common share purchase warrants to arms-length parties.</td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For details of the financing
above, see the section entitled &#8220;Liquidity and Capital Resources&#8221; below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Amendments to convertible promissory notes</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On September 11, 2024, Damon
Motors and the convertible promissory notes holders entered into a Letter of Agreement amending the maturity of the convertible promissory
notes, from September 30, 2024 to mature on October 31, 2024, subject to an additional tolling period of 30 days at the election of Damon
Motors upon notice by Damon Motors to the note holders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>SR&amp;ED tax credit refund</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 4, 2024, Damon
Motors received the Notice of Assessment for 2024 SR&amp;ED tax credit refund amount of $1,004,022 (CAD$1,355,329) from CRA and the tax
credit refund was received in full on October 16, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 88; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->81<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Conversion of Simple Agreements for Future
Equity (SAFEs)</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 1, 2024, the SAFEs
issued and outstanding (see Note 11 of Damon Motors&#8217;s consolidated financial statements of Damon Motors for the fiscal years ended
June 30, 2024, 2023 and 2022) matured and were converted to 1,437,002 Damon Motors common shares the per the terms of the agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Amendment to the Surrender of Lease Agreement</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 1, 2024, Damon
Motors and the lessor to a facility in Surrey, British Columbia, signed an amendment to the Surrender of Lease Agreement whereby the lessor
hereby agrees to a waiver of breach by Damon Motors of its payment obligations in subsection 3.1(e), (f) and (g) of the Surrender of Lease
Agreement by the Tenant. In addition, the subsections (e), (f) and (g) of Section 3.1 of the Surrender of Lease Agreement are deleted
in their entirety and replaced, whereby Damon Motors agrees to pay the lessor:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">(e)</td><td style="text-align: justify">the amount in Canadian dollars $108,333.33 on or before the
date that is thirty (30) days following the completion of the Business Combination;</td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">(f)</td><td style="text-align: justify">the amount in Canadian dollars of $108,333.33 on or before
the date that is sixty (60) days following the completion of the Business Combination;</td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">(g)</td><td style="text-align: justify">the amount in Canadian dollars of $108,333.33 on or before
the date that is ninety (90) days following the completion of the Business Combination.</td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Amendments to Wilson Sonsini Goodrich &amp;
Rosati Professional Corporation (&#8220;WSGR&#8221;) promissory notes</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 11, 2024, Damon
Motors signed another amendment to the promissory note agreement with WSGR to modify the due date of October 31, 2024 to December 15,
2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Critical Accounting Estimates</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The condensed interim unaudited
consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles. In connection with the
preparation of the financial statements, we are required to make assumptions and estimates about future events and apply judgments that
affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates
and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated
financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure
that our consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their
effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could
be material.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that the following
accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require
our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently
uncertain. There have been no changes to estimates during the periods presented in the filing. Historically changes in management estimates
have not been material.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There have been no significant
changes to our critical accounting policies and estimates from the information included in Note 3 of Damon Motors&#8217;s consolidated
financial statements of Damon Motors for the fiscal years ended June 30, 2024, 2023 and 2022.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Components of Results of Operations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Revenues</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To date, Damon Motors is a
pre-revenue company that has only been taking reservations for its motorcycles and has not delivered any to customers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 89; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->82<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Research and Development, net</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors&#8217;s research
and development, net include compensation, employee benefits, and stock-based compensation for technology developers and product management
employees as well as fees paid to outside contractors and consultants, purchase of lab supplies to build prototype motorcycles, subscriptions
and dues, travel, meals and entertainment and rent and insurance allocated. Damon Motors is eligible for government grant and claim tax
credits and accounts for these government grant and tax credits as a reduction to research and development expenses and will recognize
these claims when it is probable that the expense incurred qualify for the government grant claim and that Damon Motors has complied with
all the conditions to realize the claim. Otherwise, the recognition of government grant claim and tax credits would be deferred until
the recognition criteria are satisfied.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>General and Administrative</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">General and administrative
include compensation, employee benefits, and stock-based compensation for executive management, finance administration and human resources,
fees paid to outside contractors and consultants, professional fees, subscriptions and dues, travel, meals and entertainment, rent and
insurance allocated, and other general expenses. Damon Motors expects its cash-based administrative expenses to increase for the foreseeable
future as Damon Motors increases headcount to support the growth of its business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Sales and Marketing</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sales and marketing consist
of compensation, employee benefits and stock-based compensation of sales and marketing employees, fees paid to outside contractors and
consultants, rent and insurance allocated as well as marketing and promotion expenses, travel, trade show sponsorships and events. Costs
associated with Damon Motors&#8217;s advertising are expensed as incurred and are included in sales and marketing expenses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Depreciation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Depreciation represents the
estimated reduction in value of Damon Motors&#8217;s fixed assets within a fiscal year and are calculated using the straight-line method
over the lease term for right-of-use assets and the estimated useful lives of the assets other than right-of-use assets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Changes in Fair Value of Financial Liabilities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Changes in Fair Value of Financial
Liabilities represent the movement in the fair value for SAFE, convertible notes and warrants at each balance sheet date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Finance Expense</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Finance expense consists primarily
of interest paid on Damon Motors&#8217;s outstanding debts, convertible notes, promissory notes and on a Scientific Research and Experimental
Development (&#8220;SR&amp;ED&#8221;) facility draw down, interest on lease liabilities, as well as financing fee paid to private bankers
to help raise fund.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Foreign Exchange (Gain) Loss</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Foreign exchange gains and
losses represent the gains and losses on instruments such as cash balances, accounts receivable, accounts payable, debt balances and other
accounts that are denominated in foreign currencies to the functional currencies of the related Damon Motors entities, as a result of
changes in foreign currency rates. Damon Motors does not hedge foreign currency exchange.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 90; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->83<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Results of Operations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Comparison of Quarterly Results</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors&#8217;s results
of operations for the periods ended September 30, 2024 and 2023 are presented below:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">3 months ended <br/> September 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Expenses</td><td>&#160;</td>
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    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">790,027</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">174,166</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">376,312</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(54</td><td style="text-align: left">)%</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9.25pt">Depreciation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">67,248</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">80,138</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(12,890</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">748,541</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">458,232</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">1,899,941</td><td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">4,657,388</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">827,304</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,830,084</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">463</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,512,234</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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September 30,</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">11,792</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">147,355</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">8,054</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the three months ended
September 30, 2024, the research and development, net amounted to $0.1 mil compared to $1.9 mil for the three months ended September 30,
2023 primarily due to recognition of FY2024 Canadian Scientific Research &amp; Development tax credit (&#8220;SR&amp;ED &#8220;) receivable
of $1.0 mil in three months ended September 30, 2024 compared to $nil in the three months ended September 30, 2023 and reduced research
and development activities as Damon Motors managed its cashflow and spend on key operational items as analyzed below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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September 30, 2024, salaries and wages decreased from $1.4 mil for the three months ended September 30, 2023, to $0.9 mil mainly due to
decrease in headcount, from 39 as of June 30, 2023, to 18 by June 30, 2024 and further reduced to 17 by September 30, 2024. Similarly,
the lab supplies and materials decreased from $0.1 mil for the three months ended September 30, 2023 to just $0.03 mil for the three months
ended September 30, 2024 as development activities in 2025 were reduced significantly as the development of motorcycle models were mostly
completed largely in 2023 and tight cashflow. Stock-based compensation decreased from $0.1 mil for the three months ended September 30,
2023, to $0.01 mil in line with decrease in headcount, expiry of unexercised stock options and cancelation of unvested stock options for
terminated employees. The decrease in rent and insurance from $0.2 mil for the three months ended September 30, 2023 to $0.1 mil for the
three months ended September 30, 2024 is mainly due to surrender of 708 Powell lease effective April 26, 2024. Overall decrease in general
expenses and others were in line with Damon Motors managing costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">289,419</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">401,477</td><td style="width: 1%; text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">190,947</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">260,948</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">103,806</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">154,521</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,285</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">69,121</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">73,832</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">120,504</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">Subscriptions and dues</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">53,734</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">77,607</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">General expenses and others</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">77,004</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">65,857</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">790,027</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">General and administrative
decreased to $0.8mil for the three months ended September 30, 2024 compared to $1.1 mil for the three months ended September 30, 2023,
mainly due to management controlling its operating cost due to challenges with fund raising.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Salaries and wages for the
three months ended September 30, 2024, of $0.3 mil is lower compared to $0.4 mil for the three months ended September 30, 2023, principally
due to decrease in headcount from 10 as of June 30, 2023, to 5 as of June 30, 2024 and further reduced to 4 as of September 30, 2024.
Contractors and consultants fees paid to external parties decreased from $0.3 mil for the three months ended September 30, 2023 to $0.2
mil for the three months ended September 30, 2024 as Damon Motors further reduce engagement of contractors and consultants due to tight
cashflow. Professional fees decreased from $0.2 mil for the three months ended September 30, 2023, to $0.1 mil for the three months ended
September 30, 2024, due to decrease in professional fees related to financing and decrease in intellectual property filing and patent
registration. The decrease in professional fees related to financing is due to Damon Motors raising funds in Q1 2025 mainly through non-brokered
financing compared to largely brokered financing in Q1 2024. Stock-based compensation decreased from $0.1 mil for the three months ended
September 30, 2023, compared to almost nil for the three months ended September 30, 2024 in line with decrease in headcount and expiry
of unexercised stock options and cancelation of unvested stock options for terminated employees.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Sales and Marketing</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">108,567</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,218</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the three months ended
September 30, 2024, sales and marketing decreased from $0.4 mil for the three months ended September 30, 2023, to $0.2 mil. The decrease
was primarily due to Damon Motors reducing the marketing team activity due to a delay in production and Damon Motors continues to manage
its cash flows.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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reduced from $0.2 mil for the three months ended September 30, 2023 compared to $0.04 mil for the three months ended September 30, 2024
as Damon Motors limited the spend on promotion activities, sponsorship, advertisement, public relation consultancy costs due to the limited
cashflow.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Depreciation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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September 30, 2024, depreciation remained flat compared to the three months ended September 30, 2023 as there was no asset addition for
the three months ended September 30, 2024 and some assets were fully depreciated.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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September 30, 2024, transaction costs increased from $0.5 mil for the three months ended September 30, 2023, to $0.7 mil due to higher
legal, professional and consulting fees related to business combination closing with XTI Aerospace and public listing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Changes in Fair Value of Financial Liabilities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Changes in the fair value
of financial liabilities includes the following amounts for the three months ended September 30, 2024 and 2023:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">3 months ended <br/> September 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>Changes in Fair Value of:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
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    <td style="width: 76%; padding-left: 18.25pt">SAFEs</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Changes in the fair value
of $4.7 mil for the three months ended September 30, 2024, compared to $0.9 mil for the three months ended September 30, 2023, related
to changes in fair value of SAFEs, convertible promissory notes and common share purchase warrants issued. No changes in fair value for
SAFEs and warrants for three months ended September 30, 2024 due to conversion of SAFEs to common shares on maturity during the period
and absent of liability-classified warrants as of September 30, 2024 as all warrants are equity-classified.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The increase in fair value
for the three months ended September 30, 2024 attributed mainly to more financial instruments issued to finance Damon Motors&#8217;s
operation and the increase in the market price of Damon Motors equity as compared to the previous valuations.</p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Finance Expense</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Finance expense includes the
following amount for the three months ended September 30, 2024 and 2023:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">3 months ended <br/> September 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">43,085</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">315,962</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Interest on debt</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">70,526</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">69,546</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Interest on convertible notes</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">738,995</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">377,153</td><td style="text-align: left">&#160;</td></tr>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,240</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,492</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Finance expense increased
marginally from $0.8 mil for the three months ended September 30, 2023, to $0.9 mil for the three months ended September 30, 2024 primarily
due to Damon Motors relying more on debt to finance its operations. For the three months ended September 30, 2024, interest expense on
convertible notes increased from $0.4 mil for the three months ended September 30, 2023 compared to $0.7 mil for the three months ended
September 30, 2024 as more convertible promissory notes continued to be issued in Fiscal 2024 and Q1 2025 to finance Damon Motors&#8217;s
operation. The increase in partially off-set by decrease financing fees which decreased from $0.4 mil for the three months ended September
30, 2023 to $0.04 mil for the three months ended September 30, 2024 as the convertible notes issued in Q1 2025 are mainly non-brokered.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Net Loss</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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30, 2024, the net loss increased from $5.4 mil for the period ended June 30, 2023 to $7.4 mil. The increase in net loss was largely due
to increase in the fair value of financial liabilities of $3.8 mil, higher finance expenses of $0.1 mil as Damon Motors continued to issue
financial instruments to finance its operation, partially off-set by recognition of FY2024 Canadian Scientific Research &amp; Development
tax credit (&#8220;SR&amp;ED&#8221;) of $1.0 mil and decrease in operating expenses by $0.9 mil as Damon Motors manages its cashflow and
re-direct spending on key operational items.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Comparison of Annual Results</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors&#8217;s
results of operations for the year ended June 30, 2024, 2023 and 2022 are presented below:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold">&#160;</td>
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    <td style="padding-left: 0.125in; text-align: center">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">549,305</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,135,769</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">53,673</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,655,903</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,303,706</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -7.1pt; padding-left: 8.85pt">Rent and insurance</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">726,438</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,430,985</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">532,065</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">54,919</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -7.1pt; padding-left: 8.85pt">Subscriptions and dues</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">52,891</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">335,762</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">44,168</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">163,282</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">444,652</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,102,708</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(570,291</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -7.1pt; padding-left: 8.85pt">Industrial Research Assistance Program grant funding</td><td style="border-bottom: Black 1.5pt solid">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(102,825</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="border-bottom: Black 1.5pt solid">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(56,879</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
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    <td style="padding-bottom: 1.5pt; padding-left: 5.4pt">&#160;</td><td style="font-weight: bold; border-bottom: Black 1.5pt solid">&#160;</td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><sup>&#160;</sup></p><div>

</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 21.25pt"><sup>(1)</sup></td><td style="text-align: justify">The Canadian Scientific Research &amp; Development (&#8220;SR&amp;ED&#8221;) tax credits are accounted
as a reduction to the research and development costs above and is made up of 2022 SR&amp;ED tax credit refund of $1,036,952 (Note 7 &#8211;
CAD$1,403,514) and 2023 SR&amp;ED tax credit refund of $1,065,756 (CAD$1,461,087), both of which were received in the three months period
ended December 31, 2023</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Page; Sequence: 94; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->87<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2024 compared to Fiscal 2023</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">For the year
ended June 30, 2024, the research and development, net amounted to $4.6 mil compared to $17.5 mil for the year ended June 30, 2023.
The decrease was primarily due to reduced R&amp;D activities as Damon Motors managed its cashflow and spend on key operational items
as analyzed below and recognition of Canadian Scientific Research &amp; Development tax credit (&#8220;SR&amp;ED &#8220;) of $2.1
mil received in year ended June 30, 2024 compared to $nil received in year ended June 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended June 30, 2024, salaries and wages decreased from
$8.4 mil for the year ended June 30, 2023, to $5.1 mil mainly due to decrease in headcount, from 39 as of June 30, 2023, to 18 by June
30, 2024. Similarly, the lab supplies and materials decreased from $5.1 mil for the year ended June 30, 2023 to just $0.5 mil for the
year ended June 30, 2024 as development activities in 2024 were reduced significantly as the development of motorcycle models were mostly
completed largely in 2022 and 2023. The fees paid to outside contractors and consultants decreased from $1.1 mil for the year ended June
30, 2023 compared $0.05 mil for the year ended June 30, 2024 with development and testing work being carried out by Damon Motors employees
instead of out-sourcing to third party. Stock-based compensation decreased from $0.8 mil for the year ended June 30, 2023, to $0.1 mil
in line with decrease in headcount, expiry of unexercised stock options for terminated employees and no new stock options granted for
the year ended June 30, 2024 compared to the year ended June 30, 2023. The decrease in rent and insurance from $1.4 mil for the year ended
June 30, 2023 to $0.7 mil for the year ended June 30, 2024 is mainly due to the surrender of Surrey manufacturing facility lease effective
June 30, 2023. Overall decrease in travel, meals and entertainment, subscriptions and dues, and general and other expenses were in line
with Damon Motors&#8217;s managing costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2023 compared to Fiscal 2022</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended June 30,
2023, the research and development, net amounted to $17.5 mil, compared to $18.2 mil for the year ended June 30, 2022. The decrease was
due to scaling down of R&amp;D activities in the second half of 2023 due to tight cash position as explained below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended June 30, 2023, salaries and wages increased from
$7.4 mil for the year ended June 30, 2022 to $8.4 mil for the year ended June 30, 2023 mainly due to higher headcount in the first half
of the Fiscal 2023 and severance payment made to terminated employees. With development of HyperDrive and HyperSport, the research and
development team headcount continued to increase from 78 as of June 30, 2022, peaking at 85 team members in August 2022 but dwindling
down to 39 by June 30, 2023 as Damon Motors under-go two rounds of headcount reduction in February and April 2023. Stock-based compensation
decreased from $1.3 mil for the year ended June 30, 2023 to $0.8 mil for the year ended June 30, 2022 as stock options granted to the
R&amp;D team during the year were more than off-set by forfeiture or cancellation of unexercised stock options for terminated employees.
The fees paid to outside contractors and consultants of $3.7mil for the year ended June 30, 2022 has decreased to $1.1 mil for the year
ended June 30, 2023 as some of the contractors converted to full-time employees of Damon Motors, and due to slowing down of non-critical
research and development activities as funds were tight. The decrease was also reflected in overall decrease in travel, meals and entertainment,
subscriptions and dues and in general and other expenses in line with overall headcount decrease. The decrease was, however, partially
off-set by increase in rent and insurance due to commencement of lease of Surrey manufacturing facility and 101 Glacier on September 29,
2022 and October 1, 2022 respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Also included in research
and development, net are SR&amp;ED tax credits and government grant funding totaling $nil and $0.1 mil respectively the year ended June
30, 2023 and $0.6 mil and $0.1 mil respectively for the year ended June 30, 2022. The decrease in SR&amp;ED tax credits for the year ended
June 30, 2023 was because the tax credit claimed during the year was not finalize at of June 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0"><b><i>General and Administrative</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,283,259</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">310,725</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,067,552</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">914,818</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">58,765</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">914,408</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">829,288</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">558,204</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">472,601</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">339,713</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">39,927</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt; text-indent: -30.6pt; padding-left: 30.6pt">&#160;</td><td style="font-weight: bold; border-bottom: Black 1.5pt solid">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">4,296,231</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; border-bottom: Black 1.5pt solid">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">6,792,996</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; border-bottom: Black 1.5pt solid">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-indent: -21.25pt"><sup>&#160;</sup></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 21.3pt"><sup>(1)</sup></td><td>Rental income for the year ended June 30, 2024 is net of bad debt of $43,091 (2023 and 2022 &#8211; nil)</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2024 compared to Fiscal 2023</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">General and administrative
decreased to $4.3 mil for the year ended June 30, 2024 compared to $6.8 mil for the year ended June 30, 2023, mainly due to management
controlling its operating costs due to challenges with fund raising.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">Salaries and wages for the year ended June 30, 2024, of $1.6 mil is
lower compared to $2.2 mil for the year ended June 30, 2023, principally due to decrease in headcount from 10 as of June 30, 2023, to
5 members as of June 30, 2024 due to terminations on March 18, 2024. Contractors and consultants fees paid to external parties increased
from $1.1 mil for the year ended June 30, 2023 to $1.3 mil for the year ended June 30, 2024 as Damon Motors incurred more consultancy
and advisory fees due to interim financial statements reviews and year-end financial statements audit for the public filing requirements
in fiscal year 2024. However, professional fees decreased from $1.1 mil for the year ended June 30, 2023, to $0.3 mil for the year ended
June 30, 2024, due to decrease in professional fees related to financing and decrease in intellectual property filing and patent registration
due to tight cashflow. The decrease in professional fees related to financing is due to Damon Motors raising funds in fiscal year 2024
through a broker compared to largely non-brokered financing in fiscal year 2023. Stock-based compensation decreased from $0.9 mil for
the year ended June 30, 2023, compared to $0.06 mil for the year ended June 30, 2024 in line with decrease in headcount, expiry of unexercised
stock options for terminated employees, and no new stock options granted for the year ended June 30, 2024 compared to the year ended June
30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 96; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->89<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2023 compared to Fiscal 2022</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended June 30,
2023, general and administrative expenses increased from $4.8 mil for the year ended June 30, 2022, to $6.8 mil. The increase resulted
from the expansion of Damon Motors&#8217;s head office in anticipation of an expected increase in business and professional fees incurred
for intellectual property filing and patent registration in fiscal year 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Salaries and wages increased
from $1.4 mil for the year ended June 30, 2022, to $2.2 mil for year ended June 30, 2023 mainly due to increase in salary and wages in
line with increase headcount and severance payment for terminated employees the in second half of Fiscal 2023. The headcount increased
from 15 as of June 30, 2022, peaking at 20 headcounts in September 2022 to support business expansion, before the two rounds of headcount
reduction in February and April 2023, reducing the headcount significantly back to 10 members as of June 30, 2023 due to challenges with
fund raising. On the other hand, fees paid to contractors and consultants reduced marginally from $1.3 mil for year ended June 30, 2022
to $1.1 mil for the year ended June 30, 2023 as Damon Motors cut down its spending on third party contractors and consultants due to tight
cash position but partially off-set by increase in accounting and consulting fees due to more frequent interim financial statements reviews.
Professional fees increased from $0.9 mil for the year ended June 30, 2022, to $1.1 mil for year ended June 30, 2023 due to higher legal
and professional fees related to intellectual property filing and patent registration in fiscal year 2023 and on-going fund raising. Stock-based
compensation increased marginally for the year ended June 30, 2023 totaling $0.9 mil compared to $0.8 mil for the year ended June 30,
2022 as stock options granted were partially offset by forfeiture or cancellation of unexercised stock options for terminated employees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The increase in rent and insurance was due commencement of leases as
mentioned above. The overall increase in travel, meals and entertainment, and in general and other expenses for the year ended June 30,
2023 was mainly due to more travelling due to increase fund raising, corporate transaction activities and expansion of business activities.
Increase in subscriptions and dues was mainly due to implementation and subscription of Damon Motors cloud-based financial application
and cloud-based content management application in Fiscal 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0"><b><i>Sales and Marketing</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

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  <tr style="vertical-align: bottom">
    <td style="text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">111,739</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="padding-bottom: 1.5pt; text-indent: -30.6pt; padding-left: 30.6pt">&#160;</td><td style="font-weight: bold; border-bottom: Black 1.5pt solid">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2024 compared to Fiscal 2023</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended
June 30, 2024, sales and marketing decreased from $2.7 mil for the year ended June 30, 2023, to $1.0 mil. The decrease was primarily due
to Damon Motors reducing the marketing team activity due to a delay in production and Damon Motors continuing to manage its cash flows
as explained above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">Marketing and promotion expenses were reduced from $1.3 mil for the
year ended June 30, 2023 to $0.4 mil for the year ended June 30, 2024 as Damon Motors limited the spend on promotion activities, sponsorship,
advertisement, and public relation consultancy costs due to the limited cashflow. Salaries and wages also reduced from $0.8 mil for the
year ended June 30, 2023 to $0.5 mil for the year ended June 30, 2024 as headcount was reduced from 5 members as of June 30, 2023 to 3
members as of June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 97; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->90<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2023 compared to Fiscal 2022</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended June
30, 2023, selling and marketing expenses decreased from $4.4 mil for the year ended June 30, 2022, to $2.7 mil. The decrease was
primarily due to Damon Motors reducing headcount in its marketing team due to a delay in production and scaling down marketing
activities due to a tight cash position.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In view of the above, marketing
and promotion expenses reduced from $2.6 mil for the year ended June 30, 2022 compared to $1.3 mil for the year ended June 30, 2023. Salaries
and wages also reduced from $1.3 mil for the year ended June 30, 2022 to $0.8 mil due to headcount reduction from 8 members as of June
30, 2022 to just 5 members as of June 30, 2023 as production was delayed and due to challenging funding situation. The decrease in travel,
meals and entertainment, and general and other expense were due to drastic scaling down of activities in view of tight cash position.
On the other hand, increase in rent and insurance allocated was mainly due to commencement of new leases as mentioned previously.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0"><b><i>Depreciation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2024 compared to Fiscal 2023</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended
June 30, 2024, depreciation decreased from $0.4 mil for the year ended June 30, 2023, to $0.3 mil as there was no asset addition for the
year ended June 30, 2024 and some assets were impaired in Fiscal 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2023 compared to Fiscal 2022</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The depreciation for the year
ended June 30, 2023 increase to of $0.4 mil from $0.2 mil for the year ended June 30, 2022, due office expansion to accommodate new headcounts.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0"><b><i>Transaction costs</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended
June 30, 2024, transaction costs increased from $0.9 mil for the year ended June 30, 2023, to $1.6 mil due to higher legal, professional
and consulting fees related business combination with XTI Aerospace and public listing in Fiscal 2024 compared to costs associated with
the deSPAC transaction in Fiscal 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-indent: 0.5in">There were no transaction costs for the
year ended June 30, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0"><b><i>Changes in Fair Value of Financial Liabilities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">Changes in the fair
value of financial liabilities includes the following amounts for the year ended June 30, 2024, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="border-bottom: Black 1.5pt solid; padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; border-bottom: Black 1.5pt solid">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2024</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; border-bottom: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
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    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; padding-left: 0.125in">SAFEs</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">592,543</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 0.125in">Convertible notes</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">13,011,887</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,874,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,820,562</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt; padding-left: 5.4pt">&#160;</td><td style="font-weight: bold; border-bottom: Black 1.5pt solid">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2024 compared to Fiscal 2023</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Changes in the fair value of financial liabilities of $18.4 mil for
the year ended June 30, 2024, compared to $3.9 mil for the year ended June 30, 2023, related to changes in fair value of SAFEs issued
in August and September 2022, convertible promissory notes issued from October 2022 onwards and common share purchase warrants issued
as part of the convertible notes from June 2023 onwards to finance Damon Motors&#8217;s operation. The increase in fair value for the
year ended June 30, 2024 is attributed mainly to more financial instruments issued to finance Damon Motors&#8217;s operation (see MD&amp;A
section entitled &#8220;Liquidity and Capital Resources&#8221;) and the increase in the market price of Damon Motors equity as compared
to the previous valuations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Fiscal 2023 compared to Fiscal 2022</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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the year ended June 30, 2022 to of $0.7 mil for the year ended June 30, 2023 as the two tranches of SAFEs, Tranche 5 and Tranche 6, were
converted to preferred shares on December 31, 2021. The changes in fair value of SAFEs of $0.7 mil for the year ended June 30, 2023 relates
to Tranche 7 which will be convertible to common shares on maturity. The change in fair value of convertible promissory notes and common
share purchase warrant obligations of $2.9 mil and $0.3 mil respectively for the year ended June 30, 2023 relates to convertible notes
and share purchase warrants issued to noteholders in Fiscal 2023 compared to nil in Fiscal 2022 as Damon Motors was funded mainly from
issuance of SAFEs in Fiscal 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0"><b><i>Finance Expense</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">Finance expense
includes the following amount for the year ended June 30, 2024, 2023 and 2022:</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11,058</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2024 compared to Fiscal 2023</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">Finance expense increased from $1.1 mil for the year ended June 30,
2023, to $3.3 mil primarily by Damon Motors relying more on debt to finance its operations. For the year ended June 30, 2024, Damon Motors
incurred financing fees of $0.8 mil which increased from financing fees of $0.4 mil for the year ended June 30, 2023. Interest expense
on convertible notes increased from $0.5 mil for the year ended June 30, 2023 compared to $2.3 mil for the year ended June 30, 2024 as
all notes were largely issued in the second quarter of Fiscal 2023 and Fiscal 2024 to finance Damon Motors&#8217;s operation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2023 compared to Fiscal 2022</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended June 30,
2023, finance expenses increased from $0.1 mil for the year ended June 30, 2022, to $1.1 mil. The increase was driven primarily by financing
fees, interest expense for SR&amp;ED facility loan, promissory notes and convertible notes all drawn or issued in the second quarter of
Fiscal 2023 to finance Damon Motors&#8217;s operation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In general, Damon Motors realized
lower finance expense for the year ended June 30, 2022, as Damon Motors was largely funded by the issuance of SAFEs which are convertible
to common shares on maturity, with no interest charge.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0"><b><i>Net Loss</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2024 compared to Fiscal 2023</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended
June 30, 2024, the net loss decreased from $37.0 mil for the year ended June 30, 2023 to $34.0 mil. The decrease in net loss was largely
due to substantial drop in operating cost of $15.1 mil, recognition of Canadian Scientific Research &amp; Development tax credit (&#8220;SR&amp;ED
&#8220;) of $2.1 mil received in year ended June 30, 2024 as explained above, and absence of asset and right-of-use asset impairment of
$9.5 mil recognized in the year ended June 30, 2023, partially offset by increase in transaction cost of $0.7 mil, gain from release of
lease obligation of $6.1 mil, changes in fair value of financial liabilities of $14.5 mil, loss from debt settlement of $0.8 mil and higher
finance expenses $2.2 mil as Damon Motors relies more on convertible notes issued to finance its operation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fiscal 2023 compared to Fiscal 2022</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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2023, the net loss increased marginally from $36.7 mil for the year ended June 30, 2022, to $37.0 mil. The increase in net loss was due
to higher transaction costs $0.9 mil, asset impairment of $9.5 mil, higher finance expenses of $1.0 mil, partially off-set by gain from
the release of lease obligation of $6.2 mil and changes in fair value of financial liabilities of $5.1 mil.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Non-GAAP Financial Measures</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Adjusted EBITDA<span style="font-size: 10pt"><i><sup>(a)</sup></i></span>
of negative $1.8 mil for the period ended September 30, 2024, as compared to negative $3.7 mil for the period ended September 30, 2023,
is mainly due to management controlling its operating cost due to challenges with fund raising explained above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">Adjusted EBITDA<i><sup>(a)</sup></i>
of negative $11.3 mil for the year ended June 30, 2024, as compared to negative $26.1 mil for the year ended June 30, 2023, is mainly
due to management controlling its operating costs due to challenges with fund raising explained above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="font-size: 10pt"><span style="font-size: 10pt"><i><sup>(a)</sup></i></span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 100; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->93<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Reconciliation of EBITDA and Adjusted EBITDA</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 8.2pt; text-indent: 17.3pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table reconciles
the net loss to Adjusted EBITDA for the periods ended September 30, 2024 and 2023:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(854,846</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(765,153</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(16,295</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt">Adjusted EBITDA</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 22.1pt; text-align: justify; text-indent: -13.8pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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    <td style="font-size: 10pt; text-align: justify">Represents non-cash change in the fair value of financial liabilities as described in note 9, note 10 and note 11 to the condensed interim unaudited consolidated financial statements for periods ended September 30, 2024 and 2023.</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">The following table
reconciles the net loss to Adjusted EBITDA for the year ended June 30, 2024, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Finance expense</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(3,273,507</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,091,697</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(77,342</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Stock-based compensation <sup>(1)</sup></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(146,842</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,832,890</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,323,294</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(429,358</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(113,921</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Changes in fair value of financial liabilities <sup>(2)</sup></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(18,424,992</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(3,881,980</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(8,935,049</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Loss on debt settlement</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(785,377</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Other transactions <sup>(4)</sup></td><td style="border-bottom: Black 1.5pt solid">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">42,297</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(3,304,275</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Adjusted EBITDA</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">11,312,274</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">25,038,557</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">(1)</td><td style="text-align: justify">Represents non-cash expenses recognized in connection with the stock options issued to participants
                                                    under Damon Motors&#8217;s stock option plan as described in Note 12 to the annual audited consolidated financial statements for the year
                                                    ended June 30, 2024, 2023 and 2022.</td>
</tr></table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">(2)</td><td style="text-align: justify">Represents non-cash change in the fair value of financial
liabilities as described in note 8, note 9 and note 10 to the consolidated financial statements for the year ended June 30, 2024, 2023
and 2022.</td>
</tr></table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">(3)</td><td style="text-align: justify">Represents asset impairment arising from termination and
surrender of 708 Powell lease and Surrey manufacturing facility lease respectively in fiscal year 2024 and 2023.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 21.95pt; text-align: justify; text-indent: -13.8pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 21.95pt; text-align: justify; text-indent: -13.8pt"></p><div>

</div><!-- Field: Page; Sequence: 101; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->94<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 21.95pt; text-align: justify; text-indent: -13.8pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Financial Position</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 8.3pt; text-indent: 17.25pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets out
selected information related to the financial position of Damon Motors as of September 30, 2024 and June 30, 2024 as well as explanations
for variations:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: left; vertical-align: top">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Explanation of Variation</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: left; vertical-align: top">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td colspan="2" style="font-weight: bold; text-align: center">$</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 42%; text-align: justify">Decrease in cash is mainly due to funds raised from financing activities during the period is insufficient to cover the cash used in operation, reducing the opening cash balances - See MD&amp;A section entitled &#8220;Cash Flows&#8221; and &#8220;Liquidity and Capital Resources&#8221;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left; text-indent: -9pt; padding-left: 9.25pt">Funding receivable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,004,022</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: justify">Mainly due to recognition of FY2024 SR&amp;ED tax credit as Damon Motors received Notice of Assessment in October 2024</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left; text-indent: -9pt; padding-left: 9.25pt">Other current assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">115,806</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left; text-indent: -9pt; padding-left: 9.25pt">Premises lease deposits</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">127,309</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">878</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">941,807</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left; text-indent: -9pt; padding-left: 9.25pt">Customer deposits</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left; text-indent: -9pt; padding-left: 9.25pt">Current portion of operating lease liabilities</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: justify">Mainly due to issuance of new promissory notes and senior secured promissory notes issued to Grafiti Holding &#8211; see MD&amp;A section entitled &#8220;Liquidity and Capital Resources&#8221;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">56,306,629</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: justify">Mainly due to factors explained above</td></tr>
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    <td style="text-align: justify">Mainly due to on-going lease payments</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: justify">Mainly due to on-going lease payments</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left; text-indent: -9pt; padding-left: 9.25pt; vertical-align: top">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">5,138,751</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">71,590,087</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: justify">Mainly due to equity-classified warrant issued during the year $0.3 mil</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(148,019,769</td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(7,412,175</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: justify">Mainly due to operational loss during the year &#8211; see MD&amp;A section entitled &#8220;Results of Operations&#8221;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">(54,357,637</td><td style="font-weight: bold; text-align: left">)</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">(50,449,144</td><td style="font-weight: bold; text-align: left">)</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">(3,908,493</td><td style="font-weight: bold; text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 102; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->95<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">The following table sets out
selected information related to the financial position of Damon Motors as of June 30, 2024 and June 30, 2023 as well as explanations
for variations:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 8.3pt; text-indent: 17.25pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="vertical-align: top; padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold"><span style="font-size: 9pt">&#160;</span></td>
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    30, <br/>
    2024</span></td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold"><span style="font-size: 9pt">&#160;</span></td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    lease deposits</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">187,435</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Property
    and equipment, net</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">2,004,066</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
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    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to depreciation
    and amortization fixed asset and right-of-use assets and impairment of operating right-of-use asset</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Non-current
    assets</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">2,191,501</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(926,650</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to factors explained
    above</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">TOTAL
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9pt">1,751,352</span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9pt">4,516,139</span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9pt">(2,764,787</span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to factors explained
    above</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt; vertical-align: top"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: right"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: right"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: right"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Accounts
    payable and accrued liabilities</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">5,924,121</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">7,106,281</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(1,182,160</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to the company making
    payments to reduce accounts payable as additional funds are raised</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Customer
    deposits</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">482,575</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">488,569</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(5,994</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Movement not material</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Current
    portion of operating lease liabilities</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">443,519</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">740,486</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(296,967</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to on-going lease
    payments</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Current
    portion of finance lease liabilities</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">7,141</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">12,363</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(5,222</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to on-going lease
    payments</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt; vertical-align: top"><span style="font-size: 9pt">Debt</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">1,099,489</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">1,857,550</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(758,061</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to repayment of
    SR&amp;ED loan and promissory note converted to convertible promissory note on maturity partially offset by issuance of new promissory
    notes for debt settlement and senior secured promissory notes issued to Grafiti &#8211; see MD&amp;A section entitled &#8220;Liquidity
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  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Convertible
    notes</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">40,630,756</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">14,727,183</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">25,903,573</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to convertible notes
    $11.6 mil issued during the period, (see MD&amp;A section entitled &#8220;Liquidity and Capital Resources&#8221;), $1.3m convertible
    notes issued for debt settlement, interest accrued $2.3 mil, changes in fair value $13.0 mil partially offset by amount allocated
    to warrant bifurcated of $1.8 mil and interest paid of $0.5 mil</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Derivative
    warrant liabilities</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">-</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">521,950</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(521,950</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to $1.1 mil bifurcated
    value of additional share purchase warrants issued during the period (see MD&amp;A section entitled &#8220;Liquidity and Capital
    Resources&#8221;) and fair value changes of $4.8 mil fully off-set as these warrants are reclass to equity-classified and charge
    to AIPC $6.4 mil</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Financial
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">3,200,000</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">2,700,000</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">500,000</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to fair value changes
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Current
    liabilities</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">51,787,601</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">28,154,382</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">23,633,219</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to factors explained
    above</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Non-current
    portion of operating lease liabilities</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">235,492</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">621,325</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(385,833</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to on-going lease
    payments and de-recognition of lease liability following termination of one of the operating leases</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Non-current
    portion of finance lease liabilities</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">177,403</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">190,774</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(13,371</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to on-going lease
    payments</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Other
    non-current liabilities</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">-</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">19,099</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(19,099</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly comprised of long-term
    deposit for office space subleased, variance not material</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">Non-current
    Liabilities</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">412,895</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">831,198</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(418,303</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to factors explained
    above</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt"><span style="font-size: 9pt">TOTAL
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9pt">52,200,496</span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9pt">28,985,580</span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9pt">23,214,916</span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to factors explained
    above</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 0in; vertical-align: top"><span style="font-size: 9pt">Common shares</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">1,938,751</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">1,285,788</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">652,963</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to stock options
    exercised and shares issued to reduce severance settlements during the period</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 0in; vertical-align: top"><span style="font-size: 9pt">Preferred
    shares</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">71,590,087</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">71,590,087</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">-</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; padding-left: 0in"><span style="font-size: 9pt">Additional
    paid in capital</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">16,629,612</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">9,294,030</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">7,335,582</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to liability-classified
    warrant reclassed to equity-classified warrant charged to APIC $6.4 mil; equity-classified warrant issued during the year $1.1 mil
    and stock-based compensation vested $0.1 mil; partially offset by the increase in value of stock option exercised $0.3 mil</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; padding-left: 0in"><span style="font-size: 9pt">Accumulated
    deficit</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(140,607,594</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(106,639,346</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9pt">(33,968,248</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to operational loss
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: 0pt; padding-left: 0pt"><span style="font-size: 9pt">Total
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9pt">(50,449,144</span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9pt">(24,469,441</span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9pt">(25,979,703</span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 9pt">Mainly due to factors explained
    above</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in"><span style="font-size: 9pt">TOTAL
    LIABILITIES AND SHAREHOLDERS&#8217; DEFICIT</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 9pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9pt">1,751,352</span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 9pt">&#160;</span></td>
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9pt">(2,764,787</span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9pt">&#160;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 103; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->96<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Cash Flows</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table provides
a summary of Damon Motors&#8217;s operating, investing, and financing cash flows for the three months ended September 30, 2024 and 2023:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">(2,160,571</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">(4,302,549</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(282,031</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">The following
table provides a summary of Damon Motors&#8217;s operating, investing, and financing cash flows for the year ended June 30, 2024, 2023 and
2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; border-bottom: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
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    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">(21,082,292</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">(24,440,545</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(778,681</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,708,872</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">11,195,898</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,673,476</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(8,029,675</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,865,581</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,069,056</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">10,098,731</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">11,964,312</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">395,580</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; border-bottom: Black 1.5pt solid">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">2,069,056</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; border-bottom: Black 1.5pt solid">&#160;</td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Cash Flows Used in Operating Activities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the three months ended
September 30, 2024, cash flows used in operating activities was $2.2 mil and was composed of Damon Motors&#8217;s net loss of $7.4 mil
driven by the factors discussed partially offset by net non-cash items of $5.7 mil and by net changes in non-cash working capital of $0.4
mil. Non-cash items of $5.7 mil composed mainly of $4.7 mil loss related to the change in fair value of financial liabilities, $0.8 mil
accrued unpaid interest on debt, $0.2 mil for depreciation and amortization.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the period ended September
30, 2023, cash flows used in operating activities was $4.3 mil and was composed of Damon Motors&#8217;s loss and comprehensive loss of
$5.4 mil driven by the factors discussed above and by net changes in non-cash working capital of $0.5 mil partially offset by net non-cash
items of $1.6 mil. Non-cash items of $1.6 mil were mainly composed of $0.8 mil loss related to the change in fair value of financial liabilities,
$0.4 mil accrued unpaid interest on debt, $0.2 mil for stock-based compensation expense, $0.2 mil for depreciation and amortization, partially
off-set by $0.1 mil in unrealized foreign exchange gain. The decrease in non-cash working capital was primarily driven by decreases in
trade payables and accrued liabilities of $0.5 mil, operating lease payment of $0.1 mil, partially off-set by increase in customer deposits
and a decrease in prepaid and deposits.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">For the year
ended June 30, 2024, cash flows used in operating activities was $12.9 mil and was composed of Damon Motors&#8217;s net loss of $34.0 mil
driven by the factors discussed partially offset by net non-cash items of $21.7mil and by net changes in non-cash working capital of
$0.6 mil. Non-cash items of $21.7 mil were mainly composed of $18.4 mil loss related to the change in fair value of financial
liabilities, $1.7 mil accrued unpaid interest on debt, $0.8 mil for loss on debt settlement, $0.1 mil for stock-based compensation
expense, $0.8 mil for depreciation and amortization.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">For the year
ended June 30, 2023, cash flows used in operating activities was $21.1 mil and was composed of Damon Motors&#8217;s net loss of $37.0 mil
driven by the factors discussed above, partially offset by net non-cash items of $11.6 mil and by net changes in non-cash working
capital of $4.3mil. Non-cash items of $11.6mil were mainly composed of $1.5 mil for stock-based compensation expense, $1.1 mil for
depreciation and amortization, $0.8 mil for accrued unpaid interest on operating lease, $3.9 mil loss related to the change in fair
value of financial liabilities, $9.4 mil related to asset impairment partially off-set by $6.2 mil in gain from lease obligation
released. The increase in non-cash working capital was primarily driven by increases in trade payables.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 104; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->97<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in">For the year ended June
30, 2022, cash flows used in operating activities was $24.4 mil and was composed of Damon Motors&#8217;s net loss of $36.7 mil driven by
the factors discussed above, partially offset by net non-cash items of $11.8 mil and net changes in non-cash working capital of $0.5
mil. Non-cash items of $11.8 mil were mainly composed of $2.3 mil for stock-based compensation expense, $0.6 mil for depreciation
and amortization and $8.9 mil related to the change in fair value of SAFEs. The net changes in non-cash working capital were
primarily driven by increases in trade payables and accrued liabilities, an increase in customer deposits partially offset by an
increase in prepaid and deposits.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Cash Flows Used in Investing Activities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cash flows used in investing
activities primarily relates to capital expenditures for leasehold improvements, equipment and office furniture as Damon Motors continues
to expand and invest in its business infrastructure and scales its manufacturing operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is no cash flow used
in investing activities for the three months ended September 30, 2024 and 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">There is no cash
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended
June 30, 2023, cash flows used in investing activities primarily relates to tenant improvements made to the Surrey manufacturing facility
and on lease commencement, capitalized as part of the right-of-use asset.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 6.3pt 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended
June 30, 2022, cash flows used in investing activities relates to tenant improvement on the Surrey manufacturing facility and leasehold
improvement and equipment for new office space in both Vancouver, British Columbia, Canada and San Rafael, California, the United States
to accommodate business expansion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Cash Flows from Financing Activities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cash flows from financing
activities were $1.9 mil for the three months ended September 30, 2024 and was primarily due to proceeds from issuance of convertible
promissory notes of $0.6 mil, proceeds from issuance of senior secured promissory note to Grafiti Holding of $0.6 mil and proceeds from
issuance of secured promissory note and of $0.7 mil to uLoan and Rise Capital.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cash flows from financing
activities were $4.9 mil for the period ended September 30, 2023 and was primarily due to proceeds from issuance of convertible notes
of $4.95 mil marginally offset by partial repayment of SR&amp;ED loan $0.03mil.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">Cash flows from
financing activities were $11.2 mil for the year ended June 30, 2024 and was primarily due to proceeds from issuance of convertible notes
of $11.5 mil, proceeds from issuance of senior secured promissory note of $0.55 mil marginally offset by partial repayment of SR&amp;ED
loan $0.9 mil.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">Cash flows from
financing activities were $13.8 mil for the year ended June 30, 2023 and was primarily due to proceeds from issuance of convertible notes
of $11.2 mil, SAFEs of $2.0 mil, drawdown on SR&amp;ED facility of $1.1 mil and proceeds from promissory note of $0.7 mil, partially off-set
by cash settlement for release of lease obligation of $1.1 mil and SR&amp;ED facility repayment of $0.2 mil.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0; text-align: justify; text-indent: 0.5in">Cash flows from
financing activities were $25.3 mil for the year ended June 30, 2022 and was primarily due to proceeds from issuance of preferred shares
$25.3 mil, draw down on SR&amp;ED facility $0.6 mil, partially offset by SR&amp;ED repayments of $0.6 mil during the year.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Liquidity and Capital Resources</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Liquidity</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of September 30, 2024,
Damon Motors had a cash balance of $0.1 mil ($0.4 mil as of June 30, 2024). Damon Motors incurred loss for the year of $7.4 mil for the
three months ended September 30, 2024, of which $4.7 mil loss related to the change in fair value of financial liabilities, $0.8 mil accrued
unpaid interest on debt, $0.2 mil for depreciation and amortization, partially off-set by net changes in non-cash working capital of $0.4
mil. Damon Motors&#8217;s accumulated deficit and expected future losses cast substantial doubt upon Damon Motors&#8217;s ability to continue
as a going concern. Furthermore, Damon Motors had negative cash flows from operating activities of $2.2 mil for the three months ended
September 30, 2024. These operating losses and negative cash flows were mainly the result of on-going operating costs, transaction costs
incurred due to the business combination and the public listing exercise and financing cost to sustain its operation. Based on the foregoing
and its growth strategy, Damon Motors expects to continue to make significant expenditures to expand Damon Motors&#8217;s business and
develop manufacturing operations in the future. As a result, Damon Motors may continue to incur operating losses and have negative cash
flows in the short term, as it continues to execute on its growth strategy and develop manufacturing capability to produce the motorcycles
to meet delivery of the motorcycles in our order book.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors&#8217;s primary
sources of liquidity used in the funding of its operations and the execution of its growth comes from on-going fund raised in the form
of issuance of convertible notes (as discussed in the section &#8220;Capital Resources&#8221; of this MD&amp;A below). Damon Motors cannot
provide assurance that Damon Motors will secure financing in a timely manner.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Capital Resources</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 8.3pt; text-align: justify; text-indent: 17.15pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Convertible Notes and Share Purchase Warrants
issued between July 1, 2024 to September 30, 2024</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the period from July
1, 2024 to September 30, 2024, Damon Motors issued convertible promissory notes to arms-length parties with an aggregate principal amount
of $555,000 at valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on the maturity date. These convertible
promissory notes holders were also issued 202,820 common share purchase warrants to subscribe for, and purchase of Damon Motors common
shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization at closing date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Convertible Notes and Share Purchase Warrants
issued after September 30, 2024</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From October 1, 2024 to the
date of the report, Damon Motors secured additional convertible promissory notes with aggregate value of $550,000 with a valuation cap
of $125,000,000, maturing one year from issuance and interest rate of 12% per annum, payable in arrears on maturity. These convertible
promissory notes holders were also issued 200,993 common share purchase warrants to subscribe for, and purchase of Damon Motors common
shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization at closing date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Senior secured promissory note </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 3, 2024, Damon Motors
issued additional $396,000 senior secured promissory note (&#8220;Secured Note&#8221;) with interest rate at 10.0% per annum in favour
of Grafiti Holding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On September 25, 2024, Damon
Motors amended the senior secured promissory note dated June 26, 2024 increasing the maximum aggregate principal amount of the note from
$1,000,000 to $1,150,000. On the same date, Damon Motors drew down an additional $200,000 on the note bringing the total principal amount
drew down to $1,146,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Secured promissory notes </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 5 2024, Damon Motors
issued promissory note to arms-length parties with principal amount of $364,649 (CAD$500,000) secured against future SR&amp;ED tax credit
refund expected to be received from year-end tax returns for 2024 submitted to CRA and substantially all of the assets of Damon Motors.
The loan accrues interest at a rate of 3% per month and matures on or before November 15, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 11, 2024, Damon
Motors issued another promissory note to arms-length parties with principal amount of $364,650 (CAD$500,000) secured against substantially
all of the assets of Damon Motors on a pari passu basis with the promissory note issued on August 6, 2024. The loan accrues interest at
a rate of 3% per month and matures on or before November 15, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 9, 2024, Damon
Motors issued promissory note to arms-length parties and received proceeds of $200,000, which is net of set-up fee of $12,500. The note
accrues interest at a rate of 12% per annum and shall become due and payable in full on the earlier of (i) 60 days from the funds are
advanced; or (ii) five (5) business days following the completion of the liquidity event. The liquidity event refers to the business combination
with Grafiti, following which Damon Motors will become a wholly owned subsidiary of Grafiti Holding and Grafiti Holding&#8217;s securities
will become listed and trading on the Nasdaq.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">SR&amp;ED tax credit refund</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 4, 2024, Damon
Motors received the Notice of Assessment for 2024 SR&amp;ED tax credit refund amount of $1,004,022 (CAD$1,355,329) from CRA and the tax
credit refund was received in full on October 16, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Off-Balance Sheet Arrangements </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors does not have
any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities,
which are established for the purpose of facilitating off-balance sheet arrangements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Commitments and Contingencies</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the normal course of business,
Damon Motors enters into contractual obligations that will require it to disburse cash over future periods.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Commitments and contingencies
disclosures can be found in Note 12 of Damon Motors&#8217;s unaudited condensed interim consolidated financial statements as of September
30, 2024 included elsewhere in this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>New Accounting Standards Not Yet Adopted</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 8.3pt; text-align: justify; text-indent: 17.25pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors continually assesses
any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects
Damon Motors&#8217;s financial reporting, Damon Motors undertakes a study to determine the consequences of the change to its financial
statements and assures that there are proper controls in place to ascertain that Damon Motors&#8217;s financial statements properly reflect
the change.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Details of the recent accounting
pronouncements not yet adopted can be found in Note 3(d) of Damon Motors&#8217;s unaudited condensed interim consolidated financial statements
as of September 30, 2024 included elsewhere in this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_016"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">BUSINESS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our Group Structure</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following organization
chart indicates the intercorporate relationships of the Company and its material subsidiaries, together with the jurisdiction of formation,
incorporation or continuance of each entity, following the consummation of the Business Combination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_002.jpg"/></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our Business</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Motorcycle Development and Manufacturing
Business through Damon Motors</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The material business of the
Company operates through Damon Motors. Damon Motors is a British Columbia based motorcycle manufacturing company aiming to building a
smart and technologically advanced motorcycle with zero emissions while still maintain performance and safety while also incorporating
connectivity and artificial intelligence.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We, through our wholly-owned
subsidiary Damon Motors and its subsidiaries, design and produce motorcycles aimed at transforming the motorcycle industry by building
a smart and technologically advanced motorcycle. Damon Motors is developing the technology and investing in the capabilities to lead the
industry transformation in the high-performance electric motorcycle market. With decades of combined management and engineering experience
across the team&#8217;s careers, and a commitment to low carbon personal mobility solutions, Damon Motors is introducing existing enthusiasts
to high-performance electric products while bringing new riders to the motorcycle community with first of its kind advances in zero emissions
motorcycle performance, safety, connectivity and AI.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Founded in 2017, Damon Motors
started reimagining the future of motorcycling by means of advanced safety design, electric vehicle powertrain technology and user experience.
In 2019, Damon Motors took its first alpha prototype motorcycles and safety systems into the field to test the concept. In 2021, Damon
Motors expanded its operations and expertise with an R&amp;D facility in San Rafael, California to accelerate the engineering and development
of its HyperDrive platform drive unit and the HyperSport motorcycle. Through core technology advancements, Damon Motors electric motorcycles
are in prototype phase of product validation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our SAVES Distribution Business Through
Grafiti Limited</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We, through our wholly-owned
subsidiary Grafiti Limited, distribute in the UK and certain other European countries data analytics and visualization software products
referred to as &#8220;SAVES&#8221; primarily for scientists and engineers. Grafiti Limited&#8217;s products can be downloaded to a user&#8217;s
desktop. These products help scientific research in the health and life sciences domain in the discovery of new drugs, in the study of
the efficacy of established drugs and therapies, and in epidemic propagation research, among other applications. Engineers use our products
for a multitude of applications which include, but are not limited to, conducting surface modelling analysis and curve fitting in order
to design new engineering processes, studying signal attenuation and propagation in radio engineering. Potential automobile and motorcycle
applications could include surface panel design for aerodynamics, aesthetic symmetry, and calculated asymmetry among others. We believe
the Grafiti Limited regression analysis product could also be used for predicting vehicle sharing demand and pricing trends in various
markets based on a wide range of variables.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Grafiti Limited was formed
by the Parent on May 13, 2020 as a distribution arm for its SAVES products in the UK market and part of the European market.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our Market</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">EV Growth Worldwide</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the International
Energy Agency&#8217;s April 2023 Global EV Outlook, global electric car markets are seeing rapid growth as sales exceed 10 million units
in 2022. A total of 16% of all new cars sold were electric in 2022, up from around 9% in 2021 and less than 5% in 2020. Three geographic
markets dominated global sales. China was the frontrunner, accounting for around 60% of global electric car sales. More than half of the
electric cars on roads worldwide are now in China and the country has already exceeded its 2025 target for new energy vehicle sales. In
Europe, the second largest market, electric car sales increased by over 15% in 2022, meaning that more than one in every five cars sold
was electric. Electric car sales in the United States &#8211; the third largest market &#8211; increased 55% in 2022, reaching a sales
share of 8%. The rest of the world accounts for about 2%.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">EV Growth in the North American and
European Markets</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As reported by Silas Smith
of way.com, in North America, the percentage of electric cars hit a new high in early 2022. During the first quarter of 2022, the number
of EV registrations increased by 60% despite the generally slow performance of the overall market. During the initial nine months of 2022,
a total of 530,577 electric cars were sold in the US. These numbers are only for BEVs. The figures do not include plug-in HEV and Hybrid
Electric Vehicles. Almost 65% of these percentage of electric cars were Tesla. As early as 2026, S&amp;P Global Mobility expects the total
of new EV models available to break 200 in the US market, as the ICE new model count continues a steady decline. In late 2027/early 2028,
the total model count should be at its apex &#8212; with the number of options across all propulsion system designs approaching 650. The
situation is expected to be similar in Europe. S&amp;P Global Mobility forecasts that the three propulsion system designs &#8212; EV,
hybrid, and ICE &#8212; will each account for between 29% and 36% of the market by the end of this decade. After that, EV share is expected
to continue to grow while hybrid plateaus and then joins ICE in a continuous, but slow, decline.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Motorcycle Market Today</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The global motorcycle industry
is a $144B industry, according to data from Motorcycles Data 2022 Global Industry Sales Report, and there are more than 180M motorcycles
and scooters produced per year, which exceeds the number of passenger cars and light trucks produced per year on a combined basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s strategy is
to provide premium and high-technology electric motorcycle offerings for each highway-capable motorcycle segment, priced competitively
with the other available options with the goal of becoming a leading motorcycle manufacturer with electric motorcycles that outperform
comparable gas bikes.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The relevant electric vehicle
markets for Damon includes:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">small and large scooters</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">light, medium and heavy motorcycles</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">small and large three-wheelers</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s current core
capabilities are in the light, medium and heavy motorcycle segments. Motorcycles Data 2022 Global Industry Sales Report reported $32.1
billion in light motorcycle sales in 2022, which skewed towards the markets in Asia and Europe, while the sales of medium and heavy motorcycles
totaled $11.2 billion, growing at a CAGR of 7.2% and concentrated in North America and Europe, where customers more often choose heavier
models.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The North American market
accounts for the majority of the market&#8217;s profits, whereas the majority of volume is accounted for in Southeast Asia, albeit with
significantly lower margins than the North American market. That said, according to Motorcycles Data 2022 Global Industry Sales Report,
the average priced motorcycle purchased in Southeast Asia has risen above $2,400, with the fastest growing segment now priced at $3,000.
This increase in price is driven mainly by the increasing middle-class incomes across a younger population, where 1 out of every 2 people
is now under the age of 40.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Competitive Landscape</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The motorcycle market is highly
competitive, and Damon expects it will become even more so in the future. Currently, Damon&#8217;s competition for its vehicles comes
principally from manufacturers of motorcycles with internal combustion engines powered by gasoline, including in the premium and other
segments of its business. Although Damon intends to strategically enter the premium electric vehicle segment, it similarly expects this
segment will become more competitive in the future as a result of new entrants, both from established brands and start-up companies from
various regions of the globe.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Many of Damon&#8217;s current
and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than Damon and
may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their
products. Based on publicly available information, a number of Damon&#8217;s competitors already have displayed prototype electric motorcycles
and have announced target availability and production timelines, while others have launched pilot programs or full commercial offerings
in certain markets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Notably, Damon expects competition
in its industry to intensify in the future, considering increased demand and regulatory push for alternative fuel vehicles, continuing
globalization and consolidation in the worldwide motorcycle industry. Factors affecting competition include, among others, product quality
and features, innovation and development time, pricing, reliability, safety, fuel and energy economy, customer service (including breadth
of service network) and financing terms. Damon&#8217;s ability to successfully compete in the motorcycle industry will be fundamental
to its future success in existing and new markets and its market share. There can be no assurance that Damon will be able to compete successfully
in the markets in which it operates. If Damon&#8217;s competitors introduce new models or services that successfully compete with or surpass
the quality, price, performance or availability of Damon&#8217;s vehicles or services, it may be unable to satisfy existing customers
or attract new customers at the prices and levels that would allow it to generate attractive rates of return on its investment. Increased
competition could result in lower vehicle unit sales, price reductions and revenue shortfalls, loss of customers and loss of market share,
which may materially adversely affect Damon&#8217;s business, financial condition, operating results and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s expects competition
from two primary segments:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">First, from leading traditional ICE-focused companies including BMW, Honda, Ducati and Triumph. These
companies have the ability to scale manufacturing and leverage global distribution capabilities, but do not currently offer a premium
electric motorcycle in market. However, some of these companies are beginning to explore entering the electric motorcycle market, albeit
typically they do so first with the lowest cost motorcycles and scooters, lower technological know-how required and reduced cannibalization
of their high-margin products necessary to enter the bottom segments of the market.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">Second, electric vehicle-focused companies, including LiveWire, Zero and Energica that have product in
market today. Damon&#8217;s focus is to provide higher performing motorcycles with enhanced safety features relative to these current
products. Unlike LiveWire, which is majority owned by Harley Davidson, Zero and Energica have motorcycles in the market today but lack
the global manufacturing and distribution capabilities of the major ICE players.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While Damon expects competition
to grow as the market shifts to electric and more players begin to make serious investments, Damon believes it is well-positioned with
its combination of commitment, capabilities and advanced technology to lead the growing electric motorcycle market.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon&#8217;s Competitive Strengths</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect to drive continued
growth and strong financial performance by leveraging our distinct competitive strengths, each of which we believe provide unique competitive
advantages. These include:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Highly qualified and
knowledgeable management team</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon has assembled a top
team of innovative electric vehicle and ADAS safety system engineers and management team members with backgrounds spanning design, development
and manufacturing who have developed a wide array of electric vehicles, from buses, to cars, motorcycles, VTOL&#8217;s and transport trucks
across world class companies such as Apple, BMW, Daimler, Uber Elevate, and many others.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Best-in-class strategic
partners and suppliers</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s world class
strategic partners and suppliers, such as Continental, Fukuta, Brembo, Ohlins, Pirelli, Auteco, Indika Energy and many others, are among
the leaders in their respective fields, and Damon believes that such relationships will allow Damon to successfully pursue a competitive
position in the global electric motorcycle market.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Head start in the market</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon believes it has a significant
competitive advantage stemming from the coordinated application of multiple new technologies. With more than $75M invested to date, Damon&#8217;s
products have advanced vehicle range and power at a reduced overall mass and are developed to solve fundamental problems that motorcyclists
frequently experience that have long been poorly addressed. These include noise, emissions, range, safety, comfort and digital connectivity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Patents and trade secrets</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s patent portfolio
of 34 national and international parents awarded or filed and collection of trade secrets will further protect this new class of motorcycles.
With more than 10 billion media impressions and 1200 original earned articles in 2022, as measured by unique visitors and reach based
on BPA audited publications using databases such as Muckrack, Cision and Google Analytics, Damon believes its technological competitive
advantage is well infused into its brand, which will continue to provide a market advantage, even as heritage brands look on.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Direct to customer
distribution</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unlike its competitors, Damon
is one of a few motorcycle manufacturers selling direct to consumers. Selling over the internet, shipping direct and owning and eventually
operating its own Damon experience centers is perhaps the most important sales and distribution advantage the Company has over established
players, allowing for high margin retention and a vital information feedback loop from its customers that goes straight into manufacturing
and vehicle design, while also providing considerably higher profit margins and lower customer acquisition costs over time. The ability
to sell motorcycles directly to consumers has shown to be viable in the electric car space; however, it is uncommon in motorcycles. Damon
has enjoyed significant success with the direct sales model to date. Damon&#8217;s expects to continue to generate an evangelistic brand
and following, with a growing backlog currently extending into 2025/2026.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our SAVES Market</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We distribute SAVES products
in the UK market and part of the European market. Grafiti Limited&#8217;s strategy is to build a broader, long term customer base by increasing
its sales of Grafiti Limited&#8217;s product offerings which will include cloud and Macintosh compatible data analytics and statistical
visualization software products. We believe this will enable the Grafiti Limited business to focus on generating more recurring revenues
in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our SAVES Customers</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our customers include academic
institutions, engineers and scientists in a variety of industries including environmental sciences, behavioral sciences, medical research,
and engineering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">By understanding our customers
unique needs and considering the markets we target, we provide expert guidance, demonstrations, and ongoing support to maximize the value
our software brings. Over 60% of our customers are academic institutions or scientist associated with them. Our channel partners account
for approximately 25% of our revenue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the year ended June
30, 2024, Grafiti Limited had one customer that accounted for 11% of revenue and during the year ended June 30, 2023, Grafiti Limited
had one customer that accounted for 16% of revenue. During the quarter ended September 30, 2024, Grafiti Limited has two customers that
accounted for a total of 30% of revenue. See &#8220;<i>Risk Factors - Our SAVES business relies on a limited number of key customers,
the importance of which may vary dramatically from year to year, and a loss of one or more of these key customers may adversely affect
our operating results</i>.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Competition Faced by Our SAVES Business</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We operate in a market characterized
by intense competition from competitive products and their distributors and/or resellers, based on such factors as price, quality and
depth of product lines and training, as well as service and support provided by the distributor to the customer. We believe we are well
equipped to compete effectively with other distributors in all of these areas.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business is characterized
by innovation and rapid change in the products we distribute. Originlab and Graphpad Prism are the main competitors of the products that
we sell. These competitive products are characterized by the complexity of their user interfaces and the pre-supposition and in-depth
understanding of statistics. 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&#8217; graphing solutions. We offer multiple pricing models and believe our products are competitively
priced.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our Products and Services</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Electric Motorcycles</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s electric vehicles
are developed with a set of proprietary design principles that elevate the brand, deliver differentiated riding experiences and bring
emotion to electric propulsion. The initial product portfolio of motorcycle models will be built upon and utilize a single powertrain
platform called HyperDrive&#8482;. As a patented, monocoque-constructed battery-chassis, HyperDrive houses a proprietary 150 kW 6-phase
liquid cooled IPM motor-gearbox and proprietary electronics. This platform approach establishes a capital-efficient path to grow the product
line to meet a wide range of future segments and price points, while also supporting a wide range of future motorcycle models and power
sizes that share as much as 85 percent common parts. By using the frame of the battery as the motorcycle&#8217;s chassis, HyperDrive also
achieves valuable weight and cost reduction advantages. With 150 kW of power at its disposal, HyperDrive has been specifically designed
to compete with the performance of market leaders in the high-performance motorcycle market, whether internal combustion or electric.
Thanks to the energy modularity designed into it, HyperDrive-based motorcycles can be detuned in power, energy and thus cost to support
500 &#8211; 1500cc power equivalent classes of motorcycles in both the North American and European markets, with price points ranging
from $20,000 - $80,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The HyperDrive platform is
contrasted by the smaller, less powerful and lower cost HyperLite platform, currently in its early design phase. HyperLite will be developed
using a very similar design architecture as HyperDrive, enabling the production of a range of light weight, low to medium cost motorcycles
and scooters with milder levels of horsepower that are more common in overseas and developing markets. With these two platforms paired
with Damon&#8217;s three patented cornerstone technologies, CoPilot&#8482;, Shift&#8482; and its AI-enabled cloud platform. Damon&#8217;s
long-term objective is to build a premium, high-tech, electric motorcycle company that rivals the largest incumbents in both profit and
annual volume, by providing a technologically enhanced riding experience that is not currently available from any other manufacturer.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">CoPilot provides a novel rider
assistance and warning system integrated into the motorcycle. Shift allows the handlebars and foot pegs to mechatronically adjust on the
fly, addressing issues of ergonomic comfort and allowing users to select different riding positions for changing conditions such as a
lower, more aerodynamic position for highway use or a more upright position for urban use. Its AI-enabled cloud collects environmental
and situational data that, paired with over-the-air software updates, drives a continual loop of collision warning improvements, with
an aim to further reduce accident probability over time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The commercial production
of Damon&#8217;s motorcycles is expected to commence after passing various internal and external tests and undergoing a self-certification
process required for US-bound vehicle homologation. These tests include: the completion of Damon&#8217;s ride quality and long-term durability
testing, completion of FCC Title 47 certification for the onboard charger, completion of UN 38.3 battery testing, completion of Damon&#8217;s
internal battery testing, extreme temperature operation verification, brake testing per FMVSS, and an internal and external review of
FMVSS compliance with Damon engineering subcontractor TUV of Germany. The following is a further description on the timing and stage of
research and development:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">HyperDrive: The HyperDrive serves as a common powertrain platform for both the HyperSport and HyperFighter
models. Damon leverages a combination of in-house research and development alongside subcontracting to external experts to advance this
project. Currently, in the engineering &amp; development stage, the power electronics are 90% complete, with ongoing validation and the
integration of new features. Similarly, the mechanical and cooling systems are 90% complete, with continued testing, while the battery
system is 70% complete, with efforts focused on the development of the cell interconnect system. This stage is expected to be completed
by Q2 FY 2026. Subsequently, the project will progress to the pre-production stage, which will emphasize design validation and testing,
with an anticipated completion by Q3 - Q4 FY 2025. The budget allocated for the next 12 months is $0.6 million and $1.0 million for the
next 13 to 18 months, which proposed use of funds is disclosed in the table under the heading &#8220;Research and Development&#8221; in
this Prospectus.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">HyperSport: The Engineering &amp; Development of the HyperSport is mostly complete, with vehicle mechanics
90% finalized, pending the completion of the HyperDrive platform. The pre-production stage is set to commence, with tooling release as
a critical milestone, followed by validation and design confirmation, with an estimated completion by Q1 FY 2026. The Production &amp;
Commercialization Stage is ongoing in parallel, focusing on the establishment of the final assembly and test facility, along with the
development of distribution and delivery infrastructure. This stage is expected to conclude between Q3 FY 2026 and Q2 FY 2027. The estimated
budget for this program for the next 24 months is $24 million.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">HyperFighter: The HyperFighter shares its powertrain platform with the HyperSport, along with other key
components such as the chassis, braking system, and dash display. Currently in the concept stage, the design and performance characteristics
of the HyperFighter are being defined, leveraging these shared components, with an estimated completion date in Q2 - Q3 FY 2026. The engineering
&amp; development stage will follow with an anticipated completion in Q4 FY 2026 - Q1 FY 2027, and subsequently, the pre-production stage
is expected to be completed by Q3 - Q4 FY 2027. The Production &amp; Commercialization Stage is projected to conclude by Q1 - Q2 FY 2028.
The budget allocated for the next 24 months is $0.5 million for design and concept.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">HyperLite: The HyperLite is currently in the concept stage, where the design and performance characteristics
are being meticulously defined. This model is envisioned as a smaller and less powerful variant of the HyperSport, featuring a new powertrain
platform, and is targeted at the mass market. The concept stage, including simulation and 3D design programs, is expected to be completed
by Q2 - Q3 FY 2026. The subsequent engineering &amp; development stage is projected to conclude by Q4 FY 2027 - Q1 FY 2028. Following
this, the pre-production stage is anticipated to be completed by Q3 - Q4 FY 2028. The estimated budget for the next 24 months is $0.2
million, allocated for design and concept development.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">Additional Steps and Estimated Costs: As per the following table:</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_003.jpg" style="height: 509px; width: 624px"/></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is starting the product
portfolio with the HyperSport, the launch product sets a premium and high technology nature of the brand, which currently is responsible
for more than half of Damon&#8217;s 3400+ reservations. Damon plans to launch additional models made possible by reusing the same HyperDrive
powertrain platformcore vehicle chassis and powertrain system to address various market segmentation opportunities while reducing new
product and platform development investments. Over time, Damon intends to launch additional, lower cost commuter motorcycles, offered
with Damon&#8217;s advanced features such as CoPilot, Shift, and connectivity to further expand global appeal.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s strategy is
to commercialize and refine costly new technology with a premium family of products in the &#8216;Hyper&#8217; family of motorcycles for
the western market first. This market allows Damon to establish the brand and command the highest margins while ramping up volume. For
the large markets in India, Southeast Asia, Asia, Africa and South America, some of the key challenges include price sensitivity, brand
appeal, customer credit and financing options, import tax levies, trade tariffs and challenges relating manufacturing as a foreign entity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Building a successful western
brand is the first step to addressing the brand awareness and reputation gap in emerging markets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To address price sensitivities,
a scaled down, smaller powertrain platform called HyperLite will be introduced following the initial HyperDrive motorcycles. Using similar
battery technology and a smaller multi-variant battery design as the HyperDrive platform, it will support several models that meet the
needs of the 125cc to 400cc market segments in emerging markets such as India, SE Asia, Latin America and Africa. These vehicles are planned
to be final assembled, distributed and sold by partners in market, such as Damon&#8217;s partnership with Auteco and Indika.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s HyperLite-based
vehicles intend to compete by offering enhanced safety features, technology, or performance. Coupled with cost competitive subscription
plans proven in western markets, Damon intends to capture considerable market share by offering a low friction price model with exceptional
safety, noise and emissions benefits.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">One way to determine the size
of an emerging market is by conducting early market validation and testing through online pre-sales campaigns, similar to how Damon has
built its order book to date. This will be achieved by conducting early web-based marketing to establish appetite for the HyperLite platform.
This web-based marketing will be achieved with local language websites that link to sections of the main Damon website. In addition, Damon
will look for strategic business-to-business opportunities, such as sales to other motorcycle manufacturers, last mile and other delivery
applications that would allow Damon to establish a beachhead in new regions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Software and Connectivity Associated
with Our Motorcycles</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As software-defined vehicles,
all of Damon&#8217;s cloud backend and control for Damon&#8217;s vehicle electronic control unit is an internal development. This approach
helps Damon to ensure high compatibility and functionality, integrating critical electric vehicle systems and vehicle functions into one
vehicle-cloud-to-vehicle proprietary system. This allows Damon to be responsive to changing consumer needs, to remotely update software
and prioritize feature development identified through analysis of Damon&#8217;s data sets. This approach will apply to both its HyperLite
and HyperDrive line of vehicles.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s cloud vision
is to revolutionize the transportation landscape through its connected vehicle strategy, empowering end users with unrivaled vehicle optimization
and supervision capabilities, supporting increasingly better efficiency, safety, and performance.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s CoPilot system
interfaces with the rider via vibrating handlebars for forward collision warning, and via a proprietary 7&#8221; touchscreen display.
The display includes integrated GPS, 4G-LTE, Bluetooth, high-speed video processing and 500 GB of onboard data storage. With its 1080P
resolution, the display enables the following novel features to enhance rider awareness:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">LED forward collision warning to complement the handlebar vibration-based warning;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">LED blind spot warning;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">a digital rearview of traffic behind the motorcyclist;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">charging status via the &#8216;Dragon&#8217; logo on the back side of the display; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">full system control of the motorcycle&#8217;s features and functions.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Damon app allows riders
to interact with the electric motorcycle, providing location-based services, charging stations and vehicle control functions via an integrated
user profile. Damon&#8217;s app remotely bridges the rider to the bike using built-in cellular connectivity and GPS, providing status,
notifications, and alerts. In combination with the cloud system, the mobile app will enable an ecosystem of services provided to Damon
riders.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our SAVES Products and Services</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We offer a comprehensive set
of data analytics and statistical visualization software solutions for engineers and scientists. The suite of data analytics and statistical
visualization tools includes SigmaPlot, SigmaStat, SYSTAT, PeakFit, TableCurve 2D, TableCurve 3D, SigmaScan and MYSTAT. In addition, over
the last three years the next generation of the Sigmaplot Product called Sigmaplot NG was successfully developed. Sigmaplot NG is platform
independent/Macintosh compatible and is a technological refresh of the past versions of Sigmaplot allowing it to leverage modern hardware
architectures and computational capacity. In addition a cloud version of the Sigmaplot NG product which allows our customers to leverage
the full power of the cloud and distribute our software among its users with low touch and/or no touch installation processes is anticipated
to be released later this year.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>SigmaPlot </b>is the flagship
product that goes beyond financially oriented spreadsheets and the &#8220;bells and whistles&#8221; of business graphing software by making
the technical features that scientists and engineers need the highest priority. SigmaPlot provides more than 100 different 2D and 3D graph
types. Researchers can choose from a full range of graphing options: technical axis scales, multiple axes, multiple intersecting 3-D graphs
and more. With SigmaPlot, users create clear, compelling graphs that cannot be generated with basic spreadsheet packages.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Systat </b>is a powerful
statistical and graphical software package that is easy to use and highly integrated. The software includes basic and advanced statistics.
The basic functions are usually the most commonly used statistics (e.g., user can do descriptive statistics, frequencies, correlations
and etc.). Systat can also be used for advanced statistics (e.g., regression, ANOVA, MANOVA, factor analysis, cluster analysis, time series).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>SigmaStat </b>was sold
as a separate product for decades and was recently integrated into SigmaPlot. SigmaStat is a user-friendly statistical software package
scientists turn to when they want to be expertly guided through the analysis of their data. It is an ideal solution for anyone who needs
to conduct statistical analysis but does not have the in-depth knowledge of the math behind the statistical procedures performed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>SigmaScan Pro Scientists</b>,
engineers or technicians face problems that are difficult to measure but easy to photograph. SigmaScan provides a complete image analysis
package for studying the structure and size of the visual information &#8212; everything from image collection to data analysis. With
powerful image analysis and data manipulation techniques, SigmaScan Pro transforms images into reliable statistics, understandable graphs
and valuable scientific conclusions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>TableCurve 2D</b> is a
linear and non-linear curve fitting package for scientists. TableCurve 2D is the first and only program that completely eliminates endless
trial and error by automating curve fitting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>TableCurve 3D</b> performs
linear and non-linear surface fitting. TableCurve 3D is the first and only program that combines a powerful surface fitter with the ability
to find the ideal equation to describe three-dimensional empirical data.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>PeakFit </b>performs automated
nonlinear peak separation and analysis. It was designed for scientists performing spectroscopy, chromatography and electrophoresis. PeakFit&#8217;s
state-of-the-art nonlinear curve fitting is essential for accurate peak analysis and conclusive findings.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our Operations</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Sources and Availability of Raw Materials
for Our Motorcycle Business</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a vehicle designer and
manufacturer, Damon designs, develops and tests functional vehicle components such as the motor-gearbox, inverter, electronic control
unit, rider display interface, battery pack, cooling system and more. It has also designed and developed the bodywork and chassis system.
These components are manufactured by world class suppliers such as Fukuta, Sinbon, Inventec and Wistron. Other specialized components
such as brakes, suspension, ABS systems and tires are supplied by major brand names such as Brembo, Ohlins, Continental and Dunlop. All
final components and subassemblies and shipped for hand assembly by Damon staff. Damon does not procure any raw materials.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Distribution Methods for Our Motorcycle
Business</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is positioned to modernize
the way electric motorcycles are brought to market, combining online and in-person touchpoints to yield a superior customer experience
with greater cost efficiency. With a meaningful gap between the pace at which vehicle retailing has evolved over the past two decades
relative to other sectors, Damon believes there is tremendous upside potential for a model that incorporates direct-to-consumer online
practices with pull-based vehicle assembly. This significantly lowers on-hand inventory costs, creates a continuous customer order backlog
that generates ongoing demand and eliminates the ability for end customers to negotiate on price.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Most Damon customers begin
their journey online, with many utilizing a mobile device interfacing via its mobile website or through the Damon app. Damon is investing
in digital development to bring those customers to a single front end to address the early stages of their journey and to continue through
to purchase.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In North America and Europe,
Damon intends to offer interested customers the opportunity for a test ride before making a purchase. In addition, Damon plans to open
pop-up locations and brand installations to provide customers to interact with Damon products in key locations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Beyond North America and Europe,
Damon has agreed to a partnership with Auteco Mobility (&#8220;Auteco&#8221;), for the final assembly, distribution, and sales of Damon&#8217;s
HyperLite, its lower-cost global electric motorcycle platform.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s agreement with
Auteco is for the development of the Latin American Market, which also includes a provision for technology licensing. Damon intends to
make a depopulated variant of its CoPilot technology to provide safety on lower cost vehicles. In its discussion with Auteco, they proposed
installing CoPilot on all their bikes and providing the customers with the ability to unlock the safety features for an additional $10/month.
The details of these and other licensing opportunities are still to be finalized, but there appears to be strong demand for Damon&#8217;s
safety technology. For manufacturing, Damon intends to work with Auteco on the assembly, distribution, and sales of Damon branded motorcycles
into the LATAM countries where Auteco has an established network.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to Auteco, Damon
has received a $5 million investment from, and established a strategic partnership with, PT Ilectra Motor Group and PT Solusi Mobilitas
Indonesia for final assembly and distribution in Indonesia with the ability to expand that partnership to all of Southeast Asia. Damon
has entered into a relationship agreement with PT Ilectra Motor Group and PT Solusi Mobilitas Indonesia that establishes the strategic
partnership and a provided for the purchase of an unsecured promissory note by PT Solusi Mobilitas Indonesia from Damon for $5,000,000.
In addition, Damon agreed to invest an aggregate amount of $1,000,000 in PT Ilectra Motor Group.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Sales and Marketing for Our SAVES
Business</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Grafiti sales channels include
direct sales as well as indirect sales through channel partners including resellers and distributors. Our five indirect sales partners
distribute the Grafiti products in the western Europe region and also provide a wide range of pre- and post-sales services to Grafiti
customers including installation and support services. There has not been any revenue concentration with any single channel distributor.
The agreements with the channel distributions contain customary terms including a negotiated discount for the Manufacturer&#8217;s Suggested
Retail Price.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Direct sales representatives
are compensated with a base salary and, in certain circumstances, may participate in incentive plans such as commissions or bonuses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our products are marketed
through industry-focused as well as account-based marketing strategies which utilize SEO, advertising, social media, trade shows, conferences,
webinars, and other media.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Grafiti products are sold
as annual or perpetual licenses along with maintenance subscriptions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our Intellectual Property</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s intellectual
property is a core asset and an important tool to drive value and differentiation in its products and services. Damon protects, uses and
defends its intellectual property in support of its business objectives to increase return on investment, enhance competitive position,
and create shareholder value. Through strategic and business assessments of its intellectual property, Damon relies on a combination of
patents, trade secrets, copyrights, service marks, trademarks, domains, contractual terms and enforcement mechanisms across various international
jurisdictions to establish and protect intellectual property related to its current and future business and operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this filing,
Damon held 14 utility patents and 0 design patents, and had filed an additional 11 utility patent applications and 1 design patent applications
in the U.S. Damon also held 2 patents and 10 patent applications that are foreign counterparts of some of its U.S. patents and patent
applications with foreign patent offices. Damon does not view any individual patent as being material to its business. Subject to required
payments of annuities or maintenance fees, U.S. design patents have a term of 15 years from the date of issuance, and U.S. utility patents
have a term of 20 years from the priority application date. Accordingly, Damon&#8217;s U.S. patents that have already been issued will
expire between 2037 and 2043. Damon&#8217;s foreign patents generally have similar expiration dates, but may vary from country to country,
the duration being set according to the laws of the jurisdiction that issued the patent. Damon&#8217;s trademarks, logos, domain names,
and service marks are used to establish and maintain its reputation with its customers, and the goodwill associated with its business.
Additionally, Damon has registered trademarks including &#8220;DAMON (word),&#8221; &#8220;HYPERSPORT (word),&#8221; &#8220;HYPERCROSS
(word),&#8221; &#8220;HYPERFIGHTER (word),&#8221; and &#8220;DAMON (design)&#8221; and other pending trademark applications with U.S.
and foreign trademark offices. The duration of trademark registrations varies from country to country, but it is typically for ten years
with unlimited ten-year renewal terms, subject to the payment of maintenance and renewal fees and the laws of the jurisdiction in which
the trademark is registered.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">License, Distribution and Administrative
Service Arrangements with Grafiti LLC for Our SAVES Business</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 19, 2020, the Parent
acquired an exclusive license to use, market, distribute, and develop the SYSTAT and SigmaPlot software suite of products (referred to
as &#8220;SAVES&#8221;) pursuant to an Exclusive Software License and Distribution Agreement, among the Parent, Cranes Software International
Ltd. (&#8220;Cranes&#8221;) and Systat Software, Inc. (&#8220;Systat&#8221; and, together with Cranes, the &#8220;Systat Parties&#8221;),
as amended on June 30, 2020 and February 22, 2021 (as amended, the &#8220;License Agreement&#8221;). In connection with the License Agreement,
the Parent received an exclusive, worldwide license to use, modify, develop, market, sublicense and distribute the SAVES software, software
source, user documentation and related Systat Intellectual Property (as defined in License Agreement) (the &#8220;License&#8221;); and
an option to acquire the assets underlying the License (the &#8220;Purchase Option&#8221;). In connection with the Solutions Divestiture,
the Parent contributed the License, along with other assets and businesses, to Grafiti LLC, then a wholly-owned subsidiary of the Parent.
As reported in the current report on Form 8-K filed by the Parent on February 23, 2024, the Parent sold 100% of the equity interest in
Grafiti LLC to an entity controlled by Nadir Ali, our Chief Executive Officer and sole director.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Grafiti UK was incorporated
by the Parent in May of 2020 to operate as a distributor of the SAVES products in the UK and western European region. Grafiti UK is responsible
for maintaining all aspects of the relationship with the end customer. All customer interaction from solicitation, pre-sale activities,
sale and invoicing, delivery and customer support is the responsibility of Grafiti UK.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 19, 2024, Grafiti
UK entered into a Distributor Agreement with Grafiti LLC. Under the Distributor Agreement, Grafiti LLC granted Grafiti UK a non-exclusive,
non-transferable right and license to market and distribute SAVES products in the United Kingdom and other agreed-upon territories. Grafiti
UK will pay Grafiti LLC the then-current prices for the products, subject to a discount of up to 50% if certain revenue targets are met
or other arrangements agreed upon by the parties. The deemed effective date of the Distributor Agreement is January 1, 2024, and will
remain in effect for one year from the effective date, automatically renewing for successive one-year periods unless either party provides
advance notice prior to the end of the current term to not extend. Either party may terminate the Agreement without cause by providing
at least 90 days&#8217; prior written notice, or immediately for specified reasons, including an uncured breach or bankruptcy.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, on July 19,
2024, Grafiti UK entered into an Administrative Support Service Agreement with Grafiti LLC. Under the Administrative Support Service Agreement,
Grafiti LLC agreed to provide accounting, tax, and other administrative sales support services to Grafiti UK for $5,080 per month, with
the amount subject to a 5% annual increase by Grafiti LLC. The Administrative Support Service Agreement is deemed to have commenced on
January 1, 2024, and remains in effect for one year from the effective date, automatically renewing for successive one-year periods unless
either party provides advance notice prior to the end of the current term to not extend.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Facilities</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors entered into
a two year and four-month lease on September 12, 2022, for a facility in San Rafael, California, USA. The 18,110 square foot office, manufacturing
and warehouse space houses part of the Company&#8217;s research and development group, including battery and powertrain development. The
majority of this space is for research and development labs, prototype manufacturing, vehicle test and validation, and material storage.
The Company&#8217;s intention is to begin commercial assembly from the San Rafael location.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Employees</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this filing,
the Company has a total of 19 employees and contractors. Of these, 17 are dedicated to our motorcycle business, including 14 full-time
employees and 3 contractors. By location, 11 team members are based in Canada, 3 in the USA, and 3 are based in France and Germany. Additionally,
2 employees support the SAVES business: one focuses on sales and marketing efforts, while the other handles pre- and post-sale support.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None of its employees are
members of any unions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Regulatory Overview</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">United States</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">NHTSA Safety and Self-Certification Obligations</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a manufacturer of electric
vehicles, Damon&#8217;s electric vehicles are subject to, and must comply with, numerous regulatory requirements established by National
Highway Traffic Safety Administration (&#8220;NHTSA&#8221;), including all applicable United States Federal Motor Vehicle Safety Standards
(&#8220;Safety Standards&#8221;). As set forth by the National Traffic and Motor Vehicle Safety Act, Damon must certify that its electric
vehicles meet all applicable Safety Standards. At the time of production, Damon intends for its motorcycles to be fully compliant with
all such Safety Standards without the need for any exemptions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is also required to
comply with, or demonstrate exemptions from, other requirements of federal laws administered by NHTSA, including the consumer information
labeling and owner&#8217;s manual requirements and various reporting requirements, such as &#8220;early warning&#8221; reports regarding
warranty claims and field incidents, death and injury reports, foreign recall reports and safety defects reports. In addition, Damon&#8217;s
products are also subject to certain laws and regulations that have been enacted or proposed, e.g., &#8220;Right to Repair,&#8221; laws,
that could require Damon to provide third-party access to its network and/or vehicle systems.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">EPA Certificate of Conformity</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Clean Air Act requires
that Damon obtain an Environmental Protection Agency-issued Certificate of Conformity with respect to emissions from its electric vehicles
and include labeling providing consumer information such as miles per gallon of gas-equivalent ratings and maximum range on a single charge.
The Certificate of Conformity is required each model year for electric vehicles sold in states covered by the Clean Air Act&#8217;s standards
and is also required each model year for vehicles sold in states that have sought and received a waiver from the Environmental Protection
Agency to utilize California standards.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Battery Safety and Testing</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s battery packs
are tested in accordance with industry safety standards, including selected tests specified in the SAE J2464 and J2929 standards as well
as tests defined by other standards and regulatory bodies and Damon&#8217;s own internal safety and quality tests. These tests evaluate
battery function and performance as well as resilience to conditions including immersion, humidity, fire and other potential hazards.
Damon is still in the process of testing the vehicle battery pack. Testing has taken place at a battery cell and submodule level with
the next phase planned for battery module and full pack abuse testing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">European Union</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Europe Type Approval</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon intends to export electric
vehicles to Europe. Unlike the United States, once Damon starts operating in this market, it must obtain pre-approval from regulators
to import and sell its electric vehicles into the EU and countries that recognize EU certification or have regulatory regimes aligned
with the EU (collectively referred to as &#8220;Europe&#8221;). The process for certification in Europe is known as &#8220;Type Approval&#8221;
and requires Damon to demonstrate to a regulatory agency in the EU, referred to as a &#8220;Competent Authority&#8221;, that its electric
vehicles meet all EU safety and emission standards.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Type Approval is accomplished
through witness testing of vehicles as well as inspection of a representative vehicle intended for production and sale. Once the vehicle
type is approved, all vehicles manufactured based on the approved type of vehicle may be produced or imported and sold in Europe.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any changes to an approved
vehicle type, including substantial software changes, must go through updated Type Approval by the Competent Authority.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">EU Emissions Regulations</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon believes Europe&#8217;s
regulatory environment is generally conducive to the development, production and sale of electric vehicles. Through emission legislation,
tax incentives and direct subsidies, EU and non-EU countries in Europe are taking a progressive stance in reducing carbon emissions in
the transport sector which may lead to increasing demand for electric vehicles.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This is reflected in the EU-wide
target of a 90% reduction in greenhouse gas emissions from the transport sector by 2050 (compared to 1990 levels), as part of an economy-wide
carbon-neutral target. Moving forward, the European Commission has proposed legislation that would (i) introduce a &#8220;cap and trade&#8221;
carbon pricing system that would apply to the transport sector from 2026; and (ii) require increased levels of national greenhouse gas
reduction commitments (which include the transport sector) pursuant to a revision of the Effort Sharing Regulation, as part of efforts
to reduce EU emissions by 55% by 2030 (compared to 1990 levels).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Environmental, Health and Safety Regulations</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Certain of Damon&#8217;s operations,
properties and products are subject to stringent and comprehensive international, federal, state and local laws and regulations governing
matters including environmental protection, occupational health and safety, and the release or discharge of materials into the environment
(including air emissions and wastewater discharges). Failure to comply with these laws and regulations may result in the assessment of
administrative, civil and criminal penalties, the imposition of investigatory and remedial obligations, and the issuance of orders enjoining
some or all of Damon&#8217;s operations in affected areas.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is also subject to permitting,
registration, and other government approval requirements under environmental, health and safety laws and regulations applicable in the
jurisdictions in which Damon operates. Those requirements obligate Damon to obtain permits, registrations, and other government approvals
from one or more governmental agencies to conduct its operations and sell its products. The requirements vary depending on the location
where Damon&#8217;s regulated activities are conducted.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following summarizes certain
existing environmental, health and safety laws and regulations applicable to Damon&#8217;s operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">United States</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Hazardous Substances</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon is subject to regulations
governing the proper handling, storage, transportation and disposal of products containing hazardous substances. Transportation of its
battery packs (and of equipment containing them) is governed by regulations that address risks posed during different modes of transport
(e.g.&#184; air, rail, ground, ocean). Governing transportation regulations in the U.S., issued by the Pipeline and Hazardous Materials
Safety Administration (&#8220;PHMSA&#8221;), are based on the United Nations (&#8220;UN&#8221;) Recommendations and Model Regulations
on the Transport of Dangerous Goods as well as related UN Manual Tests and Criteria. Damon plans to test our battery pack against the
applicable UN Manual tests for its production battery packs, and the test results demonstrate Damon&#8217;s compliance with the PHMSA
regulations in the following phases of industrialization.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon currently uses transition
metal oxide cells in its high-voltage battery packs. Damon battery packs include certain packaging materials that contain trace amounts
of hazardous chemicals whose use, storage and disposal is regulated under U.S. federal law. As a result, Damon&#8217;s battery packs are
subject to federal and state environmental laws and regulations that govern the handling and disposal of waste, including, in some instances,
the remanufacture, recycling and disposal of hazardous waste.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The laws governing hazardous
substances and hazardous waste also may impose strict, joint and several liability for the investigation and remediation of areas where
hazardous substances may have been released or disposed. In the course of ordinary operations, Damon, directly and through third parties
and contractors, may handle hazardous substances within the meaning of the Comprehensive Environmental Response, Compensation, and Liability
Act and similar U.S. federal and state statutes and, as a result, may be jointly and severally liable for all or part of the costs required
to clean up sites at which any such hazardous substances have been released into the environment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">European Union</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Hazardous Substances</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Should Damon expand manufacturing
into the EU, it would also be subject to regulations governing the proper handling, and disposal of products containing hazardous substances
in the EU, including the EU Waste Framework Directive. In relation to Damon&#8217;s batteries, disposal would be governed by the Batteries
Directive, which imposes, among other obligations, certain requirements in relation to the disposal of batteries, such as that producers
of batteries and producers of other products that incorporate a battery are responsible for the waste management of batteries that they
place on the market, in particular the financing of collection and recycling schemes.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In December 2020, the EU proposed
a new Batteries Regulation, which, if passed, would include obligations with respect to the amount of recycled content required in batteries
placed on the EU market and would introduce mandatory supply chain due diligence obligations with respect to the materials used in its
batteries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Manufacturer and Dealer Regulation in the United States</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">State laws regulate the manufacture,
distribution, sale, and service (including delivery) of motorcycles, and generally require vehicle manufacturers and dealers to be licensed
in order to sell vehicles directly to customers in the state. Some states, however, do not permit motorcycle manufacturers to be licensed
as dealers or to act in the capacity of a dealer. To sell vehicles directly to residents of these states, Damon must conduct the sale
out of state over the internet or telephonically.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, certain states
and territories require service facilities to be available for vehicles sold in the state or territory, which may be interpreted to require
service facilities to be available for vehicles sold over the internet or telephonically to residents of the state or territory. Puerto
Rico, for example, is one such jurisdiction. Such laws could limit Damon&#8217;s ability to sell vehicles in states where Damon either
does not maintain service facilities or where Damon does not have retail partners licensed to act as dealers who maintain service facilities
within these states.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon believes that, as a
matter of interstate commerce, it may sell an electric vehicle to any consumer in any state in the United States from a Damon retail partner
that is duly licensed as a dealer by a state in the United States. That customer may contact a licensed Damon retail partner through the
internet, by telephone or visiting the location directly. However, states that prohibit direct sales also restrict traditional sales activities.
Accordingly, in order to test drive an electric vehicle or have an in-person discussion with a Damon salesperson regarding issues such
as price, financing, trade-ins, options or similar purchase-related topics, a consumer residing in a direct sales-prohibited state would
be required to either contact Damon through electronic means (e.g., Internet or telephone) or by traveling out of their home state to
visit a licensed Damon retail partner in another state. With respect to service, vehicle manufacturers are prohibited from providing warranty
service from an established location within several states. Service for customers residing in those states may in the future be provided
by a mobile unit dispatched from a licensed service location in a nearby state where warranty service is allowed or by that customer driving
their Damon vehicle (or having it towed) to a state which allows Damon or a licensed Damon retail partner to have a physical service location
and perform warranty service activities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Data Privacy and Cybersecurity Laws and Regulations</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s business collects,
uses, handles, stores, receives, transmits and otherwise processes different types of information about a range of individuals, including
its customers, riders of its electric vehicles, website visitors, users of its mobile application, its employees and job applicants, and
employees of companies it does business with (such as vendors and suppliers). As a result, Damon is and may become subject to existing
and emerging federal, state, local and international laws and regulations related to the privacy, security and protection of such information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following is an overview
of the legal and regulatory framework by jurisdiction that the Company may be subject to.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">United States</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Within the United States there
are numerous data privacy and cybersecurity laws and regulations that the Company may be subject to. Example of these laws and regulations
include the Federal Trade Commission (&#8220;FTC&#8221;) Act, the Gramm-Leach-Bliley Act, the Telephone Consumer Protection Act, the CAN-SPAM
Act, California Consumer Privacy Act (&#8220;CCPA&#8221;), the California Privacy Rights Act (&#8220;CPRA&#8221;), the Virginia Consumer
Data Protection Act (&#8220;VCDPA&#8221;), the Colorado Privacy Act (&#8220;CPA&#8221;), the Connecticut Data Privacy Rights Act (&#8220;CTDPA&#8221;)
and the Utah Consumer Privacy Act (&#8220;UCPA&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the United States, while
there is not a single generally applicable federal law governing the processing of personal information, there are federal laws that apply
to the processing of certain types of information, or the processing of personal information by certain types of entities, and the Federal
Trade Commission and state attorneys general may bring enforcement actions against companies that engage in processing of personal information
in a manner that constitutes an &#8220;unfair&#8221; or &#8220;deceptive&#8221; trade practice.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, certain states
have enacted laws relating to data privacy and the processing of information about residents in those states. The CCPA, which went into
effect on January 1, 2020, and applies to Damon&#8217;s business, imposes obligations and restrictions on businesses that handle personal
information of California residents and provides new and enhanced data privacy rights to California residents, including the right to
know, the right to delete and the right to opt out of the sale of personal information as well as additional protections for minors. Certain
requirements in the CCPA remain uncertain due to ambiguities in the drafting of or incomplete guidance. Adding to the uncertainty, in
November 2020, California voters also passed the CPRA, which amends and expands upon the CCPA, imposes additional obligations and sets
forth additional privacy rights for California residents. Additional states, Virginia, Colorado, Connecticut and Utah, also recently enacted
comprehensive data privacy laws. Virginia passed the VCDPA, Colorado passed the CCPA, Connecticut passed the CTDPA and Utah passed the
UCPA. The CPRA and VCDPA become effective on January 1, 2023, the CPA and CTDPA become effective on July 1, 2023, and the UCPA becomes
effective on December 31, 2023. There are currently draft CPRA regulations and draft CPA rules that, when passed, will supplement the
CPRA and CCPA. Additionally, laws, regulations, and standards covering marketing and advertising activities conducted by telephone, email,
mobile devices, and the Internet, may be applicable to Damon&#8217;s business, such as the TCPA, the CAN-SPAM Act and similar state and
federal consumer protection laws. Damon is also subject to certain laws and regulations that have been enacted or proposed, such as &#8220;Right
to Repair&#8221; laws, that could require it to provide third-party access to its network and/or vehicle systems.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">European Union and the United Kingdom</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">By expanding into Europe and
the United Kingdom, Damon will also become subject to laws, regulations and standards covering data protection and marketing and advertising,
including the EU General Data Protection Regulation (&#8220;GDPR&#8221;) and the United Kingdom data protection regime, consisting primarily
of the UK General Data Protection Regulation and the UK Data Protection Act (together referred to as the UK GDPR). The GDPR and UK GDPR
regulate the processing of data relating to an identifiable individual (personal data) and impose stringent data protection requirements
on organizations with significant penalties for noncompliance. The European Data Protection Board has also released data guidelines for
connected vehicles, and the upcoming ePrivacy Regulation is in its final stages.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Rest of World</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Regulators and legislators
in jurisdictions around the world continue to propose and enact more stringent data protection and privacy laws. New laws as well as any
significant changes to applicable laws, regulations, interpretations of laws or regulations, or market practices regarding privacy and
data protection or regarding the manner in which Damon seeks to comply with applicable laws and regulations could require Damon to make
modifications to its products, services, policies, procedures, notices and business practices. Many large geographies which may become
important to Damon&#8217;s future success, including Australia, Brazil, Canada, China and India, have passed or are considering comparable
data privacy legislation or regulations. Until prevailing compliance practices standardize, the impact of worldwide privacy regulations
on Damon&#8217;s business and, consequently, its revenue, could be negatively impacted.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon prioritizes the trust
of its customers and employees and places great emphasis on systems and product security, cybersecurity, and privacy. To earn this trust
and comply with the above legal and regulatory framework, Damon is adopting and implementing a variety of technical and organizational
security measures, procedures, and protocols designed to protect its systems, products and data, in accordance with the National Institute
of Standards and Technology (&#8220;NIST&#8221;) Cybersecurity Framework.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Utilizing the NIST Cybersecurity
Framework, Damon has instituted a cybersecurity program designed to address the evolving cyber-threat landscape. This includes a company-wide
risk management structure with capabilities to assess direct and indirect vendors and an enterprise Secure Software Development Lifecycle
to ensure that Damon reduces its attack surface by remediating vulnerabilities in the development process itself. Additionally, Damon&#8217;s
identity and access management procedures and controls are consistent with the NIST Cybersecurity Framework, including measures to validate
and authenticate the identity of its corporate users.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon maintains a vulnerability
management program that includes periodic scans designed to identify security vulnerabilities and implement remediations for potential
customer-impacting issues that are found. In addition, Damon conducts penetration tests, receives threat intelligence, follows incident
response procedures, and remediates vulnerabilities according to severity and risk. Further, seeking to implement effective management,
control, and protection, Damon has established a centralized, organization-wide view of information assets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon&#8217;s cloud security
program seeks to enable secure cloud architecture deployments and extend security capabilities to the edge of Damon&#8217;s network where
it interacts with customers. Damon works to increase cybersecurity awareness throughout its organization through education. Damon&#8217;s
cloud-hosted website and mobile application software services are developed using industry-standard SecDevOps practices and are rigorously
tested before deployment. Damon&#8217;s product software plan to utilize a zero-trust approach that employs signed certificates, encryption
keys, authentication schemes, and cryptography algorithms, and Damon has deployed these measures as appropriate as part of its efforts
to secure products&#8217; communications and data transfers, vehicles and their components, including firmware over-the-air (&#8220;FOTA&#8221;)
updates. Additionally, Damon utilizes pre-condition checks, sequence and dependency execution, failure detection, and rollback and recovery
when performing updates during the FOTA process.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon has also commenced a
corporate-wide data privacy program with dedicated cross-functional resources. The objective of Damon&#8217;s data privacy program is
to facilitate beneficial uses of data to improve its products and services while preserving its customers&#8217; privacy expectations
and complying with applicable law. Global data privacy laws and practices are continually evolving, and will continue to guide the operational
design, controls, procedures, and policies for Damon&#8217;s program. Damon&#8217;s strategy accounts for increased risk as its business
scales by addressing appropriate security and access controls for customer and employee information. A core tenet of Damon&#8217;s privacy
program is to implement privacy-by-design principles in both software and hardware development throughout the organization. Damon&#8217;s
privacy program will continue to evolve and adapt, utilizing industry practices and tailored risk management frameworks, to allow for
close collaboration across the organization, particularly between Damon&#8217;s information technology and legal functions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Legal Proceedings</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this filing,
we are not party to, nor is any of our property the subject of, any material pending legal proceedings reportable under Item 103 of Regulation
S-K.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="text-transform: uppercase">&#160;</span></p><div>

</div><div><a id="a_017"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="text-transform: uppercase"><b>Management</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following sets forth certain
information, as of the date of this filing, concerning the persons who serve as our directors and executive officers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center; width: 10%"><b>Age</b></td>
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    <td style="font-size: 10pt; text-align: justify">Dominique Kwong</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">49</td>
    <td>&#160;</td>
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  <tr style="vertical-align: top; ">
    <td style="font-size: 10pt; text-align: justify">Baljinder Kaur Bhullar</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">55</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: justify">CFO and Director</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font-size: 10pt; text-align: justify">Karan Sodhi</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">32</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: justify">Director</td></tr>
  <tr style="vertical-align: top; ">
    <td style="font-size: 10pt; text-align: justify">Shashi Tripathi</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">47</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: justify">Chairman of the Board</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font-size: 10pt; text-align: justify">Melanie Figueroa</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">42</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: justify">Director</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Karan Sodhi, Shashi Tripathi
and Melanie Figueroa serve on the Company&#8217;s Audit Committee, its Compensation Committee and its Nominating and Corporate Governance
Committee. </p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Biographies</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following are brief profiles
of the executive officers and directors of the Company, including a description of each individual&#8217;s principal occupation within
the past five years:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Dominique Kwong, Interim Chief Executive Officer and Director</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Mr. Kwong was appointed to
serve as the Interim CEO and Director of the Company effective as of December 4, 2024. He served as the Chief Technology Officer and Chief
Operating Officer of Damon Motors Inc. from June 2017 to January 2023. Between January 2023 and December 2024, Mr. Kwong served as a consultant
in the role of as Head of Electronics for Alpinestars, a globally recognized motorcycle apparel manufacturer. In this capacity, he contributed
to strategic initiatives, R&amp;D, and operational improvements for their Tech-Air airbag systems and other electronic products. Mr. Kwong&#8217;s
in-depth knowledge and experience with the Company&#8217;s business in electric motorcycle development and manufacturing and extensive
executive leadership background led us to conclude that he should serve as a director.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Baljinder (Bal) Bhullar, Chief Financial Officer and Director</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Bal Bhullar was appointed
to serve as CFO and Director of the Company with effect upon the closing of the Business Combination. She was appointed to serve as CFO
of the Company&#8217;s wholly owned subsidiaries Damon Motors, Inc. and Damon Motors Corp. effective January 1, 2024. Ms. Bhullar brings
over 20 years of experience in diversified business, investor relations, investment banking, financial &amp; risk management serving as
an executive and board member in both public and private companies across various sectors, including automotive, technology, manufacturing,
e-commerce, transport, energy, resource and health/wellness. She previously served as CFO and Corporate Secretary of Foremost Lithium
Resource and Technology (NASDAQ: FMST) from September 2023 to February 2024;; CFO of ReCar (ReBuild Manufacturing) from January 2023 to
March 2023; and Chief Compliance Officer, CFO and board member of ElectraMeccanica Vehicles Corp. (NASDAQ: SOLO) from October 2018 to
December 2022. She has also served as President of the BC Risk Management Association and has held positions as a board member and executive
of several private and public companies. Currently Ms. Bhullar is CFO of the Company and a member of the Board and CEO/Founder/board member
of BKB Management Ltd. Ms. Bhullar is a Chartered Professional Accountant, Certified General Accountant, a CRM designation from Simon
Fraser University and a diploma in Financial Management from British Columbia Institute of Technology. Ms. Bhullar has proven expertise
with increasing market capitalization, raising capital, overseeing corporate governance, SOX, ESG, diversity and regulatory compliance,
financial &amp; strategic planning, as well as successfully completing initial public offerings, reverse mergers, business expansions,
start-up operations, program development and product development which led us to the conclusion that she should serve as a director.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Melanie Figueroa, Director</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Melanie Figueroa was appointed
to serve as a member of the Board effective upon the closing of the Business Combination. Since May 2023, she has served as Co-Managing
Partner of Next Move Partners LLC, an advisory firm that supports emerging growth companies navigating the complexities of the U.S. public
markets in their capital raising and M&amp;A growth initiatives. Since March 2024, Ms. Figueroa has also served as General Counsel to
Grafiti LLC, a data analytics and statistical visualization software solution for engineers and scientists. From January 2020 until the
closing of its business combination with XTI Aircraft Company in March 2024, Ms. Figueroa served as General Counsel to Inpixon, a Nasdaq
listed global software technology company where she assisted the executive management team &amp; board in defining and successfully executing
its financing and M&amp;A strategy, including domestic, cross-border and M&amp;A transactions. Prior to her role as General Counsel, she
was the Managing Partner of the NY office of a national law firm where she advised and assisted high growth companies in structuring&amp;
executing debt &amp; equity financing transactions &amp; a multitude of domestic &amp; cross border M&amp;A transactions, on both the
buy side &amp; sell side. Ms. Figueroa has over 15 years of experience advising executive management teams and board of directors of emerging
growth companies seeking access to the U.S. public markets to raise capital and executing go public transactions through traditional IPO&#8217;s
and other alternative structures, including reverse mergers, spin-offs, and SPACs which led us to the conclusion that she should serve
as a member of the Board.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Karan Sodhi, Director</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Karan Sodhi was appointed
to serve as a member of the Board effective upon the closing of the Business Combination. He was appointed as a director of Damon in August
2024. He is a practicing lawyer, and the managing partner at Rockford Legal &amp; Advisory LP, a regional law firm in Delta, British Columbia.
Prior to his service with Damon, Karan was an Associate Lawyer at DuMoulin Black LLP from September 2022 to September 2023; General Counsel
at SOL Global Investments from September 2021 to September 2022; and Associate Legal Counsel at Pan American Silver Corp from November
2019 to September 2021. Karan brings a breadth of knowledge and experience in corporate commercial transactions, securities, capital markets
and estate planning. With nearly a decade of experience, Karan has become a trusted advisor to public companies and high-net-worth individuals,
managing complex transactions and regulatory challenges which led us to the conclusion that he should serve as a member of the Board.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Shashi Tripathi, Chairman of the Board</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Shashi Tripathi was appointed
to serve as a member of the Board effective upon the closing of the Business Combination. He was appointed as a director of Damon in August
2024. Mr. Tripathi is a seasoned entrepreneur, investor, and advisor with extensive experience in technology, operations, supply chain,
and manufacturing. He has served on the boards of several companies and has a proven track record in regulated industries, having received
accolades such as the Best Patient Engagement Strategy and Medical Design Excellence awards. Mr. Tripathi has successfully led three companies
to exits and since October 2019 has served as the founder and Managing Partner of Nurture Growth Fund, which invests in a diverse range
of sectors including artificial intelligence, SaaS, digital health, and FinTech. Prior to his service with Damon, he has served as Chief
Operating Officer and Chief Technology Officer of ImpediMed from July 2018 to June 2024. Additionally, he is currently the CEO of Sleepiz
USA. Mr. Tripathi holds a master&#8217;s degree in industrial engineering and a bachelor&#8217;s degree in mechanical engineering. His
valuable experience as an investor and advisor to early stage, pre-IPO companies across a variety of sectors led us to conclude that he
should serve as a member of the Board.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><b>Family Relationships</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are no family relationships
between any of our directors and executive officers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Involvement in Certain Legal Proceedings</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To the best of our knowledge,
none of our directors or executive officers were involved in any legal proceedings described in&#160;Item 401(f) of&#160;Regulation S-K&#160;in
the past ten years.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>The Board Composition
and Election of Directors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">The
Board is comprised of five members made up of a single class of directors. Each director is subject to re-election on an annual basis
at each annual meeting of shareholders. The Board of Directors may establish the authorized number of directors from time to time by ordinary
resolution. If, at any meeting of shareholders at which there should be an election of directors, the places of any of retiring directors
are not filled by that election, those retiring directors who are not re-elected and who are asked by the newly elected directors to continue
in office will, if willing to do so, continue in office to complete the number of directors until further new directors are elected at
a meeting of shareholders convened for that purpose. If any such election or continuance of directors does not result in the election
or continuance of the then-current number of directors, the number of directors of the Company shall be deemed to be set at the number
of directors actually elected or continued in office. Our directors hold office until the earlier of their death, resignation, retirement,
disqualification or removal or until their successors have been duly elected and qualified. In the event of a casual vacancy in our Board,
the remaining directors may fill such vacancy until the next annual meeting of shareholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Director Independence</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">We
have determined that Mr. Karan Sodhi and Mr. Shashi Tripathi are independent directors in accordance with the listing requirements of
Nasdaq. The Nasdaq independence definition includes a series of objective tests, including that the director is not, and has not been
for at least three years, one of the Company&#8217;s employees and that neither the director nor any of his, her or their family members
has engaged in various types of business dealings with the Company. The Company is relying on the phase-in exemption permitted under Nasdaq
listing rules for the requirement of having a majority of independent directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Director Compensation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">For
a discussion of our director compensation arrangements, see the section entitled &#8220;<i>Executive and Director Compensation</i>.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Committees of the
Board of Directors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">Our
Board has established an audit committee, a compensation committee and a nominating and corporate governance committee, each of which
operate pursuant to a charter to be adopted by our Board of Directors. The Board of Directors may also establish other committees from
time to time to assist our company and the Board. Our committees&#8217; charters are available on our website at <i>https://damon.com/</i>.
The reference to our website address does not constitute incorporation by reference of the information contained at or available through
our website, and you should not consider it to be part of this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Audit Committee</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">Our
audit committee consists of Melanie Figueroa, Shashi Tripathi and Karan Sodhi. Mr. Tripathi and Mr. Sodhi have been determined by the
Board to satisfy the independence requirements under Nasdaq listing standards and Rule 10A-3(b)(1) of the Exchange Act. The Company is
relying on the phase-in exemption permitted under Nasdaq listing rules for the requirement of a fully independent audit committee. The
chair of our audit committee is Karan Sodhi, who the Board has determined is an &#8220;audit committee financial expert&#8221; within
the meaning of SEC regulations. Each member of our audit committee can read and understand fundamental financial statements in accordance
with applicable requirements. In arriving at these determinations, the Board has examined each audit committee member&#8217;s scope of
experience and the nature of their employment in the corporate finance sector.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">The principal duties
and responsibilities of our audit committee include, among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing and recommending for approval to the Board the annual
financial statements (individually and collectively, the &#8220;annual Financial Statements&#8221;), accounting policies that affect
the Financial Statements, annual Management Discussion and Analysis (&#8220;MD&amp;A&#8221;) and associated press release;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing and approving, or recommending for approval to the
Board, the quarterly financial statements (individually and collectively, the &#8220;quarterly Financial Statements&#8221;, collectively
with the annual Financial Statements, the &#8220;Financial Statements&#8221;), quarterly MD&amp;A and associated press release;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing the annual report for consistency with the financial
disclosure referenced in the annual Financial Statements;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">assessing the adequacy of procedures in place for the review
of our public disclosure of financial information extracted or derived from annual or quarterly Financial Statements and periodically
assess the adequacy of such procedures;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing any significant issues affecting financial reports;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing any developments in the International Financial
Reporting Standards as issued by the IFRS Foundation and the International Accounting Standards Board (IASB) or U.S. Generally Accepted
Accounting Principles as issued by the Financial Accounting Standards Board (FASB) that could affect the Company;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing and approving any earnings guidance to be provided
by the Corporation;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">coordinating the oversight and reviewing the adequacy of our
internal control over financial reporting;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">establishing policies and procedures for the receipt and retention
of accounting-related complaints and concerns;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing with management, external auditors and legal counsel
any material litigation claims or other contingencies, including tax assessments, and adequacy of financial provisions, that could materially
affect financial reporting;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing with the our Chief Executive Officer and the Chief
Financial Officer our disclosure controls and procedures, including any significant deficiencies in, or material non-compliance with,
such controls and procedures;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">discussing with our Chief Executive Officer and the Chief
Financial Officer all elements of certification required pursuant to National Instrument 52-109 and the Sarbanes-Oxley Act of 2002, as
applicable;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing all related person transactions for potential conflict
of interest situations and approving all such transactions;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">appointing, approving the compensation of, and assessing the
independence of our independent registered public accounting firm;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">pre-approving auditing and permissible non-audit services,
and the terms of such services, to be provided by our independent registered public accounting firm;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing the overall audit plan with our independent registered
public accounting firm and members of management responsible for preparing our financial statements;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing and discussing with management and our independent
registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting
policies and practices used by us;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing and monitoring the processes in place to identify
and manage the principal risks that could impact our financial reporting;</td>
</tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing and approving corporate investment policies; and</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">assessing the effectiveness of the overall process for identifying
principal business risks and report thereon to the Board.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Compensation Committee</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">Our
compensation committee consists of Melanie Figueroa, Shashi Tripathi and Karan Sodhi. Each of Mr. Tripathi and Mr. Sodhi has been determined
has been determined by the Board to satisfy the independence requirements under Nasdaq listing standards and is a &#8220;non-employee
director&#8221; as defined in Rule 16b-3 promulgated under the Exchange Act. The Company is relying on the phase-in exemption permitted
under Nasdaq listing rules for the requirement of a fully independent compensation committee. The chair of our compensation committee
is Shashi Tripathi.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">The
principal duties and responsibilities of our compensation committee include, among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">overseeing and administering our incentive compensation and
other equity-based plans and recommending any changes to the Board as needed, as well as exercising the authority of the Board with respect
to the administration of such plans;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing and approving the corporate goals and objectives
with respect to compensation for our Chief Executive Officer;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing and recommending to the board of directors the evaluation
process and compensation structure of our other executive officers;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">periodically reviewing and making recommendations to the Board
regarding the compensation of non-management directors, including Board and Committee retainers, meeting fees, equity-based compensation
and such other forms of compensation and benefits as the Committee may consider appropriate;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">overseeing the appointment and removal of executive officers,
and reviewing and approving for executive officers, including the Chief Executive Officer, any employment, severance or change in control
agreements; and</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">approving any loans to employees as allowed by law.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Nominating and Corporate
Governance Committee</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">Our
nominating and corporate governance committee consists of Melanie Figueroa, Shashi Tripathi and Karan Sodhi. Mr. Tripathi and Mr. Sodhi
have been determined by the Board to satisfy the independence requirements under Nasdaq listing standards. The Company is relying on the
phase-in exemption permitted under Nasdaq listing rules for the requirement of a fully independent nominating and corporate governance
committee. The chair of our nominating and corporate governance committee is Shashi Tripathi.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">The
nominating and corporate governance committee&#8217;s responsibilities include, among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">identifying and recommending to the Board individuals qualified
to be nominated for election to the Board of Directors;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">recommending to the Board the members and Chair for each Board
committee;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">reviewing and assessing our corporate governance principles
and make recommendations for changes thereto to the Board; and</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">establishing and overseeing appropriate director orientation
and continuing education programs.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Board Leadership Structure</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">The
Board and management believe that the choice of whether the Chair of the Board should be an executive of our company, or a non-executive
or independent director, depends upon a number of factors, taking into account the candidates for the position and the best interests
of our company and our shareholders. Shashi Tripathi serves as the Board Chair and is an independent director. However, the Board may
decide in the future to unite the roles of Chairman and Chief Executive Officers if it determines that such structure provides better
and more effective oversight and management of the Company. In such case, the Board may also consider appointing a lead independent director,
if the circumstances warrant it. When the Board convenes for a meeting, it is expected that the non-management directors will meet in
one or more executive sessions, if the circumstances warrant it.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Role of Board in Risk
Oversight Process</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">The
Board is responsible for the oversight of the Company&#8217;s risk management processes and, either as a whole or through its committees,
regularly discusses with management the Company&#8217;s major risk exposures, their potential impact on the Company&#8217;s business and
the steps the Company takes to manage them. The risk oversight process includes receiving regular reports from board committees and members
of senior management to enable the Board to understand the Company&#8217;s risk identification, risk management and risk mitigation strategies
with respect to areas of potential material risk, including operations, finance, legal, regulatory, strategic and reputational risk.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">The
audit committee reviews and monitors the processes in place to identify and manage the principal risks that could impact our financial
reporting. It also reviews and approves corporate investment policies and assesses the effectiveness of our overall process for identifying
principal business risks. Oversight by the audit committee includes direct communication with the Company&#8217;s external auditors, and
discussions with management regarding significant risk exposures and the actions management has taken to limit, monitor or control such
exposures. The compensation committee is responsible for assessing whether any of the Company&#8217;s compensation policies or programs
has the potential to encourage excessive risk-taking. The nominating and corporate governance committee manages risks associated with
the independence of the Board and corporate practices. While each committee is responsible for evaluating certain risks and overseeing
the management of such risks, the entire Board is regularly informed through committee reports about such risks. Matters of significant
strategic risk is considered by the Board as a whole.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Compensation Committee
Interlocks and Insider Participation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">No
member of the compensation committee serves or served during the fiscal year ended June 30, 2024, as a member of the Board or compensation
committee of a company that has one or more executive officers serving as a member of the board of directors or compensation committee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Director Qualifications</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">The
nominating and corporate governance committee is responsible for reviewing with the Board, on an annual basis, the appropriate characteristics,
skills and experience required for the Board as a whole and its individual members. There is no difference in the manner in which the
nominating and corporate governance committee and evaluates nominees for director based on whether the nominee is recommended by a shareholder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Arrangements between
Officers and Directors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">To
our knowledge, there is no arrangement or understanding between any of our officers or directors and any other person, including directors,
pursuant to which the officer was selected to serve as an officer or director.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><b>Code of Business Conduct
and Ethics</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company adopted a written
code of business conduct and ethics that applies to its directors, officers and employees, including its principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the code is
posted on the corporate website at <i>https://damon.com/</i>. In addition, the Company intends to post on its website all disclosures
that are required by law or the listing standards of Nasdaq concerning any amendments to, or waivers from, any provision of the code.
The reference to the Company&#8217;s website address does not constitute incorporation by reference of the information contained at or
available through its website, and you should not consider it to be a part of this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


</div><!-- Field: Page; Sequence: 129; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->122<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_018"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">EXECUTIVE AND DIRECTOR
COMPENSATION</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Summary Compensation Table</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The information included in
the Summary Compensation Table below reflects compensation awarded or paid by the Company during fiscal years ended June 30, 2024 and
2023 to our sole officer and director prior to the consummation of the Business Combination. The individual included in the table is referred
to herein as the Company&#8217;s named executive officer (&#8220;NEO&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid; font-size: 10pt"><b>Name and Principal Position</b></td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Year</b></td>
    <td>&#160;</td>
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($)</b></td>
    <td>&#160;</td>
    <td>&#160;</td>
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($)</b></td>
    <td>&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Stock<br/>
Awards<br/>
($)</b></td>
    <td>&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Option<br/>
Awards<br/>
($)</b></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>All Other<br/>
Compensation<br/>
($)(1)</b></td>
    <td>&#160;</td>
    <td colspan="3" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Total<br/>
($)</b></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10.25pt; font-size: 10pt; text-indent: -10pt; width: 35%">Nadir Ali,</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; text-align: center; width: 7%">2024</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; width: 1%">$</td>
    <td style="font-size: 10pt; text-align: right; width: 7%">None</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; width: 1%">$</td>
    <td style="font-size: 10pt; text-align: right; width: 7%">None</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; width: 1%">$</td>
    <td style="font-size: 10pt; text-align: right; width: 7%">None</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; width: 1%">$</td>
    <td style="font-size: 10pt; text-align: right; width: 7%">219,627</td>
    <td style="font-size: 10pt; width: 1%">(2)</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; width: 1%">$</td>
    <td style="font-size: 10pt; text-align: right; width: 7%">45,000</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; width: 1%">$</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; text-align: right; width: 7%">264,627</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10.25pt; font-size: 10pt">Chief Executive Officer (3)</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: center">2023</td>
    <td>&#160;</td>
    <td style="font-size: 10pt">$</td>
    <td style="font-size: 10pt; text-align: right">None</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="font-size: 10pt">$</td>
    <td style="font-size: 10pt; text-align: right">None</td>
    <td>&#160;</td>
    <td style="font-size: 10pt">$</td>
    <td style="font-size: 10pt; text-align: right">None</td>
    <td>&#160;</td>
    <td style="font-size: 10pt">$</td>
    <td style="font-size: 10pt; text-align: right">None</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="font-size: 10pt">$</td>
    <td style="font-size: 10pt; text-align: right">None</td>
    <td>&#160;</td>
    <td style="font-size: 10pt">$</td>
    <td>&#160;</td>
    <td style="font-size: 10pt; text-align: right">None</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="font-size: 10pt; width: 0.25in">(1)</td>
    <td style="font-size: 10pt; text-align: justify">Includes service fees paid by Grafiti Holding to Mr. Ali for the period from April 1, 2024 through June 30, 2024.</td></tr>
  <tr style="vertical-align: top">
    <td style="font-size: 10pt">(2)</td>
    <td style="font-size: 10pt; text-align: justify">The fair value of employee option grants were estimated on the date of grant using the Black-Scholes option valuation model with probability weighted scenarios of the company &#8220;As-Is&#8221; on a standalone basis and on a &#8220;Merger&#8221; basis assuming the completion of the Business Combination.</td></tr>
  </table><div>
</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="font-size: 10pt; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr. Ali resigned from all director and officer positions with the Company upon the closing of the Business Combination.</span></td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Outstanding Equity Awards at Fiscal Year-End</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other than as set forth below,
there were no outstanding unexercised options, unvested stock, and/or equity incentive plan awards issued to our NEO as of June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td colspan="14" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Option Awards</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="12" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Stock Awards</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid; font-size: 10pt"><b>Name</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Grant Date</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Number of<br/>
securities<br/>
underlying<br/>
unexercised<br/>
options (#)<br/>
exercisable</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Number of<br/>
securities<br/>
underlying<br/>
unexercised<br/>
options (#)<br/>
unexercisable</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Equity<br/>
incentive<br/>
plan<br/>
awards:<br/>
number of<br/>
securities<br/>
underlying<br/>
unexercised<br/>
unearned<br/>
options<br/>
(#)</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Option<br/>
exercise<br/>
price<br/>
($)</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Option<br/>
expiration<br/>
date</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Number<br/>
of<br/>
shares<br/>
of restricted<br/>
stock<br/>
#</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><b>Market<br/>
value<br/>
of<br/>
shares<br/>
of restricted<br/>
stock<br/>
($)</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 1.25pt; font-size: 10pt; text-align: justify; width: 22%">Nadir Ali</td>
    <td style="width: 1%">&#160;</td>
    <td style="padding-left: 1.25pt; font-size: 10pt; text-align: center; width: 7%">06/11/2024</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; text-align: right; width: 7%">355,384</td>
    <td style="font-size: 10pt; width: 2%">(1)</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; text-align: right; width: 1%">&#8212;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; text-align: right; width: 7%">&#8212;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; width: 1%">$</td>
    <td style="font-size: 10pt; text-align: right; width: 7%">0.06336</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="padding-left: 1.25pt; font-size: 10pt; text-align: center; width: 10%">12/31/2024</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; text-align: right; width: 9%">&#8212;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="font-size: 10pt; text-align: right; width: 9%">&#8212;</td>
    <td style="width: 1%">&#160;</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="font-size: 10pt; width: 0.25in">(1)</td>
    <td style="font-size: 10pt; text-align: justify">This option is 100% vested.</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Advisory Services and Consulting Agreement with Nadir Ali</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company paid Mr. Ali a
fee of $15,000 per month for services rendered to the Company since April 1, 2024 and until the closing of the Business Combination. Grafiti
Holding has entered into a Consulting Agreement with Mr. Ali on September 25, 2024 (the &#8220;Ali Consulting Agreement&#8221;), pursuant
to which Mr. Ali will advise on public company reporting and compliance matters, business development, growth strategies and other operational
matters as requested.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the terms of the
Ali Consulting Agreement, the Company agreed to pay Mr. Ali, through a wholly owned affiliated entity, 3AM Investments LLC, a fee of $15,000
per month for services rendered to the Company since April 1, 2024 until the end of the month of the closing of the Business Combination.
In connection with the terms of the Ali Consulting Agreement, Mr. Ali will advise on public company reporting and compliance matters,
strategic business development and growth strategies and other operational matters as requested.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 130; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->123<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As compensation under the
Ali Consulting Agreement, Mr. Ali is entitled to a fee of $325,000 upon closing the Business Combination and his monthly fee will increase
to $54,167 per month beginning on the first of each month following the closing of the Business Combination through the remainder of the
term of the agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless otherwise terminated
earlier pursuant to the Ali Consulting Agreement, the agreement will continue for a period of six months following the closing of the
Business Combination which may be extended for additional terms, upon mutual consent. The Company has the right to terminate the Ali Consulting
Agreement with 30 days&#8217; notice; however, if it is terminated by the Company prior to the six month anniversary of the closing of
the Business Combination (the &#8220;Ali Guaranteed Period&#8221;) for any reason other than the gross negligence, recklessness or willful
misconduct of Mr. Ali, the monthly fee will continue to be paid for the remainder of the Ali Guaranteed Period. Mr. Ali has the right
to terminate the Ali Consulting Agreement with 30 days&#8217; notice for specified reasons, including the Company&#8217;s failure to make
timely payments, gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by the Company. In such cases, the monthly
fee for the remainder of the Ali Guaranteed Period will continue to be paid.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Stock Incentive Plan</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 11, 2024, the Company&#8217;s
Board adopted a Stock Incentive Plan (the &#8220;Plan Effective Date&#8221;), which was approved by the trust as the sole shareholder
on June 11, 2024. Below is a summary of the Stock Incentive Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Overview and Purpose</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Stock Incentive Plan provides
flexibility to the Company to grant equity-based incentive awards (each, an &#8220;Award&#8221;) in the form of Options, RSUs, Restricted
Shares, PSUs and DSUs, as described in further detail below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The purpose of the Stock Incentive
Plan is to, among other things, provide the Company with a share-related mechanism to attract, retain and motivate qualified directors,
employees and consultants of the Company and its subsidiaries, to reward such of those directors, employees and consultants as may be
granted awards under the Stock Incentive Plan by the Board from time to time for their contributions toward the long-term goals and success
of the Company, and to enable and encourage such directors, employees and consultants to acquire Shares as long-term investments and proprietary
interests in the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Material Terms of the Stock Incentive Plan</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Shares Subject to the Stock Incentive Plan</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The maximum aggregate number
of common shares that may be issued pursuant to Awards granted under the Plan (the &#8220;Share Reserve&#8221;) shall initially be 10,000,000,
and the Share Reserve shall automatically increase on the first day of each calendar year beginning January 1, 2025, by a number of shares
equal to the greatest of (i) 3,000,000 Shares, (ii) twenty percent (20%) of the outstanding common shares on the last day of the immediately
preceding calendar quarter, or (iii) such number of common shares determined by the Committee. The Company shall at all times while the
Stock Incentive Plan is in effect reserve such number of common shares as will be sufficient to satisfy the requirements of outstanding
Awards granted under the Stock Incentive Plan. The common shares subject to the Stock Incentive Plan shall be either authorized and unissued
or treasury common shares. Notwithstanding the foregoing, the aggregate number of common shares that may be issued during the term of
the Stock Incentive Plan may not exceed 40,000,000. For clarity, the Share Reserve is a limitation on the number of common shares that
may be issued pursuant to the Stock Incentive Plan. As a single common share may be subject to grant more than once (e.g., if a common
share subject to an Award is forfeited, it may be made subject to grant again under the Stock Incentive Plan), the Share Reserve is not
a limit on the number of Awards that can be granted. Up to 10,000,000 common shares may (but need not be) issued pursuant to the exercise
of &#8220;incentive stock options&#8221; (within the meaning of Section 422 of the United States&#160;<i>Internal Revenue Code of 1986</i>,
as amended (the &#8220;Code&#8221;)) granted under the Stock Incentive Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any common shares issued by
the Company through the assumption or substitution of outstanding stock options or other equity-based awards from an acquired company
will not reduce the number of common shares available for issuance pursuant to the exercise of Awards granted under the Stock Incentive
Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Administration of the Stock Incentive Plan</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Stock Incentive Plan designates
the Board as the initial Plan Administrator (as defined in the Stock Incentive Plan), subject to the ability of the Board to delegate
from time to time all or any of the powers conferred on the Plan Administrator to a committee of the Board. The Board has resolved to
delegate all powers of administration of the Stock Incentive Plan to the Compensation Committee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Plan Administrator determines
which directors, officers, consultants and employees are eligible to receive Awards under the Stock Incentive Plan, the time or times
at which Awards may be granted, the conditions under which awards may be granted or forfeited to the Company, the number of common shares
to be covered by any Award, the exercise price of any Award, whether restrictions or limitations are to be imposed on the common shares
issuable pursuant to grants of any Award, and the nature of any such restrictions or limitations, any acceleration of exercisability or
vesting, or waiver of termination regarding any Award, based on such factors as the Plan Administrator may determine.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the Plan Administrator
interprets the Stock Incentive Plan and may adopt guidelines and other rules and regulations relating to the Stock Incentive Plan and
make all other determinations and take all other actions necessary or advisable for the implementation and administration of the Stock
Incentive Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->124<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Eligibility</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All directors, employees and
consultants are eligible to participate in the Stock Incentive Plan. The extent to which any such individual is entitled to receive a
grant of an Award pursuant to the Stock Incentive Plan will be determined in the sole and absolute discretion of the Plan Administrator.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Types of Awards</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Awards of Options, RSUs, Restricted
Shares, PSUs and DSUs may be made under the Stock Incentive Plan. All of the Awards described below are subject to the conditions, limitations,
restrictions, exercise price, vesting, settlement and forfeiture provisions determined by the Plan Administrator, in its sole discretion,
subject to such limitations provided in the Stock Incentive Plan and will generally be evidenced by an Award agreement. In addition, subject
to the limitations provided in the Stock Incentive Plan and in accordance with applicable law, the Plan Administrator may accelerate or
defer the vesting or payment of Awards, cancel or modify outstanding Awards and waive any condition imposed with respect to Awards or
common shares issued pursuant to Awards.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Options</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An Option entitles a holder
thereof to purchase a prescribed number of common shares at an exercise price set at the time of the grant. The Plan Administrator will
establish the exercise price at the time each Option is granted. Except as otherwise determined by the Plan Administrator and specified
in an Award agreement, exercise price of an Option granted under the Stock Incentive Plan will not be less than the greater of the closing
market price of the common shares on (i) the trading day prior to the date of grant of the Option or (ii) the date of grant of the Option.
Subject to any accelerated termination as set forth in the Stock Incentive Plan, each Option expires on its respective expiry date. The
Plan Administrator will have the authority to determine the vesting terms applicable to grants of Options. Once an Option becomes vested,
it shall remain vested and shall be exercisable until expiration or termination of the Option, unless otherwise specified by the Plan
Administrator, or as otherwise set forth in any written employment agreement, Award agreement or other written agreement between the Company
or a subsidiary of the Company and the participant. The Plan Administrator has the right to accelerate the date upon which any Option
becomes exercisable. The Plan Administrator may provide at the time of granting an Option that the exercise of that Option is subject
to restrictions, in addition to those specified in the Stock Incentive Plan, such as vesting conditions relating to the attainment of
specified performance goals.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless otherwise specified
by the Plan Administrator at the time of granting an Option and set forth in the particular Award agreement, an exercise notice must be
accompanied by payment of the exercise price. A participant may, in lieu of exercising an Option pursuant to an exercise notice, elect
to surrender such Option to the Company (a &#8220;Cashless Exercise&#8221;) in consideration for an amount from the Company equal to (i)
the closing market price of the common shares issuable on the exercise of such Option (or portion thereof) as of the date such Option
(or portion thereof) is exercised, less (ii) the aggregate exercise price of the Option (or portion thereof) surrendered relating to such
Shares (the &#8220;In-the-Money Amount&#8221;), by written notice to the Company indicating the number of Options such participant wishes
to exercise using the Cashless Exercise, and such other information that the Company may require. Subject to the provisions of the Stock
Incentive Plan, the Company will satisfy payment of the In-the-Money Amount by delivering to the participant such number of common shares
having a fair market value equal to the In-the-Money Amount.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Restricted Share Units</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A RSU is a unit equivalent
in value to a common share credited by means of a bookkeeping entry in the books of the Company which entitles the holder to receive one
common share (or the value thereof) for each RSU after a specified vesting period. The Plan Administrator may, from time to time, subject
to the provisions of the Stock Incentive Plan and such other terms and conditions as the Plan Administrator may prescribe, grant RSUs
to any participant in respect of a bonus or similar payment in respect of services rendered by the applicable participant in a taxation
year.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The number of RSUs (including
fractional RSUs) granted at any particular time under the Stock Incentive Plan will be calculated by dividing: (a) the amount that is
to be paid in RSUs, as determined by the Plan Administrator; by (b) the greater of (i) the market price of a common share on the date
of grant and (ii) such amount as determined by the Plan Administrator in its sole discretion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Plan Administrator shall
have the authority to determine the settlement and any vesting terms applicable to the grant of RSUs, provided that the terms applicable
to RSUs granted to U.S. taxpayers comply with Section 409A of the Code, to the extent applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon settlement, holders will
redeem each vested RSU for one fully paid and non-assessable common share in respect of each vested RSU.</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->125<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Restricted Shares</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Plan Administrator may,
from time to time, subject to the provisions of the Stock Incentive Plan and such other terms and conditions as the Plan Administrator
may prescribe, grant Restricted Shares to any participant. Restricted Shares shall be subject to such restrictions on transferability,
risk of forfeiture and other restrictions, if any, as the Plan Administrator may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements),
in such installments or otherwise, as the Plan Administrator may determine at the date of grant or thereafter. During the restricted period
applicable to a Restricted Share, the Restricted Share may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered
by the participant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a condition to the grant
of an Award of Restricted Shares, the Plan Administrator may allow a participant to elect, or may require, that any cash dividends paid
on a Restricted Share be automatically reinvested in additional Restricted Shares, applied to the purchase of additional Awards under
this Plan or deferred without interest to the date of vesting of the associated Award of Restricted Shares; provided, that, to the extent
applicable, any such election is intended to comply with Section 409A. Unless otherwise determined by the Plan Administrator and specified
in the applicable Award Agreement, common shares distributed in connection with a share split or share dividend, and other property (other
than cash) distributed as a dividend, will be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Share
with respect to which such share or other property has been distributed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Performance Share Units</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A PSU is a unit equivalent
in value to a common share credited by means of a bookkeeping entry in the books of the Company which entitles the holder to receive one
common share for each PSU after specific performance-based vesting criteria determined by the Plan Administrator, in its sole discretion,
have been satisfied. The Plan Administrator may, from time to time, subject to the provisions of the Stock Incentive Plan and such other
terms and conditions as the Plan Administrator may prescribe, grant PSUs to any participant in respect of services rendered by the applicable
participant in a tax year. The performance goals to be achieved during any performance period, the length of any performance period, the
amount of any PSUs granted, the effect of termination of a participant&#8217;s service and the settlement terms pursuant to any PSU will
be determined by the Plan Administrator and by the other terms and conditions of any PSU, all as set forth in the applicable Award agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Plan Administrator shall
have the authority to determine the settlement and any vesting terms applicable to the grant of PSUs, provided that the terms applicable
to PSUs granted to U.S. taxpayers comply with Section 409A of the Code, to the extent applicable. Upon settlement, holders will redeem
each vested PSU for one fully paid and non-assessable common share in respect of each vested PSU.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Deferred Share Units</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A DSU is a unit equivalent
in value to a common share credited by means of a bookkeeping entry in the books of the Company which entitles the holder to receive one
common share (or, at the election of the holder and subject to the approval of the Plan Administrator, the cash value thereof) for each
DSU on a future date. The Board may fix from time to time a portion of the total compensation (including annual retainer) paid by the
Company to a director in a calendar year for service on the Board (the &#8220;Director Fees&#8221;) that are to be payable in the form
of DSUs. In addition, each director is given, subject to the provisions of the Stock Incentive Plan, the right to elect to receive a portion
of the cash Director Fees owing to them in the form of DSUs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except as otherwise determined
by the Plan Administrator or as set forth in the particular Award agreement, DSUs shall vest immediately upon grant. The number of DSUs
(including fractional DSUs) granted at any particular time will be calculated by dividing: (a) the amount of Director Fees that are to
be paid in DSUs, as determined by the Plan Administrator; by (b) the market price of a common share on the date of grant. Upon settlement,
holders will redeem each vested DSU for: (a) one fully paid and non-assessable common share in respect of each vested DSU, or (b) at the
election of the holder and subject to the approval of the Plan Administrator, a cash payment on the date of settlement. Any cash payments
made under the Stock Incentive Plan by the Company to a participant in respect of DSUs to be redeemed for cash shall be calculated by
multiplying the number of DSUs to be redeemed for cash by the market price per common share as at the settlement date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->126<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Dividend Equivalents</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except as otherwise determined
by the Plan Administrator or as set forth in the particular Award agreement, RSUs, PSUs and DSUs shall be credited with dividend equivalents
in the form of additional RSUs, PSUs and DSUs, as applicable, as of each dividend payment date in respect of which normal cash dividends
are paid on common shares. Dividend equivalents shall vest in proportion to, and settle in the same manner as, the Awards to which they
relate. Such dividend equivalents shall be computed by dividing: (a) the amount obtained by multiplying the amount of the dividend declared
and paid per common share by the number of RSUs, PSUs and DSUs, as applicable, held by the participant on the record date for the payment
of such dividend; by (b) the market price at the close of the first business day immediately following the dividend record date, with
fractions computed to three decimal places.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Black-out Periods</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event an Award expires,
at a time when a scheduled blackout is in place or an undisclosed material change or material fact in the affairs of the Company exists,
the expiry of such Award will be the date that is ten business days after which such scheduled blackout terminates or there is no longer
such undisclosed material change or material fact.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Term</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No Awards may be granted under
the Stock Incentive Plan on or after the tenth anniversary of the Plan Effective Date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While the Stock Incentive
Plan does not stipulate a specific term for Awards granted thereunder, as discussed below, Awards may not expire beyond 10 years from
its date of grant, except where shareholder approval is received or where an expiry date would have fallen within a blackout period of
the Company. All Awards must vest and settle in accordance with the provisions of the Stock Incentive Plan and any applicable Award agreement,
and which Award agreement may include an expiry date for a specific Award.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Termination of Employment or Services</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following describes the impact of certain
events upon the participants under the Stock Incentive Plan, including termination for cause, resignation, termination without cause,
disability, death or retirement, subject, in each case, to the terms of a participant&#8217;s applicable employment agreement, Award agreement
or other written agreement:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Termination
for Cause or upon Termination</span>: Any Option or other Award held by the participant that has not been exercised, surrendered or settled
as of the termination date (as defined in the Stock Incentive Plan) shall be immediately forfeited and cancelled as of the termination
date.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Termination
without Cause</span>: A portion of any unvested Options or other Awards shall immediately vest, such portion to be equal to the number of
unvested Options or other Awards held by the participant as of the termination date multiplied by a fraction the numerator of which is
the number of days between the date of grant and the termination date and the denominator of which is the number of days between the
date of grant and the date any unvested Options or other Awards were originally scheduled to vest. Any vested Options may be exercised
by the participant at any time during the period that terminates on the earlier of: (a) the expiry date of such Option; and (b) the date
that is 90 days after the termination date. If an Option remains unexercised upon the earlier of (a) or (b), the Option shall be immediately
forfeited and cancelled for no consideration upon the termination of such period. In the case of a vested Award other than an Option,
such Award will be settled within 90 days after the termination date.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(c)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Disability</span>:
A portion of any unvested Options or other Awards shall immediately vest, such portion to be equal to the number of unvested Options
or other Awards held by the participant as of the termination date multiplied by a fraction the numerator of which is the number of days
between the date of grant and the termination date and the denominator of which is the number of days between the date of grant and the
date any unvested Options or other Awards were originally scheduled to vest. Any vested Option may be exercised by the participant at
any time until the expiry date of such Option. Any vested Option may be exercised by the participant at any time until the expiry date
of such Option. Any vested Award other than an Option will be settled within 90 days after the termination date.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(d)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Death</span>:
A portion of any unvested Options or other Awards shall immediately vest, such portion to be equal to the number of unvested Options
or other Awards held by the participant as of the termination date multiplied by a fraction the numerator of which is the number of days
between the date of grant and the termination date and the denominator of which is the number of days between the date of grant and the
date any unvested Options or other Awards were originally scheduled to vest. Any vested Option may be exercised by the participant&#8217;s
beneficiary or legal representative (as applicable) at any time during the period that terminates on the earlier of: (a) the expiry date
of such Option; and (b) the first anniversary of the date of the death of such participant. If an Option remains unexercised upon the
earlier of (a) or (b), the Option shall be immediately forfeited and cancelled for no consideration upon the termination of such period.
In the case of a vested Award other than an Option, such Award will be settled with the participant&#8217;s beneficiary or legal representative
(as applicable) within 90 days after the date of the Participant&#8217;s death.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(e)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Retirement</span>:
A portion of any unvested Options or other Awards shall immediately vest, such portion to be equal to the number of unvested Options
or other Awards held by the participant as of the termination date multiplied by a fraction the numerator of which is the number of days
between the date of grant and the termination date and the denominator of which is the number of days between the date of grant and the
date any unvested Options or other Awards were originally scheduled to vest. Any vested Option may be exercised by the participant at
any time during the period that terminates on the earlier of: (a) the expiry date of such Option; and (b) the third anniversary of the
participant&#8217;s date of retirement. If an Option remains unexercised upon the earlier of (a) or (b), the Option shall be immediately
forfeited and cancelled for no consideration upon the termination of such period. In the case of a vested Award other than an Option,
such Award will be settled within 90 days after the participant&#8217;s retirement. Notwithstanding the foregoing, if, following his
or her retirement, the participant commences on the Commencement Date (as defined in the Stock Incentive Plan) employment, consulting
or acting as a director of the Company or any of its subsidiaries (or in an analogous capacity) or otherwise as a service provider to
any person that carries on or proposes to carry on a business competitive with the Company or any of its subsidiaries, any Option or
other Award held by the participant that has not been exercised or settled as of the commencement date shall be immediately forfeited
and cancelled as of the Commencement Date.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.25in; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Change in Control</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Stock Incentive
Plan, except as may be set forth in an employment agreement, Award agreement or other written agreement between the Company or a subsidiary
of the Company and a participant:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(a) the Plan Administrator may,
without the consent of any participant, take such steps as it deems necessary or desirable, including to cause: (i) the conversion or
exchange of any outstanding Awards into or for rights or other securities of substantially equivalent value, as determined by the Plan
Administrator in its discretion, in any entity participating in or resulting from a Change in Control (as defined below); (ii) outstanding
Awards to vest and become exercisable, realizable or payable, or restrictions applicable to an Award to lapse, in whole or in part prior
to or upon consummation of a Change in Control, and, to the extent the Plan Administrator determines, terminate upon or immediately prior
to the effectiveness of such Change in Control; (iii) the termination of an Award in exchange for an amount of cash and/or property, if
any, equal to the amount that would have been attained upon the exercise or settlement of such Award or realization of the participant&#8217;s
rights as of the date of the occurrence of the transaction; (iv) the replacement of such Award with other rights or property selected
by the Board in its sole discretion where such replacement would not adversely affect the holder; or (v) any combination of the foregoing;
provided that: (A) in taking any of the foregoing actions, the Plan Administrator will not be required to treat all Awards similarly in
the transaction; and (B) in the case of Options, RSUs and PSUs held by a Canadian taxpayer, the Plan Administrator may not cause the Canadian
taxpayer to receive any property in connection with a Change in Control other than rights to acquire shares of a corporation or units
of a &#8220;mutual fund trust&#8221; (as defined in the <i>Income Tax Act</i> (Canada) (the &#8220;Tax Act&#8221;)) of the Company or
a &#8220;qualifying person&#8221; (as defined in the Tax Act) that does not deal at arm&#8217;s length (for purposes of the Tax Act) with
the Company, as applicable, at the time such rights are issued or granted;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(b) if within 12 months following
the completion of a transaction resulting in a Change in Control (as defined below), a participant&#8217;s employment, consultancy or
directorship is terminated by the Company or a subsidiary of the Company without Cause (as defined in the Stock Incentive Plan), without
any action by the Plan Administrator:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: 0.5in">(i) any unvested Awards
held by the participant at the termination date shall immediately vest; and</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: 0.5in">(ii) any vested Awards
may be exercised, surrendered to the Company, or settled by the participant at any time during the period that terminates on the earlier
of: (i) the expiry date of such Award; and (ii) the date that is 90 days after the termination date. Any Award that has not been exercised,
surrendered or settled at the end of such period being immediately forfeited and cancelled; and</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(c) unless otherwise
determined by the Plan Administrator, if, as a result of a Change in Control, the common shares will cease trading on NASDAQ, the Company
may terminate all of the Awards (other than an Option, RSU or PSU held by a participant that is a resident of Canada for the purposes
of the Tax Act) at the time of and subject to the completion of the Change in Control transaction by paying to each holder at or within
a reasonable period of time following completion of such Change in Control transaction an amount for each Award equal to the fair market
value of the Award held by such participant as determined by the Plan Administrator, acting reasonably, provided that any vested Awards
granted to U.S. taxpayers will be settled within 90 days of the Change in Control.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to certain exceptions, a &#8220;Change
in Control&#8221; includes: (i) any transaction pursuant to which a person or group acquires more than 50% of the outstanding common shares
(assuming conversion of the other Shares); (ii) the sale of all or substantially all of the Company&#8217;s assets; (iii) the dissolution
or liquidation of the Company; (iv) the acquisition of the Company via consolidation, merger, exchange of securities, purchase of assets,
amalgamation, statutory arrangement or otherwise; (v) individuals who comprise the Board at the last annual meeting of shareholders (the
&#8220;Incumbent Board&#8221;) cease to constitute at least a majority of the Board, unless the election, or nomination for election by
the shareholders, of any new director was approved by a vote of at least a majority of the Incumbent Board, in which case such new director
shall be considered as a member of the Incumbent Board; or (vi) any other event which the Board determines to constitute a change in control
of the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Non-Transferability of Awards</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except as permitted by the
Plan Administrator and to the extent that certain rights may pass to a beneficiary or legal representative upon death of a participant,
by will or as required by law, no assignment or transfer of Awards, whether voluntary, involuntary, by operation of law or otherwise,
vests any interest or right in such Awards whatsoever in any assignee or transferee and immediately upon any assignment or transfer, or
any attempt to make the same, such Awards will terminate and be of no further force or effect. To the extent that certain rights to exercise
any portion of an outstanding Award pass to a beneficiary or legal representative upon the death of a participant, the period in which
such Award can be exercised by such beneficiary or legal representative shall not exceed one year from the participant&#8217;s death.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Amendments to the Stock Incentive Plan</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Plan Administrator may
also from time to time, without notice and without approval of the holders of Shares, amend, modify, change, suspend or terminate the
Stock Incentive Plan or any Awards granted pursuant thereto as it, in its discretion, determines appropriate, provided that: (a) no such
amendment, modification, change, suspension or termination of the Stock Incentive Plan or any Award granted pursuant thereto may materially
impair any rights of a participant or materially increase any obligations of a participant under the Stock Incentive Plan without the
consent of such participant, unless the Plan Administrator determines such adjustment is required or desirable in order to comply with
any applicable securities laws or stock exchange requirements; and (b) any amendment that would cause an Award held by a U.S. Taxpayer
to be subject to the income inclusion under Section 409A of the Code shall be null and void <i>ab initio</i>.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Notwithstanding the above,
and subject to the NASDAQ Listing Rules, the approval of shareholders is required to effect any of the following amendments to the Stock
Incentive Plan:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">increasing
the number of common shares reserved for issuance under the Stock Incentive Plan, except pursuant to the provisions in the Stock Incentive
Plan which permit the Plan Administrator to make equitable adjustments in the event of transactions affecting the Company or its capital;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">extending
the term of an Option award beyond the original expiry date (except where an expiry date would have fallen within a blackout period applicable
to the participant or within ten business days following the expiry of such a blackout period);</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(c)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">extending
the term of an Option award beyond the original expiry date (except where an expiry date would have fallen within a blackout period applicable
to the participant or within ten business days following the expiry of such a blackout period);</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(d)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">permitting
an Option award to be exercisable beyond ten years from its date of grant (except where an expiry date would have fallen within a blackout
period);</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(e)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">increasing
or removing the limits on the participation of directors;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(f)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">permitting
Awards to be transferred to a person;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(g)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">changing
the eligible participants; and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(h)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">deleting
or reducing the range of amendments which require approval of the shareholders.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except for the items listed
above, amendments to the Stock Incentive Plan will not require shareholder approval. Such amendments include (but are not limited to):
(a) amending the general vesting provisions of an Award; (b) amending the provisions for early termination of Awards in connection with
a termination of employment or service; (c) adding covenants of the Company for the protection of the participants; (d) amendments that
are desirable as a result of changes in law in any jurisdiction where a participant resides; and (e) curing or correcting any ambiguity
or defect or inconsistent provision or clerical omission or mistake or manifest error. Further, the Plan Administrator retains discretion
under the Stock Incentive Plan to reprice out-of-the-money Options without obtaining shareholder approve.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Anti-Hedging Policy</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Participants are restricted
from purchasing financial instruments such as prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that
are designed to hedge or offset a decrease in market value of Awards granted to them.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Policies and Practices for Granting Option Awards</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has not granted
any new option awards since becoming a reporting company, other than the replacement options issued to option holders of Damon Motors
pursuant to the plan of arrangement between the Company and Damon Motors. The Compensation Committee does not plan to take material non-public
information into account when determining the timing and terms of option awards, and the Company does not plan to time the disclosure
of such material non-public information for purposes of affecting the exercise price of the options or the value of executive compensation.
In addition, the Company does not plan to grant options during the four business days prior to or the one business day following the filing
of a periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of a Form 8-K that discloses material non-public information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Post-Closing Executive and Director Compensation</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Executive Employment Agreements</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following summarizes the
employment agreements with our executive officers appointed upon the closing of the Business Combination, which agreements have been entered
into with Damon Motors. Jay Giraud, Derek Dorresteyn and Amber Spencer served until December 4, 2024, January 15, 2025 and December 4,
2024, respectively; and as of the date of this filing, no longer hold any officer or director positions in the Company.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Employment Agreement with Interim Chief Executive Officer</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 4, 2024, Damon
Motors entered into an Interim Executive Employment Agreement with Dominique Kwong. The agreement provides for a six-month term, which
may be extended by mutual agreement. During his employment, Mr. Kwong will receive an annualized salary of CAD $265,000 and the company&#8217;s
standard senior executive benefits. The company may terminate the agreement without notice for cause or, without cause, by providing four
weeks&#8217; written notice. Mr. Kwong may resign with four weeks&#8217; written notice, during which the company may waive the notice
period and pay any outstanding wages, including no more than four weeks&#8217; additional base salary. The agreement also includes customary
confidentiality provisions and post-employment non-solicitation and non-competition covenants.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Employment Agreement with Chief Financial Officer</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On January 1, 2024, Damon
Motors entered into an employment agreement with Bal Bhullar (the &#8220;Bhullar Employment Agreement&#8221;). Ms. Bhullar serves as the
Chief Financial Officer and reports directly to the Chief Executive Officer of Damon Motors. Ms. Bhullar is entitled to a salary of US$325,000
(CAD$435,000) less applicable statutory deductions. Ms. Bhullar is also entitled to reasonable industry standard annual bonuses based
upon the performance of Damon Motors and upon the achievement of reasonable management objectives to be reasonably established by the
board of directors of Damon Motors. Pursuant to an employment side letter agreement dated August 26, 2024, Ms. Bhullar will receive a
$1 million listing bonus ninety days after the successful public listing of the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If Ms. Bhullar employment
contract is terminated for just cause or upon her resignation, Ms. Bhullar is entitled to an amount equal to her monthly salary and vacation
pay earned by and payable to the executive up to the date of termination and shall have no entitlement to any further notice of termination,
payment in lieu of notice of termination, severance, continuation of benefits or any damages whatsoever. If Ms. Bhullar&#8217;s contract
is terminated by Damon Motors without just cause, or upon a change of control, in which case the company terminates Ms. Bhullar&#8217;s
employment other than for just cause or Ms. Bhullar resigns for good reason, then: (a) Damon Motors shall pay an amount equal to the monthly
salary and vacation pay earned and payable up to the date of termination, together with any other vacation pay required to comply with
applicable employment standards legislation; (b) Damon Motors shall pay Ms. Bhullar&#8217;s annual performance bonus entitlements (if
any) calculated pro rata for the period up to the date of termination based on achievement of the objectives to such date, such payment(s)
being made not later than 30 calendar days following the board&#8217;s approval of the audited financial statements for the fiscal year
in which the date of termination occurs; and (c) Damon Motors shall pay, as severance, an amount equal to six months&#8217; monthly salary,
based on the executive&#8217;s monthly salary as at the date of termination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Employment Agreement with Former Chief Executive Officer and Chairman
of Board</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 23, 2022, Damon Motors
entered into an employment agreement with Jay Giraud (the &#8220;Giraud Employment Agreement&#8221;) for the employment of Mr. Giraud
as the CEO of Damon Motors. Under the Giraud Employment Agreement, Damon Motors agreed to pay Mr. Giraud an annual base salary of $350,000
(CAD$450,000) and a bonus in the range of $195,000 to $450,000, subject to the approval of the board of directors of Damon Motors. Pursuant
to an employment side letter agreement dated October 17, 2024, Mr. Giraud is entitled to receive a $1 million listing bonus subject to
the continued service with the Company for a period of 375 days following the date of public listing (&#8220;Service Period&#8221;). The
listing bonus shall be paid out as soon as practicable at the time when the board determines that it is in the best interests of the Company
to do so, having due regard to the Company&#8217;s financial situation. Notwithstanding the preceding sentence the listing bonus shall
be paid promptly following the completion of the Service Period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Mr. Giraud may terminate the
Giraud Employment Agreement and Mr. Giraud&#8217;s employment with Damon Motors at any time by providing Damon Motors with eight weeks&#8217;
prior written working notice. Damon Motors may waive all or any part of the notice given by Mr. Giraud and direct Mr. Giraud not to report
for work for any part of the notice period. In these circumstances, Mr. Giraud would then be paid all outstanding wages (including accrued
but unpaid vacation pay) owing up to and including the effective resignation date. In no event will Damon Motors be required to pay Mr.
Giraud more than twelve weeks&#8217; pay (plus accrued but unused vacation pay) based on Mr. Giraud&#8217;s base salary at the time of
resignation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors may terminate
the Giraud Employment Agreement and the Mr. Giraud&#8217;s employment at any time, without cause, upon Damon Motors providing Mr. Giraud
with notice of termination or pay in lieu of notice (which shall be calculated based exclusively on Mr. Giraud&#8217;s base salary at
the time of termination), or some combination of the two, equal to (i) three months&#8217; notice during his/her first year of service;
plus (ii) an additional four weeks&#8217; notice for every completed year of service thereafter, subject to an overall maximum entitlement
of 42 weeks (the &#8220;Notice Period&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors will continue
to pay the premiums required to maintain Mr. Giraud&#8217;s participation in whatever extended health and/or dental group benefit plans
Mr. Giraud is covered by at the time Mr. Giraud receives the notice of termination, until the earlier of the end of the applicable Notice
Period or the date on which Mr. Giraud becomes eligible to participate in similar benefits through alternate or self-employment, whichever
occurs first and provided that in no event will Mr. Giraud&#8217;s benefit coverage be terminated prior to the expiration of the applicable
statutory notice period. All other benefits or benefit coverage in place at the time shall be discontinued at the end the applicable statutory
notice period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors may terminate
the Giraud Employment Agreement and Mr. Giraud&#8217;s employment without notice of termination or pay in lieu of notice at any time for
Cause. For the purposes of the Giraud Employment Agreement, the term &#8220;Cause&#8221; includes: (a) the existence of cause for termination
of employment at common law, including situations involving fraud, dishonesty, illegality, breach of statute or regulation, conflict of
interest, gross negligence in the performance of Mr. Giraud&#8217;s duties, or gross incompetence; (b) any material breach of the provisions
of this Agreement; (c) wilful disobedience of a reasonable direction from Damon Motors; (d) neglect of duty; (e) misconduct that undermines
Damon Motors&#8217;s confidence in Mr. Giraud&#8217;s ability to effectively carry out the duties and responsibilities of his/her position;
or (f) any material violation of Damon Motors&#8217;s policies and procedures, as determined by Damon Motors in its sole and absolute
discretion. In the event of a termination for Cause, Mr. Giraud will receive payment of any salary and vacation pay earned up to and including
the date of termination. All other entitlements that Mr. Giraud may have as of the date of termination will be automatically extinguished,
except for such minimum mandated entitlements, if any, as may be required by the&#160;<i>Employment Standards Act</i>&#160;(British Columbia).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon termination of employment
for any reason, Mr. Giraud will cease to be and shall immediately resign as an officer or director of Damon Motors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This provision regarding termination
of employment will apply regardless of any changes to the terms and conditions of Mr. Giraud&#8217;s employment subsequent to Mr. Giraud&#8217;s
signing of the Giraud Employment Agreement including, but not limited to, promotions and transfers, unless the parties expressly agree
otherwise in writing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is a non-solicit and
other post-employment restrictions present in the Giraud Employment Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are no provisions with
respect to change of control in the Giraud Employment Agreement.</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Employment Agreement with Former Chief Technology Officer</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 12, 2021, Damon Motors
entered into an employment agreement with Derek Dorresteyn (the &#8220;Dorresteyn Employment Agreement&#8221;) for the provision of CTO
services. Under the Dorresteyn Employment Agreement, Damon Motors agreed to pay Mr. Dorresteyn an annual base salary of $300,000 (CAD$390,000)
and a bonus subject to and conditioned upon the terms and conditions of the applicable plan, as well as the Mr. Dorresteyn&#8217;s continued
employment by Damon Motors in good standing through the bonus payment date and neither party having delivered notice of an intent to terminate.
Mr. Dorresteyn&#8217;s employment through the bonus payment date as permitted by applicable law. Pursuant to an employment side letter
agreement dated October 17, 2024, Mr. Dorresteyn is entitled to receive a $1 million bonus subject to the continued service with the Company
for a period of 375 days following the date of public listing (&#8220;Service Period&#8221;). The listing bonus shall be paid out as soon
as practicable at the time when the board of directors of Damon Motors determines that it is in the best interests of the Company to do
so, having due regard to the Company&#8217;s financial situation. Notwithstanding the preceding sentence the listing bonus shall be paid
promptly following the completion of the Service Period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon Mr. Dorresteyn&#8217;s
termination for any reason, Mr. Dorresteyn will be entitled to: (i) all earned but unpaid base salary through Mr. Dorresteyn&#8217;s separation
date; (ii) any unpaid or unreimbursed business expenses incurred; (iii) any accrued but unused vacation through the separation date; and
(iv) any benefits provided under Damon Motors&#8217;s employee benefit plans, if any, following a termination of employment, in accordance
with the terms contained in said plans (the &#8220;Accrued Obligations&#8221;). The Accrued Obligations will be payable to Mr. Dorresteyn
as required by applicable law.</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Mr. Dorresteyn may terminate
the Dorresteyn Employment Agreement and Mr. Dorresteyn&#8217;s employment with Damon Motors at any time by providing Damon Motors with
12 weeks&#8217; prior written notice. Damon Motors may waive all or any part of the notice period given by Mr. Dorresteyn and direct Mr.
Dorresteyn not to report for work for any part of the notice period. In these circumstances, where Damon Motors elects to shorten the
notice period, Mr. Dorresteyn would then be paid all Accrued Obligations owing up to and including the separation date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors may terminate
the Dorresteyn Employment Agreement and Mr. Dorresteyn&#8217;s employment at any time, without Cause. If Mr. Dorresteyn&#8217;s employment
is terminated by Damon Motors without Cause, in addition to the Accrued Obligations, Mr. Dorresteyn will be entitled to receive the Severance
Benefits (defined below), subject to and contingent upon Mr. Dorresteyn executing a general release of claims satisfactory to Damon Motors,
which must be executed and effective (taking into account any applicable revocation period) on or before the sixtieth (60th) day following
the separation date (the &#8220;Release Requirements&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors will pay Mr.
Dorresteyn any Severance Benefits, if payable, in a lump sum <sup>on</sup> the 60th day following the Separation Date, provided the Release
Requirements have been satisfied. If the release has not been executed or is not effective (taking into account any applicable revocation
period) <sup>by</sup> the 60th day following the Separation Date, Mr. Dorresteyn will not be entitled to any (and shall forfeit all) payments
(other than the Accrued Obligations). For the avoidance of doubt, if Mr. Dorresteyn&#8217;s termination occurs other than by Damon Motors
without Cause, Mr. Dorresteyn will not be entitled to Severance Benefits. Other than as expressly provided herein, Mr. Dorresteyn shall
not be entitled to receive any payments or benefits under the Dorresteyn Employment Agreement for periods after Mr. Dorresteyn&#8217;s
Separation Date, and Damon Motors will have no obligation to make any additional payments or provide any other benefits for periods after
the Separation Date (except as may otherwise be required under the applicable law).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;Severance Benefits&#8221;
means an amount equal to (i) three months of Mr. Dorresteyn&#8217;s base salary on the Separation Date; plus, if the Separation Date occurs
after the first anniversary of the start date (ii) an additional four weeks of base salary for every full completed year of service thereafter,
subject to an overall maximum entitlement of forty-two weeks.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Damon Motors may terminate
the Dorresteyn Employment Agreement and his employment immediately at any time for Cause. For the purposes of the Dorresteyn Employment
Agreement, the term &#8220;Cause&#8221; includes: a) the existence of cause for termination of employment at common law, including situations
involving fraud, dishonesty, illegality, breach of statute or regulation, conflict of interest, gross negligence in the performance of
Mr. Dorresteyn&#8217;s duties, or gross incompetence; b) any material breach of the provisions of the Dorresteyn Employment Agreement;
c) wilful disobedience of a reasonable direction from Damon Motors; d) neglect of duty; e) misconduct that undermines Damon Motors&#8217;s
confidence in Mr. Dorresteyn&#8217;s ability to effectively carry out the duties and responsibilities of his/her position; f) material
unauthorized use or disclosure of any Confidential Information of Damon Motors or any other party to whom they owe an obligation of nondisclosure
as a result of their relationship with Damon Motors; g) Mr. Dorresteyn indictment, conviction, admission or plea of <i>nolo contendere</i>
to any felony, or to any other crime that involves theft, fraud or moral turpitude; or h) any material violation of Damon Motors&#8217;s
policies and procedures, as determined by Damon Motors in its sole and absolute discretion. In the event of a termination for Cause, Mr.
Dorresteyn will receive payment of the Accrued Obligations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Mr. Dorresteyn&#8217;s employment
with Damon Motors may be terminated immediately due to Mr. Dorresteyn&#8217;s death or Disability. In the event of a termination due to
Executive&#8217;s death or Disability, Mr. Dorresteyn will receive payment of the Accrued Obligations. &#8220;Disability&#8221; will have
the same meaning as such phrase is given under the long term disability plan sponsored by Damon Motors as may be offered from time to
time or, in the absence of such policy, if Mr. Dorresteyn becomes physically or mentally incapacitated or impaired and is therefore unable
for a period of twelve (12) consecutive weeks in any six (6)-consecutive month period, or such longer period as may be required by applicable
law, to perform Mr. Dorresteyn&#8217;s duties. Any question as to the existence of the disability of Mr. Dorresteyn shall be determined
in writing by a qualified independent physician selected by Damon Motors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon termination of employment
for any reason, Mr. Dorresteyn will cease to be and shall immediately resign as an officer or director of Damon Motors, if applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is a non-solicit and
other post-employment restrictions present in the Dorresteyn Employment Agreement. There are no provisions with respect to change of control
in the Dorresteyn Employment Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Employment Agreement with Former Chief Marketing
Officer</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 11, 2022, Damon Motors entered into an
employment agreement with Amber Spencer. Ms. Spencer serves as the Chief Marketing Officer of Damon Motors (the &#8220;Spencer Employment
Agreement&#8221;). Ms. Spencer is entitled to an annual salary of CAD$250,000. Ms. Spencer is entitled to participate in the company bonus
plan for senior executives according to its terms and conditions and any other incentive plans or programs established for executives
in accordance with the applicable plan or program, and, subject to board approval, may be eligible to participate in the equity incentive
plan of Damon Motors. Ms. Spencer may terminate her employment agreement by providing 8 weeks&#8217; prior written working notice. In
these circumstances, Ms. Spencer would then be paid all outstanding wages (including accrued but unpaid vacation pay) owing up to and
including the effective resignation date. Damon Motors may terminate the employment agreement at any time, without cause, upon notice
of termination or pay in lieu of notice (which shall be calculated based exclusively on the executive&#8217;s base salary at the time
of termination), or some combination of the two, equal to (i) three months&#8217; notice during his/her first year of service; plus (ii)
an additional four weeks&#8217; notice for every completed year of service thereafter, subject to an overall maximum entitlement of 42
weeks. Damon Motors may terminate Ms. Spencer&#8217;s employment agreement without notice of termination or pay in lieu of notice at any
time for cause. Ms. Spencer&#8217;s employment does not have any payment in connection with a change of control of Damon Motors.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Director Compensation</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Post-Closing, the Board and
the compensation committee of the Company approved the payment of the following compensation to its non-executive directors:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">US$60,000 annual base retainer per director;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">US$25,000 additional annual retainer payable to the director serving as lead director;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">US$20,000 additional annual retainer payable to each director serving as chair of a committee of the Board</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Consulting Agreement</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following summarizes the
terms of the consulting agreements the Company has entered into with its director Melanie Figueroa.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Melanie Figueroa Consulting Agreement</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the terms of a
consulting agreement, dated September 25, 2024 (the &#8220;Figueroa Consulting Agreement&#8221;), the Company agreed to pay Ms. Figueroa,
a fee of $15,000 per month for services rendered to the Company since April 1, 2024 until the end of the month of the closing of the Business
Combination. In connection with the terms of the Figueroa Consulting Agreement, Ms. Figueroa will advise on public company reporting and
compliance matters, business development, growth strategies and other operational matters as requested. As compensation under the Figueroa
Consulting Agreement, Ms. Figueroa is entitled to a fee of $175,000 upon closing the Business Combination and her monthly fee will increase
to $29,167 per month beginning on the first of each month following the closing of the Business Combination through the remainder of the
term of the agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless otherwise terminated
earlier pursuant to the Figueroa Consulting Agreement, the agreement will continue for a period of six months following the closing of
the Business Combination which may be extended for additional terms, upon mutual consent. The Company has the right to terminate the Figueroa
Consulting Agreement with 30 days&#8217; notice; however, if it is terminated by the Company prior to the Figueroa Guaranteed Period for
any reason other than the gross negligence, recklessness or willful misconduct of Ms. Figueroa, the monthly fee will continue to be paid
for the remainder of the Figueroa Guaranteed Period. Ms. Figueroa has the right to terminate the Figueroa Consulting Agreement with 30
days&#8217; notice for specified reasons, including the Company&#8217;s failure to make timely payments, gross negligence, recklessness,
willful misconduct, or the filing of bankruptcy by the Company. In such cases, the monthly fee for the remainder of the Figueroa Guaranteed
Period will continue to be paid.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_019"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">CERTAIN RELATIONSHIPS
AND RELATED PARTY TRANSACTIONS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to the compensation
arrangements with directors and executive officers described under &#8220;<i>Executive and Director Compensation</i>&#8221; and &#8220;<i>Management</i>&#8221; in this prospectus, the following is a description of each transaction since our incorporation,
and each currently proposed transaction in which:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">we have been or are to be a participant;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">the amount involved exceeds or will exceed the lesser of $120,000 and
1% of the average of the Company&#8217;s total assets at year-end for the last two completed fiscal years; and</p></td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or
any immediate family member of, or person sharing the household with, any of these individuals (other than tenants or employees), had
or will have a direct or indirect material interest.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has policies and
procedures designed to minimize potential conflicts of interest arising from any dealings it may have with its affiliates and to provide
appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically,
pursuant to its audit committee charter, the audit committee has the responsibility to review related party transactions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Certain Relationships and Related Party Transactions</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Agreements Entered into by Grafiti
Limited or Grafiti Holding in connection with the SAVES Business</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Grafiti Limited is a primary
distributor in the UK and Western European region of the SAVES products. Historically, Grafiti UK relied on advances from the Parent,
as its parent to satisfy expenses. The expenses incurred that were settled by the Parent consisted of salaries and benefits to certain
employees of the Parent that provided services for the company. In addition, Grafiti Limited recorded cost of sales for the purchase of
the SAVES software from the Parent at market value based on the price that the Parent would charge third parties for the purchase of its
software with industry consistent margins.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Solutions
Divestiture, the Parent contributed the License, along with other assets and businesses, Grafiti LLC, then a wholly-owned subsidiary of
the Parent. As reported in the current report on Form 8-K filed by the Parent on February 23, 2024, the Parent sold 100% of the equity
interest in Grafiti LLC to an entity controlled by Nadir Ali, our former Chief Executive Officer and sole director prior to the closing
of the Business Combination, who also owned more than 5% of Grafiti Holding common shares immediately prior to the closing of the Business
Combination. The Company has entered into a Distributor Agreement and an Administrative Support Service Agreement with Grafiti LLC. See
the description of the terms of these agreements in &#8220;<i>Business - License, Distribution and Administrative Service Arrangements
with Grafiti LLC</i>.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Agreements Entered into by Grafiti
Holding in connection with the Spinoff</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Separation and Distribution Agreement</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 23, 2023, the Parent
and the Company entered into a Separation and Distribution Agreement, pursuant to which all of the outstanding shares of Grafiti Limited,
were transferred to the Company, such that on December 26, 2023, Grafiti Limited became a wholly-owned subsidiary of Grafiti (the &#8220;reorganization&#8221;).
Following the reorganization, and in connection with the spin-off of the Company from Parent, on December 27, 2023 (the &#8220;record
date&#8221;), all of the outstanding common shares of the Company held by the Parent (the &#8220;Trust Shares&#8221;) were transferred
to the Grafiti Holding Inc. Liquidating Trust (the &#8220;Trust&#8221;), to be held for the benefit of holders of the Parent&#8217;s common
stock, preferred stock and those outstanding warrants that are contractually entitled to participate in the distribution of the Trust
Shares, on a pro rata basis as of the record date (collectively, the &#8220;participating Parent securityholders&#8221;). On November
12, 2024 (the &#8220;distribution date&#8221;), the Trust Shares were delivered to the participating Parent securityholders, on a pro
rata basis at a ratio of 1 Trust Share for every 50 shares of common stock of the Parent held by the participating Parent securityholders,
with all fractional shares being rounded up, resulting in the distribution of an aggregate of 3,536,746 Trust Shares to participating
Parent securityholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Liquidating Trust Agreement</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 27, 2023, Grafiti
Holding, the Parent and the initial trustee of the trust have entered into a Liquidating Trust Agreement (the &#8220;Liquidating Trust
Agreement&#8221;), pursuant to which the Parent distributed the Grafiti Holding common shares owned by the Parent to the trust as of the
record date and the trust will deliver the Grafiti Holding common shares to the beneficiaries promptly following the effective date. If
the distribution is not consummated prior to the second anniversary of the date of the Liquidating Trust Agreement, the trustee(s) of
the trust will be empowered to liquidate the Grafiti Holding common shares held by the trust and distribute the proceeds thereof to the
participating securityholders as beneficiaries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Agreements Entered into by Grafiti
Holding in connection with Consulting Services</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Prior to the closing of the
Business Combination, the Company paid Melanie Figueroa $15,000 a month for advisory services with respect to her knowledge and expertise
related to Company&#8217;s public company reporting and compliance matters and corporate business development and growth strategies. Ms.
Figueroa is the trustee of the Grafiti Holding Inc. Liquidating Trust and also individually owned more than 5% of the outstanding common
shares immediately prior to the closing of the Business Combination. Grafiti Holding has entered into a consulting agreement on September
25, 2024 with Ms. Figueroa. See the description of the terms of the agreement in <i>&#8220;Management &#8211; Consulting Agreement &#8211;
Melanie Figueroa Consulting Agreement.</i>&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, Grafiti Holding
has entered into a consulting agreement on September 25, 2024 with Ms. Wendy Loundermon, who owned more than 5% of the outstanding common
shares immediately prior to the closing of the Business Combination. Pursuant to this agreement, Grafiti Holding has agreed to pay a fee
of $10,000 per month for services rendered to the Company since April 1, 2024 until the closing of the Business Combination pursuant to
which Ms.&#8239;Loundermon is providing advisory services in connection with the transition of the Company&#8217;s financial reporting
function to ensure continuity of business operations following the Closing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As compensation under the
Consulting Agreement, Grafiti Holding will pay Ms. Loundermon a fee of $150,000 upon closing the Business Combination and her monthly
fee will increase to $25,000 per month beginning on the first of each month following the closing of the Business Combination through
the remainder of the term of the agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless otherwise terminated
earlier pursuant to the Consulting Agreement, the agreement will continue for a period of six months following the closing of the Business
Combination which may be extended for additional terms, upon mutual consent. Grafiti Holding will have the right to terminate the Consulting
Agreement with 30 days&#8217; notice; however, if it is terminated by Grafiti Holding prior to the six month anniversary of the closing
of the Business Combination (the &#8220;Loundermon Guaranteed Period&#8221;) for any reason other than the gross negligence, recklessness
or willful misconduct of Ms. Loundermon, the monthly fee will continue to be paid for the remainder of the Loundermon Guaranteed Period.
Mrs. Loundermon will have the right to terminate the Consulting Agreement with 30 days&#8217; notice for specified reasons, including
Grafiti Holding&#8217;s failure to make timely payments, gross negligence, recklessness, willful misconduct, or the filing of bankruptcy
by Grafiti Holding. In such cases, the monthly fee for the remainder of the Loundermon Guaranteed Period will continue to be paid.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Agreements Entered by Damon with Former
CEO and Chairman of Board</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon the closing of the Business
Combination, Damon Jay Giraud was appointed as CEO, President, and Executive Chairman of the Board. Pursuant to the Plan of Arrangement
and the BCBCA, as contemplated in the Business Combination Agreement, Mr. Giraud received 1,391,181 multiple voting shares of the Company
(the &#8220;Multiple Voting Shares&#8221;), which were the only multiple voting shares issued by the Company. On December 4, 2024, Mr.
Giraud resigned from all positions as a director and officer of the Company and its subsidiaries. In accordance with the terms of the
Founder Agreement between Mr. Giraud and the Company, all 1,391,181 Multiple Voting Shares held by Mr. Giraud and his controlled entity
were converted into common shares on a one-for-one basis. Following this conversion and as of the date of this filing, Mr. Giraud owns
more than 5% of the Company&#8217;s issued and outstanding common shares. Summarized below are the Coattail Agreement and the Founder
Agreement Damon entered into with Mr. Giraud upon the Closing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Coattail Agreement and Founder Agreement</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the issuance
of 1,391,181 multiple voting shares to Mr. Giraud on the Closing Date, the Company and Mr. Giraud entered into a coattail agreement among
Mr. Giraud, the Company and a trustee (the &#8220;Coattail Agreement&#8221;), and a founder agreement between Mr. Giraud and the Company
(the &#8220;Founder Agreement&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Coattail Agreement,
any sale of Multiple Voting Shares (other than a transfer to a pledgee as security) by a holder of Multiple Voting Shares party to the
Coattail Agreement will be conditional upon the transferee becoming a party to the Coattail Agreement, to the extent such transferred
Multiple Voting Shares are not automatically converted into common shares in accordance with the Articles.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Coattail Agreement contains
provisions for authorizing action by the trustee to enforce the rights under the Coattail Agreement on behalf of the holders of the common
shares. The obligation of the trustee to take such action will be conditional on the combined company or holders of the common shares
providing such funds and indemnity as the trustee may reasonably require. No holder of common shares will have the right, other than through
the trustee, to institute any action or proceeding or to exercise any other remedy to enforce any rights arising under the Coattail Agreement
unless the trustee fails to act on a request authorized by holders of not less than 10% of the outstanding common shares and reasonable
funds and indemnity have been provided to the trustee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other than in respect of non-material
amendments and waivers that do not adversely affect the interests of holders of common shares, the Coattail Agreement provides that, among
other things, it may not be amended, and no provision thereof may be waived, unless, prior to giving effect to such amendment or waiver,
the following have been obtained: (a) the consent of any applicable securities regulatory authority in Canada or the United States; and
(b) the approval of at least two-thirds of the votes cast by holders of common shares represented at a meeting duly called for the purpose
of considering such amendment or waiver, excluding votes attached to common shares held by the holder of Multiple Voting Shares or their
affiliates and related parties and any persons who have an agreement to purchase Multiple Voting Shares on terms which would constitute
a sale or disposition for purposes of the Coattail Agreement, other than as permitted thereby. Non-material amendments and waivers that
do not adversely affect the interests of holders of common shares shall be subject to the approval of any applicable exchange on which
the common shares trade but shall not require approval of holders of common shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Coattail Agreement provides
that, in the event that a lender transfers or takes beneficial ownership of Multiple Voting Shares pursuant to an enforcement by a lender
of a pledge of, or other security interest in, such Multiple Voting Shares, the applicable Multiple Voting Shares will automatically be
converted into common shares pursuant to the Articles such that, as a result of such enforcement, the applicable lender does not hold
Multiple Voting Shares. Any Multiple Voting Share held by a lender pursuant to a pledge or other grant of a security interest shall be
deemed to continue to be held by Jay Giraud so long as the lender has not transferred or taken beneficial ownership of such Multiple Voting
Share pursuant to an enforcement by the lender of a pledge of, or other security interest in, such Multiple Voting Shares. A lender will
have no rights as a shareholder until the occurrence of an event of default under the loan agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No provision of the Coattail
Agreement will limit the rights of any holders of common shares under applicable law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Founder Agreement,
Mr. Giraud shall not be entitled to transfer any of the Multiple Voting Shares to any other person, except for certain permitted transferees.
Jay Giraud also agreed to convert his Multiple Voting Shares into common shares upon:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">The shipment of 1,000 motorcycles to customers by the combined company; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">Jay Giraud ceasing to be an executive officer of the Company due to his voluntary resignation as both
a director and an officer of the combined company, or his termination as an executive officer for cause (which termination has been confirmed
by a court of competent jurisdiction, or in respect of which a claim is not brought within 90 days following such termination).</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, under the Founder
Agreement, Mr. Giraud agreed that he will not vote or cause to be voted more than one-seventh of the number of Multiple Voting Shares
that he owns, or over which he has voting control, in favor, against or withheld on a vote for the election or removal directors, except
in the case of a vote for the election of directors proposed in any management information circular of the Company, in which case Mr.
Giraud will be entitled to vote all Multiple Voting Shares held by him in favor of the slate of directors proposed in such management
information circular.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Mr. Giraud resigned as an
executive officer and director of the Company on December 4, 2024; accordingly the Multiple Voting shares that were beneficially owned
by him are deemed converted into an equivalent number of common shares as of such date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Lock-Up Agreement</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the execution
of the Business Combination Agreement, Mr. Giraud executed a lock-up agreement to be subject to lock-up restrictions for the period from
the closing of the Business Combination to 180 days after the closing, unless released earlier by the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indemnification Agreements
Entered by Damon with Directors and Officers</p><div>

</div><p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company&#8217;s Articles
contain provisions limiting the liability of directors and provide that the Company will indemnify each of its directors and officers
to the fullest extent permitted under law. In addition, we have entered into an indemnification agreement with each of our directors,
which requires us to indemnify them.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


</div><!-- Field: Page; Sequence: 144; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_020"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">PRINCIPAL SHAREHOLDERS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
the beneficial ownership of our common shares as of the date of this filing by:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">each person who is known to be the beneficial owner of more than 5% of the outstanding common shares;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">each of our current named executive officers and directors; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">all our current executive officers and directors as a group.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Beneficial ownership is determined
according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses
sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable
within 60 days after that date through the exercise of any option or warrant. In computing the number of common shares beneficially owned
by a person and the percentage ownership of that person, our common shares subject to options or warrants (as set forth above) held by
that person that are currently exercisable, or will become exercisable within 60 days thereafter, are deemed outstanding for such person,
while such shares are not deemed outstanding for purposes of computing percentage ownership of any other person. Each person named in
the table has sole voting and investment power with respect to all of the shares shown as beneficially owned by such person, except as
otherwise indicated in the table or footnotes below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless otherwise indicated,
we believe that all persons named in the table below have sole voting and investment power with respect to the voting securities beneficially
owned by them. To our knowledge, none of the common shares beneficially owned by any executive officer or director have been pledged as
security. Unless otherwise noted, the address of each beneficial owner is c/o Damon Inc., 704 Alexander Street, Vancouver, British Columbia,
V6A 1E3.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this filing,
there are 22,030,884 common shares issued and outstanding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-size: 10pt"><b>Name of Beneficial Owner</b></td>
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nature of<br/>
beneficial<br/>
owner</b></td>
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  <tr>
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    <td style="vertical-align: bottom; width: 1%">&#160;</td>
    <td style="vertical-align: bottom; font-size: 10pt; text-align: right; width: 9%">&#160;</td>
    <td style="vertical-align: bottom; font-size: 10pt; width: 1%">&#160;</td>
    <td style="vertical-align: bottom; font-size: 10pt; width: 1%">&#160;</td>
    <td style="vertical-align: bottom; font-size: 10pt; width: 1%">&#160;</td>
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  <tr style="background-color: rgb(204,238,255)">
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    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom; font-size: 10pt; text-align: right">1,917,035</td>
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    <td style="vertical-align: bottom; font-size: 10pt">&#160;</td>
    <td style="vertical-align: bottom; font-size: 10pt">&#160;</td>
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  <tr>
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    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
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    <td style="vertical-align: bottom; font-size: 10pt; text-align: right">748,945</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
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  <tr>
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    <td style="vertical-align: bottom; font-size: 10pt">&#160;</td>
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    <td style="vertical-align: bottom; font-size: 10pt">&#160;</td></tr>
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    <td style="vertical-align: bottom">&#160;</td>
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    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom; font-size: 10pt; text-align: right">*</td>
    <td style="vertical-align: bottom; font-size: 10pt">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9.25pt; font-size: 10pt; text-indent: -9pt">Melanie Figueroa (4)</td>
    <td style="vertical-align: bottom">&#160;</td>
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    <td style="vertical-align: bottom; font-size: 10pt; text-align: right">317,341</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
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  <tr>
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    <td style="vertical-align: bottom; padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; vertical-align: bottom">&#160;</td>
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    <td style="vertical-align: bottom; padding-bottom: 1.5pt">&#160;</td>
    <td style="vertical-align: bottom; padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; vertical-align: bottom">&#160;</td>
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    <td style="vertical-align: bottom; padding-bottom: 1.5pt; font-size: 10pt">%</td></tr>
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</div><p style="margin: 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">* Indicates beneficial ownership of less than 1% of the outstanding common shares.</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left">(1)</td><td style="text-align: justify">Based on 22,030,884 shares outstanding as of the date of this
filing.</td>
</tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left">(2)</td><td style="text-align: justify">According to the Schedule 13D/A filed with the SEC on December
6, 2024, this represents (i) 10,142 common shares, (ii) 525,854 common shares issuable upon exercise of options to purchase common shares
which are immediately exercisable, both directly owned by Mr. Giraud, and (iii) 1,381,039 common shares owned by Lime Dragon Holdings
Corp. (&#8220;Lime Dragon&#8221;), of which Mr. Giraud serves as the sole director and sole shareholder. The business address of Mr.
Giraud and Lime Dragon is 342 15<sup>th</sup> Street W, North Vancouver, British Columbia, Canada V7M 1S5.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left">(3)</td><td style="text-align: justify">According to the Form 4 filed with the SEC on November 15, 2024,
this represents (i) 29,272 common shares held by Nurture Growth Fund, LP, (ii) 32,011 common shares of Damon underlying private warrants,
which were distributed to Nurture Growth Fund, LP in connection with the Closing of the Business Combination Agreement, (iii) 2,333 common
shares held by Nurture Group Ventures LLC, and (iv) 2,560 common shares of Damon underlying private warrants, which were distributed
to Nurture Group ventures LLC in connection with the Closing of the Business Combination Agreement. Mr. Tripathi is the managing partner/member
of Nurture Growth Fund, LP and Nurture Group Ventures LLC and may be deemed to control and have voting and investment power over these
securities.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.25in; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left">(4)</td><td style="text-align: justify">Includes 63,255 common shares that are held by the Trust, resulting
from the rounding down of fractional shares pursuant to the Distribution. Ms. Figueroa is the sole trustee of the Trust and maintains
limited voting and dispositive power over the shares held by the Trust pursuant to the Liquidating Trust Agreement dated December 27,
2023, and may be deemed to control and have voting and investment power over these shares.</td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


</div><!-- Field: Page; Sequence: 145; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->138<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_021"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">Selling SECURITYHOLDERS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus relates to
(i) the resale of up to 343,053 common shares issued to Streeterville pursuant to the Securities Purchase Agreement, (ii) the resale from
time to time of up to 17,656,947 common shares potentially issuable to Streeterville in satisfaction of pre-paid purchase balances outstanding
from time to time under the Securities Purchase Agreement, subject to such limitation as may be required pursuant to Nasdaq Listing Rule
5635(d) and a beneficial ownership limitation equal to 9.99% of the common shares outstanding from time to time , and (iii) the resale
of up to 514,579 common shares issued to Maxim Partners LLC pursuant to the Financial Advisory Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
may from time to time offer and sell any or all of the common shares set forth below pursuant to this prospectus and any accompanying
prospectus supplement. When we refer to the &#8220;Selling Securityholders&#8221; in this prospectus, we mean the persons listed in the
table below, and the pledgees, donees, transferees, assignees, successors, designees and others who later come to hold any of the Selling
Securityholders&#8217; interest in the common shares other than through a public sale.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth,
as of the date of this filing, the names of the Selling Securityholders, and the aggregate number of common shares that the Selling Securityholders
may offer pursuant to this prospectus. The following table does not reflect the beneficial ownership of any common shares issuable upon
exercise of exercisable securities or conversion of convertible securities unless such securities are exercisable or convertible within
60 days following this filing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We cannot advise you as to
whether the Selling Securityholders will in fact sell any or all of such common shares. In addition, the Selling Securityholders may sell,
transfer or otherwise dispose of, at any time and from time to time, the common shares in transactions exempt from the registration requirements
of the Securities Act after the date of this prospectus. For purposes of this table, we have assumed that the Selling Securityholders
will have sold all of the securities covered by this prospectus upon the completion of the offering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->139<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Material Relationships with Selling Securityholders
</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Streeterville</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt 0; text-align: justify">See the disclosures regarding the equity and debt
financial transactions the Company has with Streeterville and its affiliate, as described elsewhere in the prospectus, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;<i>Unaudited Pro Forma Condensed Combined
and Consolidated Combined Financial Information -- Grafiti Promissory Note - Streeterville Capital, LLC</i>,&#8221; </span></td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;<i>Management&#8217;s Discussion and Analysis
of Financial Condition and Results of Operations of Damon (Formerly, Grafiti Holding) &#8211; Recent Events &#8211; Financing Agreements
- Streeterville June 2024 Note &#8211; Amended Security Agreements,</i>&#8221; </span></td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;<i>Management&#8217;s Discussion and Analysis
of Financial Condition and Results of Operations of Damon (Formerly, Grafiti Holding) &#8211; Recent Events &#8211; Financing Agreements
&#8211; November 2024 Debt Financing &#8211; East-West,</i>&#8221; and </span></td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#8220;<i>Prospectus Summary -- December 2024
Securities Purchase Agreement.</i>&#8221;</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Maxim </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the terms of an
advisory agreement between the Company and Maxim Group Partners LLC, which served the listing advisor for the Company&#8217;s listing
on Nasdaq, and following the receipt of listing approval by Nasdaq, Damon Motors issued a convertible promissory note and warrants to
purchase common shares of the Company, which were exchanged for 62,499 common shares of the Company and warrants to purchase 62,499 common
shares of the Company, as compensation for the Listing Advisor&#8217;s financial advisory services in connection with the listing, and
in accordance with the Business Combination Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, see the disclosure
regarding the Financial Advisor Agreement with Maxim Group LLC under &#8220;<i>Prospectus Summary -- Financial Advisory Agreement with
Maxim&#8221; </i>in this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->140<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_022"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">Description of
Capital Stock</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following description
is a general summary of the terms of the common shares that we may issue. The description below, and in any prospectus supplement, does
not include all of the terms of the common shares and should be read together with our articles, as amended and notice of articles, as
amended (collectively, our &#8220;Articles&#8221;), copies of which have been filed previously with the SEC. For more information on how
you can obtain copies of our Articles, see the section titled &#8220;<i>Where You Can Find More Information</i>.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Articles authorizes (i)
an unlimited amount of common shares, with no par value, which are also referred to herein as &#8220;Subordinate Voting Shares,&#8221;
and (ii) an unlimited amount of Multiple Voting Shares. On December 4, 2024, all 1,391,181 outstanding Multiple Voting Shares held by
the Company&#8217;s former Chief Executive Officer and director, Jay Giraud and his wholly-owned company, were automatically converted
into 1,391,181 common shares pursuant to the terms of his Founder Agreement with the Company. After giving effect to the conversion and
as of the date of this filing, a total of 22,030,884 common shares are outstanding, and no Multiple Voting Shares remain outstanding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Subordinate Voting Shares and Multiple Voting Shares</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except as described below,
the Subordinate Voting Shares and Multiple Voting Shares will have the same rights, will be equal in all respects and will be treated
by the combined company as if they were one class of shares. The Articles provide that following the listing of the Company&#8217;s common
shares on the Nasdaq Stock Market (&#8220;Nasdaq&#8221;) or other similar recognized national securities exchange in Canada or the United
States, the Company may not issue any new Multiple Voting Shares from its treasury.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Ranking</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Subordinate Voting Shares
and Multiple Voting Shares will rank <i>pari passu</i> with respect to the payment of dividends, return of capital and distribution of
assets in the event of the Company&#8217;s liquidation, dissolution or winding up.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Dividend Rights</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders of Subordinate Voting
Shares and Multiple Voting Shares will be entitled to receive dividends on a pari passu basis out of the combined company&#8217;s assets
legally available for the payment of dividends at such times and in such amount and form as the board of directors may from time to time
determine. In the event of the payment of a dividend in the form of shares, holders of Subordinate Voting Shares will receive Subordinate
Voting Shares, and holders of Multiple Voting Shares will receive Multiple Voting Shares, unless otherwise determined by the board of
directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Voting Rights</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders of Subordinate Voting
Shares will be entitled to one vote per Subordinate Voting Share, and holders of Multiple Voting Shares will be entitled to seven votes
per Multiple Voting Share, on all matters upon which shareholders are entitled to vote.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->141<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Conversion</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Subordinate Voting Shares
will not convertible into any other class of shares. In addition, the Multiple Voting Shares shall convert to Subordinate Voting Shares
as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">Each outstanding Multiple Voting Share may at any time, at the option of the holder, be converted into
one Subordinate Voting Share;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">On the first business day following the fifth annual meeting of shareholders of the combined company following
the Subordinate Voting Shares being listed and posted for trading on a U.S. national securities exchange such as Nasdaq, the Multiple
Voting Shares shall automatically convert to Subordinate Voting Shares; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">If Jay Giraud or his permitted transferees no longer beneficially owns, directly or indirectly and in
the aggregate, at least 2% of the issued and outstanding Subordinate Voting Shares and Multiple Voting Shares on a non-diluted basis (on
an as converted basis), the Multiple Voting Shares shall automatically convert to Subordinate Voting Shares.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, pursuant to the
Founder Agreement with Jay Giraud, Jay Giraud agreed to convert his Multiple Voting Shares into Subordinate Voting Shares upon:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">The shipment of 1,000 motorcycles to customers by the combined company; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">Jay Giraud ceasing to be an executive officer of the Company due to his voluntary resignation as both
a director and an officer of the combined company, or his termination as an executive officer for cause (which termination has been confirmed
by a court of competent jurisdiction, or in respect of which a claim is not brought within 90 days following such termination). Mr. Giraud
resigned as an executive officer and director of the Company on December 4, 2024; accordingly the Multiple Voting shares that were beneficially
owned by him are deemed converted into an equivalent number of common shares as of such date.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Meetings of Shareholders</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders of Subordinate Voting
Shares and Multiple Voting Shares will be entitled to receive notice of any meeting of shareholders and may attend and vote at such meetings,
except those meetings where only the holders of shares of another class or of a particular series are entitled to vote. A quorum for the
transaction of business at a meeting of shareholders is present if at least two shareholders who, together, hold not less than 33 and
1/3% of the votes attaching to the issued and outstanding shares entitled to vote at the meeting are present in person or represented
by proxy.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Redemption Rights</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The combined company will
have no redemption or purchase for cancellation rights.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Liquidation Rights</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon a liquidation, dissolution
or winding-up, whether voluntary or involuntary, of the combined company, the holders of Subordinate Voting Shares and Multiple Voting
Shares, without preference or distinction, will be entitled to receive ratably all of the Company&#8217;s assets remaining after payment
of all debts and other liabilities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Subdivision, Consolidation and Issuance of Rights</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No subdivision or consolidation
of the Subordinate Voting Shares or Multiple Voting Shares may occur unless both classes of shares are concurrently subdivided or consolidated
and in the same manner and proportion. No new rights to acquire additional shares or other securities or property of ours will be issued
to holders of Subordinate Voting Shares or Multiple Voting Shares unless the same rights are concurrently issued to the holders of both
classes of shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Certain Amendments</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to any other voting
right or power to which the holders of Subordinate Voting Shares shall be entitled by law or regulation or other provisions of the Articles
from time to time in effect, but subject to the provisions of the Articles, holders of Subordinate Voting Shares shall be entitled to
vote separately as a class, in addition to any other vote of shareholders that may be required, in respect of any alteration, repeal or
amendment of the Articles which would adversely affect the rights or special rights of the holders of Subordinate Voting Shares or affect
the holders of Subordinate Voting Shares and Multiple Voting Shares differently, on a per share basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->142<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Articles,
holders of Subordinate Voting Shares and Multiple Voting Shares will be treated equally and identically, except with respect to voting
and conversion, on a per share basis, in certain change in control transactions that require approval of the shareholders under the Business
Corporations Act (British Columbia) (&#8220;BCBCA&#8221;), unless different treatment of the shares of each such class is approved by
a majority of the votes cast by the holders of the Subordinate Voting Shares and Multiple Voting Shares, each voting separately as a class.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Forum Selection</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Articles include a forum
selection provision that provides that, unless the combined company consents in writing to the selection of an alternative forum, the
British Columbia Supreme Court and appellate Courts therefrom will be the sole and exclusive forum for (i) any derivative action or proceeding
brought on the combined company&#8217;s behalf; (ii) any action or proceeding asserting a breach of fiduciary duty owed by any of the
combined company&#8217;s directors, officers or other employees to the combined company; (iii) any action or proceeding asserting a claim
arising pursuant to any provision of BCBCA or the Articles; or (iv) any action or proceeding asserting a claim otherwise related to the
&#8220;affairs&#8221; (as defined in the BCBCA) of the combined company. The forum selection provision also provides that the combined
company&#8217;s securityholders are deemed to have consented to personal jurisdiction in the Province of British Columbia and to service
of process on their counsel in any foreign action initiated in violation of the Articles. To the fullest extent permitted by law, the
forum selection provision applies to claims arising under U.S. federal securities laws. In addition, investors cannot waive compliance
with U.S. federal securities laws and the rules and regulations thereunder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Advance Notice Provisions</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Articles include certain
advance notice provisions with respect to the election of directors (the &#8220;Advance Notice Provisions&#8221;). The Advance Notice
Provisions are intended to: (i) facilitate orderly and efficient annual general meetings or, where the need arises, special meetings;
(ii) ensure that all shareholders receive adequate notice of the board of directors nominations and sufficient information with respect
to all nominees; and (iii) allow shareholders to register an informed vote. Only persons who are nominated by shareholders in accordance
with the Advance Notice Provisions will be eligible for election as directors at any annual meeting of shareholders, or at any special
meeting of shareholders if one of the purposes for which the special meeting was called was the election of directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Advance Notice Provisions,
a shareholder wishing to nominate a director would be required to provide the combined company notice, in the prescribed form, within
the prescribed time periods. These time periods include, (i) in the case of an annual meeting of shareholders (including annual and special
meetings), not more than 40 days prior to the date of the annual meeting of shareholders; provided, that if the first public announcement
of the date of the annual meeting of shareholders (the &#8220;Notice Date&#8221;) is less than 50 days before the meeting date, notice
must be given not later than the close of business on the 10th day following the Notice Date; and (ii) in the case of a special meeting
(which is not also an annual meeting) of shareholders called for the purpose of electing directors (whether or not called for other purposes),
not later than the close of business on the 15th day following the Notice Date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Transfer Agent and Registrar</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The transfer agent and registrar
for our common shares is Odyssey Transfer &amp; Trust Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Trading Symbols and Market</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our common shares are listed
on the Nasdaq Global Market under the symbol &#8220;DMN.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->143<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_023"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">SECURITIES ACT
RESTRICTIONS ON RESALE OF COMMON STOCK</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Rule 144</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to Rule 144, a person
who has beneficially owned restricted common shares of Damon for at least six months would be entitled to sell their securities provided
that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding,
a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have
filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required
to file reports) preceding the sale.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Persons who have beneficially
owned restricted common shares of Damon for at least six months but who are our affiliates at the time of, or at any time during the three
months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month
period only a number of securities that does not exceed the greater of:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">1% of the total number of shares of Damon common shares then outstanding; or</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the average weekly reported trading volume of Damon common shares during the four calendar weeks preceding
the filing of a notice on Form 144 with respect to the sale.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sales by affiliates of Damon
under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information
about Damon.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->144<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><div><a id="a_024"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">PLAN OF DISTRIBUTION</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will not receive any of
the proceeds from the sale of the securities by the Selling Securityholders. The Selling Securityholders, which as used herein includes
donees, pledgees, transferees, distributees or other successors-in-interest selling common shares or interests in our common shares received
after the date of this prospectus from the Selling Securityholders as a gift, pledge, partnership distribution or other transfer, may,
from time to time, sell, transfer, distribute or otherwise dispose of certain of their common shares or interests in our common shares
on any stock exchange, market or trading facility on which common shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices
determined at the time of sale, or at negotiated prices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
may use any one or more of the following methods when disposing of their common shares or interests therein:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">one or more underwritten offerings;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">block trades in which the broker-dealer will attempt to sell the common shares as agent, but may position
and resell a portion of the block as principal to facilitate the transaction;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">purchases by a broker-dealer as principal and resale by the broker-dealer for its accounts;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">an exchange distribution in accordance with the rules of the applicable exchange;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">privately negotiated transactions;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">distributions to their members, partners or shareholders;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">short sales effected after the date of the registration statement of which this prospectus is a part is
declared effective by the SEC;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">through the writing or settlement of options or other hedging transactions, whether through an options
exchange or otherwise;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">in market transactions, including transactions on a national securities exchange or quotations service
or over-the-counter market;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">directly to one or more purchasers;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">through agents;</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">broker-dealers may agree with the Selling Securityholders to sell a specified number of such common shares
at a stipulated price per share; and</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">a combination of any such methods of sale.</td></tr></table><div>

</div><p style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
may, from time to time, pledge or grant a security interest in some common shares owned by them and, if a Selling Securityholder defaults
in the performance of its secured obligations, the pledgees or secured parties may offer and sell such common shares, as applicable, from
time to time, under this prospectus, or under an amendment or supplement to this prospectus amending the list of the Selling Securityholders
to include the pledgee, transferee or other successors in interest as the Selling Securityholders under this prospectus. The Selling Securityholders
also may transfer common shares in other circumstances, in which case the transferees, pledgees or other successors in interest will be
the selling beneficial owners for purposes of this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the sale
of common shares or interests therein, the Selling Securityholders may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of our common shares in the course of hedging the positions they assume. The Selling
Securityholders may also sell common shares short and deliver these securities to close out their short positions, or loan or pledge common
shares to broker-dealers that in turn may sell these securities. The Selling Securityholders may also enter into option or other transactions
with broker-dealers or other financial institutions or the creation of one or more derivative securities that require the delivery to
such broker-dealer or other financial institution of common shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The aggregate proceeds to
the Selling Securityholders from the sale of common shares offered by them will be the purchase price of such common shares less discounts
or commissions, if any. The Selling Securityholders reserve the right to accept and, together with their agents from time to time, to
reject, in whole or in part, any proposed purchase of share of our common shares to be made directly or through agents. We will not receive
any of the proceeds from any offering by the Selling Securityholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
also may in the future resell a portion of our common shares in open market transactions in reliance upon Rule 144 under the Securities
Act; provided that they meet the criteria and conform to the requirements of that rule, or pursuant to other available exemptions from
the registration requirements of the Securities Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
and any underwriters, broker-dealers or agents that participate in the sale of common shares or interests therein may be &#8220;underwriters&#8221;
within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of
common shares may be underwriting discounts and commissions under the Securities Act. If any Selling Securityholder is an &#8220;underwriter&#8221;
within the meaning of Section 2(11) of the Securities Act, then the Selling Securityholder will be subject to the prospectus delivery
requirements of the Securities Act. Underwriters and their controlling persons, dealers and agents may be entitled, under agreements entered
into with us and the Selling Securityholders, to indemnification against and contribution toward specific civil liabilities, including
liabilities under the Securities Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To the extent required, our
common shares to be sold, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter, and
any applicable discounts, commissions, concessions or other compensation with respect to a particular offer will be set forth in an accompanying
prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To facilitate the offering
of our common shares offered by the Selling Securityholders, certain persons participating in the offering may engage in transactions
that stabilize, maintain or otherwise affect the price of our common shares. This may include over-allotments or short sales, which involve
the sale by persons participating in the offering of more common shares than were sold to them. In these circumstances, these persons
would cover such over-allotments or short positions by making purchases in the open market or by exercising their over-allotment option,
if any. In addition, these persons may stabilize or maintain the price of our common shares by bidding for or purchasing common shares
in the open market or by imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may be reclaimed
if common shares sold by them are repurchased in connection with stabilization transactions. The effect of these transactions may be to
stabilize or maintain the market price of our common shares at a level above that which might otherwise prevail in the open market. These
transactions may be discontinued at any time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->146<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Registration Rights
Agreement, we have agreed to indemnify the Selling Securityholders party thereto against certain liabilities that they may incur in connection
with the sale of the securities registered hereunder, including liabilities under the Securities Act, and to contribute to payments that
the Selling Securityholders may be required to make with respect thereto. In addition, we and the Selling Securityholders may agree to
indemnify any underwriter, broker-dealer or agent against certain liabilities related to the selling of the securities, including liabilities
arising under the Securities Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have agreed to maintain
the effectiveness of this registration statement until all such securities have been sold under this registration statement or Rule 144
under the Securities Act or are no longer outstanding. We have agreed to pay all expenses in connection with this offering, other than
underwriting fees, discounts, selling commissions, stock transfer taxes and certain legal expenses. The Selling Securityholders will pay,
on a pro rata basis, any underwriting fees, discounts, selling commissions, stock transfer taxes and certain legal expenses relating to
the offering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Selling Securityholders may
use this prospectus in connection with resales of common shares. This prospectus and any accompanying prospectus supplement will identify
the Selling Securityholders, the terms of our common shares and any material relationships between us and the Selling Securityholders.
Selling Securityholders may be deemed to be underwriters under the Securities Act in connection with common shares they resell and any
profits on the sales may be deemed to be underwriting discounts and commissions under the Securities Act. Unless otherwise set forth in
a prospectus supplement, the Selling Securityholders will receive all the net proceeds from the resale of common shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A Selling Securityholder that
is an entity may elect to make an in-kind distribution of common shares to its members, partners or shareholders pursuant to the registration
statement of which this prospectus is a part by delivering a prospectus. To the extent that such members, partners or shareholders are
not affiliates of ours, such members, partners or shareholders would thereby receive freely tradable common shares pursuant to the distribution
through a registration statement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are required to pay all
fees and expenses incident to the registration of common shares to be offered and sold pursuant to this prospectus.</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_025"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">LEGAL MATTERS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The validity of the securities
offered hereby will be passed upon for us by Norton Rose Fulbright Canada LLP, Vancouver, British Columbia. Additional legal matters may
be passed on for us, or any underwriters, dealers or agents by counsel we will name in the applicable prospectus supplement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_026"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">EXPERTS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The audited consolidated financial
statements of Grafiti Holding Inc. as of June 30, 2024, 2023 and 2022 and for each of the years in the period ended June 30, 2024, 2023
and 2022, included in this prospectus have been so included in reliance on the report (which report expresses an unqualified opinion and
includes an explanatory paragraph as to Grafiti Holding Inc.&#8217;s ability to continue as a going concern) of Marcum LLP, an independent
registered public accounting firm, given upon their authority as experts in accounting and auditing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The audited consolidated financial
statements of Damon Motors Inc. as of June 30, 2024 and for the year ended June 30, 2024, included in this prospectus have been so included
in reliance on the report (which report expresses an unqualified opinion and includes an explanatory paragraph as to Damon Motors Inc.&#8217;s
ability to continue as a going concern) of Marcum LLP, an independent registered public accounting firm, given upon their authority as
experts in accounting and auditing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The consolidated financial
statements of Damon Motors Inc. as of June 30, 2023 and for each of the two years in the period ended June 30, 2023 included in this prospectus
have been so included in reliance on the report of BDO Canada LLP, an independent registered public accounting firm, appearing elsewhere
herein, given on the authority of said firm as experts in auditing and accounting. The report on the consolidated financial statements
contains an explanatory paragraph regarding the ability of Damon Motors Inc. to continue as a going concern.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_027"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">Where You Can Find
More Information</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have filed with the SEC
this registration statement on Form S-1 under the Securities Act, with respect to our common shares covered by this prospectus. This prospectus
is part of, and does not contain all of the information set forth in, the registration statement and the exhibits thereto. Some items
are omitted in accordance with the rules and regulations of the SEC. For further information with respect to us and our common shares,
we refer you to the registration statement and the exhibits filed therewith. Statements contained in this prospectus as to the contents
of any contract, agreement or any other document referred to are summaries of the material terms of the respective contract, agreement
or other document. With respect to each of these contracts, agreements or other documents filed as an exhibit to the registration statement,
reference is made to the exhibits for a more complete description of the matter involved.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The SEC maintains a website
that contains reports, proxy and information statements and other information regarding registrants, like us, that file electronically
with the SEC. The address of the SEC&#8217;s website is http://www.sec.gov.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are subject to the information
and periodic reporting requirements of the Exchange Act and, accordingly, we file annual reports containing financial statements audited
by an independent public accounting company, quarterly reports containing unaudited financial statements, current reports, proxy statements
and other information with the SEC. You will be able to inspect them without charge at the SEC&#8217;s website. You will also be able
to access, free of charge, our reports filed with the SEC (for example, our Annual Report on Form 10-K, our Quarterly Reports on Form
10-Q and our Current Reports on Form 8-K and any amendments to those forms) through our website at <i>https://damon.com/</i>. Reports
filed with or furnished to the SEC will be available as soon as reasonably practicable after they are filed with or furnished to the SEC.
Our website is included in this prospectus as an inactive textual reference only. The information found on our website is not part of
this prospectus or any report filed with or furnished to the SEC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should rely only on the
information contained in this registration statement or to which this registration statement has referred you. We have not authorized
any person to provide you with different information or to make any representation not contained in this registration statement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 155; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->148<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="a_028"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</b><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="width: 90%">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: center; width: 10%"><b>Page</b></td></tr>
  <tr style="vertical-align: bottom">
    <td><b>Consolidated Financial Statements of Grafiti Holding Inc.</b></td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><a href="#F_001">Report of Independent Registered Public Accounting Firm (PCAOB NO. 688)</a></td>
    <td style="text-align: center">F-2</td></tr>
  <tr style="vertical-align: bottom; ">
    <td><a href="#F_002">Consolidated Balance Sheets as of June 30, 2024, 2023 and 2022</a></td>
    <td style="text-align: center">F-3</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><a href="#F_003">Consolidated Statements of Operations for the years ended June 30, 2024, 2023 and 2022</a></td>
    <td style="text-align: center">F-4</td></tr>
  <tr style="vertical-align: bottom; ">
    <td><a href="#F_004">Consolidated Statements of Comprehensive Loss for the years ended June 30, 2024, 2023 and 2022</a></td>
    <td style="text-align: center">F-5</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><a href="#F_005">Consolidated Statements of Changes in Stockholder&#8217;s Equity for the years ended June 30, 2024, 2023 and 2022</a></td>
    <td style="text-align: center">F-6</td></tr>
  <tr style="vertical-align: bottom; ">
    <td><a href="#F_006">Consolidated Statements of Cash Flows for the years ended June 30, 2024, 2023 and 2022</a></td>
    <td style="text-align: center">F-7</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><a href="#F_007">Notes to Consolidated Financial Statements</a></td>
    <td style="text-align: center">F-8</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><b>Consolidated Financial Statements of Damon Motors, Inc.</b></td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td><a href="#F_008">Report of Independent Registered Public Accounting Firm (PCAOB NO. 688)</a></td>
    <td style="text-align: center">F-27</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><a href="#F_009">Report of Independent Registered Public Accounting Firm (PCAOB NO. 1227)</a></td>
    <td style="text-align: center">F-28</td></tr>
  <tr style="vertical-align: bottom; ">
    <td><a href="#F_010">Consolidated Balance Sheets as of June 30, 2024 and 2023</a></td>
    <td style="text-align: center">F-29</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><a href="#F_011">Consolidated Statements of Loss and Comprehensive Loss for the years ended June 30, 2024, 2023 and 2022</a></td>
    <td style="text-align: center">F-30</td></tr>
  <tr style="vertical-align: bottom; ">
    <td><a href="#F_012">Consolidated Statements of Changes in (Deficit) Equity for the years ended June 30, 2024, 2023 and 2022</a></td>
    <td style="text-align: center">F-31</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><a href="#F_013">Consolidated Statements of Cash Flows for the years ended June 30, 2024, 2023 and 2022</a></td>
    <td style="text-align: center">F-32</td></tr>
  <tr style="vertical-align: bottom; ">
    <td><a href="#F_014">Notes to Consolidated Financial Statements</a></td>
    <td style="text-align: center">F-33</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>

<tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 90%"><b>Interim Unaudited Condensed Consolidated Financial Statements of Damon Inc. (formerly Grafiti Holding Inc.)</b></td>
    <td style="text-align: center; width: 10%"/></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><a href="#F_015">Interim Unaudited Consolidated Balance Sheets as of September 30, 2024 and June 30, 2024</a></td>
    <td style="text-align: center">F-82</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><a href="#F_016">Interim Unaudited Consolidated Statements of Operations for the three months ended September 30, 2024 and 2023</a></td>
    <td style="text-align: center">F-83</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><a href="#F_017">Interim Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended September 30, 2024 and 2023</a></td>
    <td style="text-align: center">F-84</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><a href="#F_018">Interim Unaudited Condensed Consolidated Statements of Changes in Stockholders&#8217; Equity (Deficit) for the three months ended September 30, 2024 and 2023</a></td>
    <td style="text-align: center">F-85</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><a href="#F_019">Interim Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2024 and 2023</a></td>
    <td style="text-align: center">F-86</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><a href="#F_020">Notes to Unaudited Condensed Consolidated Financial Statements</a></td>
    <td style="text-align: center">F-87</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>

<tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 90%"><b>Interim Unaudited Condensed Consolidated Financial Statements of Damon Motors Inc.</b></td>
    <td style="text-align: center; width: 10%"/></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><a href="#F_021">Condensed Interim Unaudited Consolidated Balance Sheets for the three months ended September 30, 2024 and 2023</a></td>
    <td style="text-align: center">F-104</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><a href="#F_022">Condensed Interim Unaudited Consolidated Statements of Operations for the three months ended September 30, 2024 and 2023</a></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><p style="margin: 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 156; Options: NewSection; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->1<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="F_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To the Shareholders and Board of Directors of</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Grafiti Holding Inc.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Opinion on the Financial Statements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
balance sheets of Grafiti Holding Inc. (the &#8220;Company&#8221;) as of June 30, 2024, 2023 and 2022, the related consolidated statements
of operations, comprehensive loss, changes in stockholders&#8217; equity (deficit) and cash flows for each of the three years in the period
ended June 30, 2024, and the related notes (collectively referred to as the &#8220;financial statements&#8221;). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024, 2023 and 2022, and the
results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in conformity with accounting
principles generally accepted in the United States of America.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Going Concern</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has suffered recurring
losses from operations, recurring negative cash flows from operations and needs to raise additional funds to meet its obligations and
sustain its operations. These conditions raise substantial doubt about the Company&#8217;s ability to continue as a going concern. Management&#8217;s
plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Basis for Opinion</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These financial statements are the responsibility
of the Company&#8217;s management. Our responsibility is to express an opinion on the Company&#8217;s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (&#8220;PCAOB&#8221;)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audits in accordance with the
standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but
not for the purpose of expressing an opinion on the effectiveness of the Company&#8217;s internal control over financial reporting. Accordingly,
we express no such opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">/s/ Marcum <span style="font-variant: small-caps">llp</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Marcum <span style="font-variant: small-caps">llp</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have served as the Company&#8217;s auditor since 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">New York, NY</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">September 26, 2024</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 157; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->2<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="F_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>GRAFITI
HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>CONSOLIDATED BALANCE
SHEETS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>




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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Long Term Liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-3">&#8212;</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-4">&#8212;</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Total Liabilities</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0pt; text-indent: 0pt; text-align: left"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b>Commitments
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-5">&#160;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-6">&#160;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Stockholders&#8217; (Deficit) Equity</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">Common Stock - $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockParOrStatedValuePerShare" scale="0" unitRef="usdPershares" id="ixv-48867"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockParOrStatedValuePerShare" scale="0" unitRef="usdPershares" id="ixv-48868"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockParOrStatedValuePerShare" scale="0" unitRef="usdPershares" id="ixv-48869">0</ix:nonFraction></ix:nonFraction></ix:nonFraction> par value, <ix:nonFraction contextRef="c1" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesAuthorized" scale="0" unitRef="shares" id="ixv-48870"><ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesAuthorized" scale="0" unitRef="shares" id="ixv-48871"><ix:nonFraction contextRef="c3" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesAuthorized" scale="0" unitRef="shares" id="ixv-48872"><ix:nonFraction contextRef="c1" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-48873"><ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-48874"><ix:nonFraction contextRef="c3" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-48875"><ix:nonFraction contextRef="c1" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-48876"><ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-48877"><ix:nonFraction contextRef="c3" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-48878">3,600,001</ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction> shares authorized, issued and outstanding as of June 30, 2024, June 30, 2023&#160;&#160;and June 30, 2022</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockValue" scale="0" unitRef="usd" id="ixv-48880">611,972</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Additional paid-in capital</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AdditionalPaidInCapital" scale="0" unitRef="usd" id="ixv-48882">627,478</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-7">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-8">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Accumulated other comprehensive loss</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccumulatedOtherComprehensiveIncomeLossNetOfTax" scale="0" sign="-" unitRef="usd" id="ixv-48884">3,015</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccumulatedOtherComprehensiveIncomeLossNetOfTax" scale="0" sign="-" unitRef="usd" id="ixv-48885">3,777</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="F_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF OPERATIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>




</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 159; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->4<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="F_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>




</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


</div><!-- Field: Page; Sequence: 160; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->5<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><div><a id="F_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS&#8217;
EQUITY (DEFICIT)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt; text-align: center"><b>&#160;</b></td><td style="padding-bottom: 1.5pt; text-align: center"><b>&#160;</b></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><!-- Field: Page; Sequence: 161; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->6<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="F_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF CASH FLOWS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(In thousands)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>




</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-85">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Amortization of right-of-use asset</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-89">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Provision for credit losses</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-91">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Accrued interest income</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-92">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-93">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Accrued interest expense</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-94">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-95">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Accrued monitoring fee expense</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="dmn:IncreaseAndDecreaseInAccruedMonitoringFeeExpense" scale="0" unitRef="usd" id="ixv-49010">1,620</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-96">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-97">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Unrealized gain on foreign currency transactions</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ForeignCurrencyTransactionGainLossUnrealized" scale="0" unitRef="usd" id="ixv-49011">5,492</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-98">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-99">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Changes in operating assets and liabilities:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left">Accounts receivable</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsReceivable" scale="0" unitRef="usd" id="ixv-49014">21,372</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left">Prepaid expenses and other current assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets" scale="0" unitRef="usd" id="ixv-49015">68,496</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets" scale="0" sign="-" unitRef="usd" id="ixv-49017">4,962</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left">Other assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-100">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherOperatingAssets" scale="0" sign="-" unitRef="usd" id="ixv-49018">4,430</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherOperatingAssets" scale="0" unitRef="usd" id="ixv-49019">816</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left">Accounts payable</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsPayable" scale="0" sign="-" unitRef="usd" id="ixv-49021">2,625</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsPayable" scale="0" sign="-" unitRef="usd" id="ixv-49022">2,379</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left">Accrued liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccruedLiabilities" scale="0" sign="-" unitRef="usd" id="ixv-49023">15,535</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccruedLiabilities" scale="0" unitRef="usd" id="ixv-49024">31,607</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccruedLiabilities" scale="0" sign="-" unitRef="usd" id="ixv-49025">18,368</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left">Deferred revenue</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInDeferredRevenue" scale="0" unitRef="usd" id="ixv-49026">57,652</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInDeferredRevenue" scale="0" sign="-" unitRef="usd" id="ixv-49027">13,149</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInDeferredRevenue" scale="0" sign="-" unitRef="usd" id="ixv-49028">54,209</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Operating lease obligation</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-101">&#8212;</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-102">&#8212;</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOperatingLeaseLiability" scale="0" sign="-" unitRef="usd" id="ixv-49029">8,259</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Net Cash Used in Operating Activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" sign="-" unitRef="usd" id="ixv-49030">129,551</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" sign="-" unitRef="usd" id="ixv-49031">75,616</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" sign="-" unitRef="usd" id="ixv-49032">154,813</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Investing Activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Purchase of property and equipment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" scale="0" unitRef="usd" id="ixv-49033">2,871</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-103">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-104">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt; padding-left: 0.125in; text-indent: -0.125in; text-align: left">Cash - Beginning of year</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Supplemental Disclosure of cash flow
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-120">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The
accompanying notes are an integral part of these consolidated financial statements</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->7<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="F_007"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c10" continuedAt="_NatureOfOperations-c10_cont_1" escape="true" name="us-gaap:NatureOfOperations" id="ixv-22781"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 1 - Organization and Nature of Business</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Grafiti Holding Inc. (collectively the &#8220;Company,&#8221;
&#8220;we,&#8221; &#8220;us&#8221; or &#8220;our&#8221;) (&#8220;Grafiti Holding&#8221;) was incorporated in British Columbia, Canada
on October 17, 2023. The Company is the parent non-operating holding company of Grafiti Limited (formerly known as Inpixon Limited).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Grafiti Limited was incorporated in England and
Wales on May 13, 2020. Grafiti Limited provides specialized scientific software products and services for the environmental sciences,
life sciences, behavioral sciences, medical research and engineering domains. Grafiti Limited provides effective solutions to the scientific
and engineering community to compress the time intensive process of data analysis and presentation, thus enhancing productivity. Users
of Grafiti Limited&#8217;s products include government organizations, academic institutions and leading corporations. Grafiti Limited&#8217;s
headquarters are located in Slough, United Kingdom, and operations for Grafiti Limited are primarily performed in the United Kingdom.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On October 23, 2023, a Business Combination Agreement
(the &#8220;Damon Business Combination Agreement&#8221;) was entered into by and among XTI Aerospace Inc. (f/k/a &#8220;Inpixon&#8221;
or &#8220;XTI&#8221;), Grafiti Holding, 1444842 B.C. LTD (&#8220;Amalco Sub&#8221;), and Damon Motors, Inc. (&#8220;Damon&#8221;), pursuant
to which Damon will combine and merge with Amalco Sub, a British Columbia corporation and a wholly-owned subsidiary of Grafiti Holding,
with Damon continuing as the surviving entity and a wholly-owned subsidiary of Grafiti Holding (the &#8220;Grafiti Holding Transaction&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the Damon Business Combination Agreement,
Inpixon formed a newly wholly owned subsidiary, Grafiti Holding for the sole purpose of consummation of the Grafiti Holding Transaction.
Inpixon contributed the assets and liabilities of Grafiti Limited, a wholly owned subsidiary of Inpixon, to the then Inpixon wholly owned
subsidiary Grafiti Holding in accordance with the separation and distribution agreement. As the Registration Statement for the Damon
Business Combination Agreement is not expected to become effective until 2024, on December 27, 2023 Inpixon transferred the Grafiti Holding
common shares to a newly-created liquidating trust, titled the Grafiti Holding Inc. Liquidating Trust (the &#8220;Trust&#8221;)(the &#8220;Spin-Off:),
which holds the Grafiti Holding common shares for the benefit of the participating Inpixon security holders. As of December 27, 2023,
the date the transfer of shares occurred, Grafiti Limited was assigned by Inpixon to the Company. Grafiti Holding consolidates Grafiti
Limited via the voting interest model, as Grafiti Limited is wholly owned by Grafiti Holding. This transaction between entities under
common control resulted in a change in reporting entity and required retrospective combination of the entities for all periods presented,
as if the combination had been in effect since the inception of common control. Accordingly, the financial statements of the Company
reflect the accounting of the combined acquired subsidiary at historical carrying values except that equity reflects the equity of Grafiti
Holdings. This change in reporting entity did not impact net income for the periods presented. The Grafiti Holding common shares will
be held by the Trust until the Registration Statement has been declared effective by the Securities and Exchange Commission (the &#8220;SEC&#8221;).
Promptly following the effective time of the Registration Statement, Inpixon will deliver the Grafiti Holding common shares to the participating
Inpixon security holders, as beneficiaries of the Trust, pro rata in accordance with their ownership of shares or underlying shares of
Inpixon common stock as of the record date. Amalco Sub, a wholly-owned, direct subsidiary of Grafiti Holding, will merge with Damon resulting
in Damon as the surviving entity post-merger (&#8220;Damon Surviving Corporation&#8221;). Upon the consummation of the Merger, both Grafiti
Limited and Damon will be wholly-owned subsidiaries of Grafiti Holding. Following the Merger, Grafiti Holding shall be known as the &#8220;Grafiti
Combined Company.&#8221; The combined company will be renamed Damon Motors, Inc., and the ticker symbol will be changed to a symbol to
be determined concurrent with the closing. The Company incurred $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationAcquisitionRelatedCosts" scale="0" unitRef="usd" id="ixv-49057">280,789</ix:nonFraction> of acquisition related costs related to the Damon Business Combination
Agreement during the fiscal year ended June 30, 2024. These costs are included in the acquisition-related costs line in the consolidated
statements of operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying consolidated financial statements
of Grafiti Holding, show the historical financial position, results of operations, changes in stockholders&#8217; equity (deficit) and
cash flows of the Company. Prior to December 27, 2023, the Company operated as a segment of Inpixon and not as a separate entity.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 163; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->8<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:continuation id="_NatureOfOperations-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The operating results of the Company prior to
December 27, 2023 have been specifically identified by Inpixon&#8217;s management based on the Company&#8217;s existing divisional organization
and are presented on a carve-out basis. The assets and liabilities of the Company as of June 30, 2023 have been identified based on the
existing divisional structure. The historical costs and expenses reflected in our consolidated financial statements prior to December
27, 2023 include an allocation by time spent for certain corporate and shared service functions. See Note 11 for further additional information
regarding the Investments by Inpixon prior to December 27, 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management believes the assumptions underlying
our consolidated financial statements are reasonable but may not necessarily be indicative of the costs that would have incurred if the
Company had been operated on a standalone basis for the entire periods presented. Actual costs that would have been incurred if we had
operated as a standalone company for the entirety of the periods presented would depend on multiple factors, including organizational
structure and strategic decisions made in various areas, including information technology and infrastructure. The Company also may incur
additional costs associated with being a standalone, publicly listed company that were not included in the expense allocations, prior
to December 27, 2023, and therefore, would result in additional costs that are not reflected in our historical results of operations,
financial position and cash flows.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c10" continuedAt="_SignificantAccountingPoliciesTextBlock-c10_cont_1" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock" id="ixv-22828"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 2 - Summary of Significant Accounting
Policies</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="dmn_LiquidityAndGoingConcernPolicyTextBlock-c10_cont_1" escape="true" name="dmn:LiquidityAndGoingConcernPolicyTextBlock" id="ixv-22834"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Liquidity and Going Concern</i></b></p></ix:nonNumeric>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="dmn_LiquidityAndGoingConcernPolicyTextBlock-c10_cont_2" id="dmn_LiquidityAndGoingConcernPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying consolidated financial statements
of the Company have been prepared assuming the Company will continue as a going concern in accordance with U.S. GAAP. The going concern
basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued
and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="dmn_LiquidityAndGoingConcernPolicyTextBlock-c10_cont_3" id="dmn_LiquidityAndGoingConcernPolicyTextBlock-c10_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of June&#160;30, 2024, the Company has a working
capital surplus of $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="dmn:WorkingCapital" scale="0" unitRef="usd" id="ixv-49058">1,050,245</ix:nonFraction>, inclusive of cash of $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="0" unitRef="usd" id="ixv-49059">1,148,904</ix:nonFraction>. For the year ended June&#160;30, 2024, the Company incurred a net loss
attributable to common stockholders of $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-49060">1,348,357</ix:nonFraction> and net cash used in operating activities during the year ended June&#160;30, 2024
was $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" sign="-" unitRef="usd" id="ixv-49061">129,551</ix:nonFraction>. As the Company was part of Inpixon group of companies prior to December 27, 2023, the Company was dependent upon Inpixon
for all of its working capital and financing requirements as Inpixon uses a centralized approach to cash management and financing of
its operations. This arrangement is not reflective of the way the Company would have financed its operations had the Company been a standalone
public company during the periods presented. Prior to December 27, 2023, financial transactions relating to the Company are accounted
for through Stockholders&#8217; Equity. Accordingly, none of Inpixon&#8217;s cash, cash equivalents, or debt at the corporate level have
been assigned to the Company in the consolidated financial statements. As a result of the Grafiti Holding Transaction, the Company will
no longer participate in Inpixon&#8217;s corporate-wide cash management and financing approach, and therefore the Company&#8217;s ability
to fund operating needs will depend on the Company&#8217;s ability to generate positive cash flows from operations, and on the Company&#8217;s
ability to obtain debt financing on acceptable terms or to issue additional equity or equity-linked securities as needed.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="dmn_LiquidityAndGoingConcernPolicyTextBlock-c10_cont_4" id="dmn_LiquidityAndGoingConcernPolicyTextBlock-c10_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company cannot assure you that we will ever
earn revenues sufficient to support our operations, or that we will ever be profitable. In order to continue our operations, the Company
supplemented the revenues earned with funding from Inpixon and other third parties. The adverse conditions detailed above indicate material
uncertainties that cast substantial doubt upon the Company&#8217;s ability to continue as a going concern within one year after financial
statement issuance date.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="dmn_LiquidityAndGoingConcernPolicyTextBlock-c10_cont_5" id="dmn_LiquidityAndGoingConcernPolicyTextBlock-c10_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">When substantial doubt exists, management evaluates
whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company&#8217;s ability to continue as
a going concern. The mitigating effect of management&#8217;s plans, however, is only considered if both (1) it is probable that the plans
will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that
the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity&#8217;s ability
to continue as a going concern within one year after the date that the financial statements are issued.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->9<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c10_cont_2" id="_SignificantAccountingPoliciesTextBlock-c10_cont_1"><ix:continuation id="dmn_LiquidityAndGoingConcernPolicyTextBlock-c10_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management&#8217;s
                                            plans to address the uncertainty that the Company will continue as a going concern include
                                            the business combination described in Note 1 above as well as obtaining associated debt and
                                            equity financing. There is no assurance that the Company&#8217;s plans to consummate the
                                            business combination will be successful and the Company cannot provide assurance that the
                                            Company will secure financing in a timely manner, nor can they provide assurance that the
                                            business combination will be completed. As such, the substantial doubt of the Company&#8217;s
                                            ability to continue as a going concern has not been alleviated by management&#8217;s plans.
                                            The accompanying consolidated financial statements have been prepared assuming the Company
                                            will continue as a going concern and do not include any adjustments that might result from
                                            the outcome of this uncertainty.</p></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_IncomeTaxUncertaintiesPolicy-c10_cont_1" escape="true" name="us-gaap:IncomeTaxUncertaintiesPolicy" id="ixv-22882"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Risks and Uncertainties</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_IncomeTaxUncertaintiesPolicy-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company cannot assure you that we will ever
earn revenues sufficient to support our operations, or that we will ever be profitable. In order to continue our operations, the Company
supplemented the revenues earned with funding from Inpixon and other third parties.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_UseOfEstimates-c10_cont_1" escape="true" name="us-gaap:UseOfEstimates" id="ixv-22892"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Use of Estimates</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_UseOfEstimates-c10_cont_2" id="_UseOfEstimates-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of financial statements in conformity
with generally accepted accounting principles in the United States of America (&#8220;GAAP&#8221;) requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results
could differ from those estimates. The Company&#8217;s significant estimates consist of:</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&#160;</p>

<ix:continuation continuedAt="_UseOfEstimates-c10_cont_3" id="_UseOfEstimates-c10_cont_2"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the allowance for credit losses;</td></tr></table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&#160;</p>

<ix:continuation id="_UseOfEstimates-c10_cont_3"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the valuation allowance for deferred
                                            tax assets;</td></tr></table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_ConcentrationRiskCreditRisk-c10_cont_1" escape="true" name="us-gaap:ConcentrationRiskCreditRisk" id="ixv-22916"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Cash and Concentration of Credit Risk</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_ConcentrationRiskCreditRisk-c10_cont_2" id="_ConcentrationRiskCreditRisk-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cash consist of savings and checking accounts.
Financial instruments that subject the Company to credit risk consist principally of trade accounts receivable and cash. The Company
performs certain credit evaluation procedures and does not require collateral for financial instruments subject to credit risk. The Company
believes that credit risk is limited because the Company routinely assesses the financial strength of its customers and, based upon factors
surrounding the credit risk of its customers, establishes an allowance for uncollectible accounts and, consequently, believes that its
accounts receivable credit risk exposure beyond such allowances is limited.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ConcentrationRiskCreditRisk-c10_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company maintains cash deposits with financial
institutions, which, from time to time, may exceed federally insured limits. Cash is also maintained at foreign financial institutions
in the UK. Cash in UK financial institutions as of June&#160;30, 2024, 2023 and 2022 was $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashAndCashEquivalentsAtCarryingValue" scale="0" unitRef="usd" id="ixv-49062">1,148,904</ix:nonFraction>, $<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashAndCashEquivalentsAtCarryingValue" scale="0" unitRef="usd" id="ixv-49063">264,244</ix:nonFraction>, and $<ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashAndCashEquivalentsAtCarryingValue" scale="0" unitRef="usd" id="ixv-49064">170,166</ix:nonFraction>,respectively.
The Company has not experienced any losses and believes it is not exposed to any significant credit risk from cash.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_ConsolidationPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:ConsolidationPolicyTextBlock" id="ixv-22929"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Consolidations</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ConsolidationPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The consolidated financial statements have been
prepared using the accounting records of Grafiti Holding and Grafiti Limited. All material inter-company balances and transactions have
been eliminated.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 165; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->10<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI
                                            HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c10_cont_3" id="_SignificantAccountingPoliciesTextBlock-c10_cont_2"><ix:nonNumeric contextRef="c10" continuedAt="_TradeAndOtherAccountsReceivablePolicy-c10_cont_1" escape="true" name="us-gaap:TradeAndOtherAccountsReceivablePolicy" id="ixv-22970"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Accounts Receivable, net and Allowance
for Credit Losses</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_TradeAndOtherAccountsReceivablePolicy-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accounts receivable are stated at the amount
the Company expects to collect. The Company recognizes an allowance for credit losses to ensure accounts receivables are not overstated
due to un-collectability. Bad debt reserves are determined based on a variety of factors, including the length of time the receivables
are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the
Company becomes aware of a customer&#8217;s inability to meet its financial obligation, such as in the case of bankruptcy filings, or
deterioration in such customer&#8217;s operating results or financial position. If circumstances related to a customer change, estimates
of the recoverability of receivables would be further adjusted. After reviewing the collectability of the receivables the Company&#8217;s
allowance for credit losses was not material as of June&#160;30, 2024, 2023 or 2022 .</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c10" continuedAt="_FairValueOfFinancialInstrumentsPolicy-c10_cont_1" escape="true" name="us-gaap:FairValueOfFinancialInstrumentsPolicy" id="ixv-22978"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Financial Instruments &#8212; Credit Losses
(&#8220;CECL&#8221;) - (ASU 2016-13)</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_FairValueOfFinancialInstrumentsPolicy-c10_cont_2" id="_FairValueOfFinancialInstrumentsPolicy-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The CECL impairment model is applicable to financial
assets measured at amortized cost, including loans, held-to-maturity debt securities and off-balance sheet credit exposures. The CECL
impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, that considers
forecasts of future economic conditions in addition to information about past events and current conditions. Based on this model, we
analyze the following criteria, as applicable in developing allowances for credit losses: historical loss information, the borrower&#8217;s
ability to make scheduled payments, the remaining time to maturity, the value of underlying collateral, projected future performance
of the borrower and macroeconomic trends.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_FairValueOfFinancialInstrumentsPolicy-c10_cont_3" id="_FairValueOfFinancialInstrumentsPolicy-c10_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company carries its note receivable from
Damon (the &#8220;Grafiti Holding Note&#8221;) at its amortized cost basis in the consolidated balance sheets since management has the
intent and ability to hold the Grafiti Holding Note for the foreseeable future or until maturity or payoff. The Company reviews its loans
carried at amortized cost for expected credit losses under <i>ASC 326, Financial Instruments - Credit Losses</i>, on an ongoing basis.
The Company utilized probability-of-default (&#8220;PD&#8221;) and loss-given-default (&#8220;LGD&#8221;) methodologies to calculate
the allowance for expected credit losses.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_FairValueOfFinancialInstrumentsPolicy-c10_cont_4" id="_FairValueOfFinancialInstrumentsPolicy-c10_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the PD&#215;LGD method, the loss rate
is a function of two components: (1) the lifetime default rate (&#8220;PD&#8221;); and (2) the loss given default (&#8220;LGD&#8221;).
Due to the Company&#8217;s limited operating history and lack of loss history, the Company derived its PD and LGD rates by considering
average historical default and recovery rates for corporate debt instruments, the borrower&#8217;s current financial position, and unsupportable
forecasts utilizing default studies and hybrid quantitative regression models provided by multiple industry leading sources. The Company
uses PD and LGD rates that correspond to the customer&#8217;s assumed credit rating and the contractual term of the note.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation id="_FairValueOfFinancialInstrumentsPolicy-c10_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The amortized cost, including accrued interest,
of the Company&#8217;s Grafiti Holding Note was $<ix:nonFraction contextRef="c60" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesAndLoansReceivableNetCurrent" scale="0" unitRef="usd" id="ixv-49065">441,980</ix:nonFraction>, net of the allowance for expected credit losses of $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllowanceForNotesAndLoansReceivableCurrent" scale="0" unitRef="usd" id="ixv-49066">108,568</ix:nonFraction>, as of June 30,
2024.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:PropertyPlantAndEquipmentPolicyTextBlock" id="ixv-22998"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Property and Equipment, net</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_PropertyPlantAndEquipmentPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment are recorded at cost less
accumulated depreciation and amortization. The Company depreciates its property and equipment for financial reporting purposes using
the straight-line method over the estimated useful lives of the assets, which is 3 years. Expenditures for maintenance and repairs, which
do not extend the economic useful life of the related assets, are charged to operations as incurred, and expenditures, which extend the
economic life, are capitalized. When assets are retired, or otherwise disposed of, the costs and related accumulated depreciation or
amortization are removed from the accounts and any gain or loss on disposal is recognized.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_LesseeLeasesPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:LesseeLeasesPolicyTextBlock" id="ixv-23008"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Leases and Right-of-Use Assets</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_LesseeLeasesPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company determines if an arrangement is a
lease at its inception. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease
payments over the lease term. The Company generally uses their incremental borrowing rate based on the information available at the lease
commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known.
Right-of-use assets related to the Company&#8217;s operating lease liabilities are measured at lease inception based on the initial measurement
of the lease liability, plus any prepaid lease payments and less any lease incentives. The Company&#8217;s lease terms that are used
in determining their operating lease liabilities at lease inception may include options to extend or terminate the leases when it is
reasonably certain that the Company will exercise such options. The Company amortizes their right-of-use assets as operating lease expense
generally on a straight-line basis over the lease term and classify both the lease amortization and imputed interest as operating expenses.
The Company does not recognize lease assets and lease liabilities for any lease with an original lease term of less than one year. All
leases as of June&#160;30, 2024, 2023 and 2022 were considered short-term in nature.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 166; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->11<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI
                                            HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c10_cont_4" id="_SignificantAccountingPoliciesTextBlock-c10_cont_3"><ix:nonNumeric contextRef="c10" continuedAt="_IncomeTaxPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock" id="ixv-23049"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Income Taxes</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_IncomeTaxPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for income taxes using the
separate return method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is
recognized in income or expense in the period that the change is enacted. Income tax benefits are recognized when it is probable that
the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred
tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. The Company
recorded no income tax provision or benefit for the year ended June 30, 2024, 2023, or 2022. See Note 9 - Income Taxes for further details.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock" id="ixv-23059"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Foreign Currency Translation</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Assets and liabilities related to the Company&#8217;s
foreign operations in the United Kingdom are calculated using the British Pound, Grafiti Limited&#8217;s functional currency, and are
translated to the U.S. Dollar, the Company&#8217;s reporting currency, at end-of-period exchange rates. The Company&#8217;s related revenues
and expenses are translated from the British Pound to U.S. Dollar at average exchange rates prevailing during the period. Translation
adjustments are recorded as a separate component of stockholder&#8217;s equity, totaling a gain/(loss) of approximately $(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentNetOfTax" scale="0" sign="-" unitRef="usd" id="ixv-49067">5,813</ix:nonFraction>), $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentNetOfTax" scale="0" unitRef="usd" id="ixv-49068">762</ix:nonFraction>,
and $(<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentNetOfTax" scale="0" sign="-" unitRef="usd" id="ixv-49069">3,957</ix:nonFraction>) for the years ended June&#160;30, 2024, 2023, and 2022 respectively. Gains or losses resulting from transactions denominated
in foreign currencies are included in general and administrative expenses in the statements of operations. Realized gains/(losses) from
transactions for the years ended June 30, 2024, 2023 and 2022 totaled $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ForeignCurrencyTransactionGainLossRealized" scale="0" unitRef="usd" id="ixv-49070">947</ix:nonFraction>, ($<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ForeignCurrencyTransactionGainLossRealized" scale="0" sign="-" unitRef="usd" id="ixv-49071">3,808</ix:nonFraction>), and ($<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ForeignCurrencyTransactionGainLossRealized" scale="0" sign="-" unitRef="usd" id="ixv-49072">8,744</ix:nonFraction>), respectively. Unrealized gains/(losses)
from transactions for the year ended June 30, 2024 was a gain of $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ForeignCurrencyTransactionGainLossUnrealized" scale="0" unitRef="usd" id="ixv-49073">5,492</ix:nonFraction>. Unrealized gains/(losses) from transactions for the years ended
June 30, 2023 and 2022 were not material.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_ComprehensiveIncomePolicyPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:ComprehensiveIncomePolicyPolicyTextBlock" id="ixv-23069"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Comprehensive Loss</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ComprehensiveIncomePolicyPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company reports comprehensive loss and its
components in its financial statements. Comprehensive loss consists of net loss and foreign currency translation adjustments affecting
parent&#8217;s net investment from Inpixon that, under GAAP, are excluded from net loss.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:RevenueFromContractWithCustomerPolicyTextBlock" id="ixv-23079"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Revenue Recognition</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_2" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognizes revenue when control is
transferred of the promised products or services to its customers, in an amount that reflects the consideration the Company expects to
be entitled to in exchange for those products or services. The Company derives revenue from the sale of software and software as a service.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_3" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">License Revenue Recognition</span></i></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_4" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company enters into contracts with its customers
whereby it grants a non-exclusive license for the use of its proprietary software. The contracts provide for either (i) a one year stated
term with a one year renewal option, (ii) a perpetual term or (iii) a two year term with the option to upgrade to a perpetual license
at the end of the term. The contracts may also provide for yearly on-going maintenance services for a specified price, which includes
maintenance services, designated support, and enhancements, upgrades and improvements to the software (the &#8220;Maintenance Services&#8221;),
depending on the contract. Licenses for on-premises software provide the customer with a right to use the software as it exists when
made available to the customer. All software provides customers with the same functionality and differ mainly in the duration over which
the customer benefits from the software.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 167; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->12<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c10_cont_5" id="_SignificantAccountingPoliciesTextBlock-c10_cont_4"><ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_5" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The timing of the Company&#8217;s revenue recognition
related to the licensing revenue stream is dependent on whether the software licensing agreement entered into represents a good or service.
Software that relies on an entity&#8217;s IP and is delivered only through a hosting arrangement, where the customer cannot take possession
of the software, is a service. A software arrangement that is provided through an access code or key represents the transfer of a good.
Licenses for on-premises software represents a good and provide the customer with a right to use the software as it exists when made
available to the customer. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same
functionality and differ mainly in the duration over which the customer benefits from the software. Revenue from distinct on-premises
licenses is recognized at a point in time when the software is made available to the customer.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_6" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Renewals or extensions of licenses are evaluated
as distinct licenses (i.e., a distinct good or service), and revenue attributed to the distinct good or service cannot be recognized
until (1) the entity provides the distinct license (or makes the license available) to the customer and (2) the customer is able to use
and benefit from the distinct license. Renewal contracts are not combined with original contracts, and, as a result, the renewal right
is evaluated in the same manner as all other additional rights granted after the initial contract. The revenue is not recognized until
the customer can begin to use and benefit from the license, which is typically at the beginning of the license renewal period. Therefore,
the Company recognizes revenue resulting from renewal of licensed software starting at the beginning of the license renewal period.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_7" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognizes revenue related to software
as a service evenly over the service period using a time-based measure because the Company is providing continuous service and the customer
simultaneously receives and consumes the benefits provided by the Company&#8217;s performance as the services are performed.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_8" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Contract Balances</span></i></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_9" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The timing of the Company&#8217;s revenue recognition
may differ from the timing of payment by its customers. The Company records a receivable when revenue is recognized prior to payment
and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the
Company records deferred revenue until the performance obligations are satisfied. The Company had deferred revenue of approximately $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ContractWithCustomerLiabilityCurrent" scale="0" unitRef="usd" id="ixv-49074">144,390</ix:nonFraction>,
$<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ContractWithCustomerLiabilityCurrent" scale="0" unitRef="usd" id="ixv-49075">86,635</ix:nonFraction> and $<ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ContractWithCustomerLiabilityCurrent" scale="0" unitRef="usd" id="ixv-49076">96,303</ix:nonFraction> as of June&#160;30, 2024, 2023, and 2022, respectively, related to cash received in advance for product license and
maintenance services to be performed in future periods. The Company expects to satisfy its remaining performance obligations for these
license and maintenance services, and recognize the deferred revenue and related contract costs over the next twelve months. The Company
recognized revenue of $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ContractWithCustomerLiabilityRevenueRecognized" scale="0" unitRef="usd" id="ixv-49077">67,688</ix:nonFraction> during the year ended June 30, 2024 that was included in the contract liability balance at the beginning
of the period.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_10" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_9"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Costs to Obtain a Contract</span></i></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_11" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company does not have a history of incurring
incremental costs to obtain a contract with a customer, but if the Company incurs these costs in the future, the Company will recognize
these costs as an asset that will be amortized over the expected contract term.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_12" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_11"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Cost to Fulfill a Contract</span></i></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_13" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_12"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company incurs costs to fulfill their obligations
under a contract once it has obtained, but before transferring goods or services to the customer. The Company has determined that these
costs are immaterial. Therefore, the Company expenses the costs as they are incurred.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 168; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->13<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI
                                            HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c10_cont_6" id="_SignificantAccountingPoliciesTextBlock-c10_cont_5"><ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_14" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_13"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Multiple Performance Obligations</span></i></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_15" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_14"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company enters into contracts with customers
for its technology licenses that may include multiple performance obligations. Each distinct performance obligation was determined by
whether the customer could benefit from the good or service on its own or together with readily available resources. The Company allocates
revenue to each performance obligation based on its standalone selling price. The Company&#8217;s contracts with its customers outline
the terms of the number of software licenses to be issued and any Maintenance Services, along with the agreed-upon prices. The price
for both the licenses and any related Maintenance Fees are fixed and stated in the contract.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_16" id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_15"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Sales and Use Taxes</span></i></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_RevenueFromContractWithCustomerPolicyTextBlock-c10_cont_16"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company presents transactional taxes such
as sales and use tax collected from customers and remitted to government authorities on a net basis.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_SegmentReportingPolicyPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:SegmentReportingPolicyPolicyTextBlock" id="ixv-23207"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Segments</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_SegmentReportingPolicyPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company and its Chief Executive Officer (&#8220;CEO&#8221;),
acting as the Chief Operating Decision Maker (&#8220;CODM&#8221;) determines its operating segments in accordance with Segment Reporting
(&#8220;ASC 280&#8221;). If there are components within an operating segment that meet the definition of a business, the Company evaluates
those components to determine if they must be separated into separate segments. The Company has <ix:nonFraction contextRef="c10" decimals="0" format="ixt-sec:numwordsen" name="us-gaap:NumberOfOperatingSegments" scale="0" unitRef="pure" id="ixv-49078">one</ix:nonFraction> operating segment. The Company is
organized and operated as one business. Management reviews its business as a single operating segment, using financial and other information
rendered meaningful only by the fact that such information is presented and reviewed in the aggregate.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_AdvertisingCostsPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:AdvertisingCostsPolicyTextBlock" id="ixv-23217"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Advertising Costs</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_AdvertisingCostsPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Advertising costs are expensed as incurred. The
Company incurred advertising costs, which are included in sales and marketing expense of $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherSellingAndMarketingExpense" scale="0" unitRef="usd" id="ixv-49079">1,696</ix:nonFraction>, $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherSellingAndMarketingExpense" scale="0" unitRef="usd" id="ixv-49080">8,237</ix:nonFraction> and $<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherSellingAndMarketingExpense" scale="0" unitRef="usd" id="ixv-49081">18,510</ix:nonFraction> during the years
ended June&#160;30, 2024, 2023, and 2022, respectively.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_EarningsPerSharePolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:EarningsPerSharePolicyTextBlock" id="ixv-23227"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Net Loss Per Share</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_EarningsPerSharePolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company computes basic and diluted earnings
per share by dividing net loss by the weighted average number of common shares outstanding during the period. Basic and diluted net loss
per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options in the calculation of
diluted net loss per common shares would have been anti-dilutive. The Company notes that there were common share equivalents of <ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross" scale="0" unitRef="shares" id="ixv-49082">1,015,383</ix:nonFraction>
in the form of stock options that were excluded from the calculation of diluted net loss per common share for the year ended June 30,
2024 as they are considered to be anti-dilutive. The Company notes that there were no such shares outstanding for the years ended June
30, 2023 and 2022.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:FairValueMeasurementPolicyPolicyTextBlock" id="ixv-23237"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Fair Value of Financial Instruments</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_FairValueMeasurementPolicyPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Financial instruments consist of cash, accounts
receivable, note receivable, and accounts payable. The Company determines the estimated fair value of such financial instruments presented
in these financial statements using available market information and appropriate methodologies. These financial instruments are stated
at their respective historical carrying amounts, which approximate fair value due to their short-term nature.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 169; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->14<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI
                                            HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c10_cont_7" id="_SignificantAccountingPoliciesTextBlock-c10_cont_6"><ix:nonNumeric contextRef="c10" continuedAt="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock" id="ixv-23278"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Carrying Value, Recoverability and Impairment
of Long-Lived Assets</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c10_cont_2" id="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has adopted Section 360-10-35 of
the FASB ASC for its long-lived assets. Pursuant to ASC Paragraph 360-10-35-17, an impairment loss shall be recognized only if the carrying
amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset
group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition
of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested
for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group)
exceeds its fair value. Pursuant to ASC Paragraph 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a
long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized)
over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c10_cont_3" id="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c10_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to ASC Paragraph 360-10-35-21, the Company&#8217;s
long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount
may not be recoverable. The Company considers the following to be some examples of such events or changes in circumstances that may trigger
an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) a significant adverse change
in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) a significant adverse
change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse
action or assessment by a regulator; (d) an accumulation of costs significantly in excess of the amount originally expected for the acquisition
or construction of a long-lived asset (asset group); (e) a current-period operating or cash flow loss combined with a history of operating
or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset
group); and (f) a current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed
of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment
indicators at least annually and more frequently upon the occurrence of such events.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c10_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Based on its assessments, the Company has not
recorded any impairment on long-lived assets during the years ended June&#160;30, 2024, 2023, and 2022, respectively.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_PriorPeriodReclassificationAdjustmentDescription-c10_cont_1" escape="true" name="us-gaap:PriorPeriodReclassificationAdjustmentDescription" id="ixv-23294"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Reclassifications</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_PriorPeriodReclassificationAdjustmentDescription-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Certain prior year amounts have been reclassified
to conform to June 30, 2024 presentation. The Company notes that these reclassifications only impacted the balance sheet and did not
impact cash flows or net income.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c10" continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c10_cont_1" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock" id="ixv-23304"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Recently Issued Accounting Standards Not
Yet Adopted</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c10_cont_2" id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company reviewed recently issued accounting
pronouncements and concluded that they were not applicable to the consolidated financial statements, except for the following:</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c10_cont_3" id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c10_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In July 2023, the FASB issued ASU 2023-03, &#8220;Presentation
of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity
(Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)&#8221;, which updates codification on how an entity
would apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards should be accounted
for in accordance with Topic 718, Compensation&#8212;Stock Compensation. The effective date of this update is for fiscal years beginning
after December 15, 2023, including interim periods within those fiscal years. The Company is currently assessing potential impacts of
ASU 2023-03 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial statements
and disclosures.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 170; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->15<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_SignificantAccountingPoliciesTextBlock-c10_cont_7"><ix:continuation continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c10_cont_4" id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c10_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2023, the FASB issued ASU 2023-07,
&#8220;Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures&#8221;, which amends the disclosure to improve reportable
segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an annual and interim basis
for to enable investors to develop more decision-useful financial analyses. All public entities will be required to report segment information
in accordance with the new guidance starting in annual periods beginning after December 15, 2023. The Company is currently assessing
potential impacts of ASU 2023-07 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated
financial statements and disclosures as the Company currently only has one reportable segment.</p></ix:continuation>

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                                            to Income Tax Disclosures&#8221;, which amends the disclosure to address investor requests
                                            for more transparency about income tax information through improvements to income tax disclosures
                                            primarily related to the rate reconciliation and income taxes paid information and includes
                                            certain other amendments to improve the effectiveness of income tax disclosures. For entities
                                            other than public business entities, the requirements will be effective for annual periods
                                            beginning after December 15, 2025. The guidance will be applied on a prospective basis with
                                            the option to apply the standard retrospectively. Early adoption is permitted. The Company
                                            is currently assessing potential impacts of ASU 2023-09 and does not expect the adoption
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                                            and disclosures.</p></ix:continuation></ix:continuation><div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Disaggregation of Revenue</i></b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognizes revenue when control of
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_DisaggregationOfRevenueTableTextBlock-c10_cont_4" id="_DisaggregationOfRevenueTableTextBlock-c10_cont_3"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td> <td style="text-align: justify; font-size: 10pt"><ix:footnote id="ix_0_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Software&#8217;s performance obligation is satisfied at a point in time when access to the software is provided to the customer.</span></ix:footnote></td></tr> </table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI
                                            HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c10" escape="true" name="dmn:TheGrafitiHoldingNoteTextBlock" id="ixv-23557"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 4 - The Grafiti Holding Note</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 26, 2024, Grafiti Holding purchased
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accordance with the terms of the Grafiti Holding Note, Grafiti Holding must loan to Damon, at Damon&#8217;s request, additional
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December 31, 2024, (b) when declared due and payable by Grafiti Holding upon the occurrence of an event of default, or (c) within
three business days following termination of the Damon Business Combination Agreement. Concurrent with the original principal amount
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><ix:nonNumeric contextRef="c10" continuedAt="_AllowanceForCreditLossesOnFinancingReceivablesTableTextBlock-c10_cont_1" escape="true" name="us-gaap:AllowanceForCreditLossesOnFinancingReceivablesTableTextBlock" id="ixv-49116">A roll forward of the Company&#8217;s allowance for credit losses
was as follows:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation id="_AllowanceForCreditLossesOnFinancingReceivablesTableTextBlock-c10_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Balance at June 30, 2023</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Balance at June 30, 2024</td><td>&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllowanceForNotesAndLoansReceivableCurrent" scale="0" unitRef="usd" id="ixv-49118">108,568</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There were neither charges against the allowance
nor recoveries of previously written off amounts for the years ended June 30, 2024, 2023 and 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s Grafiti Holding Note represents
a variable interest in Damon Motors. As such, the Company applied ASC 810 to assess whether the Company is the primary beneficiary and
Damon Motors should be consolidated. The Company determined they are not the primary beneficiary, as the Company does not have the power
to direct the activities that most significantly affect Damon Motors&#8217;s economic performance. The Company&#8217;s support to Damon
Motors, and the Company&#8217;s maximum exposure, consists only of the Grafiti Holding Note outlined above. The primary reason for the
financial support is to assist Damon Motors&#8217; operations until the close of the merger. As such, the Company concluded the Damon
Motors legal entity should not be consolidated.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 172; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->17<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI
                                            HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><ix:nonNumeric contextRef="c10" escape="true" name="us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock" id="ixv-23736"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 5 - Property and Equipment, net</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_PropertyPlantAndEquipmentTextBlock-c10_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Computer and office equipment</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Less: accumulated depreciation</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt">Total Property and Equipment, Net</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentNet" scale="0" unitRef="usd" id="ixv-49127">216</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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  </table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Depreciation expense was approximately $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Depreciation" scale="0" unitRef="usd" id="ixv-49129">695</ix:nonFraction>, $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Depreciation" scale="0" unitRef="usd" id="ixv-49130">1,246</ix:nonFraction> and $<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Depreciation" scale="0" unitRef="usd" id="ixv-49131">1,319</ix:nonFraction> for the years ended June&#160;30, 2024, 2023 and 2022, respectively. The Company disposed of $<ix:nonFraction contextRef="c82" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentDisposals" scale="0" unitRef="usd" id="ixv-49132">3,873</ix:nonFraction> of computer and office equipment during the year ended June 30, 2024.</p></ix:nonNumeric><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c10" escape="true" name="us-gaap:AccountsPayableAccruedLiabilitiesAndOtherLiabilitiesDisclosureCurrentTextBlock" id="ixv-23808"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 6 - Accrued Liabilities</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c10" continuedAt="_ScheduleOfAccruedLiabilitiesTableTextBlock-c10_cont_1" escape="true" name="us-gaap:ScheduleOfAccruedLiabilitiesTableTextBlock" id="ixv-49133">Accrued liabilities as of June&#160;30, 2024,
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfAccruedLiabilitiesTableTextBlock-c10_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Accrued compensation and benefits</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-bottom: 4pt">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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  </table></ix:continuation></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c10" escape="true" name="us-gaap:LongTermDebtTextBlock" id="ixv-23907"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 7 - Long-Term Debt</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 26, 2024, Grafiti Holding and Streeterville
Capital, LLC (&#8220;Streeterville,&#8221; or &#8220;Investor&#8221;) entered into a note purchase agreement, pursuant to which Grafiti Holding agreed to sell,
and Streeterville agreed to purchase, a secured promissory note in an aggregate original principal amount of $<ix:nonFraction contextRef="c83" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="0" unitRef="usd" id="ixv-49148">6,470,000</ix:nonFraction> (the &#8220;Streeterville
Note&#8221;). The Streeterville Note accrues interest on the outstanding balance of the note at the rate of <ix:nonFraction contextRef="c84" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateStatedPercentage" scale="-2" unitRef="pure" id="ixv-49149">10</ix:nonFraction>% per annum, and all principal
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$<ix:nonFraction contextRef="c86" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromDebtNetOfIssuanceCosts" scale="0" unitRef="usd" id="ixv-49151">20,000</ix:nonFraction> of issuance costs to cover legal, accounting, due diligence, monitoring and other transaction costs. On the same day, the Investor
paid the purchase price of $<ix:nonFraction contextRef="c87" decimals="0" format="ixt:num-dot-decimal" name="dmn:InvestorPurchaseAmountReceived" scale="0" unitRef="usd" id="ixv-49152">5,000,000</ix:nonFraction> as follows: (a) $<ix:nonFraction contextRef="c88" decimals="0" format="ixt:num-dot-decimal" name="dmn:InvestorPurchaseAmountReceived" scale="0" unitRef="usd" id="ixv-49153">1,150,000</ix:nonFraction> to Grafiti Holding; (b) $<ix:nonFraction contextRef="c89" decimals="0" format="ixt:num-dot-decimal" name="dmn:InvestorPurchaseAmountReceived" scale="0" unitRef="usd" id="ixv-49154">350,000</ix:nonFraction> to Damon as a senior secured loan from
Grafiti Holding to Damon (the &#8220;Grafiti Holding Note&#8221;), and (c) $<ix:nonFraction contextRef="c90" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EscrowDeposit" scale="0" unitRef="usd" id="ixv-49155">3,500,000</ix:nonFraction> into escrow, which will be distributed to Grafiti
Holding upon satisfaction of certain conditions including: (a) consummation of the Grafiti Holding Transaction; (b) the combined company&#8217;s
common shares being listed on Nasdaq; and (c) immediately following the closing of the Grafiti Holding Transaction, the combined company
having no outstanding debt other than the Streeterville Note, certain other specified debts and trade payables incurred in the ordinary
course of business (the &#8220;Escrow Conditions&#8221;). Pursuant to the escrow agreement,
if the Escrow Conditions have not been satisfied by August 31, 2024 (the &#8220;Deadline Date&#8221;), the escrow agent may return the
escrow amount to the Investor and the Guaranties in favor of Streeterville (as defined below) to Damon and Damon Subsidiary (as defined
below). In accordance with the first and second amendments to the escrow agreement, the Deadline Date has been extended to October 31,
2024. Additionally, the second amendment to the escrow agreement allows for the release of funds at the discretion of the Investor even
if the funding conditions have not been satisfied. On September 23, 2024, $<ix:nonFraction contextRef="c91" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EscrowDeposit" scale="0" unitRef="usd" id="ixv-49156">350,000</ix:nonFraction> of the funds placed in escrow were released to Grafiti
Holding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><ix:nonNumeric contextRef="c10" continuedAt="_ScheduleOfDebtInstrumentsTextBlock-c10_cont_1" escape="true" name="us-gaap:ScheduleOfDebtInstrumentsTextBlock" id="ixv-49157">Long-Term Debt as of June&#160;30, 2024 consisted of the following:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation id="_ScheduleOfDebtInstrumentsTextBlock-c10_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Long-Term Debt</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Maturity</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in">June 2024 <ix:nonFraction contextRef="c93" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateStatedPercentage" scale="-2" unitRef="pure" id="ixv-49158">10</ix:nonFraction>% Note (net of $<ix:nonFraction contextRef="c93" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-49159"><ix:nonFraction contextRef="c93" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredFinanceCostsNet" scale="0" unitRef="usd" id="ixv-49160">450,059</ix:nonFraction></ix:nonFraction> unamortized debt discount and issuance costs)</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td> <td style="width: 11%; text-align: center; padding-bottom: 1.5pt"><ix:nonNumeric contextRef="c93" format="ixt:date-month-day-year" name="us-gaap:LongTermDebtMaturityDate" id="ixv-49161">12/26/2025</ix:nonNumeric></td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td> <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right"><ix:nonFraction contextRef="c93" decimals="0" format="ixt:num-dot-decimal" name="dmn:LongTermDebts" scale="0" unitRef="usd" id="ixv-49162">1,509,862</ix:nonFraction></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; "> <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -0.125in; padding-left: 0.125in">Total Long-Term Debt</td><td style="padding-bottom: 4pt">&#160;</td> <td style="text-align: center; padding-bottom: 4pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">$</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="dmn:LongTermDebts" scale="0" unitRef="usd" id="ixv-49163">1,509,862</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr> </table></ix:continuation>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Debt discount and issuance costs in the amount of $<ix:nonFraction contextRef="c92" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-49164">455,000</ix:nonFraction> related to the Streeterville Note was recorded as a contra liability within long-term debt, which will be amortized over the term of the note. Additional debt discount and issuance costs will be recorded as the Company receives the remaining portions of the Streeterville Note. Interest expense on the long-term debt for the year ended June 30, 2024 totaled $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestExpenseLongTermDebt" scale="0" unitRef="usd" id="ixv-49165">9,862</ix:nonFraction> which includes $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestExpenseDebt" scale="0" unitRef="usd" id="ixv-49166">3,301</ix:nonFraction> of interest expense, $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfFinancingCosts" scale="0" unitRef="usd" id="ixv-49167">4,941</ix:nonFraction> of amortized debt discount and $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForFees" scale="0" unitRef="usd" id="ixv-49168">1,620</ix:nonFraction> of monitoring fees. There was <span style="-sec-ix-hidden: hidden-fact-147">no</span> interest expense in the years ended June 30, 2023 or 2022.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had <span style="-sec-ix-hidden: hidden-fact-148">no</span> short-term or long-term debt
as of June 30, 2023 or 2022.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 173; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->18<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI
                                            HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c10" continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c10_cont_1" escape="true" name="us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock" id="ixv-23980"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 8 - Stock Award Plan and Stock-Based
Compensation</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 11, 2024, the Grafiti Holding board of
directors adopted a Stock Incentive Plan. The maximum aggregate number of Subordinate Voting Shares that may be issued pursuant to the
awards granted under the Plan (the &#8220;Share Reserve&#8221;) shall initially be <ix:nonFraction contextRef="c94" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant" scale="0" unitRef="shares" id="ixv-49169">10,000,000</ix:nonFraction>, and the Share Reserve shall automatically
increase on the first day of each calendar year beginning January 1, 2025, by a number of shares equal to the greatest of (i) <ix:nonFraction contextRef="c95" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant" scale="0" unitRef="shares" id="ixv-49170">3,000,000</ix:nonFraction>
Shares, (ii) twenty percent (<ix:nonFraction contextRef="c96" decimals="2" format="ixt:num-dot-decimal" name="dmn:PercentageOfOutstandingCommonShares" scale="-2" unitRef="pure" id="ixv-49171">20</ix:nonFraction>%) of the outstanding Subordinate Voting Shares on the last day of the immediately preceding calendar
quarter, or (iii) such number of Subordinate Voting Shares determined by the Committee. As of June 30, 2024, <ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod" scale="0" unitRef="shares" id="ixv-49172">1,015,383</ix:nonFraction> of options were
granted to consultants of the Company and <ix:nonFraction contextRef="c97" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant" scale="0" unitRef="shares" id="ixv-49173">8,984,617</ix:nonFraction> options were available for future grant under the Stock Incentive Plan.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Incentive stock options granted under the Option
Plans are granted at exercise prices not less than <ix:nonFraction contextRef="c97" decimals="2" format="ixt:num-dot-decimal" name="dmn:PercentageOfExercisePrice" scale="-2" unitRef="pure" id="ixv-49174">100</ix:nonFraction>% of the estimated fair market value of the underlying common stock at date of
grant. The exercise price per share for incentive stock options may not be less than <ix:nonFraction contextRef="c1" decimals="2" format="ixt:num-dot-decimal" name="dmn:PercentageOfExercisePrice" scale="-2" unitRef="pure" id="ixv-49175">110</ix:nonFraction>% of the estimated fair value of the underlying
common stock on the grant date for any individual possessing more that <ix:nonFraction contextRef="c1" decimals="2" format="ixt:num-dot-decimal" name="dmn:PercentageOfOutstandingCommonShares" scale="-2" unitRef="pure" id="ixv-49176">10</ix:nonFraction>% of the total outstanding common stock of the Company. Options
granted under the Option Plans vest over periods ranging from immediately to <ix:nonNumeric contextRef="c98" format="ixt-sec:durwordsen" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardAwardVestingPeriod1" id="ixv-49177">four years</ix:nonNumeric> and are exercisable over periods not exceeding
<ix:nonNumeric contextRef="c98" format="ixt-sec:durwordsen" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardExpirationPeriod" id="ixv-49178">ten years</ix:nonNumeric>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the year ended June&#160;30, 2024, the
Company granted options under the stock option plan for the purchase of <ix:nonFraction contextRef="c98" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" scale="0" unitRef="shares" id="ixv-49179">1,015,383</ix:nonFraction> shares of common stock to Nadir Ali, CEO of the Company,
and other consultants. Nadir Ali was considered a related party to the Company and $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllocatedShareBasedCompensationExpense" scale="0" unitRef="usd" id="ixv-49180">219,627</ix:nonFraction> of the stock-based compensation expense is
related to his options. Nadir Ali and the other consultants were granted these stock options for services performed in connection with
the Spin Off. These options are <ix:nonFraction contextRef="c1" decimals="2" format="ixt:num-dot-decimal" name="dmn:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVested" scale="-2" unitRef="pure" id="ixv-49181">100</ix:nonFraction>% vested upon grant, expire on December 31, 2024, and have an exercise price of $<ix:nonFraction contextRef="c1" decimals="5" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" scale="0" unitRef="usdPershares" id="ixv-49182">0.06336</ix:nonFraction> per share.
The Company valued the stock options using the Black-Scholes option valuation model under probability weighted scenarios. The &#8220;As-Is&#8221;
scenario represents the value of the Company on a standalone basis. The &#8220;Merger&#8221; scenario represents the agreed upon price
for the reverse merger with Damon. The fair value of the awards was determined to be approximately $<ix:nonFraction contextRef="c10" decimals="1" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedInPeriodFairValue1" scale="0" unitRef="usd" id="ixv-49183">0.6</ix:nonFraction> million. The fair values of the
common stock as of the grant date under the &#8220;As-Is&#8221; and &#8220;Merger&#8221; scenarios were determined to be $<ix:nonFraction contextRef="c99" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageGrantDateFairValue" scale="0" unitRef="usdPershares" id="ixv-49184">0.0634</ix:nonFraction> and
$<ix:nonFraction contextRef="c10" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageGrantDateFairValue" scale="0" unitRef="usdPershares" id="ixv-49185">6.00</ix:nonFraction> per share, respectively.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the year ended June&#160;30, 2024, the
Company recorded a charge of approximately $<ix:nonFraction contextRef="c10" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxBenefitExpense" scale="6" unitRef="usd" id="ixv-49186">0.6</ix:nonFraction> million for stock option expense for the stock options granted during the fiscal year
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The expected stock price volatility for the Company&#8217;s
stock options was determined by the historical volatilities for industry peers and used an average of those volatilities. Risk free interest
rates were obtained from U.S. Treasury rates for the applicable periods. The dividends assumptions was $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendPayments" scale="0" unitRef="usd" id="ixv-49198">0</ix:nonFraction> as the Company historically
has not declared any dividends and does not expect to. The Company accounts for forfeitures as they occur, rather than estimating expected
forfeitures.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI
                                            HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c10" continuedAt="_ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock-c10_cont_1" escape="true" name="us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock" id="ixv-49199">See below for a summary of the stock options
granted under the stock option plan:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock-c10_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Outstanding at Outstanding at July 1, 2023</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-151">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-152">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-153">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="width: 64%">Granted</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Exercised</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-155">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-156">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-157">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
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    <td>Expired</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-158">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-159">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-160">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-161">&#8212;</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td>Outstanding at June 30, 2024</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-164">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="padding-bottom: 4pt">Exercisable at June 30, 2024</td><td style="padding-bottom: 4pt">&#160;</td>
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  </table></ix:continuation>

<p style="margin-top: 0; margin-bottom: 0">&#160;</p>

<p style="text-align: justify; margin-top: 0; margin-bottom: 0">All of the <ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant" scale="0" unitRef="shares" id="ixv-49206">1,015,383</ix:nonFraction> of stock options granted during the fiscal year
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c10" continuedAt="_ScheduleOfIncomeBeforeIncomeTaxDomesticAndForeignTableTextBlock-c10_cont_1" escape="true" name="us-gaap:ScheduleOfIncomeBeforeIncomeTaxDomesticAndForeignTableTextBlock" id="ixv-49207">The domestic and foreign components of loss before
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfIncomeBeforeIncomeTaxDomesticAndForeignTableTextBlock-c10_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c10" continuedAt="_ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock-c10_cont_1" escape="true" name="us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock" id="ixv-49214">The income tax provision (benefit) for the years
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock-c10_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td>&#160;</td><td>&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt">Income Tax Benefit</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-172">&#8212;</div></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-173">&#8212;</div></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-174">&#8212;</div></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 175; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI
                                            HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c10_cont_2" id="_IncomeTaxDisclosureTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c10" continuedAt="_ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock-c10_cont_1" escape="true" name="us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock" id="ixv-49224">The reconciliation between the U.S. statutory
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock-c10_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">For the Years Ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">U.S. federal statutory rate</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c10" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate" scale="-2" unitRef="pure" id="ixv-49225">21.0</ix:nonFraction></td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c11" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate" scale="-2" unitRef="pure" id="ixv-49226">21.0</ix:nonFraction></td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c12" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate" scale="-2" unitRef="pure" id="ixv-49227">21.0</ix:nonFraction></td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationForeignIncomeTaxRateDifferential" scale="-2" sign="-" unitRef="pure" id="ixv-49228">8.0</ix:nonFraction></td><td style="text-align: left">)%</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationOtherReconcilingItemsPercent" scale="-2" sign="-" unitRef="pure" id="ixv-49231">3.2</ix:nonFraction></td><td style="text-align: left">)%</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Change in valuation allowance</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c10" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance" scale="-2" sign="-" unitRef="pure" id="ixv-49234">9.8</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)%</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt">Effective Rate</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-175">&#8212;</div></td><td style="padding-bottom: 2.5pt; text-align: left">%</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-176">&#8212;</div></td><td style="padding-bottom: 2.5pt; text-align: left">%</td><td style="padding-bottom: 4pt">&#160;</td>
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  </table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c10" continuedAt="_ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock-c10_cont_1" escape="true" name="us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock" id="ixv-49237">As of June&#160;30, 2024, 2023 and 2022, the
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of June&#160;30, 2024, 2023 and 2022, Grafiti
Limited, had approximately $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLossCarryforwards" scale="0" unitRef="usd" id="ixv-49249">461,913</ix:nonFraction>, $<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLossCarryforwards" scale="0" unitRef="usd" id="ixv-49250">380,733</ix:nonFraction>, and $<ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLossCarryforwards" scale="0" unitRef="usd" id="ixv-49251">296,593</ix:nonFraction> of UK NOL carryovers available to offset future taxable income, respectively.
These NOLs do not expire. In the UK, there are limitations to the usage of prior losses after a change in ownership if either:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>


<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">(1)</td><td style="text-align: justify">the scale of activities was small before the change
                                            of ownership and a considerable revival of the trade follows the change or</td>
</tr></table>

<p style="margin-top: 0; margin-bottom: 0">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">(2)</td><td style="text-align: justify">within any five-year period beginning no more than
                                            three years before the change in ownership there is a major change in the nature or conduct
                                            of the trade.&#8221;</td>
</tr></table>

<p style="margin-top: 0; margin-bottom: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of June 30, 2024, Grafiti Holding has approximately
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in the event of a change in ownership. This is broadly defined as when a person or group of persons acquires shares of a corporation
to hold more than 75% of the FMV of all of the shares of the corporation without otherwise acquiring control of the corporation and if
it is reasonable to conclude that one of the main reasons that control was not acquired was to avoid the loss restriction rules.</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes. In assessing the realization of deferred tax assets, management considers, whether it is &#8220;more likely
than not&#8221;, that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets
is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible
amounts become deductible.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_IncomeTaxDisclosureTextBlock-c10_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">ASC 740, &#8220;Income Taxes&#8221; requires
that a valuation allowance be established when it is &#8220;more likely than not&#8221; that all, or a portion of, deferred tax assets
will not be realized. A review of all available positive and negative evidence needs to be considered, including the scheduled reversal
of deferred tax liabilities, projected future taxable income, and tax planning strategies. After consideration of all the information
available, management believes that uncertainty exists with respect to future realization of its deferred tax assets with respect to
both Grafiti Holding and Grafiti Limited. Therefore, a full valuation allowance was established as of June 30, 2024, 2023 and 2022. As
of June 30, 2024, 2023 and 2022, the change in valuation allowance was $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TaxCreditCarryforwardValuationAllowance" scale="0" unitRef="usd" id="ixv-49254">132,501</ix:nonFraction>, $<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TaxCreditCarryforwardValuationAllowance" scale="0" unitRef="usd" id="ixv-49255">15,986</ix:nonFraction>, and $<ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TaxCreditCarryforwardValuationAllowance" scale="0" unitRef="usd" id="ixv-49256">4,087</ix:nonFraction>, respectively.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">ASC 740 also clarifies the accounting for uncertainty
in income taxes recognized in an enterprise&#8217;s financial statements and prescribes a recognition threshold and measurement process
for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits
to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. ASC 740 also provides
guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company
is required to file income tax returns in the United Kingdom and in Canada. Based on the Company&#8217;s evaluation, it has been concluded
that there are no material uncertain tax positions requiring recognition in the Company&#8217;s consolidated financial statements for
the years ended June 30, 2024, 2023 and 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s policy for recording interest
and penalties associated with unrecognized tax benefits is to record such interest and penalties as interest expense and as a component
of income tax expense. There were no amounts accrued for interest or penalties for the years ended June 30, 2024, 2023 and 2022. Management
does not expect any material changes in its unrecognized tax benefits in the next year.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c10" name="us-gaap:IncomeTaxExaminationDescription" id="ixv-49257">The Company operates in the UK and in Canada
and in the normal course of business, its tax returns are subject to examination by taxing authorities. Such examinations may result
in future assessments by these taxing authorities. Grafiti Limited is subject to examination by UK tax authorities beginning May 13,
2020. In general, the UK Revenue &amp; Customs Authority may reassess taxes four years from the date of filing. The tax years that remain
open and subject to UK reassessment are 2020 &#8211; 2022. Grafiti Holding is subject to examination by Canadian tax authorities for
their filings for up to four years.</ix:nonNumeric></p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c10" escape="true" name="us-gaap:ConcentrationRiskDisclosureTextBlock" id="ixv-24757"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 10 - Credit Risk and Concentrations</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the year ended June 30, 2024, the Company
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of June&#160;30, 2024, three customers represented
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As of June&#160;30, 2022, one customer represented <ix:nonFraction contextRef="c113" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ConcentrationRiskPercentage1" scale="-2" unitRef="pure" id="ixv-49265">28</ix:nonFraction>% of total accounts receivable and another customer represented approximately <ix:nonFraction contextRef="c114" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ConcentrationRiskPercentage1" scale="-2" unitRef="pure" id="ixv-49266">26</ix:nonFraction>%
of total accounts receivable.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of June&#160;30, 2024, 2023 and 2022, the
majority of cost of goods sold was related to related party expenses as discussed in Note 11. Therefore, there are no significant concentrations
of purchases or accounts payable.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c10" escape="true" name="us-gaap:InvestmentTextBlock" id="ixv-24769"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 11 - Net Investments from Inpixon</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to the transaction on December 27, 2023,
the Company incurred expenses that were paid by Inpixon. The expenses incurred consist of salaries and benefits to certain employees
of Inpixon that provided services for the Company. Inpixon allocated expenses to the Company based on the estimated time spent by each
Inpixon employee. In addition, the Company recorded cost of sales for the use of Inpixon&#8217;s software. The Company also recorded
adjustments to these consolidated financial statements to record cost of sales at market value based on the price Inpixon would charge
third parties for the use of the Inpixon&#8217;s software with industry consistent margins. The Company settled the amounts through equity.
The Company has recorded these amounts as a change in stockholders&#8217; equity (deficit) of $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="dmn:NetInvestmentsFromInpixon" scale="0" unitRef="usd" id="ixv-49267">67,330</ix:nonFraction>, $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="dmn:NetInvestmentsFromInpixon" scale="0" unitRef="usd" id="ixv-49268">166,471</ix:nonFraction> and $<ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="dmn:NetInvestmentsFromInpixon" scale="0" unitRef="usd" id="ixv-49269">177,053</ix:nonFraction> for the
years ended June 30, 2024, 2023 and 2022, respectively.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c10" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock" id="ixv-24800"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 12 - Grafiti LLC Transactions</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company notes that after the transaction
on December 27, 2023, the software is owned by Grafiti LLC and the Company has negotiated a monthly license fee of <ix:nonFraction contextRef="c115" decimals="2" format="ixt:num-dot-decimal" name="dmn:LicenseFee" scale="-2" unitRef="pure" id="ixv-49270">50</ix:nonFraction>% of the amount
invoiced to customers during the month for the use/sale of its software (See Note 15 for distributor agreement details). The Company
notes that Grafiti LLC is wholly owned by Grafiti Group LLC, which is owned by Nadir Ali, the former CEO of Inpixon. The Company has
recorded the amounts related to the recognized revenue during the January 1, 2024 through June 30, 2024 period as cost of revenues on
the Company&#8217;s consolidated statement of operations of approximately $<ix:nonFraction contextRef="c116" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostOfRevenue" scale="0" unitRef="usd" id="ixv-49271">34,474</ix:nonFraction>, $<ix:nonFraction contextRef="c117" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostOfRevenue" scale="0" unitRef="usd" id="ixv-49272">0</ix:nonFraction> and $<ix:nonFraction contextRef="c118" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostOfRevenue" scale="0" unitRef="usd" id="ixv-49273">0</ix:nonFraction> for the years ended June 30, 2024, 2023
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to Grafiti LLC for the administrative services provided by Grafiti LLC. The Company has recorded these amounts as general and administrative
costs on the Company&#8217;s consolidated statement of operations of approximately $<ix:nonFraction contextRef="c116" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GeneralAndAdministrativeExpense" scale="0" unitRef="usd" id="ixv-49275">30,480</ix:nonFraction>, $<ix:nonFraction contextRef="c120" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GeneralAndAdministrativeExpense" scale="0" unitRef="usd" id="ixv-49276">0</ix:nonFraction> and $<ix:nonFraction contextRef="c121" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GeneralAndAdministrativeExpense" scale="0" unitRef="usd" id="ixv-49277">0</ix:nonFraction> for the years ended June 30, 2024,
2023 and 2022, respectively.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c10" continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c10_cont_1" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock" id="ixv-24809"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 13- Commitments and Contingencies</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Litigation</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Certain conditions may exist as of the date the
consolidated financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more
future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise
of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims
that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well
as the perceived merits of the amount of relief sought or expected to be sought therein.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If the assessment of a contingency indicates
that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability
would be accrued in the Company&#8217;s financial statements. If the assessment indicates that a potentially material loss contingency
is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and
an estimate of the range of possible losses, if determinable and material, would be disclosed.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Loss contingencies considered remote are generally
not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters
will not materially and adversely affect the Company&#8217;s business, financial position, and results of operations or cash flows. However,
the performance of our Company&#8217;s business, financial position, and results of operations or cash flows may be affected by unfavorable
resolution of any particular matter.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Leases</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had a six months operating lease
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that it retains for approximately $<ix:nonFraction contextRef="c124" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseExpense" scale="0" unitRef="usd" id="ixv-49280">300</ix:nonFraction> per month that renews on an annual basis in October of each year.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 178; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->23<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI
                                            HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><ix:continuation id="_CommitmentsAndContingenciesDisclosureTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Consulting Arrangements</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Grafiti Holding agreed to pay Mr. Ali, a related
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in connection with public company financing, business opportunities and other strategic transactions, as well as operational matters
as requested. As of the date of this filing, Grafiti Holding has paid Mr. Ali $<ix:nonFraction contextRef="c126" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherGeneralAndAdministrativeExpense" scale="0" unitRef="usd" id="ixv-49282">45,000</ix:nonFraction> for services provided during the months of April
through June 2024 which is included in the general and administrative line in the consolidated statements of operations. See Note 15.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Grafiti Holding agreed to pay Ms. Figueroa $<ix:nonFraction contextRef="c127" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfessionalFees" scale="0" unitRef="usd" id="ixv-49283">15,000</ix:nonFraction>
a month for advisory services with respect to her knowledge and expertise related to Company&#8217;s public company reporting and compliance
matters and corporate business development and growth strategies. As of the date of this filing, Grafiti Holding has paid Ms. Figueroa
$<ix:nonFraction contextRef="c128" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherGeneralAndAdministrativeExpense" scale="0" unitRef="usd" id="ixv-49284">45,000</ix:nonFraction> for services provided during the months of April through June 2024 which is included in the general and administrative line in
the consolidated statements of operations. See Note 15.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Grafiti Holding agreed to pay Ms. Loundermon,
the former CFO of Inpixon, $10,000 a month for advisory services with respect to her knowledge and expertise regarding the transition
of the Company&#8217;s financial reporting function to ensure continuity of business operations. As of the date of this filing, Grafiti
Holding has paid Ms. Loundermon $<ix:nonFraction contextRef="c129" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherGeneralAndAdministrativeExpense" scale="0" unitRef="usd" id="ixv-49285">30,000</ix:nonFraction> for services provided during the months of April through June 2024 which is included in the general
and administrative line in the consolidated statements of operations. See Note 15.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company notes that the Company will continue
to pay for the advisory services noted above until the Damon Business Combination is completed.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c10" escape="true" name="dmn:ForeignOperationsTextBlock" id="ixv-24880"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 14 - Foreign Operations</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s operations are located in
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation id="_ScheduleOfRevenuesFromExternalCustomersAndLongLivedAssetsByGeographicalAreasTableTextBlock-c10_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Canada</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold"><span style="text-decoration:underline">For the Years Ended June 30, 2024:</span></td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Revenue by geographic area</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-185">&#8212;</div></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c131" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Revenues" scale="0" unitRef="usd" id="ixv-49287">336,562</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Revenues" scale="0" unitRef="usd" id="ixv-49288">336,562</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Operating loss by geographic area</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c130" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-49289">1,263,106</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c131" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-49290">75,937</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-49291">1,339,043</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Net loss by geographic area</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c131" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-49293">75,937</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-49294">1,348,357</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-decoration: underline; font-weight: bold">As of June 30, 2024:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Total identifiable assets by geographic area</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c132" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Assets" scale="0" unitRef="usd" id="ixv-49296">220,863</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Assets" scale="0" unitRef="usd" id="ixv-49297">1,694,586</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Long lived assets by geographic area</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-186">&#8212;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c132" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NoncurrentAssets" scale="0" unitRef="usd" id="ixv-49298">2,643</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  </table></ix:continuation>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company notes that the Company&#8217;s Canadian
operations consist of Grafiti Holdings while the Company&#8217;s United Kingdom operations consist of Grafiti Limited. As such, the years
ended June 30, 2023 and 2022 only include the operations from United Kingdom.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 179; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c10" continuedAt="_SubsequentEventsTextBlock-c10_cont_1" escape="true" name="us-gaap:SubsequentEventsTextBlock" id="ixv-25026"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 15 - Subsequent Events</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Distributor Agreement</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 19, 2024, Grafiti Limited entered into
a Distributor Agreement with Grafiti LLC. Under the Distributor Agreement, Grafiti LLC granted Grafiti Limited a non-exclusive, non-transferable
right and license to market and distribute SAVES (statistical analytics and visualization) products in the United Kingdom and other agreed-upon
territories. Grafiti Limited will pay Grafiti LLC the then-current prices for the products, subject to a discount of up to <ix:nonFraction contextRef="c133" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:VariableInterestEntityOwnershipPercentage" scale="-2" unitRef="pure" id="ixv-49300">50</ix:nonFraction>% if certain
revenue targets are met or other arrangements agreed upon by the parties. The deemed effective date of the Distributor Agreement is retroactive
to January 1, 2024, and will remain in effect for one year from the effective date, automatically renewing for successive one-year periods
unless either party provides advance notice prior to the end of the current term to not extend. Either party may terminate the Agreement
without cause by providing at least 90 days&#8217; prior written notice, or immediately for specified reasons, including an uncured breach
or bankruptcy. As of June 30, 2024 Grafiti Limited owed Grafiti LLC $<ix:nonFraction contextRef="c134" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableCurrent" scale="0" unitRef="usd" id="ixv-49301">42,896</ix:nonFraction> under the agreement which is included in the Accounts Payable
line on the Consolidated Balance Sheets.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Administrative Support Service Agreement</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Additionally, on July 19, 2024, Grafiti Limited
entered into an Administrative Support Service Agreement with Grafiti LLC. Under the Administrative Support Service Agreement, Grafiti
LLC agreed to provide accounting, tax, and other administrative sales support services to Grafiti Limited for $<ix:nonFraction contextRef="c135" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AdministrativeFeesExpense" scale="0" unitRef="usd" id="ixv-49302">5,080</ix:nonFraction> per month, with
the amount subject to a <ix:nonFraction contextRef="c136" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:VariableInterestEntityOwnershipPercentage" scale="-2" unitRef="pure" id="ixv-49303">5</ix:nonFraction>% annual increase by Grafiti LLC. The Administrative Support Service Agreement is deemed to have commenced on
January 1, 2024, and remains in effect for one year from the effective date, automatically renewing for successive one-year periods unless
either party provides advance notice prior to the end of the current term to not extend. As of June 30, 2024, Grafiti Limited owed Grafiti
LLC $<ix:nonFraction contextRef="c137" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableCurrent" scale="0" unitRef="usd" id="ixv-49304">15,240</ix:nonFraction> under the agreement which is included in the Accounts Payable line on the Consolidated Balance Sheets.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Advisory Services and Consulting Agreements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><span style="text-decoration:underline">Nadir Ali</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Grafiti Holding has entered into a consulting
agreement with Mr. Ali on September 25, 2024 pursuant to which it has agreed to pay a fee of $<ix:nonFraction contextRef="c138" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForFees" scale="0" unitRef="usd" id="ixv-49305">15,000</ix:nonFraction> per month for services rendered
to the Company since April 1, 2024 until the closing of the Business Combination pursuant to which Mr. Ali will advise on public company
reporting and compliance matters, business development, growth strategies and other operational matters as requested.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As compensation under the Consulting Agreement,
Grafiti Holding will pay Mr. Ali a fee of $<ix:nonFraction contextRef="c138" decimals="0" format="ixt:num-dot-decimal" name="dmn:BusinessCombinationConsultingAgreementCompensation" scale="0" unitRef="usd" id="ixv-49306">325,000</ix:nonFraction> upon closing the Business Combination and his monthly fee will increase to $<ix:nonFraction contextRef="c138" decimals="0" format="ixt:num-dot-decimal" name="dmn:IncreaseFromBusinessCombination" scale="0" unitRef="usd" id="ixv-49307">54,167</ix:nonFraction>
per month beginning on the first of each month following the closing of the Business Combination through the remainder of the term of
the agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unless otherwise terminated earlier pursuant
to the Consulting Agreement, the agreement will continue for a period of six months following the closing of the Business Combination
which may be extended for additional terms, upon mutual consent. Grafiti Holding will have the right to terminate the Consulting Agreement
with 30 days&#8217; notice; however, if it is terminated by Grafiti Holding prior to the six month anniversary of the closing of the
Business Combination (the &#8220;Guaranteed Period&#8221;) for any reason other than the gross negligence, recklessness or willful misconduct
of Mr. Ali, the monthly fee will continue to be paid for the remainder of the Guaranteed Period. Mr. Ali will have the right to terminate
the Consulting Agreement with 30 days&#8217; notice for specified reasons, including Grafiti Holding&#8217;s failure to make timely payments,
gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by Grafiti Holding. In such cases, the monthly fee for
the remainder of the Guaranteed Period will continue to be paid.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GRAFITI HOLDING INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_SubsequentEventsTextBlock-c10_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><span style="text-decoration:underline">Melanie Figueroa</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Grafiti Holding has entered into a consulting
agreement on September 25, 2024 with Ms. Figueroa pursuant to which it has agreed to pay a fee of $<ix:nonFraction contextRef="c139" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForFees" scale="0" unitRef="usd" id="ixv-49308">15,000</ix:nonFraction> per month for services rendered
to the Company since April 1, 2024 until the closing of the Business Combination pursuant to which Ms. Figueroa will provide advisory
services with respect to her knowledge and expertise related to Company&#8217;s public company reporting and compliance matters and corporate
business development and growth strategies.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As compensation under the Consulting Agreement,
Grafiti Holding will pay Ms. Figueroa a fee of $<ix:nonFraction contextRef="c139" decimals="0" format="ixt:num-dot-decimal" name="dmn:BusinessCombinationConsultingAgreementCompensation" scale="0" unitRef="usd" id="ixv-49309">175,000</ix:nonFraction> upon closing the Business Combination and her monthly fee will increase to $<ix:nonFraction contextRef="c139" decimals="0" format="ixt:num-dot-decimal" name="dmn:IncreaseFromBusinessCombination" scale="0" unitRef="usd" id="ixv-49310">29,167</ix:nonFraction>
per month beginning on the first of each month following the closing of the Business Combination through the remainder of the term of
the agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unless otherwise terminated earlier pursuant
to the Consulting Agreement, the agreement will continue for a period of six months following the closing of the Business Combination
which may be extended for additional terms, upon mutual consent. Grafiti Holding will have the right to terminate the Consulting Agreement
with 30 days&#8217; notice; however, if it is terminated by Grafiti Holding prior to the six month anniversary of the closing of the
Business Combination (the &#8220;Guaranteed Period&#8221;) for any reason other than the gross negligence, recklessness or willful misconduct
of Ms. Figueroa, the monthly fee will continue to be paid for the remainder of the Guaranteed Period. Ms. Figueroa will have the right
to terminate the Consulting Agreement with 30 days&#8217; notice for specified reasons, including Grafiti Holding&#8217;s failure to
make timely payments, gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by Grafiti Holding. In such cases,
the monthly fee for the remainder of the Guaranteed Period will continue to be paid.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><span style="text-decoration:underline">Wendy Loundermon</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Grafiti Holding has entered into a consulting
agreement with Mrs. Loundermon on September 25, 2024 pursuant to which it has agreed to pay a fee of $<ix:nonFraction contextRef="c140" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForFees" scale="0" unitRef="usd" id="ixv-49311">10,000</ix:nonFraction> per month for services rendered
to the Company since April 1, 2024 until the closing of the Business Combination pursuant to which Mrs. Loundermon will provide advisory
services with respect to her knowledge and expertise regarding the transition of the Company&#8217;s financial reporting function to
ensure continuity of business operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As compensation under the Consulting Agreement,
Grafiti Holding will pay Mrs. Loundermon a fee of $<ix:nonFraction contextRef="c140" decimals="0" format="ixt:num-dot-decimal" name="dmn:BusinessCombinationConsultingAgreementCompensation" scale="0" unitRef="usd" id="ixv-49312">150,000</ix:nonFraction> upon closing the Business Combination and her monthly fee will increase to
$<ix:nonFraction contextRef="c140" decimals="0" format="ixt:num-dot-decimal" name="dmn:IncreaseFromBusinessCombination" scale="0" unitRef="usd" id="ixv-49313">25,000</ix:nonFraction> per month beginning on the first of each month following the closing of the Business Combination through the remainder of the
term of the agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unless otherwise terminated earlier pursuant
to the Consulting Agreement, the agreement will continue for a period of six months following the closing of the Business Combination
which may be extended for additional terms, upon mutual consent. Grafiti Holding will have the right to terminate the Consulting Agreement
with 30 days&#8217; notice; however, if it is terminated by Grafiti Holding prior to the six month anniversary of the closing of the
Business Combination (the &#8220;Guaranteed Period&#8221;) for any reason other than the gross negligence, recklessness or willful misconduct
of Mrs. Loundermon, the monthly fee will continue to be paid for the remainder of the Guaranteed Period. Mrs. Loundermon will have the
right to terminate the Consulting Agreement with 30 days&#8217; notice for specified reasons, including Grafiti Holding&#8217;s failure
to make timely payments, gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by Grafiti Holding. In such
cases, the monthly fee for the remainder of the Guaranteed Period will continue to be paid.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="F_008"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"><b>REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To the Shareholders and Board of Directors of</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon Motors Inc.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Opinion on the Financial Statements</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
balance sheet of Damon Motors Inc. (the &#8220;Company&#8221;) as of June 30, 2024, the related consolidated statements of operations,
changes in shareholders&#8217; deficit and cash flows for the year then ended, and the related notes (collectively referred to as the
&#8220;financial statements&#8221;). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of June 30, 2024, and the results of its operations and its cash flows for the year then ended, in conformity
with accounting principles generally accepted in the United States of America.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Explanatory Paragraph &#8211; Going Concern</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a significant
working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the Company&#8217;s ability to continue as a going concern. Management&#8217;s plans regarding
these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from
the outcome of this uncertainty.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Basis for Opinion</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These financial statements are the responsibility
of the Company&#8217;s management. Our responsibility is to express an opinion on the Company&#8217;s financial statements based on our audit. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (&#8220;PCAOB&#8221;) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company&#8217;s internal
control over financial reporting. Accordingly, we express no such opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">/s/ Marcum LLP</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Marcum LLP</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have served as the Company&#8217;s auditor
since 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">New York, NY</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">September 26, 2024</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td rowspan="5" style="width: 20%"><img alt="" src="fin_001.jpg"/></td>
    <td style="width: 10%">&#160;</td>
    <td style="width: 30%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Tel: (604) 688-5421</span></td>
    <td style="width: 30%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">BDO Canada LLP</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fax: (604) 688-5132</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1100 Royal Centre</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>www.bdo.ca</b></span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1055 West Georgia Street, P.O. Box 11101</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Vancouver, British Columbia</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">V6E 3P3</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><div><a id="F_009"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="border-top: Black 1.5pt solid; border-bottom: Black 1.5pt solid; padding-top: 6pt; width: 100%; text-align: center; font-size: 10pt; layout-grid-mode: line; padding-bottom: 6pt"><span style="font-family: Times New Roman, Times, Serif"><b> Report of Independent Registered Public Accounting Firm</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><div><span style="font-family: Times New Roman, Times, Serif"><b>Shareholders
and Board of Directors </b></span></div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>Damon
Motors Inc.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>Vancouver,
British Columbia, Canada</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif"><b>Opinion
on the Consolidated Financial Statements </b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif">We
have audited the accompanying consolidated balance sheet of Damon Motors Inc. (the &#8220;Company&#8221;) as of June 30, 2023, the related
consolidated statements of loss and comprehensive loss, changes in (deficit) equity, and cash flows for each of the two years in the
period ended June 30, 2023, and the related notes (collectively referred to as the &#8220;consolidated financial statements&#8221;).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at June 30, 2023, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2023, in
conformity with accounting principles generally accepted in the United States of America.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif"><b>Substantial
Doubt About the Company&#8217;s Ability to Continue as a Going Concern</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif">The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations, has a net capital deficit
and negative cash flows from operations that raise substantial doubt about the Company&#8217;s ability to continue as a going concern.
Management&#8217;s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif"><b>Basis
for Opinion</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif">These
consolidated financial statements are the responsibility of the Company&#8217;s management. Our responsibility is to express an opinion
on the Company&#8217;s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (&#8220;PCAOB&#8221;) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company&#8217;s internal control over financial reporting. Accordingly, we express no such opinion.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><i>/s/
BDO Canada LLP</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Chartered
Professional Accountants</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">We
have served as the Company&#8217;s auditor since 2021.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Vancouver,
British Columbia, Canada</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">December
28, 2023</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">BDO Canada
LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms
part of the international BDO network of independent member firms</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"></p><div>

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</div><div><a id="F_010"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">CONSOLIDATED BALANCE SHEETS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of June 30, 2024 and June 30, 2023</p><div>

</div><p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Notes</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: right">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: center"><span style="font-size: 10pt">$</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold">ASSETS</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="width: 11%; text-align: center">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">126,431</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">187,435</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,264,851</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="padding-bottom: 2.5pt; text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">1,751,352</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>LIABILITIES</b></p></td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="font-weight: bold; text-align: left">Current liabilities</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">5,924,121</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">7,106,281</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">482,575</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">443,519</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: center">6</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">7,141</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center">7</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,099,489</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Going Concern (Note 1)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Commitments and Contingencies (Note 11)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Subsequent Events (Note 24)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>The accompanying notes are an integral part of these consolidated
financial statements.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 184; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->29<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><div><a id="F_011"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">CONSOLIDATED STATEMENTS OF OPERATIONS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the years ended June 30, 2024, 2023 and 2022</p><div>

</div><p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

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  <tr style="vertical-align: bottom">
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    <td style="vertical-align: bottom; text-align: center">&#160;</td><td>&#160;</td>
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    <td style="vertical-align: bottom; width: 11%; text-align: center">14</td><td style="width: 1%">&#160;</td>
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    <td style="vertical-align: bottom; text-align: center">16</td><td>&#160;</td>
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  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 15.75pt; text-indent: -15.75pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>The accompanying notes are an integral part of these consolidated
financial statements.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 185; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->30<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><div><a id="F_012"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS&#8217; DEFICIT</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the years ended June 30, 2024, 2023 and 2022</p><div>

</div><p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">43,389,091</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">43,389,091</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">95,380</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">260,999</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">260,999</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">146,842</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">146,842</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">391,964</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(330,809</td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">61,155</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,090,797</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,090,797</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>The accompanying notes are an integral part of these consolidated
financial statements.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->31<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="F_013"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">CONSOLIDATED STATEMENTS OF CASH FLOWS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the year ended June 30, 2024, 2023 and 2022</p><div>

</div><p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Operating activities</td><td>&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">(36,736,110</td><td style="width: 1%; text-align: left">)</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">303,424</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">146,842</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,472,634</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">6,296</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,694,149</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">13,794</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">808,275</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">18,424,992</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,881,980</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">8,935,049</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">785,377</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">9,471,276</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(42,297</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(6,167,001</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(184,514</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">320,235</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(54,495</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Changes in operating assets and liabilities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">159,010</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">187,498</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(273,578</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(136,934</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,533,684</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">914,390</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-align: left">Operating lease</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(587,677</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(506,592</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(309,566</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Customer deposits</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt">Cash used in operating activities</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="font-weight: bold; text-align: left">Investing activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,265,843</td><td style="text-align: left">)</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,100,248</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,865,581</td><td style="text-align: left">)</td></tr>
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  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Supplemental Cash Flow Information (Note 23)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>The accompanying notes are an integral part of these consolidated
financial statements.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 187; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->32<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>




</div><div><a id="F_014"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b> 1.</b></td><td style="text-align: justify"><b>NATURE OF OPERATIONS
                                            AND GOING CONCERN</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Nature of operations</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Damon Motors Inc. was incorporated
on July 22, 2016, under the laws of British Columbia. The Company&#8217;s registered address is Suite 2300, Bentall 5, 550 Burrard Street,
Vancouver, British Columbia, V6C 2B5 and head office and principal address is 704 Alexander Street, Vancouver, British Columbia, V6A
1E3, Canada. The Company is a leading light electric vehicle manufacturer currently focused on electric motorcycles including proprietary
electric powertrain, shifting and predictive awareness technologies. The Company has a single reportable segment given that the Company
is engaged in the manufacture of motorcycles in North America, and management views the business as a single reporting segment. See Segment
Reporting (Note 21).&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On April 26, 2021, the Company formed
a wholly owned subsidiary, Damon Motors Corporation, a corporation organized and registered in the state of Delaware, USA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">These consolidated financial statements
include the accounts of Damon Motors Inc. and Damon Motors Corporation, collectively the &#8220;Company.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Going concern</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The accompanying consolidated financial
statements of the Company have been prepared assuming the Company will continue as a going concern in accordance with U.S. GAAP. The
going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements
are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company is subject to a number
of risks, including, but not limited to, the need for successful development of products, the need for additional capital (or financing)
to fund operating losses (see below), competition from substitute products and services from larger companies, protection of proprietary
technology, patent litigation, dependence on key individuals, and risks associated with changes in electric automotive technology. The
Company&#8217;s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to fund its research
and development, complete the construction of its manufacturing facility for the eventual production of electrical motorcycles and meets
its obligations and repay its liabilities arising from normal business operations when they come due.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company has incurred net losses
of $33,968,248 and utilized $12,869,374 of cash in operations for the year ended June 30, 2024 and has accumulated a deficit as of June
30, 2024 of $140,607,594 and expects to incur future additional losses. These conditions indicate material uncertainties that cast substantial
doubt upon the Company&#8217;s ability to continue as a going concern within one year after financial statement issuance date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">When substantial doubt exists, management
evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company&#8217;s ability to continue
as a going concern. The mitigating effect of management&#8217;s plans, however, is only considered if both (1) it is probable that the
plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable
that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity&#8217;s
ability to continue as a going concern within one year after the date that the financial statements are issued.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 188; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->33<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>1.</b></td><td style="text-align: justify"><b>NATURE OF OPERATIONS AND GOING CONCERN
                                            (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Going concern</span> (continued)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Management&#8217;s plans to address
the uncertainty that the Company will continue as a going concern include the business combination described in footnote 2 above as well
as obtaining associated debt and equity financing. There is no assurance that the Company&#8217;s plans to consummate the business combination
will be successful and the Company cannot provide assurance that the Company will secure financing in a timely manner, nor can they provide
assurance that the business combination will be completed. As such, the substantial doubt of the Company&#8217;s ability to continue
as a going concern has not been alleviated by management&#8217;s plans. The financial statements have been prepared assuming the Company
will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0"/><td style="text-align: justify; width: 0.25in"><b>2.</b></td><td style="text-align: justify"><b>BASIS
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>a)</b></td><td style="text-align: justify"><b>Basis
                                            of presentation</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The financial statements have been
prepared in accordance with accounting principles generally accepted in the United States (&#8220;U.S. GAAP&#8221;) and applicable rules
and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;) regarding financial reporting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>b)</b></td><td style="text-align: justify"><b>Basis
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">These financial statements have been
prepared on a historical cost basis except for certain financial instruments which are measured at their fair value as explained in the
accounting policies set out below. In addition, these financial statements have been prepared using the accrual basis of accounting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>c)</b></td><td style="text-align: justify"><b>Consolidated
                                            statements</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The consolidated financial statements
incorporate the financial statements of the Company and its consolidated subsidiary, Damon Motors Corporation, over which the Company
has control. Control occurs when the Company has power over the investee; is exposed, or has rights, to variable returns from its involvement
with the investee; and has the ability to use its power over the investee to affect its returns. All intercompany transactions and balances
between the Company and the subsidiary are eliminated upon consolidation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>d)</b></td><td style="text-align: justify"><b>Business
                                            combination with XTI Aerospace, Inc. (&#8220;XTI Aerospace&#8221; and formerly known as Inpixon)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On October 23, 2023, Damon Motors
Inc. (&#8220;Damon&#8221;) entered into a Business Combination agreement (&#8220;BCA&#8221;) with XTI Aerospace (NASDAQ: XTIA), Grafiti
Holding Inc. (&#8220;Grafiti&#8221;), a British Columbia corporation and wholly owned subsidiary of XTI Aerospace, 1444842 B.C. Ltd.,
and a wholly owned subsidiary of Grafiti (&#8220;Amalco Sub&#8221;), pursuant to which it is proposed that Amalco Sub and Damon amalgamate
under the laws of British Columbia, Canada with the amalgamated company (the &#8220;Damon Surviving Corporation&#8221;) continuing as
a wholly owned subsidiary of Grafiti (the &#8220;Business Combination&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->34<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>2.</b></td><td style="text-align: justify"><b>BASIS OF PRESENTATION (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -21.3pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>d)</b></td><td style="text-align: justify"><b>Business combination with XTI
                                            Aerospace, Inc. (&#8220;XTI Aerospace&#8221; and formerly known as Inpixon) (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Business Combination is subject
to material conditions, including approval of the Business Combination by securities holders of Damon, approval of the issuance of Grafiti
Common Shares to Damon securities holders pursuant to the Business Combination Agreement by a British Columbia court after a hearing
upon the fairness of the terms and conditions of the Business Combination Agreement as required by the exemption from registration provided
by Section 3(a)(10) under the Securities Act of 1933, and approval of the listing of the Grafiti Common Shares on the Nasdaq Stock Market
(&#8220;Nasdaq&#8221;) under the ticker symbol DMN, after giving effect to the Business Combination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Upon the consummation of the Business
Combination (the &#8220;Closing&#8221;), both Grafiti Limited (formerly known as Inpixon UK Ltd.), a subsidiary of Grafiti and the Damon
Surviving Corporation will be wholly owned subsidiaries of Grafiti, which will adopt a new name as determined by Damon.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Holders of Grafiti Common Shares and
warrants, including management of XTI Aerospace that hold Grafiti Common Shares immediately prior to the closing of the Business Combination,
are anticipated to retain approximately 18.75% of the outstanding capital stock of the combined company, determined on a fully diluted
basis. Damon shareholders are anticipated to hold approximately 81.25% of the combined company, determined on a fully diluted basis.
It is anticipated that public trading for the Grafiti Common Shares on the Nasdaq would begin following the consummation of the Business
Combination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Following the signing of the Business
Combination agreement, on October 26, 2023, Damon issued a convertible promissory note to XTI Aerospace in an aggregate principal amount
of $3.0 million (Note 8) together with the Share purchase Warrants (Note 9) pursuant to a private placement. The convertible promissory
note has a 12% annual interest rate, payable in arrears on the maturity date, June 15, 2024. The full principal balance and interest
on the convertible promissory note will automatically convert into common shares of Damon upon the public listing of Damon or a successor
issuer thereof on a national securities exchange (a &#8220;Public Company Event&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On June 15, 2024, the Company and
XTI Aerospace signed a Letter of Agreement amending the maturity date of the notes to September 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0"/><td style="text-align: justify; width: 0.25in"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT
                                            ACCOUNTING POLICIES </b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>&#160;</i></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>a)</b></td><td style="text-align: justify"><b>Use
                                            of estimates</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The preparation of financial statements
in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expense
during the reporting period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->35<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>a)</b></td><td style="text-align: justify"><b>Use of estimates (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The most significant estimates relate
to the determination of the fair value of the Company&#8217;s common shares, determination of the fair value of stock option grants,
and the classification and measurement of Simple Agreements for Future Equity (&#8220;SAFEs&#8221;), convertible notes and warrants as
a financial liability or an equity instrument, and determination of Scientific Research and Experimental Development (&#8220;SR&amp;ED&#8221;)
tax credit recoverable. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other
factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. These estimates are
based on information available as at the date of the financial statements; therefore, actual results could differ from those estimates.
The Company&#8217;s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are
adjusted for prospectively in the period in which the estimates are revised.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>b)</b></td><td style="text-align: justify"><b>Foreign
                                            currencies</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">These financial statements are presented
in United States dollars, unless otherwise noted, which is the reporting and functional currency of the Company. Foreign currency transaction
gains and losses resulting from or expected to result from transactions denominated in a currency other than the functional currency
are recognized in the consolidated statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>c)</b></td><td style="text-align: justify"><b>Cash
                                            and restricted cash</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Cash is comprised of cash and restricted
cash. Cash is recorded at cost, which approximates fair value. Cash includes cash held with Canadian financial institutions. The Company&#8217;s
cash balances exceed those that are federally insured. To date, the Company has not recognized any losses caused by uninsured balances.
Restricted cash consists of certificates of deposits on a leased premises.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>d)</b></td><td style="text-align: justify"><b>Property
                                            and equipment</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Property and equipment are stated
at cost, net of accumulated depreciation and accumulated impairment losses, if any. Construction in Progress comprises leasehold improvements
and fixturing which are stated at cost less accumulated impairment losses. Equipment comprises computer equipment, tools and office equipment.
Depreciation and amortization are calculated using the straight-line method over the lease term for right-of-use assets and the estimated
useful lives of the assets other than right-of-use assets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Depreciation is calculated using the
following methods and terms:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="width: 43%; text-align: justify"><span style="font-size: 10pt">Equipment: Computer equipment</span></td>
    <td style="width: 35%; text-align: center"><span style="font-size: 10pt">Straight-line</span></td>
    <td style="width: 22%; text-align: center"><span style="font-size: 10pt">3.33 years</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify"><span style="font-size: 10pt">Equipment: Tools</span></td>
    <td style="text-align: center"><span style="font-size: 10pt">Straight-line</span></td>
    <td style="text-align: center"><span style="font-size: 10pt">5 years</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">Equipment: Office equipment</span></td>
    <td style="text-align: center"><span style="font-size: 10pt">Straight-line</span></td>
    <td style="text-align: center"><span style="font-size: 10pt">5 years</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify"><span style="font-size: 10pt">Leasehold Improvements</span></td>
    <td style="text-align: center"><span style="font-size: 10pt">Straight-line</span></td>
    <td style="text-align: center"><span style="font-size: 10pt">life of lease</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">Right-of-use assets</span></td>
    <td style="text-align: center"><span style="font-size: 10pt">Straight-line</span></td>
    <td style="text-align: center"><span style="font-size: 10pt">life of lease</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->36<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>d)</b></td><td style="text-align: justify"><b>Property and equipment (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">An item of equipment is derecognized
upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the statement of
operations in the period the asset is derecognized. The assets&#8217; residual values, useful lives and methods of depreciation are reviewed
at each reporting date, and adjusted prospectively, if appropriate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>e)</b></td><td style="text-align: justify"><b>Long
                                            term prepayment </b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Long term prepayment relates to prepayment
for tenant improvements of Surrey manufacturing facility lease property that were paid prior to the commencement of the lease on September
29, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>f)</b></td><td style="text-align: justify"><b>Leases</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company enters into contractual
arrangements for the utilization of certain non-owned assets. These principally relate to property for the Company&#8217;s offices, planned
manufacturing plant, equipment and vehicles which have varying terms including extension and termination options. The determination of
whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception and whether the arrangement
is to be fulfilled through the use of a specific asset or assets, or whether the arrangement conveys a right to use the asset. Leases
are classified as either operating or finance leases at lease inception, depending on the transfer of risks and rewards of ownership,
along with other criteria such as the transfer of ownership to the lessee, purchase options, or percentage of economic life of leased
asset. This lease classification is not revised unless there is a modification to the lease agreement. Leases will be classified as finance
or operating, with classification affecting the pattern and classification of expense recognition in the consolidated statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">The Company recognizes a right-of-
use asset and lease liability at lease commencement based on the present value of lease payments over the lease term. The Company generally
uses its incremental borrowing rate as the discount rate as most of the Company&#8217;s lease arrangements do not provide an implicit
borrowing rate. The incremental borrowing rate reflects the rate of interest that the Company would have to pay to borrow the funds necessary
to obtain an asset of similar value in a similar economic environment with similar terms and conditions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">For operating leases, fixed lease
payments are recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components
and has elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease
component. Certain lease agreements include variable lease payments that depend on an index, as well as payments for non-lease components,
such as common area maintenance, and certain pass-through operating expenses such as real estate taxes and insurance. In instances where
these payments are fixed, they are included in the measurement of our lease liabilities, and when variable, are excluded and recognized
in the period in which the obligations for those payments are incurred. The Company&#8217;s leases do not contain any material residual
value guarantees or payments under purchase and termination options.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->37<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>f)</b></td><td style="text-align: justify"><b>Leases (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">Lease terms are initially determined
as the non-cancellable period of a lease adjusted for options to extend or terminate a lease that are reasonably certain to be exercised.
Lease liabilities are subsequently measured at amortized cost using the effective interest method.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">Right of use assets are carried at
cost less accumulated amortization, impairment losses, and any subsequent remeasurement of the lease liability. Initial cost comprises
the lease liability adjusted for lease payments at or before the commencement date, lease incentives received, initial direct costs and
an estimate of restoration costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">The Company has elected not to present
short-term leases on the consolidated balance for leases that have lease terms of 12 months or less and do not contain purchase options
or renewal terms that the Company is reasonably certain to exercise. The lease expense related to those short-term leases is recognized
on a straight-line basis over the lease term.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company subleases one of its office
spaces to third parties, which does not relieve the Company of its primary lease obligations with the lessor (the &#8220;headlease&#8221;).
This sublease is classified as an operating lease, and therefore the Company continues to account for the headlease as it did before
the commencement of the sublease. Sublease income is presented within the same category of operating expenses as the underlying headlease
expenses on the consolidated statements of operations. If the lease cost of the term of the sublease exceeds the Company&#8217;s anticipated
sublease income for the same period, the Company assesses the right-of-use asset associated with the head lease for impairment under
the long-lived asset impairment provisions of ASC 360.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>g)</b></td><td style="text-align: justify"><b>Current
                                            and deferred income taxes</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company accounts for income taxes
under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets
and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted
tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax
assets and liabilities is recognized in income in the period that includes the enactment date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company recognizes deferred tax
assets net of a valuation allowance to the extent it believes that these assets are more likely than not to be realized. In making such
a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary
differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that
it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment
to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 193; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->38<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>g)</b></td><td style="text-align: justify"><b>Current and deferred income
                                            taxes (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company records uncertain tax
positions in accordance with ASC 740 &#8211; Income Taxes on the basis of a two-step process in which (1) it determines whether it is
more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those
tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that
is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company has determined that
its tax returns do not include uncertain tax positions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company recognizes accrued interest
and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued
for interest and penalties as of June 30, 2024 and 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>h)</b></td><td style="text-align: justify"><b>Share
                                            capital</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Common shares are classified as equity.
Incremental costs directly attributable to the issuance of common shares and stock options are recognized as a deduction from equity.
Share issue costs incurred in advance of share subscriptions are recorded as non-current deferred assets. Share issue costs related to
uncompleted share subscriptions are expensed in the period they are incurred.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Preferred shares are classified as
equity. Incremental costs directly attributable to the issuance of preferred shares are recognized as a deduction from equity. Share
issue costs incurred in advance of share subscriptions are recorded as non-current deferred assets. Share issue costs related to uncompleted
share subscriptions are expensed in the period they are incurred.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>i)</b></td><td style="text-align: justify"><b>Stock-based
                                            compensation</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company measures and records the
expense related to stock-based payment awards based on the fair value of those awards as determined on the date of grant. The Company
recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting
period and uses the straight-line method to recognize stock-based compensation. For stock options with performance conditions, the Company
records compensation expense when it is deemed probable that the performance condition will be met.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company uses a contemporaneous
valuation model, the Black-Scholes-Merton (&#8220;Black-Scholes&#8221;) option-pricing model to determine the estimated fair value of
stock option awards. The Black-Scholes option-pricing model requires the use of the Company&#8217;s share price estimates on the date
of grant as well as highly subjective and complex assumptions, which determine the fair value of stock-based awards, including the option&#8217;s
expected term and the price volatility of the underlying stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 194; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->39<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>j)</b></td><td style="text-align: justify"><b>Financial instruments</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Financial assets</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Financial assets comprise of cash,
restricted cash and accounts receivable. The Company classifies its financial assets in the following categories: at fair value through
statement of operations (&#8220;FVTPL&#8221;) or at amortized cost. The classification is largely driven by the specific type of instrument
but also depends on the Company&#8217;s business model for managing the financial assets and terms of the related cashflow. Management
determines the classification of its financial assets at initial recognition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Financial assets carried at FVTPL
are initially recorded at fair value and transaction costs are expensed in the consolidated statements of operations. Realized and unrealized
gains and losses arising from changes in the fair value of the financial assets held at FVTPL are included in the consolidated statements
of operations in the period in which they arise. There are no financial assets held at FVTPL as of June 30, 2024 and 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Financial assets at amortized cost
are initially recognized at fair value and subsequently carried at amortized cost less any impairment. Transaction costs are netted against
financial assets and are accounted for using the effective interest method. They are classified as current assets or non-current assets
based on their maturity date. The Company&#8217;s financial assets carried at amortized cost include cash, and receivables.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Financial assets are derecognized
when they mature or are sold and substantially all the risks and rewards of ownership have been transferred.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Financial liabilities</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Financial liabilities include convertible
debt and other interest-bearing debt, accounts payable and accrued liabilities, customer deposits, lease liabilities. The Company classifies
its financial liabilities into categories, depending on the purpose for which the liability was incurred. The Company&#8217;s accounting
policy for each category is as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.5in"/><td style="text-align: justify; width: 0.25in">&#9679;</td><td style="text-align: justify">FVTPL
                                            - This category comprises derivatives or liabilities acquired or incurred principally for
                                            the purpose of selling or repurchasing it in the near term. They are carried in the consolidated
                                            balance sheets at fair value with changes in fair value recognized in the consolidated statements
                                            of operations. Items measured at FVPTL include financial liabilities convertible to equity.
                                            Transaction costs are expensed in the consolidated statements of operations.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"/><td style="text-align: justify">&#9679;</td><td style="text-align: justify">Amortized cost - This
                                            category includes the accounts payable and accrued liabilities, customer deposits, lease
                                            liabilities, and debt, all of which are recognized at amortized cost.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"/><td style="text-align: justify">&#9679;</td><td style="text-align: justify">Fair value option &#8211;
                                            Under the Fair Value Option Subsections of ASC Subtopic 825-10, Financial Instruments &#8211;
                                            there is an irrevocable option to report certain financial assets and financial liabilities
                                            at fair value on an instrument-by-instrument basis, with changes in fair value reported in
                                            the statement of operations. Any changes in the fair value of liabilities resulting from
                                            changes in instrument-specific credit risk are reported in other comprehensive income. The
                                            change to fair value of financial liabilities and interest accrued are presented as separate
                                            line items.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 195; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->40<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>j)</b></td><td style="text-align: justify"><b>Financial instruments (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Derivative financial instruments</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company evaluates its financial
instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The terms of warrants
issued by the Company are reviewed to determine whether they contain terms that result in the warrants being classified as derivative
liabilities for accounting purposes. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value and then is revalued at each reporting date, with changes in fair value reported in the consolidated
statements of operations. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency
risks.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Other equity-linked instruments</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Other equity linked securities include
warrants, convertible debt and SAFEs. The Company relies on the guidance provided by ASC 480 - Distinguishing Liabilities from Equity,
to classify certain redeemable and/or convertible equity-linked instruments. The Company first determines whether a financial instrument
should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily
redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or
may settle by issuing a variable number of its equity shares. Once the Company determines that a financial instrument should not be classified
as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity
section of the consolidated balance sheets. The Company will determine temporary equity classification if the redemption of the financial
instrument is outside the control of the Company (i.e., at the option of the holder). Otherwise, the Company accounts for the financial
instrument as permanent equity. The Company records its financial instruments classified as liability, temporary equity or permanent
equity at issuance at the fair value, or cash received. The Company records its financial instruments classified as liabilities at their
fair value at each subsequent measurement date. The changes in fair value of these financial instruments are recorded as other expense/income.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Warrants</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">For issued or modified warrants that
meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital
at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are
required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes
in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 196; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->41<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>j)</b></td><td style="text-align: justify"><b>Financial instruments (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Warrants </span>(continued)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company accounts for warrants
as either equity-classified or liability-classified instruments based on an assessment of the warrant&#8217;s specific terms and applicable
authoritative guidance in Financial Accounting Standards Board Accounting Standards Codification ASC 480 - Distinguishing Liabilities
from Equity (&#8220;ASC 480&#8221;) and ASC 815 - Derivatives and Hedging (&#8220;ASC 815&#8221;). The assessment considers whether the
warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether
the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the
Company&#8217;s own common shares and whether the warrant holders could potentially require &#8220;net cash settlement&#8221; in a circumstance
outside of the Company&#8217;s control, among other conditions for equity classification. This assessment, which requires the use of
professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants
are outstanding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">For financial liabilities issued with
detachable share purchase warrant, at inception, the proceeds from the issuance of the financial instruments were allocated between the
host instrument and the share purchase warrants based on the residual method.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Convertible Debt</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.65pt 0pt 0.25in; text-align: justify">Upon the issuance of convertible
debt, including convertible promissory notes, the Company evaluates embedded conversion features within convertible debt to determine
whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value
with changes in fair value recorded in the combined consolidated statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.65pt 0pt 21.3pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.65pt 0pt 0.25in; text-align: justify">The equity component, if any,
is treated as a discount on the liability component of the convertible debt, which is amortized over the term of the convertible debt
using the effective interest rate method. When it has been determined an instrument does not have an equity component, the Company may
elect to account for the instrument at fair value with changes in fair value recorded in the combined consolidated statements of operations,
except with respect to changes in value caused by changes in the Company&#8217;s own credit risk.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.65pt 0pt 21.3pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.65pt 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">SAFEs</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.65pt 0pt 0.25in; text-align: justify">The Company accounts for a SAFE
as a liability at fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement
at each balance sheet date until a triggering event, equity financing or a liquidity/dissolution occurs, and any change in fair value
is recognized in the Company&#8217;s statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 197; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->42<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT ACCOUNTING POLICIES
                                            (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>k)</b></td><td style="text-align: justify"><b>Revenue recognition</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Revenues are recognized when control
of the promised goods or services are transferred to a customer in an amount that reflects the consideration that the Company expects
to receive in exchange for those services. The Company applies the following five steps in order to determine the appropriate amount
of revenue to be recognized as it fulfills its obligations under each of its arrangements:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.5in"/><td style="text-align: justify; width: 0.25in">&#9679;</td><td style="text-align: justify">identify
                                            the contract with a customer,</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"/><td style="text-align: justify">&#9679;</td><td style="text-align: justify">identify the performance
                                            obligations in the contract,</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"/><td style="text-align: justify">&#9679;</td><td style="text-align: justify">determine the transaction
                                            price,</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"/><td style="text-align: justify">&#9679;</td><td style="text-align: justify">allocate the transaction
                                            price to performance obligations in the contract, and</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td><td style="text-align: justify">&#160;</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"/><td style="text-align: justify">&#9679;</td><td style="text-align: justify">recognize revenue as
                                            the performance obligation is satisfied.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 39.3pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">For the years ended June 30, 2024,
2023 and 2022, the Company did not recognize any revenue. The Company did however receive cash deposits.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif"><b>l)</b></span></td><td style="text-align: justify"><b>Customer
                                            deposits</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company accepts reservation of
the motorcycles that include cash deposit placed by a potential customer. The deposits serve to prioritize orders when the motorcycles
become available for delivery. Customers making deposits are not obligated to purchase motorcycle and may request return of their deposit
any time up. The Company records such advance deposits as a liability and defers the related revenue recognition until delivery of the
motorcycle occurs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>m)</b></td><td style="text-align: justify"><b>Government
                                            grants</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Government grants are recognized when
the Company has reasonable assurance that it has complied with the relevant conditions of the grant and that it will be received. The
Company recognizes the grants that compensate the Company for expenses incurred against the financial statement line item that it is
intended to compensate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>n)</b></td><td style="text-align: justify"><b>Impairment
                                            of long-lived assets</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company assesses long-lived assets
for impairment in accordance with the provisions of Financial Accounting Standards Board ASC 360 - Property, Plant and Equipment. Long-lived
assets (asset group), such as property and equipment as well as intangible assets subject to amortization, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount
of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use
and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the carrying value
of the asset and its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow
models, quoted market value, as considered necessary.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company ceased the use of the
Surrey manufacturing facility lease on December 14, 2022 and recognized an impairment loss on the right-of-use asset and construction
work in progress equal to its carrying value of $8,997,858 and $249,971 respectively (Note 17) in the statements of operations for the
second quarter ended December 31, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 198; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->43<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>n)</b></td><td style="text-align: justify"><b>Impairment of long-lived assets
                                            (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On January 3, 2023, the Company subleased
its office and operating premises at 708 Powell Street (&#8220;708 Powell&#8221;) to a third party for the remaining term of the lease.
The sublease arrangement triggered an impairment assessment of the right-of-use asset of $175,397 and leasehold improvements of $48,050,
and, as a result, the Company recorded an asset impairment totalling $223,447 (Note 17) in the statements of operations for the third
quarter ended March 31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On April 26, 2024, the Company entered
into a release agreement with landlord of 708 Powell Street to terminate the lease, settle the amount owing and release Damon of all
further obligation and right to the leased property. As a result, the Company recorded a net gain on release of lease obligation of $42,297
(Note 18) in the statements of operations for the year ended June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>o)</b></td><td style="text-align: justify"><b>Loss
                                            per share</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Basic loss per share is computed by
dividing the net loss, less accrued dividends on any outstanding preferred stock, by the weighted average number of common shares outstanding
for the period. Diluted loss per share calculations reflects the assumed exercise of all dilutive employee stock options and warrants
and the conversion of any outstanding convertible preferred shares or notes payable that are-in-the-money, applying the as-if-converted
method.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The preferred shares meet the definition
of a participating security, and the two-class method is required. For any periods in which earnings are recognized, the earnings will
be allocated between the common shares and the preferred shares on a six-to-one basis. For any periods in which losses are recognized,
no effect is given to the preferred shares as they do not contractually participate in the losses of the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">For the years ended June 30, 2024,
2023 and 2022, the Company&#8217;s basic loss per share is computed using the two-class method, and the Company&#8217;s diluted loss
per share is computed using the more dilutive of the treasury stock method or two-class method.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">When the Company is in a loss position,
all potential share issuances on the exercise of stock options or warrants and the conversion of any preferred shares or convertible
notes payable are anti-dilutive and the diluted loss per share is the same as the basic loss per share. Potentially dilutive items outstanding
as of June 30, 2024 and 2023 include preferred shares, stock options, SAFE, convertible notes and share purchase warrants.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following table summarizes the
number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the years
ended June 30, 2024 and 2023:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30,<br/>
    2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30,<br/>
    2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: right">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%">Preferred shares</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">35,111,034</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">27,809,460</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Stock options</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">9,253,467</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10,138,537</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>SAFE</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,276,857</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,054,294</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Convertible promissory notes</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">15,300,585</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6,231,812</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt">Share purchase warrants</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,658,105</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">950,153</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">66,600,048</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">46,184,256</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>


</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"></p><div>

</div><!-- Field: Page; Sequence: 199; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->44<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT ACCOUNTING POLICIES
                                            (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>p)</b></td><td style="text-align: justify"><b>Research and development</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Research and development costs that
do not meet the criteria for capitalization are expensed as incurred. Research and development expenses include compensation, employee
benefits, and stock-based compensation for technology developers and product management employees as well as fees paid to outside consultants
and software costs for the Company&#8217;s proprietary technology. The Company is eligible for government grant and tax credits. The
Company accounts for these credits as a reduction to research and development costs and will recognize these claims when it is probable&#160;that
the expense incurred&#160;qualify for the government grant claim&#160;and that the Company has&#160;complied with all the conditions
to realize the claim. Otherwise, the recognition of government grant claim would be deferred until the recognition criteria are satisfied.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>q)</b></td><td style="text-align: justify"><b>General
                                            and administrative</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">General and administrative expenses
include compensation, employee benefits, and stock-based compensation for executive management, finance administration and human resources,
facility costs (including rent), bad debt costs, professional service fees, and other general overhead costs including depreciation on
corporate assets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>r)</b></td><td style="text-align: justify"><b>Sales
                                            and marketing</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Costs associated with the Company&#8217;s
advertising are expensed as incurred and are included in sales and marketing expenses. The advertising expenses incurred for the year
ended June 30, 2024 and 2023 are not material.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>s)</b></td><td style="text-align: justify"><b>Transaction
                                            costs</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company recognized transaction
costs related to Business Combination with XTI Aerospace, and the professional fees related to the public listing for the year ended
June 30, 2024. For the year ended June 30, 2023, the Company incurred and recognized transaction costs and professional fees related
to deSPAC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>t)</b></td><td style="text-align: justify"><b>Reclassifications</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Certain prior period amounts in the
consolidated financial statements and notes thereto have been reclassified to conform to current period presentation. These reclassifications
did not impact the previously reported net income (loss), stockholders&#8217; equity or cash flows. The nature and impact of the reclassifications
are explained below:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 200; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->45<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT ACCOUNTING POLICIES
                                            (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>u)</b></td><td style="text-align: justify"><b>Recent accounting pronouncements
                                            not yet adopted</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In July 2023, the FASB issued ASU
2023-03, &#8220;Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing
Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)&#8221;, which updates codification
on how an entity would apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards should
be accounted for in accordance with Topic 718, Compensation&#8212;Stock Compensation. The effective date of this update is for fiscal
years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is currently assessing potential
impacts of ASU 2023-03 and does not expect the adoption of this guidance will have a material impact on its consolidated financial statements
and disclosures.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In November 2023, the FASB issued
ASU 2023-07, &#8220;Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures&#8221;, which amends the disclosure
to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an
annual and interim basis for to enable investors to develop more decision-useful financial analyses. All public entities will be required
to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023. The Company
is currently assessing potential impacts of ASU 2023-06 and does not expect the adoption of this guidance will have a material impact
on its consolidated financial statements and disclosures as disclosed in Note 21.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In December 2023, the FASB issued
ASU 2023-09, &#8220;Income Taxes (Topic 740): Improvements to Income Tax Disclosures&#8221;, which amends the disclosure to address investor
requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate
reconciliation and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures.
For entities other than public business entities, the requirements will be effective for annual periods beginning after December 15,
2025. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted.
The Company is currently assessing potential impacts of ASU 2023-09 and does not expect the adoption of this guidance will have a material
impact on its consolidated financial statements and disclosures and the Company is in a loss position and not incurring any tax expenses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0.25in"/><td style="text-align: justify; width: 0.25in"><b>v)</b></td><td style="text-align: justify"><b>Adoption
                                            of recent accounting pronouncements</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Effective July 1, 2021, the Company
adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (&#8220;ASU 2019-12&#8221;), which modifies
ASC 740 to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements.
Adoption of this standard did not materially affect the Company&#8217;s financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->46<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT ACCOUNTING POLICIES
                                            (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>v)</b></td><td style="text-align: justify"><b>Adoption of recent accounting
                                            pronouncements (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify; text-indent: -21.25pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In August 2020, the FASB issued ASU
No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity&#8217;s Own Equity (&#8220;ASU 2020-06&#8221;), which
simplifies an issuer&#8217;s accounting for convertible instruments by reducing the number of accounting models that require separate
accounting for embedded conversion features. ASU 2020-06 also simplifies the settlement assessment that entities are required to perform
to determine whether a contract qualifies for equity classification and makes targeted improvements to the disclosures for convertible
instruments and earnings-per-share (EPS) guidance. ASU 2020-06 is effective for annual reporting periods beginning after December 15,
2023 for smaller reporting companies as defined by the SEC. Early adoption is allowed under the standard with either a modified retrospective
or full retrospective method. The Company early adopted ASU 2020-06 on July 1, 2022 using the modified retrospective method. At the date
of adoption, the ASU did not impact the Company&#8217;s financial position, results of operations or cash flows. The Company elected
the fair value option to account for its convertible promissory notes that were issued as at June 30, 2023 and June 30, 2024, see note
3(j) above for the accounting policy and Note 8 for the underlying terms and required fair value disclosures.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>4.</b></td><td style="text-align: justify"><b>PROPERTY AND EQUIPMENT, NET</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Cost</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td>Balance, June 30, 2023</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,131,295</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,358,899</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">259,211</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,251,385</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>



</div><p style="margin: 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -21.3pt"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -21.3pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>4<span style="font-family: Times New Roman, Times, Serif">.</span></b></td><td style="text-align: justify"><b>PROPERTY
                                            AND EQUIPMENT, NET (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended June 30, 2024,
the Company incurred rent expense, included in general and administrative expense in the consolidated statements of operations of $542,496
(2023 &#8211; $779,091, 2022 &#8211; $309,566) which is included in the above note under depreciation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On December 14, 2022, the Company
entered into a conditional surrender agreement for the Surrey manufacturing facility and recognized an impairment loss on the right-of-use
asset and construction work in progress equal to its carrying value of $8,997,858 and $249,971, respectively (Note 17). This amount is
included in expenses in the statements of operations for the second quarter ended December 31, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On January 3, 2023, the Company subleased
708 Powell to a third party for the remaining term of the lease. The sublease arrangement triggered impairments of the right-of-use asset
of $175,397 and leasehold improvements of $48,050, respectively (Note 17), and, as a result, the Company recorded an asset impairment
totalling $223,447 in the statements of operations for the third quarter ended March 31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company signed a full surrender
agreement with the landlord and lessor of Surrey manufacturing facility (&#8220;Lessor&#8221;) and the surrender agreement was effective
as of June 30, 2023. As of June 30, 2023 the carrying value of the lease liability was $8,208,714. Under this agreement, the Company
reached a final and full settlement with Lessor to fully surrender the property, settling all outstanding amount owing for a consideration
made up of cash consideration of $566,465 (CAD$749,998) payable in 7 instalments, $375,000 convertible promissory note (Note 8), forfeiture
of standby letter of credit $1,100,248 (CAD$1,469,710) and payment of GST owing for tenant improvements ($185,529). For the year ended
June 30, 2023, the Company recorded a gain of $6,167,001 (Note 18) from the final settlement and abandonment of the lease. As a result
of the asset impairment noted above, the Company recorded a net loss on termination of the Surrey manufacturing facility of $3,080,828
(Note 18) for the year ended June 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On April 26, 2024, the Company signed
a release of the 708 Powell lease to surrender the lease. This resulted in the Company recognising a net loss on termination of $42,297
(Note 18) in the statements of operations for the year ended June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Refer to Note 11 for contingencies
related to the settlement agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>5.</b></td><td style="text-align: justify"><b>ACCOUNTS PAYABLE AND ACCRUED LIABILITIES</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, <br/>
    2024</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    2023</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Accounts payable</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">3,172,403</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">3,882,928</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Accrued wages</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,408,358</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">827,828</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Accrued liabilities and other payables</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,343,360</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,395,525</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">5,924,121</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">7,106,281</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As at June 30, 2024, $220,526 (June
30, 2023 - $458,209) was related to severance and included in accrued wages.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -21.3pt"></p><div>

</div><!-- Field: Page; Sequence: 203; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->48<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -21.3pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>5.</b></td><td style="text-align: justify"><b>ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
                                            (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Included in accrued liabilities and
other payables is amount owing for the surrender and settlement of lease of Surrey manufacturing facility (Note 6) of $237,452 as of
June 30, 2024 (June 30, 2023 - $566,465). On April 29, 2024 the Company requested payment deferment of the instalment payment due on
March 1, 2024 and May 1, 2024 respectively (Note 18) to July 1, 2024. On June 6, 2024, the Lessor agreed to further defer the payments
due on July 1, 2024 to be paid on or before September 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On March 26, 2024, the Company entered
into a Settlement of Debt agreement to settle the amount owing for directors&#8217; fees and consulting fees of $55,724 and $32,667,
respectively included in accrued liability amount above by issuing convertible promissory notes in the amount of $88,391 (Note 8) and
32,302 common share purchase warrants (Note 9) to the debtholders in full settlement of the amount owing. The Company analyzed the settlement
as an extinguishment and compared the net carrying value of the debt being extinguished to the fair value of the convertible promissory
notes and share purchase warrants issued and accounted for the loss on settlement of the debt (Note 8) in the statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On May 1, 2024, the Company entered
into a Settlement of Debt agreement to settle the directors&#8217; fees owing to former directors of $76,228 by issuing convertible promissory
notes with aggregate value of $76,228 and 27,857 common share purchase warrants (Note 9) to the debtholders in full settlement of the
amount owing. The Company analyzed the settlement as an extinguishment and compared the net carrying value of the debt being extinguished
to the fair value of the convertible promissory notes and share purchase warrants issued and accounted for the loss on settlement of
the debt (Note 8) in the statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="text-align: justify; width: 0"/><td style="text-align: justify; width: 0.25in"><b>6.</b></td><td style="text-align: justify"><b>LEASES</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Operating leases</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On September 1, 2019, the Company
entered into a lease for its office and operating premises at 708 Powell Street, Vancouver, British Columbia, Canada for a period of
five years. The incremental borrowing rate was estimated to be 12% and the remaining lease term as at June 30, 2023 is 1.2 years. On
January 3, 2023, the Company subleased 708 Powell to a third party for the remaining term of the lease. Under the sublease arrangement,
the Company is not relieved of its primary obligation under the headlease, therefore, the headlease and sublease is accounted separately.
The sublease triggers an impairment assessment of the headlease and as a result, the Company recorded an asset impairment of $175,397
(Note 4) and leasehold improvements of $48,050, and, as a result, the Company recorded an asset impairment totalling $223,447 (Note 17)
in the statements of operations for the year ended June 30, 2023. Following the impairment assessment, the headlease continued to be
recognized as a single lease cost but will no longer be recognized on a straight-line basis. The sublease is recorded as an operating
lease and the Company recorded rental income on the operating lease for the year ended June 30, 2024 of $195,821 (2023 - $44,436, 2022
- nil). Subsequently, on April 26, 2024, the Company signed a release of the 708 Powell lease to surrender the lease and recorded a net
loss on termination of $42,297 (Note 18) in the statements of operations for the year ended June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On July 1, 2021, the Company entered
into a two-year lease agreement on a 3,360 square foot office and warehouse facility located in San Rafael, California, USA with a commencement
date of August 1, 2021. The incremental borrowing rate was estimated to be 12% and this lease has lapse as at June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On July 5, 2021, the Company began
its fixturing period on a 15,707 square foot office facility in Vancouver, British Columbia, Canada with a lease commencement date of
September 1, 2021. The incremental borrowing rate was estimated to be 12% and the remaining term on this sublease as at June 30, 2024
is 1.9 years.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt"></p><div>

</div><!-- Field: Page; Sequence: 204; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>6.</b></td><td style="text-align: justify"><b>LEASES (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Operating leases</span> (continued)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On July 15, 2021, the Company entered
into a 10-year lease agreement on a 109,820 square foot manufacturing plant in Surrey, British Columbia, Canada (&#8220;Surrey manufacturing
facility&#8221;) and the incremental borrowing rate was estimated to be 14.2%. In the agreement, the Company has two (2) options to renew
the Lease for a period of five (5) years each, but the renewal terms were not incorporated in capitalization of right-of-use asset and
lease liability as the probability of the Company renewing the lease is very low. As part of the lease agreement, the Company and the
Lessor mutually agreed for the Lessor to perform lessor-owned Tenant Improvements on the property which was capitalized as part of the
right-of-use asset upon the lease commencement date. On July 15, 2021 the Company amended the termination right of the lease agreement
giving the tenant the sole discretion to terminate the lease at any time after the 7<sup>th</sup> year of the lease, revising the non-cancellable
term of the lease to 7-years. On September 29, 2022, the Lessor delivered notice of possession to allow the Company to begin fixturing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On December 14, 2022, the Company
entered into conditional surrender of the Lease agreement to surrender the leased property due to change in corporate direction but does
not release the Company of the lease obligation. As a result, the Company impaired the right-of-use assets to its $nil recoverable amount
and recorded an asset impairment of $8,997,858 (Note 17) for the year ended June 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company signed a full surrender
agreement with the Lessor and the surrender agreement was effective as at June 30, 2023. As at June 30, 2023 the carrying value of the
lease liability was $8,208,714 (Note 18). Under this agreement, the Company reached a final and full settlement with Lessor to fully
surrender the property, settling all outstanding amount owing for a consideration made up of cash consideration of $566,465 (CAD$749,998)
payable in 7 instalments, $375,000 convertible promissory notes (Note 8), forfeiture of standby letter of credit $1,100,248 (CAD$1,469,710)
and payment of GST owing for tenant improvements ($185,529). As a result, the Company recorded a gain of $6,167,001 (Note 18) from the
final settlement and abandonment of the lease for the year ended June 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On September 12, 2022, the Company
entered into a two year and four months lease agreement on a 18,110 square foot office and warehouse facility located in San Rafael,
California, USA with a commencement date of October 1, 2022. The incremental borrowing rate was estimated to be 12% and the remaining
lease term as at June 30, 2024 is 0.6 year.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Finance leases</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On June 1, 2021, the Company entered
into a lease for camera equipment for a period of 36 months. The incremental borrowing rate was estimated to be 12% and the lease has
lapse as at June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On June 22, 2021, the Company entered
into a lease for a vehicle for a period of 60 months. The incremental borrowing rate was estimated to be 4.89% and the remaining lease
term as at June 30, 2024 is 1.9 years.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->50<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>6.</b></td><td style="text-align: justify"><b>LEASES (continued)</b></td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Presentation</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The lease liability in connection
with operating and finance leases are included in lease liabilities and current portion of lease liabilities on the consolidated balance
sheets as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left; padding-bottom: 4pt">Total lease liabilities</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
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    lease</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
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    leases</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
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    2023</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 64%; text-align: left">Non-current portion of lease liabilities</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">621,325</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">812,099</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Current portion of lease liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">740,486</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The right-of-use assets in connection
with leases are included under property and equipment on the consolidated balance sheets and are separately disclosed in Note 4.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following lease costs are
included in the consolidated statements of operations:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 9pt; text-align: center; text-indent: -9pt">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Year
    ended June 30,</b></span></td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 9pt; text-align: center; text-indent: -9pt">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2024</b></span></td>
    <td style="text-align: center">&#160;</td>
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    <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2023</b></span></td>
    <td style="text-align: center">&#160;</td>
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    <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2022</b></span></td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 9pt; text-align: center; text-indent: -9pt">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finance
    lease costs:</span></td>
    <td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; padding-left: 0.25in; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amortization
    of right-of-use assets</span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">46,447</span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">47,868</span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">58,683</span></td>
    <td style="width: 1%">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.25in; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
    on lease liability</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">9,499</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10,606</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">12,435</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating
    lease costs</span></td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">587,677</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">506,592</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">476,357</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Rental
    Income</span></td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(152,729)</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(44,436)</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Total
    lease costs</b></span></td>
    <td>&#160;</td>
    <td style="border-bottom: black 4.5pt double; text-align: right">&#160;</td>
    <td style="border-bottom: black 4.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>490,894</b></span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="border-bottom: black 4.5pt double; text-align: right">&#160;</td>
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    <td>&#160;</td>
    <td>&#160;</td>
    <td style="border-bottom: black 4.5pt double; text-align: right">&#160;</td>
    <td style="border-bottom: black 4.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>547,475</b></span></td>
    <td>&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>6.</b></td><td style="text-align: justify"><b>LEASES (continued)</b></td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The future payments due under operating
and finance leases as at June 30, 2024 is as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Operating<br/>
    lease</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Finance<br/>
    leases</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Total</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: left">Undiscounted lease payments:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; text-indent: -2.25pt; padding-left: 8.95pt">2025</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">490,963</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">15,942</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">506,905</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -2.25pt; padding-left: 8.95pt">2026</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">247,528</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">185,159</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">432,687</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 1.35pt">Total undiscounted lease payments</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">738,491</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">201,101</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">939,592</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 1.35pt">Discount</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(59,480</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(16,557</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(76,037</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -6.05pt; padding-left: 6.05pt">Lease liabilities</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">679,011</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">184,544</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">863,555</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>7.</b></td><td style="text-align: justify"><b>DEBT</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(11,524</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">Accretion</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt">Repayment of principal</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">542,753</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">542,753</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Funds advanced</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">550,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Foreign exchange adjustment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(45,612</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(14,030</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(59,642</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Interest paid, net of interest capitalized</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(133,686</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">33,658</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">603</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(99,425</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">Repayment of principal</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(916,539</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(916,539</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Debt settled via issuance of convertible
    promissory notes and common share purchase warrants (Note 8)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; padding-bottom: 4pt">Balance, June 30, 2024</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
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    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">548,886</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">550,603</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">1,099,489</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.7pt; text-align: justify; text-indent: -35.7pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">SR&amp;ED financing </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company entered into a secured
Scientific Research and Experimental Development (&#8220;SR&amp;ED&#8221;) loan agreement dated December 20, 2019 for SR&amp;ED financing.
The SR&amp;ED loan accrues interest at a rate of 13% per annum, requires a 1% advance fee for each drawdown, and matures twelve months
after the fiscal year in which the advance was made. Due to the delays caused by the Canada Revenue Agency (&#8220;CRA&#8221;) audit
process, the maturity date has been extended from September 30, 2023 to November 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 207; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->52<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>7<span style="font-family: Times New Roman, Times, Serif">.</span></b></td><td style="text-align: justify"><b>DEBT
                                            (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">SR&amp;ED financing</span> (continued)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company&#8217;s SR&amp;ED loan
agreement was secured against future SR&amp;ED tax credit refunds expected to be received from year-end tax returns for 2022 submitted
to CRA. On October 26, 2023, the Company received its 2022 SR&amp;ED tax credit refund amount of $1,107,464 (CAD$1,466,282 made up of
CAD$1,403,514 in investment tax credit refund and CAD$62,768 refund interest). Following the refund of the tax credit, the Company repaid
in full the SR&amp;ED loan and the accrued interest. In addition, on December 15, 2023, the Company received 2023 SR&amp;ED tax credit
refund of $1,065,756 (CAD$1,461,087).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Promissory note </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On March 13, 2023, the Company issued
an unsecured promissory note to arms-length parties with principal amount of $728,332 (CAD$1,000,000). The promissory note accrued simple
interest of 18% per annum, payable in arrears quarterly. Any outstanding principal amount and any accrued and unpaid interest then outstanding
is due and payable on the earlier of (i) the first anniversary of the issuance date; or (ii) the date of closing of a transaction effected
by the Company in which the Company issues and sells equity securities, with the principal purpose of raising capital, for aggregate
gross proceeds of at least $10,000,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On March 12, 2024, the Company entered
into a Settlement of Debt agreement to settle the outstanding principal amount of CAD$1,000,000 and the interest owing of CAD$44,754
by issuing convertible promissory notes with an aggregate principal amount of $775,208 (Note 8) and 283,294 common share purchase warrants
(Note 9). The Company analyzed the settlement as an extinguishment and compared the net carrying value of the debt being extinguished
to the fair value of the convertible promissory notes and share purchase warrants issued and accounted for the loss on settlement of
the debt (Note 8) in the statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On April 16, 2024, the Company signed
an agreement to issue as payment and settlement of professional fees owing, a promissory note in the aggregate amount of $542,753 with
interest rate at 5.5% per annum in favour of Wilson Sonsini Goodrich &amp; Rosati Professional Corporation. All unpaid principal, together
with any then unpaid and accrued interest and other amounts payable hereunder shall be due and payable on the earliest of (i) September
1, 2024; (ii) the closing of a Debt Financing or Equity Financing; (iii) the closing of a Change of Control transaction; (iv) the Company
becomes cash flow positive and is in a position to make payment on the outstanding invoices; or (v) upon the occurrence of an Event of
Default. If all unpaid principal and accrued interest shall not be paid when otherwise due, the interest rate per annum on the note shall
increase from 5.5% per annum to 7% per annum.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Senior secured promissory note
</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On June 26, 2024, the Company issued
senior secured promissory note (&#8220;Secured Note&#8221;) in the aggregate amount of $550,000 as of June 30, 2024 (up to an aggregate
principal amount of $1,000,000) with interest rate at 10.0% per annum in favour of Grafiti Holding Inc. All unpaid principal, together
with any then unpaid and accrued interest and other amounts payable hereunder shall be due and payable on the earliest of (i) December
31, 2024; (ii) upon the occurrence of an Event of Default; (iii) within three Business Days (as defined in the BCA) following termination
of the BCA by Borrower or Lender pursuant to Section 9.1(b) of the BCA or by Lender pursuant to Section 9.1(d) of the BCA. The Secured
Note is secured by substantially all of the assets of the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The weighted average interest rate
on the debt is 7.8% as of June 30, 2024 (2023 &#8211; 14.9%).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 21.3pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 21.3pt"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 21.3pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>8.</b></td><td style="text-align: justify"><b>CONVERTIBLE NOTES</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Amount</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">Balance, July 1, 2022</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 88%; text-align: left">Funds advanced</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">11,220,000</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Convertible note issued in settlement of lease obligation
    (Note 6)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">375,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Warrant bifurcated (Note 9)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(254,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Interest accrued</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">512,183</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Changes in fair value of financial
    liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,874,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold">Balance, June 30, 2023</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">14,727,183</td><td style="font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Funds advanced</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11,549,945</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Convertible note issued for settlement of debt (see below)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,308,441</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Warrant bifurcated classified as liability (Note 9)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,086,240</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Warrant bifurcated classified as equity</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(674,034</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Interest accrued, net of capitalized interest paid</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,793,574</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Changes in fair value of financial
    liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">13,011,887</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; padding-bottom: 4pt">Balance, June 30, 2024</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">40,630,756</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Between October and November 2022,
the Company issued three convertible promissory notes (&#8220;Tranche 1&#8221;) to arms-length parties with an aggregate principal amount
of $5,700,000 at valuation cap of $350,000,000 and interest rate of 8% per annum, payable in arrears on July 1, 2023 and on the maturity
date, June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On April 25, 2023, the Tranche 1 convertible
notes holder with aggregate principal amount of $700,000 has its terms amended to revise the valuation cap from $350,000,000 to $125,000,000
and revise the interest rate from 8% per annum to 12% per annum, payable in arrears on October 1, 2023. Revised date of October 1, 2023
resulted in deferral of interest payable date by 3 months. The amendment of Tranche 1 on April 25, 2023 was determined to be a modification
of a financial liability and the changes in fair value before and after modification was recorded to the statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Between January to February 2023,
the Company issued six convertible promissory notes (&#8220;Tranche 2&#8221;) to arms-length parties with an aggregate principal amount
of $1,020,000 and $100,000 at valuation cap of $150,000,000 and $125,000,000 respectively, with interest rate of 12% per annum, payable
in arrears on July 1, 2023 and the maturity date, June 30, 2024. The Tranche 2 convertible notes interest of $51,784 due on July 1, 2023
was not paid as of the date of this report and the Company is in negotiation to include the interest due into the investment amount for
conversion on closing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Between April to May 2023, the Company
issued four convertible promissory notes (&#8220;Tranche 3&#8221;) to arms-length parties with an aggregate principal amount of $1,900,000
at valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on October 1, 2023 and on the maturity date,
June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On June 16, 2023, the Company issued
five convertible promissory notes (&#8220;Tranche 4&#8221;) to arms-length parties with an aggregate principal amount of $2,500,000 at
valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on the maturity date, June 15, 2024. Any Principal
which is not paid when due shall bear interest at the rate of the lesser of (i) 16% per annum and (ii) the maximum amount permitted by
the applicable law from the due date thereof until the same is paid. Tranche 4 convertible promissory notes holders were also issued
950,153 common share purchase warrants (Note 9) to subscribe for, and purchase of the Company common shares at the exercise price equal
to the quotient of the valuation cap of $125,000,000 and the diluted capitalization at closing date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>8<span style="font-family: Times New Roman, Times, Serif">.</span></b></td><td style="text-align: justify"><b>CONVERTIBLE
                                            NOTES (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On June 30, 2023, as part of the lease
settlement (Note 6), the Company issued $375,000 convertible promissory notes ((&#8220;Tranche 5&#8221;) to the Lessor as part of the
consideration to fully surrender the manufacturing facility lease (Note 18). The note is issued at valuation cap of $125,000,000 and
interest rate of 12% per annum, payable in arrears on the maturity date, June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">For the year ended June 30, 2024,
the Company issued convertible promissory notes (Tranches 6 to 11, Tranches 14 to 16, and Tranche 18) to arms-length parties with an
aggregate principal amount of $11,549,945 at valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on
the maturity date. For details of the terms and conditions of these Tranches, see table below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On March 12, 2024, as part of the
Settlement of Debt, the Company issued $775,208 convertible promissory notes (&#8220;Tranche 12&#8221;) to the promissory notes (Note
7) holder in full settlement of the debt owing. The note is issued at a valuation cap of $125,000,000 and interest rate of 12% per annum,
payable in arrears on the maturity date, March 11, 2025. As part of the settlement, the Company also issued 283,294 common share purchase
warrants to subscribe for, and purchase of the Company common shares. The Company analyzed the settlement as an extinguishment and compared
the net carrying value of the debt being extinguished to the fair value of the convertible promissory notes and share purchase warrants
issued and accounted for the loss on settlement of the debt (see table below) in the statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On March 26, 2024, the Company entered
into a Settlement of Debt agreement to settle the amount owing for directors&#8217; fees and consulting fees of $55,724 and $32,667,
respectively (Note 5) by issuing convertible promissory notes in the amount of $88,391 (&#8220;Tranche 13&#8221;) and 32,302 common share
purchase warrants (Note 9) to the debtholders in full settlement of the amount owing. The note is issued at a valuation cap of $125,000,000
and interest rate of 12% per annum, payable in arrears on the maturity date, March 25, 2025. The Company analyzed the settlement as an
extinguishment and compared the net carrying value of the debt being extinguished to the fair value of the convertible promissory notes
and share purchase warrants issued and accounted for the loss on settlement of the debt (see table below) in the statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On May 1, 2024, the Company entered
into a Settlement of Debt agreement to settle the directors&#8217; fees owing to former directors of $76,228 by issuing convertible promissory
notes with aggregate value of $76,228 (&#8220;Tranche 17&#8221;). The note is issued at valuation cap of $125,000,000 and interest rate
of 12% per annum, payable in arrears on the maturity date, April 30, 2025. The Company also issued 27,857 common share purchase warrants
to the debt holder to subscribe for, and purchase of the Company common shares. The Company analyzed the settlement as an extinguishment
and compared the net carrying value of the debt being extinguished to the fair value of the convertible promissory notes and share purchase
warrants issued and accounted for the loss on settlement of the debt (see table below) in the statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">For details of the terms and conditions
of the common share purchase warrants issued, please refer to Note 9.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>8<span style="font-family: Times New Roman, Times, Serif">.</span></b></td><td style="text-align: justify"><b>CONVERTIBLE
                                            NOTES (continued)</b></td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">At inception, the fair value of the
convertible notes issued with detachable share purchase warrants were determined and compared to the carrying value of the debt settled.
The loss on debt settlement for the year ended June 30, 2024 is accounted in the statements of operations as summarized below:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Debt <br/>
    settled</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Fair value of convertible notes issued</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Fair value of warrants issued (Note
    9)</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Loss on<br/>
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    settlement</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">Convertible note issued for settlement of Promissory Note (Note 7)</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">775,208</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">1,078,534</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">343,763</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">647,089</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 52%; text-align: left">Convertible note issued for settlement of
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">88,391</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">122,425</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">39,197</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">73,231</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Convertible note issued for settlement
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    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">76,228</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">107,482</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">33,803</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">939,827</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">1,308,441</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
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    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">785,377</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On June 15, 2024 and June 26, 2024,
the Company and the convertible promissory note holders entered into a Letter of Agreement amending the maturity of the notes, June 15,
2024 and June 30, 2024, respectively, to mature on September 30, 2024. As such, all the principal and interest payable in arrears is
due on the new maturity date, September 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


</div><!-- Field: Page; Sequence: 211; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->56<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -21.3pt"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>8<span style="font-family: Times New Roman, Times, Serif">.</span></b></td><td style="text-align: justify"><b>CONVERTIBLE
                                            NOTES (continued)</b></td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -21.3pt"><b>&#160;</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Summary of the convertible notes issued
and their key terms are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: justify"><b>Tranche</b></td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Date of issuance</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Amount issued</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
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    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Interest rate</td>
    <td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: center"><b>&#160;Interest due date</b></td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Maturity date</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="text-align: center">$&#8217; million</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="text-align: center">%</td>
    <td style="white-space: nowrap">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 12%; text-align: justify; padding-left: 1.75pt">Tranche 1</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 21%; text-align: center">October to November 2022</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 7%; text-align: right">5,700,000</td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 7%; text-align: right">125</td>
    <td style="width: 1%; text-align: left"><sup>(1)</sup></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 7%; text-align: right">12</td>
    <td style="white-space: nowrap; width: 1%; text-align: left">%<sup>(1)</sup></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 17%; text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">October 1, 2023<sup>(1)(2)</sup></span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 17%; text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">September 30, 2024<sup>(7)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; padding-left: 1.75pt">Tranche 2</td>
    <td>&#160;</td>
    <td style="text-align: center">January to February 2023</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">1,020,000</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">150</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">12</td>
    <td style="white-space: nowrap; text-align: left">%</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">July 1, 2023<sup>(2)</sup></span></td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">September 30, 2024<sup>(7)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-left: 1.75pt">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">February 2023</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">100,000</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">125</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">12</td>
    <td style="white-space: nowrap; text-align: left">%</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">July 1, 2023<sup>(2)</sup></span></td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">September 30, 2024<sup>(7)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; padding-left: 1.75pt">Tranche 3</td>
    <td>&#160;</td>
    <td style="text-align: center">April to May 2023</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">1,900,000</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">125</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">12</td>
    <td style="white-space: nowrap; text-align: left">%</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">October 1, 2023<sup>(2)</sup></span></td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">September 30, 2024<sup>(7)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-left: 1.75pt">Tranche 4</td>
    <td>&#160;</td>
    <td style="text-align: center">June 16, 2023</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">2,500,000</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">125</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">12</td>
    <td style="white-space: nowrap; text-align: left">%</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">June 15, 2024<sup>(3)(4)</sup></span></td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">September 30, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 1.75pt">Tranche 5</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">June 30, 2023</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">375,000</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: right">125</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: right">12</td>
    <td style="white-space: nowrap; padding-bottom: 1.5pt; text-align: left">%</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 5.4pt">June 29, 2024</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 5.4pt"><span style="font-size: 10pt">September 30, 2024<sup>(7)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td>
    <td style="font-weight: bold; text-align: right">11,595,000</td>
    <td style="font-weight: bold; text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="white-space: nowrap; text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; padding-left: 1.75pt">Tranche 6</td>
    <td>&#160;</td>
    <td style="text-align: center">August 10, 2023</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">1,025,000</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">125</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">12</td>
    <td style="white-space: nowrap; text-align: left">%</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">June 15, 2024<sup>(3)(4)</sup></span></td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">September 30, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-left: 1.75pt">Tranche 7</td>
    <td>&#160;</td>
    <td style="text-align: center">September 13, 2023</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">1,020,000</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">125</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">12</td>
    <td style="white-space: nowrap; text-align: left">%</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">June 15, 2024<sup>(3)(4)</sup></span></td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">September 30, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; padding-left: 1.75pt">Tranche 8</td>
    <td>&#160;</td>
    <td style="text-align: center">September 26, 2023</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">2,705,000</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">125</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">12</td>
    <td style="white-space: nowrap; text-align: left">%</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">June 15, 2024<sup>(3)(4)</sup></span></td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">September 30, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-left: 1.75pt">Tranche 9</td>
    <td>&#160;</td>
    <td style="text-align: center">September 30, 2023</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">200,000</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">125</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">12</td>
    <td style="white-space: nowrap; text-align: left">%</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">September 29, 2024<sup>(3)(4)</sup></span></td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">September 29, 2024</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; padding-left: 1.75pt">Tranche 10</td>
    <td>&#160;</td>
    <td style="text-align: center">October 26, 2023</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">4,275,000</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">125</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">12</td>
    <td style="white-space: nowrap; text-align: left">%</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">June 15, 2024<sup>(3)(4)</sup></span></td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">September 30, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-left: 1.75pt">Tranche 11</td>
    <td>&#160;</td>
    <td style="text-align: center">December 15, 2023</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">350,000</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">125</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">12</td>
    <td style="white-space: nowrap; text-align: left">%</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">June 15, 2024<sup>(3)(4)</sup></span></td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt"><span style="font-size: 10pt">September 30, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; padding-left: 1.75pt">Tranche 12</td>
    <td>&#160;</td>
    <td style="text-align: center">March 12, 2024</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">775,208</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">125</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">12</td>
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    <td>&#160;</td>
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    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: right">&#160;</td>
    <td style="padding-bottom: 2.5pt; text-align: right">&#160;</td>
    <td style="padding-bottom: 2.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: right">&#160;</td>
    <td style="padding-bottom: 2.5pt; text-align: right">&#160;</td>
    <td style="white-space: nowrap; padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 4pt; padding-left: 5.4pt">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 4pt; padding-left: 5.4pt">&#160;</td></tr>
  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Note 1 - On April 25, 2023, the Tranche
1 convertible notes with aggregate principal amount of $700,000 has its terms amended to revise the valuation cap from $350,000,000 to
$125,000,000 and revise the interest rate from 8% per annum to 12% per annum, payable in arrears on October 1, 2023. On October 11, 2023,
the convertible notes holder with aggregate principal amount of $5,000,000 had its terms amended to revise the valuation cap from $350,000,000
to $125,000,000 and the interest rate revised from 8% per annum to 12% per annum, payable in arrears on October 1, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Note 2 - The Company negotiated to
defer payments of convertible debt interest and include the interest amount into the investment amount for conversion on closing date,
June 30, 2024. The agreement for the deferment of the interest due on July 1, 2023 for Tranche 2 of $29,264, and on October 1, 2023 for
Tranche 1 and Tranche 3 of $76,438 and $100,537, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Note 3 - Any Principal which is not
paid when due shall bear interest at the rate of the lesser of (i) 16% per annum and (ii) the maximum amount permitted by the applicable
law from the due date thereof until the same is paid.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Note 4 - Convertible promissory notes
holders were also issued common share purchase warrants (Note 9) to subscribe for, and purchase of the Company common shares at the exercise
price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization at closing date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Note 5 - Convertible promissory notes
holders were also issued common share purchase warrants (Note 9) to subscribe for, and purchase of the Company common shares at the exercise
price of $2.7364 per share.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Note 6 - On June 15, 2024, the Company
and the convertible promissory note holders entered into a Letter of Agreement amending the maturity of the notes, June 15, 2024, to
mature on September 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Note 7 - On June 26, 2024, the Company
and the convertible promissory note holders entered into a Letter of Agreement amending the maturity of the notes, June 30, 2024, to
mature on September 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company may not prepay the principal
amount and the accrued and unpaid interest in whole or in part without the written consent of the convertible noteholders. The convertible
notes will rank pari passu in right of payment with respect to each other, and all payment to each of the convertible noteholders will
be made pro rata among the convertible noteholders based upon the aggregate outstanding principal amount of the convertible promissory
note immediately before any such payment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->57<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>8<span style="font-family: Times New Roman, Times, Serif">.</span></b></td><td style="text-align: justify"><b>CONVERTIBLE
                                            NOTES (continued)</b></td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Conversion events</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In the event of <span style="font-family: Times New Roman, Times, Serif">a
change of control, the convertible noteholders would have the right to either:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">convert
                                            principal and unpaid interest into shares at a conversion price which is lower of (i) the
                                            respective valuation cap (for Tranches 4 through 18, the valuation cap is reduced to $93,750,000
                                            if event of default occurs prior to conversion) divided by the diluted capitalization and
                                            (ii) discounted conversion price of 75% (with 2.5% increase in discount every 6 months from
                                            issuance date for Tranches 1 through 2) multiplied by the price per share ascribed to the
                                            common share in the change of control event; or</span></td></tr><tr style="vertical-align: top">
<td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
            </table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">require
                                            the Company to repurchase their convertible notes in cash, in whole or in part, at a price
                                            equal to 100% of the principal amount of the convertible notes plus accrued and unpaid interest
                                            (for Tranches 1 through 3 and at 25% redemption premium for Tranches 4 through 18) thereon
                                            to the date of repurchase.</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">In
the event of a qualified financing, which refers to the next transaction after the issue date and before the maturity date in which the
Company issues and sells equity securities, with the principal purpose of raising capital (for Tranches 1 through 3) or a</span> Public
Company event, convertible notes include automatic mandatory conversion features resulting in the receipt of shares at a conversion price
which is lower of (i) the valuation cap (for Tranches 4 through 18), the cap price further reduced to $93,750,000 if event of default
occurs prior to conversion) divided by diluted capitalization immediately prior to the event of qualified financing or Public Company
event and (ii) the discounted conversion price of 25% (with 2.5% increase in discount every 6 months from issuance date for Tranches
1 through 3) applied to the lowest price paid/offered for equity security subject to a cap price of $125,000,000 multiplied by a price
per share of the qualified financing or Public Company event.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Diluted capitalization refers to aggregate
number of outstanding common shares immediately prior to the closing or occurrence of a qualified financing, change of control, or Public
Company event, as applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In the event that the convertible
notes are not converted prior to maturity date, the Company is obligated to settle the convertible notes by paying in cash equivalent
to 100% of the convertible notes principal amount and the accrued and unpaid interest.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As the conversion features were not
required to be bifurcated and as none of the components of convertible note were required to be classified under equity, the Company
made the election to measure the convertible notes subsequently at fair value through profit and loss.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">At inception, the proceeds from the
convertible notes issued with detachable share purchase warrants for Tranches 4 to 11, Tranches 14 to 16 and Tranche 18 to were determined
to be their fair values, were allocated between the convertible notes issued with detachable share purchase warrants based on the residual
method. During the year ended June 30, 2024, the Company issued $11,549,945 of convertible notes in Tranches 6 to 11, Tranches 14 to
16 and Tranche 18. The fair value of these convertible notes of $10,463,705 was determined as discussed below and the residual amount
of $1,086,240 (Note 9) was allocated to the share purchase warrants classified as derivative liabilities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>


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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->58<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;<b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>8<span style="font-family: Times New Roman, Times, Serif">.</span></b></td><td style="text-align: justify"><b>CONVERTIBLE
                                            NOTES (continued)</b></td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Management has determined that due
to the complexity of the various embedded features and the short life expected of the notes, it will elect the fair value option under
ASC 825-10-1 as the instruments are eligible for the fair value election under ASC 825-10. As a result, the entire convertible promissory
note is carried at fair value and the difference between the aggregate fair value and aggregate unpaid principal balance of the convertible
notes for the year ended June 30, 2024 totaling $13,011,887 (2023 &#8211; $2,874,000, 2022 &#8211; nil) are accounted as changes in fair
value of financial liabilities in the statements of operations. No amounts were recognized in other comprehensive income as the changes
in fair value due to credit risk were nominal.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended June 30, 2024,
the Company expensed $714,297 (2023 &#8211; $346,000, 2022 &#8211; nil) in transaction costs related to issuance of convertible promissory
notes in the consolidated statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The convertible notes are valued by
management at each measurement date based on the Company&#8217;s estimated enterprise value implied by the most comparable transaction
and allocating the value to each of the Company&#8217;s equity-linked instruments (preferred shares, SAFE agreements, convertible promissory
notes, stock options and common shares) based on their respective characteristics and rights. In arriving at the value attributable to
each instrument, the Company applies an option pricing model. The Company&#8217;s model values the preferred shares, SAFEs, convertible
promissory notes, common shares, warrants and stock options as call options on the Company&#8217;s equity value with exercise prices
based on the conversion options of the respective instruments. The model used the following assumptions during the year ended June 30,
2024 and 2023, including volatility, risk free rates and management&#8217;s best estimate of the expected time for the occurrence of
a conversion event as described in Note 10 below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>9.</b></td><td style="text-align: justify"><b>WARRANTS AND DERIVATIVE WARRANT
                                            LIABILITIES</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company account for common share
purchase warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. The
assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability
pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether
the warrants are indexed to the Company&#8217;s own common shares. We classify derivative warrant liabilities on the balance sheet at
fair value, and changes in fair value during the periods presented in the statement of operations, which is revalued at each balance
sheet date subsequent to the initial issuance of the common share purchase warrant. For warrants that meet the criteria for equity classification,
the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Between August 10, 2023 to May 29,
2024, in connection with the issuance of Tranche 6 through 18 convertible promissory notes to arms-length parties (Note 8), the Company
issued common share purchase warrants to the noteholders. Similarly, each warrant is exercisable anytime for 1 common share of the Company
at an exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization on closing date. The holder
of the common share warrants can exercise the warrant either fully or partially at any time from issuance date until its expiry, 5 years
from issuance date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>


</div><!-- Field: Page; Sequence: 214; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->59<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>9.</b></td><td style="text-align: justify"><b>WARRANTS AND DERIVATIVE WARRANT
                                            LIABILITIES (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In the event there is no effective
registration statement or prospectus available for resale of shares under the warrant agreement within 180 days following the closing
of the Public Company event, the warrant holder can exercise the warrants, in whole or in part, on a cashless basis for the number of
shares computed as:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 39.3pt"/><td style="width: 18pt">i.</td><td style="text-align: justify">the difference between the exercise price
                                            and volume-weighted average price (&#8220;VWAP&#8221;) on trading day immediately preceding
                                            the date of notice of exercise provided notice is in accordance with section 2(a) of the
                                            note common share purchase agreement.</td></tr><tr style="vertical-align: top">
<td>&#160;</td><td>&#160;</td><td style="text-align: justify">&#160;</td></tr>
                    </table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 39.3pt"/><td style="width: 18pt">ii.</td><td style="text-align: justify">the difference between the exercise price
                                            and, at holder&#8217;s option:</td></tr><tr style="vertical-align: top">
<td>&#160;</td><td>&#160;</td><td style="text-align: justify">&#160;</td></tr>
                                                                                                                                                                                 </table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 75.3pt"/><td style="width: 18pt">a.</td><td style="text-align: justify">VWAP on trading day immediately preceding
                                            the date of notice of exercise; or</td></tr><tr style="vertical-align: top">
<td>&#160;</td><td>&#160;</td><td style="text-align: justify">&#160;</td></tr>
                                                                                                                                                                                    </table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 75.3pt"/><td style="width: 18pt">b.</td><td style="text-align: justify">Bid price of the Company&#8217;s common
                                            share on principal trading market on the date of notice of exercise.</td></tr><tr style="vertical-align: top">
<td>&#160;</td><td>&#160;</td><td style="text-align: justify">&#160;</td></tr>
                                                                                                                                                                                                                    </table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 39.3pt"/><td style="width: 18pt">iii.</td><td style="text-align: justify">the difference between the exercise price
                                            and VWAP on date of notice of exercise.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The warrant holder for tranches 4
and tranches 6 through 11 may be entitled to additional 3% shares of the unexercised part of the warrant (up to a maximum of 8%) that
may be issued for each 30-day registration statement default past the registration deadline (i.e., 180 days of Public Company event)
along with liquidated damages up to a maximum of $250,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The warrant holder&#8217;s option
for net cash settlement (equal to Black Scholes value) in the event a fundamental transaction occurs at or before a Public Company event
and which is within the control of the Company including approved by the Company&#8217;s Board. However, if the transaction is outside
the control of the Company or board, the warrant holder shall receive the same form and type of consideration as received by common stockholders
in connection with the fundamental transaction.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Fundamental transaction refers to
one or more related transactions that results in (i) merger or consolidation of the Company with another, (ii) any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or substantially all of its assets, (iii) purchase offer, tender offer or
exchange offer to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of
50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company, (iv) reclassification,
reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively
converted into or exchanged for other securities, cash or property, or (v) a stock or share purchase agreement or other business combination
with another resulting in acquisition of 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common
equity of the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="text-decoration:underline">Liability-classified warrants
</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">At inception, the proceeds from the
convertible notes for Tranches 6 through 11, Tranches 14 to 16 and Tranche 18 (Note 8) were allocated between the convertible notes and
the warrants based on the residual method with $1,086,240 allocated to the warrants and since the warrants did not meet the indexation
and equity classification requirements, the warrants are classified as derivative liabilities. The warrants are subsequently remeasured
at fair value and accounted as changes in fair value of derivative liabilities in the statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>


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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->60<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;<b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>9.</b></td><td style="text-align: justify"><b>WARRANTS AND DERIVATIVE WARRANT
                                            LIABILITIES (continued)</b></td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="text-decoration:underline">Liability-classified warrants
</span>(continued)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Upon exercise, the holders will pay
the Company the respective exercise price for each warrant exercised in exchange for one common share of the Company and the fair value
at the date of exercise and the associated non-cash liability will be reclassified to share capital. The non-cash liability associated
with any warrants that expire unexercised will be recorded as a gain in the consolidated statements of operations. Unexercised warrants
shall be exercised automatically on a cashless basis on the termination date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The fair value of derivative warrant
liabilities was estimated by management at year end or each measurement date based on the Company&#8217;s estimated enterprise value
implied by the most comparable transaction and allocating the value to each of the Company&#8217;s equity-linked instruments (preferred
shares, SAFE agreements, convertible promissory notes, stock options and common shares) based on their respective characteristics and
rights. In arriving at the value attributable to each instrument, the Company applies an option pricing model. The Company&#8217;s model
values the preferred shares, SAFEs, convertible promissory notes, common shares, warrants and stock options as call options on the Company&#8217;s
equity value with exercise prices based on the conversion options of the respective instruments. The model used the following assumptions
during the year ended June 30, 2024 and 2023, including volatility, risk free rates and management&#8217;s best estimate of the expected
time for the occurrence of a conversion event as described in Note 10 below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Changes in the value of the derivative
liability related to the warrants for the year ended June 30, 2024 and the year ended June 30, 2023 were as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Number of warrants</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td>
    <td colspan="2" style="padding-bottom: 1.5pt; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><p style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><b>Amount</b></p></td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: right">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">#</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">Balance, July 1, 2022</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%">Bifurcated value of warrant (Note 8)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">950,153</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">254,000</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Change in fair value of derivative
    liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">267,950</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold">Balance, June 30, 2023</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">950,153</td><td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">521,950</td><td style="font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">Bifurcated value of warrant (Note 8)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,809,030</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,086,240</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Change in fair value of derivative liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,820,562</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Liability-classified warrants reclassified
    to equity-classified warrants</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,759,183</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,428,752</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; padding-bottom: 4pt">Balance, June 30, 2024</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In June 2024, the Company, with the
consent of warrant holders, amended the terms of the common share purchase warrant to be indexed to the Company&#8217;s equity. These
warrants are reclassified from liability-classified warrants to equity-classified warrants and recorded as a component of additional
paid-in capital.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The warrants were initially classified
as liability and elected to measure at fair value because they failed the fixed shares to fixed monetary amount test in accordance with
ASC 815 due to the provision in section 3b of the original warrants agreement whereby the warrants&#8217; exercise price shall be reduced
to lower exercise price on:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -21.25pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 35.45pt"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the issuance of new options or
                                            common share equivalents at an exercise price that is less than the warrants&#8217; exercise
                                            price immediately before such issuance; or</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -21.25pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -21.25pt"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 35.45pt"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">on the modification of any existing
                                            options or common share equivalents at an exercise price that is less than the warrant&#8217;s
                                            exercise price immediately before such modification</td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -21.25pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -21.25pt"></p><div>

</div><!-- Field: Page; Sequence: 216; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->61<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -21.25pt">&#160;<b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -21.25pt"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>9.</b></td><td style="text-align: justify"><b>WARRANTS AND DERIVATIVE WARRANT
                                            LIABILITIES (continued)</b></td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -21.25pt"></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="text-decoration:underline">Liability-classified warrants
</span>(continued)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.05pt">Section 3b resulted
in an adjustment to the warrants exercise price on change of existing equity-linked instruments which did not meet the definition of
a down-round feature as it was based on neither the sale nor the issuance of stock or a financial instrument. Instead, it was based on
the modification of existing instruments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Accordingly, as the adjustment pursuant
to section 3b of the warrant agreement was not a down-round feature as defined by ASU 2017-11, the warrants failed to meet the requirements
of ASC 815 of a fixed shares for fixed monetary amount and accordingly were not considered as Indexed to the Company&#8217;s own stock
pursuant to ASC 815.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company has amended the warrant
agreements to remove section 3b. Additionally, the warrants exercise price is modified to make it fixed at $2.7364 per common share.
As a result of these changes to the warrant agreement, the warrants are eligible to pass the fixed shares for fixed monetary amount test
and considered as indexed to the Company&#8217;s own stock pursuant to ASC 815 and qualify for equity classification.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="text-decoration:underline">Equity-classified warrants
</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On March 12, 2024, March 26, 2024
and May 1, 2024, in connection with the settlement of debt (Note 5 and Note 7), the Company issued Tranche 12, 13 and 17 convertible
promissory notes to arms-length parties (Note 8) and common share purchase warrants to the debt holders. At inception, these warrants
were assessed to meet the equity classification requirements and fair value of the warrants of $416,763 was recorded as a component of
additional paid-in capital.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In connection with the issuance of
Tranche 15 and Tranche 18 convertible promissory notes to arms-length parties (Note 8), the Company issued common share purchase warrants
to the noteholders. At inception, these warrants were assessed to meet the equity classification requirements and fair value of the warrants
of $674,034 was recorded as a component of additional paid-in capital.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>9.</b></td><td style="text-align: justify"><b>WARRANTS AND DERIVATIVE WARRANT
                                            LIABILITIES (continued)</b></td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 21.3pt">The following table provides
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 21.3pt">&#160;</p><div>

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    <td style="padding-bottom: 1.5pt; font-weight: bold"><sup>&#160;</sup></td>
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    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Expiry date</td></tr>
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    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">&#160;</td>
    <td>&#160;</td>
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    <td><sup>&#160;</sup></td>
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    <td>&#160;</td>
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td style="width: 9%; text-align: right">950,153</td>
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    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">September 30, 2023</td>
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    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">73,088</td>
    <td style="text-align: left"><sup>(1)</sup></td>
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">2.7364</td>
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    <td style="text-align: left">&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">133,020</td>
    <td style="text-align: left"><sup>(1)</sup></td>
    <td>&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">2.7364</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">115,892</td>
    <td style="text-align: left"><sup>(1)</sup></td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: right">2.7364</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 5.4pt">April 25, 2029</td></tr>
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    <td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td>
    <td style="font-weight: bold; text-align: right">4,759,183</td>
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    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">&#160;</td></tr>
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    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 5.4pt">&#160;</td></tr>
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    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 5.4pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
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    <td>&#160;</td>
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    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
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    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left"><sup>&#160;</sup></td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">2.7364</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">April 14, 2029</td></tr>
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    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">27,857</td>
    <td style="text-align: left"><sup>&#160;</sup></td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">27,857</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">2.7364</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
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    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">7,309</td>
    <td style="padding-bottom: 1.5pt; text-align: left"><sup>&#160;</sup></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">7,309</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: right">2.7364</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 5.4pt">May 28, 2029</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Equity-classified warrants issued</td>
    <td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td>
    <td style="font-weight: bold; text-align: right">898,922</td>
    <td style="font-weight: bold; text-align: left"><sup>&#160;</sup></td>
    <td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td>
    <td style="font-weight: bold; text-align: right">898,922</td>
    <td style="font-weight: bold; text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Liability-classified warrants reclassified
    to equity-classified warrants</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">4,759,183</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><sup>&#160;</sup></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">4,759,183</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 5.4pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left; padding-bottom: 4pt">Balance of equity-classified
    warrants as of June 30, 2024</td>
    <td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">5,658,105</td>
    <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><sup>&#160;</sup></td>
    <td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">5,658,105</td>
    <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: right">&#160;</td>
    <td style="padding-bottom: 2.5pt; text-align: right">&#160;</td>
    <td style="padding-bottom: 2.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 4pt; padding-left: 8.5pt">&#160;</td></tr>
  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"><sup>(1)</sup></td><td style="text-align: justify">In June 2024, the Company, with the consent of warrant holders,
                                            amended the terms of the common share purchase warrant to be indexed to the Company&#8217;s
                                            equity. As a result, these warrants are reclassified from liability-classified warrants to
                                            equity-classified warrants and recorded as a component of additional paid-in capital</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&#160;</p><div>


</div><!-- Field: Page; Sequence: 218; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->63<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>10.</b></td><td style="text-align: justify"><b>FINANCIAL LIABILITY CONVERTIBLE
                                            TO EQUITY</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended June 30, 2023,
the Company issued $2,005,213 Conversion of Simple Agreements for Future Equity (&#8220;SAFE&#8221;) for cash. Continuity of the SAFE
transactions for the periods are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Amount</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">Balance, July 1, 2022</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 88%; text-align: justify">Issued</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">2,005,213</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">Foreign exchange adjustment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(45,243</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify; padding-bottom: 1.5pt">Changes in fair value</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">740,030</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: justify">Balance, June 30, 2023</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">2,700,000</td><td style="font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">Foreign exchange adjustment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(92,543</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify; padding-bottom: 1.5pt">Changes in fair value</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">592,543</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: justify; padding-bottom: 4pt">Balance, June
    30, 2024</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">3,200,000</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended June 30, 2024,
the Company expensed nil (2023 &#8211; $23,009, 2022 &#8211; $17,496) in transaction costs in relation to issuance of SAFEs in the consolidated
statements of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The SAFEs are recorded as a liability
measured at fair value at inception and subsequently carried at fair value with changes in fair value for June 30, 2024 of $592,543 (2023
&#8211; $740,030, 2022 &#8211; $8,935,049) recorded in the statements of operatio<span style="font-family: Times New Roman, Times, Serif">ns.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">The
SAFEs may be converted or paid in cash on the occurrence of the following events/transactions before the maturity date:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -21.25pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 35.45pt"/><td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">In
                                            the event of equity financing, the Company will automatically issue to the SAFE holders a
                                            number of SAFE shares equal to the quotient obtained by dividing (i) the sum of the SAFE
                                            proceeds and the return amount (which is an amount determined by applying a rate of return
                                            of 8% per annum, on a non-compounding basis, on the SAFE Proceeds as calculated from the
                                            issue date to, but excluding, the date of expiration or termination of the SAFEs) by (ii)
                                            the conversion Price.</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -21.25pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 35.45pt"/><td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">In
                                            the event of liquidation, SAFE holders at their option have a right to receive either (i)
                                            cash payment equivalent to the respective SAFE proceeds or (ii) automatically receive common
                                            shares (in the case of change of control) or listed securities (in the case of a Public company
                                            event), as applicable, that is equal to the quotient obtained by dividing (i) the sum of
                                            the SAFE proceeds and the return amount (which is an amount determined by applying a rate
                                            of return of 8% per annum, on a non-compounding basis, on the SAFE Proceeds as calculated
                                            from the issue date to, but excluding, the date of expiration or termination of the SAFEs)
                                            by (ii) the liquidity price, if the SAFE holders fails to select the cash option.</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -21.25pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 35.45pt"/><td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">If
                                            there is a dissolution event, the SAFE holders at their option have a right to receive either
                                            (i) cash equivalent to the respective SAFE proceeds or (ii) automatically receive common
                                            shares that is equal to the quotient obtained by dividing (i) the sum of the SAFE proceeds
                                            and the return amount (which is an amount determined by applying a rate of return of 8% per
                                            annum, on a non-compounding basis, on the SAFE proceeds as calculated from t</span>he issue
                                            date to, but excluding, the date of expiration or termination of the SAFEs) by (ii) the dissolution
                                            price, if the SAFE holders fails to select the cash option.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -21.3pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -21.3pt"></p><div>

</div><!-- Field: Page; Sequence: 219; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->64<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -21.3pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>10.</b></td><td style="text-align: justify"><b>FINANCIAL LIABILITY CONVERTIBLE
                                            TO EQUITY (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">At maturity, the SAFE holders automatically
receive common shares of the Company that are equal to the quotient obtained by dividing (i) the sum of the SAFE proceeds and the return
amount (which is an amount determined by applying a rate of return of 8% per annum, on a non-compounding basis, on the SAFE proceeds
as calculated from the issue date to, but excluding, the date of expiration or termination of the SAFEs) by (ii) the maturity conversion
price.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The SAFEs are valued by management
at each measurement date based on the Company&#8217;s estimated enterprise value implied by the most comparable transaction and allocating
the value to each of the Company&#8217;s equity-linked instruments (preferred shares, SAFE agreements, convertible promissory notes,
share purchase warrants, stock options and common shares) based on their respective characteristics and rights. In arriving at the value
attributable to each instrument, the Company applies an option pricing model. The Company&#8217;s model values the preferred shares,
SAFEs, common shares, and stock options as call options on the Company&#8217;s equity value with exercise prices based on the conversion
options of the respective instruments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The model used for the valuation of
convertible promissory notes, share purchase warrants and SAFEs used the following assumptions as of June 30, 2024 and June 30, 2023,
including volatility, risk free rates and management&#8217;s best estimate of the expected time for the occurrence of a conversion event:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, <br/>
    2024</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, <br/>
    2023</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Annualized volatility</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center"><span style="font-size: 10pt">70% &#8211; 90%</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center"><span style="font-size: 10pt">70% &#8211; 90%</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Expected time to liquidity</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center"><span style="font-size: 10pt">0.5 &#8211; 1.5 year</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 70%; text-align: left">Dividend rate</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: center">&#160;</td><td style="width: 12%; text-align: center">0%</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: center">&#160;</td><td style="width: 12%; text-align: center">0%</td><td style="width: 1%; text-align: left"/></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Risk-free interest rate</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center">5.09%</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended June 30, 2024
and June 30, 2023, the common share price valuation estimate used for the SAFE valuation was $3.77 and $1.92, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>11.</b></td><td style="text-align: justify"><b>COMMITMENTS AND CONTINGENCIES</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">A summary of undiscounted liabilities
and future operating commitments as at June 30, 2024 are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Total</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td>
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                                            year</b></p></td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>2
                                            - 5 </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>years</b></p></td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Greater&#160;than <br/>
    5&#160;years</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 52%; text-align: left">Purchase obligations</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">1,611,548</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">1,469,431</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">142,117</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt"><span style="font-size: 10pt">Investment
    obligation <sup>(1)</sup></span></td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,000,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,000,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left; padding-bottom: 4pt">Total financial
    liabilities and commitments</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">2,611,548</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">2,469,431</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">142,117</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 14.15pt"><sup>(1)</sup></td><td style="text-align: justify">The Company entered into
                                            a strategic partnership arrangement with a third-party. As part of the agreement, the Company
                                            agree to invest an aggregate amount of $1,000,000 in the third-party upon a future financing
                                            and negotiation of terms that are agreed to by both parties during the term of the agreement.
                                            As at the date of these financial statements no such arrangement has been made.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->65<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif"><b>11.</b></span></td><td style="text-align: justify"><b>COMMITMENTS
                                            AND CONTINGENCIES (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.05pt">On June 30, 2023,
the Company signed a full surrender agreement with the Lessor (Note 4) of the Surrey manufacturing facility. Per the agreement, cash
consideration must be paid on or before the dates set forth in the agreement. In the event that the Company defaults on such payment
obligations, the Company will immediately have to pay the Lessor the full amount of all rent and other amounts, which would have otherwise
been payable by the Company during the term if the lease had not surrendered, less any cash consideration paid and any rent which the
Landlord recovers (or is reasonably expected to recover) from any replacement tenant(s) at the Premises over the balance of the initial
Term of the Lease. In circumstances where a replacement tenant has not yet been secured, then such rent will be estimated as of the date
of default by an appraiser, less any costs and expenses of such reletting, including brokerage fees, solicitor&#8217;s fees, tenant inducements
and of costs of alterations and repairs as may be necessary to relet the premises. On April 29, 2024 the Company requested payment deferment
of the 5th and 6<sup>th</sup> instalment payment due on March 1, 2024 and May 1, 2024 respectively to July 1, 2024. On June 6, 2024,
the Lessor agreed to further defer the payments due on July 1, 2024 to be paid on or before September 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.05pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.05pt">The Company met
the eligibility criteria under the Small Business Venture Capital Act (the &#8220;Act&#8221;) and was registered as an Eligible Business
Corporation (&#8220;EBC&#8221;) in 2018. Under the Act, the Company was approved to raise up to $10 million through the issuance of authorized
equity capital whereby the investing shareholders received up to 30% of the amount invested as a tax credit against their B.C. provincial
taxes. Under this program, should the Company be out of compliance with the Act during the required five-year investment hold period,
it would be contingently liable to repay any tax credits previously issued to investors. At the date of these financial statements, repayable
tax credits are approximately $0.9 million. Management believes the Company is compliant with all relevant terms of the Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.05pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>12.</b></td><td style="text-align: justify"><b>SHARE CAPITAL</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>a)</b></td><td style="text-align: justify"><b>Authorized</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The authorized share capital of the
Company consists of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">i.</td><td style="text-align: justify">An unlimited number of common shares (&#8220;common
                                            shares&#8221;) without par value; and</td></tr></table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">ii.</td><td style="text-align: justify">An unlimited number of Class Seed preferred
                                            shares, Class A preferred shares and Class B preferred shares (collectively, &#8220;preferred
                                            shares&#8221;) without par value, issuable in series.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>b)</b></td><td style="text-align: justify"><b>Issued and outstanding</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.7pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">i.</td><td style="text-align: justify">As at June 30, 2024, the Company had 12,324,504
                                            (June 30, 2023 &#8211; 11,829,386) common shares outstanding.</td></tr></table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">ii.</td><td style="text-align: justify">As at June 30, 2024 and June 30, 2023,
                                            the Company had 16,758,528 preferred shares outstanding.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="text-decoration:underline">Common shares transactions</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In the year ended June 30, 2024, the
Company issued 95,380 common shares with an estimated fair value of $260,999 (CAD$345,725) to partially settle a severance agreement
recorded in fiscal 2023 with a former executive. The remaining balance outstanding of $16,271 (Note 13) is included in accounts payable
and accrued liabilities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>12.</b></td><td style="text-align: justify"><b>SHARE CAPITAL (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Preferred shares transactions</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt; font-weight: bold; text-align: left">Preferred shares
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Preferred
                                            share outstanding</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>#</b></p></td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Amount,
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%; text-align: justify">Series 1 Class Seed Preferred</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">926,392</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">Series 2 Class Seed Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">477,117</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">143,836</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">Series 3 Class Seed Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,802,304</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">Series 4 Class Seed Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">157,381</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">102,754</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">Series 5 Class Seed Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">364,324</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">Series 6 Class Seed Preferred</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,113,885</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">Series 1 Class A Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,512,713</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">13,440,769</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">Series 2 Class A Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,578,780</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">29,841,488</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify; padding-bottom: 1.5pt">Series 2 Class B Preferred</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,627,211</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended June 30, 2024
and 2023, no preferred shares were issued.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"><span style="text-decoration:underline">Rights and privileges of preferred shareholders </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Preferred shareholders hold the option
to convert their preferred shares to common shares at any time based on a Conversion Price. The Conversion Price is initially equal to
the price of the first share issued in the preferred shares class. Thereafter the Conversion Price is symmetrically adjusted for common
share issuances to prevent anti-dilution. The anti-dilution clause maintains the relative rights of the common and preferred shareholders,
and its effect is that those relative rights remain the same immediately before and immediately after the issuance of common shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On any matter presented to the shareholders
of the Company for their action or consideration at any meeting of shareholders of the Company, each holder of outstanding preferred
shares is entitled to cast the number of votes equal to the number of whole common shares into which the preferred shares are convertible
as of the record date for determining shareholders entitled to vote on such matter.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company shall not declare, pay
or set aside any dividends on shares of any other class unless the holders of the preferred shares first receive, or simultaneously receive,
a dividend on each outstanding preferred share in an amount at least equal to the dividend received should the preferred shares be converted
to common shares as of the record date for determination of holders entitled to receive such dividend.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In the event of liquidation, dissolution
or winding up of the Company, before any payment shall be made to the holders of common shares by reason of their ownership thereof,
the holders of each series of preferred shares, shall be entitled to be paid out of the funds and assets available for distribution to
its shareholders, an amount per share equal to the greater of the original issue price for such series of preferred shares plus any dividends
declared but unpaid thereon, or such amount per share as would have been payable had all shares of such series of preferred shares been
converted into common shares.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>12.</b></td><td style="text-align: justify"><b>SHARE CAPITAL (continued)</b></td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>c)</b></td><td style="text-align: justify"><b>Stock options</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On August 30, 2017 (and amended on
June 24, 2021), the Board adopted a Stock Option Plan which provides that the Board may from time to time, in its discretion, grant to
directors, officers, employees, and consultants, non-transferable stock options to purchase common shares of the Company. As per the
terms of the Stock Option Plan, the requisite vesting period of the employees is generally four years.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The fair value of each stock option
grant is estimated on the date of grant using the Black-Scholes option pricing model. Refer to table below for additional information
regarding such assumptions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended June 30, 2024,
the Company issued nil (2023 &#8211;721,568) stock options. The following assumptions were used in determining the fair value of options
granted during the year ended June 30, 2023:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">A summary of the changes in the Company&#8217;s
stock options is as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">721,568</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(955,045</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,209,776</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>12.</b></td><td style="text-align: justify"><b>SHARE CAPITAL (continued)</b></td></tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><b>c)</b></td><td style="text-align: justify"><b>Stock options
                                            (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The aggregate intrinsic value of stock
options is calculated as the difference between the exercise price of the stock options and the fair value of the Company&#8217;s common
shares for all stock options that had exercise prices lower than the fair value of the Company&#8217;s common shares. The weighted average
grant date fair value per share of stock options granted during the years ended June 30, 2024, 2023 and 2022 was nil, CAD$2.21 and CAD$2.35,
respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following table summarizes the
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

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    <td style="text-align: left">$</td><td style="text-align: right">0.60</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">112,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-indent: -1.85pt; padding-left: 1.85pt">December 3, 2029</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">0.12</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">0.12</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">30,000</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">$</td><td style="text-align: right">0.12</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">220,086</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">0.12</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">0.20</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,493,422</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">0.20</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">0.20</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">0.20</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">$</td><td style="text-align: right">2.68</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -16.05pt; padding-left: 16.05pt">Weighted average
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    <td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; text-align: right">&#160;</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended June 30, 2024,
the Company expensed $123,168 (2023 &#8211; $1,472,634, 2022 &#8211; $2,323,294) related to the vesting of stock options.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Cash received by the Company upon
the exercise of stock options during the years ended June 30, 2024, 2023 and 2022 amounted to $61,155, $5,751 and $40,946, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;<b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>13.</b></td><td style="text-align: justify"><b>RELATED PARTY TRANSACTIONS</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Parties are considered to be related
if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party
in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common
significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction
when there is a transfer of resources or obligations between related parties.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As at June 30, 2024, $404,426 (2023
- $852,436) was due for remuneration payable to key management and included in accrued liabilities (Note 5).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>14.</b></td><td style="text-align: justify"><b>RESEARCH AND DEVELOPMENT, NET</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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in research and development expenses for the year ended June 30, 2024, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; text-indent: -7.1pt; padding-left: 8.85pt">Salaries and wages</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">5,098,938</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="text-align: left; text-indent: -7.1pt; padding-left: 8.85pt">Lab supplies and materials</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">549,305</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,135,769</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,700,997</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -7.1pt; padding-left: 8.85pt">Contractors and consultants</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">53,673</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,129,714</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,655,903</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -7.1pt; padding-left: 8.85pt">Stock-based compensation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">72,605</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">789,486</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,303,706</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -7.1pt; padding-left: 8.85pt">Rent and insurance</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">726,438</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,430,985</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">532,065</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -7.1pt; padding-left: 8.85pt">Travel, meals and entertainment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">54,919</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">234,877</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">413,848</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -7.1pt; padding-left: 8.85pt">Subscriptions and dues</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">52,891</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">252,328</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">335,762</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -7.1pt; padding-left: 8.85pt">General expenses and others</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">44,168</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">163,282</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">444,652</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -7.1pt; padding-left: 8.85pt"><span style="font-size: 10pt">Canadian Scientific Research
    &amp; Development tax credits <sup>(1)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,102,708</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(570,291</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -7.1pt; padding-left: 8.85pt">Industrial Research Assistance Program
    grant funding</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(102,825</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(56,879</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt; padding-left: 5.4pt">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">4,550,229</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
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</table><div>

</div><p style="margin: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><sup>(1)</sup></td><td style="text-align: justify">The Canadian Scientific Research &amp;
                                            Development (&#8220;SR&amp;ED&#8221;) tax credits is accounted as a reduction to the research
                                            and development costs above is made up of 2022 SR&amp;ED tax credit refund of $1,036,952
                                            (Note 7 &#8211; CAD$1,403,514) and 2023 SR&amp;ED tax credit refund of $1,065,756 (CAD$1,461,087)
                                            which were received in the three months period ended December 31, 2023</td>
</tr></table><div>

</div><p style="margin: 0">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>15.</b></td><td style="text-align: justify"><b>GENERAL AND ADMINISTRATIVE</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following amounts are included
in general and administrative expenses for the year ended June 30, 2024, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">1,595,844</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,283,259</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">310,725</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">58,765</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">558,204</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">159,760</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">286,444</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">339,713</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">142,690</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 2.5pt; text-indent: -30.6pt; padding-left: 30.6pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">4,296,231</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">6,792,996</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">4,778,250</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 14.15pt"><sup>(1)</sup></td><td>Rental income for the year ended June 30, 2024 is net of bad debt of $43,091 (2023
                                            and 2022 &#8211; nil)</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt; text-indent: -14.15pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>16.</b></td><td style="text-align: justify"><b>SALES AND MARKETING</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following amounts are included
in sales and marketing expenses for the year ended June 30, 2024, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
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    <td style="width: 64%; text-align: left; text-indent: -8.85pt; padding-left: 8.85pt">Marketing and promotion</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">390,305</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -8.85pt; padding-left: 8.85pt">Salaries and wages</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">456,216</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">793,209</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,270,935</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -8.85pt; padding-left: 8.85pt">Stock-based compensation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">15,471</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">190,301</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">8,500</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">98,889</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11,861</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -8.85pt; padding-left: 8.85pt">Rent and insurance</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">111,739</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">435,517</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">136,977</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt">General expenses and others</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,906</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">17,501</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">219,893</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt; text-indent: -30.6pt; padding-left: 30.6pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">986,137</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">2,747,792</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">4,417,165</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;<b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>17.</b></td><td style="text-align: justify"><b>ASSET AND RIGHT-OF-USE ASSET IMPAIRMENT</b></td></tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following amounts are included
in asset and right-of-use asset impairment for the year ended June 30, 2024, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>Impairment arising from sublease of 708 Powell:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; padding-left: 5.4pt">&#160;- Right-of-use asset (Note 4)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt">&#160;- Leasehold improvements (Note 4)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">48,050</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: right; padding-bottom: 1.5pt; padding-left: 5.4pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">223,447</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -8.85pt; padding-left: 8.85pt">Impairment arising from conditional surrender of leased
    Surrey manufacturing facility:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 5.4pt">&#160;- Right-of-use asset (Note 4)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">8,997,858</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt">&#160;- Construction in progress (Note 4)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">249,971</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; padding-left: 5.4pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,247,829</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 2.5pt; text-indent: -30.6pt; padding-left: 30.6pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">9,471,276</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On December 14, 2022, the Company
entered into conditional surrender agreement to surrender the leased manufacturing plant in Surrey due to change in corporate direction.
In the agreement, the Company surrenders the leased property to the Lessor, covenants the Lessor to use commercially reasonable efforts
to find a replacement tenant for the lease property and agreed that the Lessor can draw on the standby letter of credit but did not release
the Company of its lease obligation. As a result, the Company impaired the assets to its recoverable amount, $nil and recorded an asset
impairment of $9,247,829. Subsequent to the impairment, the Company continued to negotiate for surrender of the leased property, to secure
full release from all the obligation related to the leased and settlement of all amounts owing which resulted in net loss on termination
of lease of $3,080,828 for the year ended June 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>18.</b></td><td style="text-align: justify"><b>GAIN FROM RELEASE OF LEASE OBLIGATION</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On April 26, 2024, the Company entered
into an agreement with landlord of 708 Powell Street to terminate the lease, settle the amount owing and release Damon of all further
obligation and right to the leased property. As a result, the Company recorded a net gain on release of lease obligation of $42,297 in
the statements of operations for the year ended June 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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                                            30,<br/>
                                            2024</b></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left; padding-left: 1.4pt">Cash paid</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">36,582</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 1.4pt">Deposit forfeited</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">47,556</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -1.85pt; padding-left: 1.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">84,138</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -1.85pt; padding-left: 1.85pt">Amount owing forfeited (Note 5)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(76,854</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -1.85pt; padding-left: 1.85pt">Lease obligation released (Note 6)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(69,307</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -8.9pt; padding-left: 8.9pt">Net book value of right-of-use asset
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">19,726</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -30.6pt; padding-left: 30.6pt">Net gain on termination
    of lease</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">(42,297</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">)</td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 227; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->72<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
<tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif"><b>18.</b></span></td><td style="text-align: justify"><b>GAIN
                                            FROM RELEASE OF LEASE OBLIGATION (continued)</b></td></tr>
</table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.05pt">In 2023, the
Company signed a full surrender agreement with the Lessor to surrender the Surrey manufacturing facility and the surrender agreement
was effective as at June 30, 2023. Under this agreement, the Company reached a final and full settlement with the Lessor to fully surrender
the lease property, settling all outstanding amounts owing under the lease of Surrey manufacturing plant for a consideration made up
of the <span style="font-family: Times New Roman, Times, Serif">following:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.05pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 39.3pt"/><td style="width: 18pt"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">restricted
                                            cash deposit surrendered $1,100,248 (CAD$1,469,710), fully drawn as of June 30, 2023;</span></td></tr><tr style="vertical-align: top">
<td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
                                                                                                                                                                                                                                                       </table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 39.3pt"/><td style="width: 18pt"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">cash
                                            consideration of $566,465 (CAD$749,998) payable in 7 instalments over 1 year per table below;</span></td></tr><tr style="vertical-align: top">
<td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
                                                                                                                                                                                                                                                         </table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 39.3pt"/><td style="width: 18pt"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">issuance
                                            of $375,000 Tranche 5 convertible promissory notes (Note 8); and</span></td></tr><tr style="vertical-align: top">
<td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
                                                                                                                                                                                                                                </table><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 39.3pt"/><td style="width: 18pt"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">GST
                                            owing for tenant improvements.</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">The
Company has made all payments in Canadian dollars as per the payment schedule below:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Consideration amount</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold">Payment date</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">US$</td><td style="text-align: center; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">CAD$</td><td style="text-align: center; font-weight: bold">&#160;</td><td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 25%; text-indent: -1.85pt; padding-left: 1.85pt"><span style="font-size: 10pt">1<sup>st</sup> payment</span></td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">75,527</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">100,000</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="text-align: center; width: 50%; padding-left: 5.4pt">On or before September 19, 2023</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -1.85pt; padding-left: 1.85pt"><span style="font-size: 10pt">2<sup>nd</sup> payment</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">81,823</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">108,333</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">On or before September 19, 2023</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -1.85pt; padding-left: 1.85pt"><span style="font-size: 10pt">3<sup>rd</sup> payment</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">81,823</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">108,333</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">On or before November 1, 2023</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -1.85pt; padding-left: 1.85pt"><span style="font-size: 10pt">4<sup>th</sup> payment</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">81,823</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">108,333</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">On or before January 1, 2024</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -1.85pt; padding-left: 1.85pt"><span style="font-size: 10pt">5<sup>th</sup> payment</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">81,823</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">108,333</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">On or before March 1, 2024</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -1.85pt; padding-left: 1.85pt"><span style="font-size: 10pt">6<sup>th</sup> payment</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">81,823</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">108,333</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 5.4pt">On or before May 1, 2024</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; text-indent: -1.85pt; padding-left: 1.85pt"><span style="font-size: 10pt">7<sup>th</sup> payment</span></td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">81,823</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">108,333</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 5.4pt">On or before July 1, 2024</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -0.125in; padding-left: 0.125in">Total cash consideration</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">566,465</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">749,998</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 4pt; padding-left: 5.4pt">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As a result, for the year ended June
30, 2023, the Company recorded a gain of $6,167,001 from the final settlement and abandonment of the lease as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: right"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>Year
                                            ended </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>June
                                            30,<br/>
                                            2023</b></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>Settlement:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left; text-indent: -7.1pt; padding-left: 15.95pt">-&#160;&#160;Restricted cash paid</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">1,100,248</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -7.1pt; padding-left: 15.95pt">-&#160;&#160;Cash payable over 1 year</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">566,465</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -7.1pt; padding-left: 15.95pt">-&#160;&#160;Convertible promissory note issued, at fair
    value (Note 8)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">375,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -7.1pt; padding-left: 15.95pt">-&#160;&#160;GST on tenant improvements</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">185,529</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -1.85pt; padding-left: 1.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,227,242</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -1.85pt; padding-left: 1.85pt">Lease obligation released</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(8,208,714</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt">Amount owing on GST for tenant improvements</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(185,529</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left; text-indent: -30.6pt; padding-left: 30.6pt">Gain from release of lease obligation</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">(6,167,001</td><td style="font-weight: bold; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -8.9pt; padding-left: 8.9pt">Asset and right-of-use asset impairment
    for Surrey manufacturing facility (Note 17)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,247,829</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -30.6pt; padding-left: 30.6pt">Net loss on termination
    of lease</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">3,080,828</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Refer to Note 11 for further information
with respect to contingency in the event cash consideration is not paid on or before the dates set forth in the agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>


</div><!-- Field: Page; Sequence: 228; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->73<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"/><td style="width: 0.25in"><b>19.</b></td><td style="text-align: justify"><b>FINANCE EXPENSE</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">Finance expense includes the following
amounts for the year ended June 30, 2024, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: right">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; text-indent: -8.85pt; padding-left: 8.85pt">Financing fees (Note 8) and other</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">833,904</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">432,312</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">44,817</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -8.85pt; padding-left: 8.85pt">Interest on debt</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">162,758</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">173,632</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">13,794</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">2,320,751</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">512,183</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -8.85pt; padding-left: 8.85pt">Interest on finance lease (Note 6)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">9,499</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10,606</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">12,435</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -8.85pt; padding-left: 8.85pt">Accretion (Note 7)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11,058</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6,296</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -8.85pt; padding-left: 8.85pt">Interest Income</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(53,405</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(48,094</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt; padding-left: 5.4pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">3,273,507</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">1,091,697</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">77,342</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>



</div><p style="margin-top: 0; margin-bottom: 0"></p><div>


</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>20.</b></td><td style="text-align: justify"><b>INCOME TAXES</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">The disaggregation of the Company&#8217;s
Canadian and foreign pre-tax loss for the years ended June 30, 2024, 2023, and 2022 is as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-indent: -1.85pt; padding-left: 1.85pt">Canada</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">(30,831,794</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">(30,976,384</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">(34,150,575</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt; text-indent: -1.85pt; padding-left: 1.85pt">Foreign</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(3,136,454</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,036,225</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,585,535</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt; text-indent: -30.6pt; padding-left: 30.6pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">(33,968,248</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">(37,012,609</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">(36,736,110</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">)</td></tr>
  </table><div>






</div><p style="margin: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">The following is a reconciliation
between statutory income taxes and the income tax expense for year ended June 30, 2024, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; padding-bottom: 1.5pt; text-indent: -15.6pt; padding-left: 15.6pt">Loss for the period (100%
    in Canadian tax jurisdiction)</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">33,968,248</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">37,012,609</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">36,736,110</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -30.6pt; padding-left: 30.6pt">Tax recovery at statutory rate</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(9,172,000</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(9,994,000</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(9,919,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -30.6pt; padding-left: 30.6pt">Impact of permanent differences</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,622,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,608,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,249,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -30.6pt; padding-left: 30.6pt">SR&amp;ED and IRAP government assistance</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(327,000</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(209,000</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(158,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -30.6pt; padding-left: 30.6pt">Foreign exchange and other</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">452,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">506,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">109,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -30.6pt; padding-left: 30.6pt">Change in valuation allowance</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,425,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">8,089,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,719,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -30.6pt; padding-left: 30.6pt">Income tax expense</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -30.6pt; padding-left: 30.6pt">Combined federal and provincial rate</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">27</td><td style="padding-bottom: 2.5pt; text-align: left">%</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">27</td><td style="padding-bottom: 2.5pt; text-align: left">%</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">27</td><td style="padding-bottom: 2.5pt; text-align: left">%</td></tr>
  </table><div>




</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->74<!-- Field: /Sequence --></p></div><div>
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</div><p style="margin-top: 0; margin-bottom: 0">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><b>20.</b></td><td style="text-align: justify"><b>INCOME TAXES
                                            (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">The Company&#8217;s deferred tax
assets are as follows for the year end June 30, 2024, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,647,638</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">405,957</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -30.6pt; padding-left: 30.6pt">Total deferred tax assets</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-indent: -30.6pt; padding-left: 30.6pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -22pt; padding-left: 30.6pt">ROU asset</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(179,572</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(346,846</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(390,973</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -22pt; padding-left: 30.6pt">BC Proxy SR&amp;ED</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(20,194</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(16,461</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(24,518</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(208,182</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -30.6pt; padding-left: 30.6pt">Total deferred tax liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(21,385,046</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -30.6pt; padding-left: 30.6pt">Net Deferred Tax
    Assets (Liability)</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">ASC 740 additionally requires a
valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
After consideration of all of the information available, management believes that significant uncertainty exists with respect to future
realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended June 30, 2024 and
2023, the change in the valuation allowance was $3,425,000 and $8,089,000, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">The Company has unclaimed Canadian
SR&amp;ED expenditures of approximately $6,102,364 as at June 30, 2024 (2023 &#8211; $6,902,000, 2022 &#8211; $4,127,000), which can
be carried forward indefinitely to reduce future years&#8217; taxable income. The balance is included as a reduction to research and
development expense.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">The Company has also received approximately
$277,000 (over 2019, 2020, 2021, 2022 and 2023) in assistance from the Government of Canada through the Industrial Research Assistance
Program (&#8220;IRAP&#8221;) administered by the National Research Council of Canada.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">At June 30, 2024, the Company had
Canadian non-capital losses carry-forward of $58,606,697 (2023 &#8211; 48,138,000, 2022 &#8211; $27,831,000) which expires over 2037
through 2043, and a US net operating loss carry-forward of $6,357,899 (2023 &#8211; $9,020,000, 2022 &#8211; $2,571,000) which can be
carried forward subject to 80% of US federal tax income.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->75<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><b>20.</b></td><td style="text-align: justify"><b>INCOME TAXES
                                            (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">The amount and expiry date of deductible
temporary differences, unused tax losses and unused tax credits for which no deferred tax asset is recognized in the statement of financial
position are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Jurisdiction</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Expiry</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"/><td style="width: 0.25in"><b>21.</b></td><td style="text-align: justify"><b>SEGMENT REPORTING</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">ASC 280 - Segment Reporting establishes
standards for reporting information about operating segments on a basis consistent with internal organization reporting used by the Company&#8217;s
chief operating decision maker, our CEO, for making operating decisions and assessing performance as the source for determining the Company&#8217;s
reportable segments. The Company is pre-revenue and pre-production and operates as a single reportable operating segment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">The following table is our long-lived
assets information by geography as of June 30, 2024 and June 30, 2023:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">676,886</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -1.85pt; padding-left: 1.85pt">United States</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">461,534</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt; text-indent: -30.6pt; padding-left: 30.6pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">1,138,420</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">2,004,066</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 231; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->76<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>22.</b></span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FINANCIAL
    INSTRUMENTS AND RISK MANAGEMENT</b></span></td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in"><b>a)</b></td><td style="text-align: justify"><b>Fair value of financial assets
                                            and liabilities</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company reports all financial
assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Valuation techniques
used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative
guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value
hierarchy are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Level 1:	Inputs are quoted prices
(unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Level 2:	Inputs are observable,
unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets
or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the related assets or liabilities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Level 3:	Inputs are unobservable
inputs for the asset or liability. These financial instruments are measured using management&#8217;s best estimate of fair value, where
the inputs into the determination of fair value require significant management judgment or estimation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The level in the fair value hierarchy
within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value
measurement in its entirety.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">All financial instruments are initially
measured and recognized at fair value, and thereafter recognized at cost, or amortized cost; except for convertible notes, warrants and
SAFEs which are subsequently measured at fair value through the statements of operations. As at June 30, 2024 and June 30, 2023, the
carrying values of cash, prepaids, deposits and other receivables, long-term deposits, accounts payable and accrued liabilities, and
customer deposits approximate their respective fair values due to the short-term nature of these instruments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">At June 30, 2024 and June 30, 2023,
the Convertible Notes and SAFEs that are measured at fair value on a recurring basis are categorized as Level 3. For assets and liabilities
recognized at fair value on a recurring basis, the Company reassesses categorization to determine whether changes have occurred between
the hierarchy levels at the end of each reporting period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The fair value of these Level 3 financial
liabilities is determined using pricing models, discounted cash flow methodologies or similar techniques for which the determination
of fair value requires significant management judgment or estimation (see Note 10).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Areas of significant judgement are
the risk-free rate, volatility rate, dividend yield, term to liquidation, discount for lack of marketability, most recent financing rounds
and implied equity value per letter of intent.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">These valuations use assumptions and
estimates the Company believes would be made by a market participant in making the same valuation. The Company reassesses these assumptions
and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"/><td style="width: 0.25in"><b>22.</b></td><td><b>FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">A significant increase/decrease in
some of those unobservable inputs would result in a significantly higher/lower fair value measurement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended June 30, 2024,
the Company recognized fair value adjustments with respect to financial instruments categorized as Level 3 of $18,424,992 (2023 - $3,881,980,
2022 - $8,935,049) in the statements of operations as changes in fair value of financial liabilities. No amounts were recognized in other
comprehensive income as the changes in fair value due to credit risk were nominal.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">There were no transfers into or
out of the Level 3 hierarchy during the period ended. The table below presents the changes in Level 3 liabilities measured at fair value
on a recurring basis during the years ended June 30, 2024 and 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Foreign exchange</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(45,243</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,086,240</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Foreign exchange a</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(92,543</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">592,543</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">13,011,887</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,820,562</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in">Liability-classified warrant reclassified
    to equity-classified warrant</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,428,752</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; padding-bottom: 4pt; text-indent: -0.125in; padding-left: 0.125in">Balance, June 30, 2024</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">3,200,000</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">40,630,756</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>22.</b></td><td><b>FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><b>b)</b></td><td style="text-align: justify"><b>Risk management</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">The Company&#8217;s financial instruments
are exposed to certain financial risks, including credit risk, liquidity risk and market risk.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Liquidity risk</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">The Company monitors its cash balances
and cash invested to ensure there is sufficient liquidity to meet its financial obligations as they come due. Liquidity management is
comprised of regular analysis, monitoring, and review of forecasted and actual cash flows and managing operation and capital finding
requirements on a planning and projected basis. The Company&#8217;s accumulated deficit and expected future losses cast substantial doubt
upon the Company&#8217;s ability to continue as a going concern (Note 1).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Market risk </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">Market risk is the risk of loss
that may arise from changes in market factors such as foreign exchange rates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Foreign currency risk</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">The Company&#8217;s lease liabilities
and various operating expenses on the financial statements are denominated in Canadian dollars, and therefore are exposed to fluctuations
in foreign currency exchange rates. The Company evaluated the exposure to foreign currency risk and concluded that it is not material.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"/><td style="width: 0.25in"><b>23.</b></td><td style="text-align: justify"><b>SUPPLEMENTAL CASH FLOW INFORMATION</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">Cash and restricted cash comprise
of the followings:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%">Cash</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Restricted cash</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"/><td style="width: 0.25in"><b>23.</b></td><td><b>SUPPLEMENTAL CASH FLOW INFORMATION (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">Summary of non-cash investing and
financing transactions for the year ended June 30, 2024, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; text-indent: -0.125in; padding-left: 0.125in">SAFEs converted to preferred shares (Note
    10)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">43,389,091</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Common shares issued for services (Note 12(b))</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">368,878</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">75,566</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Operating lease capitalized</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">9,865,904</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,123,630</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Convertible promissory notes issued for settlement of
    lease (Note 8 and Note 18)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">375,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Common shares issued for settlement of amount owing for
    severance payment (Note 12(b))</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">260,999</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Convertible promissory notes issued for settlement of
    Promissory notes (Note 7 and Note 8)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">775,208</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Convertible promissory notes issued for settlement of
    director fees owing (Note 5 and Note 8)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">164,619</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Promissory notes issued in settlement of amount owing
    (Note 7)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">542,753</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Reclassification of liability-classified warrants to equity
    (Note 9)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6,428,752</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  </table><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>24.</b></td><td style="text-align: justify"><b>SUBSEQUENT EVENTS</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">In addition to subsequent events
disclosed elsewhere, the following events occurred after June 30, 2024, up to the date these financial statements were issued :</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">i.</td><td style="text-align: justify">On July 3, 2024, the Company issued additional
                                            senior secured promissory note in the aggregate amount of $396,000 (up to an aggregate principal
                                            amount of $1,000,000) with interest rate at 10.0% per annum in favour of Grafiti Holding
                                            Inc (Note 7).</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">ii.</td><td style="text-align: justify">On July 20, 2024, the Company secured
                                            $250,000 in funding from certain investors via issuance of convertible promissory notes with
                                            a valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on
                                            maturity, July 19, 2025. These convertible promissory notes holders were also issued 91,361
                                            common share purchase warrants to subscribe for, and purchase of the Company common shares
                                            at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the
                                            diluted capitalization at closing date. The holder of the common share warrants can exercise
                                            the warrant either fully or partially at any time from issuance date until its expiry, 5
                                            years from issuance date.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">iii.</td><td style="text-align: justify">On July 22, 2024, the Company secured
                                            $100,000 in funding from certain investors via issuance of convertible promissory notes with
                                            a valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on
                                            maturity, July 21, 2025. These convertible promissory notes holders were also issued 36,544
                                            common share purchase warrants to subscribe for, and purchase of the Company common shares
                                            at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the
                                            diluted capitalization at closing date. The holder of the common share warrants can exercise
                                            the warrant either fully or partially at any time from issuance date until its expiry, 5
                                            years from issuance date.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-indent: 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-indent: 0.25in; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-indent: 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-indent: 0.25in; text-align: justify"></p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0"/><td style="width: 0.25in"><b>24.</b></td><td><b>SUBSEQUENT EVENTS (continued)</b></td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">iv.</td><td style="text-align: justify">On July 30, 2024, the Company secured
                                            $20,000 in funding from certain investors via issuance of convertible promissory notes with
                                            a valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on
                                            maturity, July 29, 2025. These convertible promissory notes holders were also issued 7,309
                                            common share purchase warrants to subscribe for, and purchase of the Company common shares
                                            at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the
                                            diluted capitalization at closing date. The holder of the common share warrants can exercise
                                            the warrant either fully or partially at any time from issuance date until its expiry, 5
                                            years from issuance date.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">v.</td><td style="text-align: justify">On August 5 2024, the Company issued
                                            promissory note to arms-length parties with principal amount of $362,476 (CAD$500,000) secured
                                            against future SR&amp;ED tax credit refund expected to be received from year-end tax returns
                                            for 2024 submitted to CRA. The loan accrues interest at a rate of 3% per month and matures
                                            on or before November 15, 2024.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">vi.</td><td style="text-align: justify">On August 11, 2024, the Company issued
                                            another promissory note to arms-length parties with principal amount of $362,476 (CAD$500,000)
                                            secured against substantially all of the assets of the Company and rank pari passu with the
                                            promissory note issued on August 6, 2024. The loan accrues interest at a rate of 3% per month
                                            and matures on or before November 15, 2024.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
  <tr style="vertical-align: top">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">vii.</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On August
    30, 2024 the Company secured 6 convertible promissory notes with a valuation cap of $125,000,000 and interest rate of 12% per annum,
    payable in arrears on maturity, August 29, 2025. $185,000 has been received from 5 of the investors by August 30, 2024. The 5 convertible
    promissory note holders were issued 67,606 common share purchase warrants to subscribe for, and purchase of the Company common shares
    at the exercise price equal to the quotient of the valuation capitalization of $125,000,000 and diluted capitalization at closing
    date. The holder of the common share warrants can exercise the warrant either fully or partially at any time from the issuance until
    its expiry, 5 years from issuance date. To date the sixth investor has yet to fund the convertible promissory note of $500,000. This
    investor will be able to receive 182,721 common share purchase warrants at the time the note is funded.</span></td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">viii.</td><td style="text-align: justify">On August 28, 2024 the Company entered
                                            into an amendment to the letter of agreement amending certain terms in the original engagement
                                            agreement (&#8220;Agreement&#8221;) dated September 25, 2023. In the amended agreement, in
                                            lieu of the compensation described in Section 3 of the Agreement, Peikin, as assignee of
                                            Joseph Gunnar, shall receive from the Company a one-time fee of $1,000,000 in cash due and
                                            payable on the thirteen (13) month anniversary of the closing (the &#8220;Closing&#8221;)
                                            of the reverse merger; and the Company shall also issue to Peikin, as assignee of Joseph
                                            Gunnar, the following amounts, any of which may be paid in securities (i.e., common stock
                                            of the post-merger Damon public company), with each issuance further made pursuant to a resale
                                            registration statement to be filed within (10) days of each payment date based on the payment
                                            schedule below:</td></tr></table><div>

</div><p style="text-indent: 0.25in; margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">(a)</td><td style="text-align: justify">$600,000 on the 90-day anniversary of
                                            the Closing;</td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">(b)</td><td style="text-align: justify">$400,000 on the 180-day anniversary of
                                            the Closing; and</td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">(c)</td><td style="text-align: justify">$300,000 on the 270-day anniversary of
                                            the Closing.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify; text-indent: -21.8pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0in">The total of $2,300,000,
of which up to $1,300,000 may potentially be paid in securities as set forth above to Peikin shall fully satisfy all obligations of the
Company to Joseph Gunnar, which obligations Joseph Gunnar has assigned to Peikin. The number of shares to calculate the USD value on
each of the three (3) issuances shall be calculated based on the Nasdaq Market Price, which is the lower of the consolidated closing
bid price for the Business Day immediately preceding each date that any one (1) of the three (3) issuances are due and payable OR the
average of the consolidated closing bid price of the post-merger Damon public company&#8217;s common stock for the five (5) trading days
immediately preceding each date that any one (1) of the three (3) issuances are due and payable. Joseph Gunnar and Peikin, each respectively,
and collectively, reserve all rights with respect to compensation described in Section 3 of the Agreement if any one or more of such
issuances/remittances are not timely made.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify; text-indent: -21.8pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
  <tr style="vertical-align: top">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ix.</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsequent
    to the year end, the SAFEs issued and outstanding (Note 10) matured and were converted to 1,437,002 Damon common shares the per the
    terms of the agreement.</span></td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify; text-indent: -21.8pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left">x.</td><td style="text-align: justify">On September 25, 2024, the Company amended the senior secured
promissory note dated June 26, 2024 (Note 7) increasing the maximum aggregate principal amount of the note from $1,000,000 to $1,150,000.
On the same date, the Company drew down an additional $200,000 on the note.</td>
</tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><div><a id="F_015"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b> DAMON INC. (FORMERLY GRAFITI HOLDING INC.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>CONDENSED CONSOLIDATED BALANCE SHEETS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">As of<br/> September&#160;30,<br/> 2024</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">As of<br/> June 30,<br/> 2024</td>
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  <tr style="vertical-align: bottom">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td colspan="2">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2">&#160;</td>
    <td>&#160;</td></tr>
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    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td>
    <td>&#160;</td>
    <td colspan="2">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2">&#160;</td>
    <td>&#160;</td></tr>
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    <td>&#160;</td>
    <td colspan="2">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2">&#160;</td>
    <td>&#160;</td></tr>
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    <td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
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    <td style="width: 1%; text-align: left">&#160;</td></tr>
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Other current assets</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Total Current Assets</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Property and equipment, net</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentNet" scale="0" unitRef="usd" id="ixv-49329">2,392</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Other assets</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c7" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssetsNoncurrent" scale="0" unitRef="usd" id="ixv-49330">265</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssetsNoncurrent" scale="0" unitRef="usd" id="ixv-49331">251</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left; padding-bottom: 4pt">Total Assets</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Assets" scale="0" unitRef="usd" id="ixv-49333">1,694,586</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Liabilities and Stockholders&#8217; Deficit</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Current Liabilities</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Accounts payable</td>
    <td>&#160;</td>
    <td style="text-align: left">$</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c7" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableCurrent" scale="0" unitRef="usd" id="ixv-49334">972,125</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">$</td>
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    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Accrued liabilities</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Deferred revenue</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Total Current Liabilities</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesCurrent" scale="0" unitRef="usd" id="ixv-49341">644,999</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Long Term Liabilities</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Long term debt, net</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebt" scale="0" unitRef="usd" id="ixv-49343">1,506,561</ix:nonFraction></td>
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    <td style="text-align: right">&#160;</td>
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    <td>&#160;</td>
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    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
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    <td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these condensed consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 237; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->82<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="F_016"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b> DAMON INC. (FORMERLY GRAFITI HOLDING INC.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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 September 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
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    <td>&#160;</td><td>&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these condensed consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><div><a id="F_017"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b> DAMON INC. (FORMERLY GRAFITI HOLDING INC.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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 September 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="6" style="text-align: center">(Unaudited)</td><td>&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these condensed consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="F_018"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b> DAMON INC. (FORMERLY GRAFITI HOLDING INC.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS&#8217; EQUITY (DEFICIT)<br/>
 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>(UNAUDITED)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; padding-bottom: 4pt">Balance - September 30, 2024</td><td style="padding-bottom: 4pt">&#160;</td>
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  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these condensed consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->85<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="F_019"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b> DAMON INC. (FORMERLY GRAFITI HOLDING INC.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Three Months Ended</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>September 30,</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="6" style="text-align: center">(Unaudited)</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Cash Flows (Used In) Provided by Operating Activities</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Net loss</td><td style="width: 1%">&#160;</td>
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    <td style="text-align: left">Adjustment to reconcile net loss to net cash used in operating activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-align: left">Depreciation and amortization</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Amortization of original issue discount</td><td>&#160;</td>
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    <td style="text-align: left">Accrued interest income</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-123">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accrued interest expense</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="dmn:IncreaseAndDecreaseInAccruedInterestExpense" scale="0" unitRef="usd" id="ixv-49443">50,405</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-124">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Accrued monitoring fee expense</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="dmn:IncreaseAndDecreaseInAccruedMonitoringFeeExpense" scale="0" unitRef="usd" id="ixv-49444">35,577</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-125">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Changes in operating assets and liabilities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsReceivable" scale="0" unitRef="usd" id="ixv-49445">23,541</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets" scale="0" unitRef="usd" id="ixv-49447">3,068</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-align: left">Accounts payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsPayable" scale="0" unitRef="usd" id="ixv-49449">528,078</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-align: left">Accrued liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccruedLiabilities" scale="0" sign="-" unitRef="usd" id="ixv-49451">9,058</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Deferred revenue</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInDeferredRevenue" scale="0" sign="-" unitRef="usd" id="ixv-49453">1,288</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Net Cash (Used In) Provided by Operating Activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" sign="-" unitRef="usd" id="ixv-49455">799,535</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c13" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" unitRef="usd" id="ixv-49456">57,285</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Cash Flows Used in Investing Activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Loan to Damon Motors</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireLoansReceivable" scale="0" unitRef="usd" id="ixv-49457">596,000</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-126">&#8212;</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left">Net Cash Used in Investing Activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd" id="ixv-49458">596,000</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-127">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left">Cash From Financing Activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Proceeds from long term debt</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromIssuanceOfLongTermDebt" scale="0" unitRef="usd" id="ixv-49459">350,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-128">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Cash received from exercise of stock options</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromStockOptionsExercised" scale="0" unitRef="usd" id="ixv-49460">64,335</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-129">&#8212;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">Cash paid for:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these condensed consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="F_020"></a></div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b> DAMON INC. (FORMERLY GRAFITI HOLDING INC.)<br/>
 NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS<br/>
 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_NatureOfOperations-c0_cont_1" escape="true" name="us-gaap:NatureOfOperations" id="ixv-38525"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 1 - Organization and Nature of Business</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Damon Inc. (formerly known as Grafiti Holding
Inc. (&#8220;Grafiti Holding&#8221;)) (collectively with its subsidiaries, as appropriate, &#8220;Damon&#8221;, the &#8220;Company,&#8221;
&#8220;we,&#8221; &#8220;us&#8221; or &#8220;our&#8221;) was incorporated in British Columbia, Canada on October 17, 2023.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Grafiti Limited (formerly known as &#8220;Inpixon
Limited&#8221;) was incorporated in England and Wales on May 13, 2020. Grafiti Limited provides specialized scientific software products
and services for the environmental sciences, life sciences, behavioral sciences, medical research and engineering domains. Grafiti Limited
provides effective solutions to the scientific and engineering community to compress the time intensive process of data analysis and presentation,
thus enhancing productivity. Users of Grafiti Limited&#8217;s products include government organizations, academic institutions and leading
corporations. Grafiti Limited&#8217;s headquarters are located in Slough, United Kingdom, and operations for Grafiti Limited are primarily
performed in the United Kingdom.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On October 23, 2023, a Business Combination Agreement
(as amended by the First Amendment to the Business Combination Agreement dated June 18, 2024 and the Second Amendment to the Business
Combination Agreement dated September 26, 2024, the &#8220;Damon Business Combination Agreement&#8221;) was entered into by and among
XTI Aerospace Inc., formerly known as &#8220;Inpixon&#8221; (&#8220;Inpixon,&#8221; or &#8220;Parent&#8221;), the Company, 1444842 B.C.
LTD (&#8220;Amalco Sub&#8221;), and Damon Motors, Inc. (&#8220;Damon Motors&#8221;), pursuant to which Damon Motors will amalgamate with
Amalco Sub, a British Columbia corporation and a wholly-owned subsidiary of the Company, with Damon Motors continuing as the surviving
entity and a wholly-owned subsidiary of the Company (the &#8220;Business Combination&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Additionally, pursuant to a Separation and Distribution
Agreement, dated October 23, 2023, between Inpixon and the Company, Inpixon contributed the assets and liabilities of Grafiti Limited,
a wholly owned subsidiary of Inpixon, to the Company, the then Inpixon wholly owned subsidiary. As a result, the Company became the parent
non-operating holding company of Grafiti Limited. In connection with the spin-off of the Company from Inpixon as contemplated by the Business
Combination Agreement (&#8220;Grafiti Holding Spin-off&#8221;), on December 27, 2023 (the &#8220;record date&#8221;), Inpixon transferred
the Company&#8217;s common shares to a newly-created liquidating trust, titled the Grafiti Holding Inc. Liquidating Trust (the &#8220;Trust&#8221;),
which holds the Company&#8217;s common shares for the benefit of the holders of Inpixon common stock, preferred stock and those outstanding
warrants that are contractually entitled to participate in the distribution of the Company&#8217;s common shares, on a pro rata basis
as of the record date (the &#8220;participating Inpixon securityholders&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 26, 2023, pursuant to the Separation and Distribution
Agreement, Grafiti Limited was assigned by Inpixon to the Company. The Company consolidates Grafiti Limited via the voting interest model,
as Grafiti Limited is wholly owned by the Company. This transaction between entities under common control resulted in a change in reporting
entity and required retrospective combination of the entities for all periods presented, as if the combination had been in effect since
the inception of common control. Accordingly, the financial statements of the Company reflect the accounting of the combined acquired
subsidiary at historical carrying values except that equity reflects the equity of the Company. This change in reporting entity did not
impact net income for the periods presented. Pursuant to a Liquidating Trust Agreement, dated December 27, 2023, among Inpixon, the Company
and the initial trustee of the Trust, the Company common shares were to be held by the Trust until the registration statement on Form
10-12B filed for the spin-off (the &#8220;Registration Statement&#8221;) had been declared effective by the Securities and Exchange Commission
(the &#8220;SEC&#8221;). Promptly following the effective time of the Registration Statement, the Trust will deliver the Company&#8217;s
common shares to the participating Inpixon security holders, as beneficiaries of the Trust, pro rata in accordance with their ownership
of shares or underlying shares of Inpixon common stock as of the record date.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 12, 2024, the Trust shares were delivered
to participating Parent securityholders, and on November 13, 2024, Damon Motors and Amalco Sub amalgamated to continue as a wholly owned
subsidiary of the Company (the &#8220;Amalgamation&#8221;). Following the Amalgamation, the Company was renamed &#8220;Damon Inc.&#8221;
(also referred to herein as the &#8220;combined company&#8221;). The common shares of the combined company are listed on the Nasdaq Global
Market under the ticker symbol &#8220;DMN&#8221;. The Company incurred $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationAcquisitionRelatedCosts" scale="0" unitRef="usd" id="ixv-49472">1,085,297</ix:nonFraction> of acquisition related costs related to the Damon Business
Combination Agreement during the three months ended September 30, 2024. These costs are included in the acquisition-related costs line
in the condensed consolidated statements of operations. See Note 14.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->87<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_NatureOfOperations-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying condensed consolidated financial
statements of the Company, show the historical financial position, results of operations, changes in stockholders&#8217; deficit and cash
flows of the Company. Prior to December 27, 2023, the Company operated as a segment of Inpixon and not as a separate entity. The operating
results of the Company prior to December 27, 2023 have been specifically identified by Inpixon&#8217;s management based on the Company&#8217;s
existing divisional organization and are presented on a carve-out basis. The historical costs and expenses reflected in our condensed
consolidated financial statements prior to December 27, 2023 include an allocation by time spent for certain corporate and shared service
functions. See Note 11 for further additional information regarding the Investments by Inpixon prior to December 27, 2023.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management believes the assumptions underlying
our condensed consolidated financial statements are reasonable but may not necessarily be indicative of the costs that would have incurred
if the Company had been operated on a standalone basis for the entire periods presented. Actual costs that would have been incurred if
we had operated as a standalone company for the entirety of the periods presented would depend on multiple factors, including organizational
structure and strategic decisions made in various areas, including information technology and infrastructure. The Company also may incur
additional costs associated with being a standalone, publicly listed company that were not included in the expense allocations, prior
to December 27, 2023, and therefore, would result in additional costs that are not reflected in our historical results of operations,
financial position and cash flows.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:BusinessDescriptionAndBasisOfPresentationTextBlock" id="ixv-38571"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 2 - Basis of Presentation</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying unaudited condensed consolidated
financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States
of America (&#8220;GAAP&#8221;), for interim financial information and the rules and regulations of the SEC. Accordingly, they do not
include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Interim results for the three
months ended September 30, 2024 are not necessarily indicative of the results for the full year ending June 30, 2025. These interim unaudited
condensed consolidated financial statements should be read in conjunction with the Company&#8217;s audited consolidated financial statements
and notes for the years ended June 30, 2024, 2023 and 2022 included in our filings with the SEC.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_1" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock" id="ixv-38581"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 3 - Summary of Significant Accounting
Policies</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<ix:nonNumeric contextRef="c0" continuedAt="dmn_LiquidityAndGoingConcernPolicyTextBlock-c0_cont_1" escape="true" name="dmn:LiquidityAndGoingConcernPolicyTextBlock" id="ixv-38586"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Liquidity and Going Concern</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="dmn_LiquidityAndGoingConcernPolicyTextBlock-c0_cont_2" id="dmn_LiquidityAndGoingConcernPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying condensed consolidated financial
statements of the Company have been prepared assuming the Company will continue as a going concern in accordance with U.S. GAAP. The going
concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are
issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="dmn_LiquidityAndGoingConcernPolicyTextBlock-c0_cont_3" id="dmn_LiquidityAndGoingConcernPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September&#160;30, 2024, the Company has
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Company was part of Inpixon group of companies prior to December 27, 2023, the Company was dependent upon Inpixon for all of its working
capital and financing requirements as Inpixon uses a centralized approach to cash management and financing of its operations. This arrangement
is not reflective of the way the Company would have financed its operations had the Company been a standalone public company during the
periods presented. Prior to December 27, 2023, financial transactions relating to the Company are accounted for through Stockholders&#8217;
Equity (Deficit). Accordingly, none of Inpixon&#8217;s cash, cash equivalents, or debt at the corporate level have been assigned to the
Company in the condensed consolidated financial statements. As a result of the Grafiti Holding Spin-off, the Company will no longer participate
in Inpixon&#8217;s corporate-wide cash management and financing approach, and therefore the Company&#8217;s ability to fund operating
needs will depend on the Company&#8217;s ability to generate positive cash flows from operations, and on the Company&#8217;s ability to
obtain debt financing on acceptable terms or to issue additional equity or equity-linked securities as needed.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 243; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_2" id="_SignificantAccountingPoliciesTextBlock-c0_cont_1"><ix:continuation continuedAt="dmn_LiquidityAndGoingConcernPolicyTextBlock-c0_cont_4" id="dmn_LiquidityAndGoingConcernPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company cannot assure you that we will ever
earn revenues sufficient to support our operations, or that we will ever be profitable. In order to continue our operations, the Company
supplemented the revenues earned with funding from Inpixon and other third parties. The adverse conditions detailed above indicate material
uncertainties that cast substantial doubt upon the Company&#8217;s ability to continue as a going concern within one year after the financial
statement issuance date.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="dmn_LiquidityAndGoingConcernPolicyTextBlock-c0_cont_5" id="dmn_LiquidityAndGoingConcernPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">When substantial doubt exists, management evaluates
whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company&#8217;s ability to continue as
a going concern. The mitigating effect of management&#8217;s plans, however, is only considered if both (1) it is probable that the plans
will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the
plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity&#8217;s ability
to continue as a going concern within one year after the date that the financial statements are issued.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="dmn_LiquidityAndGoingConcernPolicyTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management&#8217;s plans to address the uncertainty that the Company
will continue as a going concern include the business combination that occurred on November 13, 2024 as described in Note 1 above as well
as obtaining associated debt and equity financing. On November 13, 2024, the Company secured a commitment for additional financing in
the aggregate amount of $<ix:nonFraction contextRef="c141" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsOfFinancingCosts" scale="0" unitRef="usd" id="ixv-49477">13,000,000</ix:nonFraction> under the November 2024 Debt Financing, and on November 20, 2024 the remaining $<ix:nonFraction contextRef="c142" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EscrowDeposit" scale="0" unitRef="usd" id="ixv-49478">3,150,000</ix:nonFraction> of the funds
placed in escrow under the Streeterville Note (as defined below) were released to the Company which has increased the Company&#8217;s
available source of funding and, accordingly, it is expected that the Company will have sufficient working capital and available funds
to continue operations for at least twelve (12) months following the date these financial statements are issued.</p></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_UseOfEstimates-c0_cont_1" escape="true" name="us-gaap:UseOfEstimates" id="ixv-38629"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Use of Estimates</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_UseOfEstimates-c0_cont_2" id="_UseOfEstimates-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
each of the reporting periods. Actual results could differ from those estimates. The Company&#8217;s significant estimates consist of:</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_UseOfEstimates-c0_cont_3" id="_UseOfEstimates-c0_cont_2"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the allowance for credit losses;</td></tr></table></ix:continuation>

<p style="margin-top: 0; margin-bottom: 0">&#160;</p>

<ix:continuation id="_UseOfEstimates-c0_cont_3"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify">the valuation allowance for deferred tax assets.</td></tr></table></ix:continuation>

<p style="margin-top: 0; margin-bottom: 0">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_ConsolidationPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:ConsolidationPolicyTextBlock" id="ixv-38651"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Consolidations</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:continuation id="_ConsolidationPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The condensed consolidated financial statements
have been prepared using the accounting records of the Company and Grafiti Limited. All material inter-company balances and transactions
have been eliminated.</p></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_TradeAndOtherAccountsReceivablePolicy-c0_cont_1" escape="true" name="us-gaap:TradeAndOtherAccountsReceivablePolicy" id="ixv-38661"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Accounts Receivable, net and Allowance for
Credit Losses</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:continuation id="_TradeAndOtherAccountsReceivablePolicy-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accounts receivable are stated at the amount the
Company expects to collect. The Company recognizes an allowance for credit losses to ensure accounts receivables are not overstated due
to un-collectability. Allowance for credit losses are determined based on a variety of factors, including the length of time the receivables
are past due, significant one-time events and historical experience. An additional allowance for credit loss for individual accounts is
recorded when the Company becomes aware of a customer&#8217;s inability to meet its financial obligation, such as in the case of bankruptcy
filings, or deterioration in such customer&#8217;s operating results or financial position. If circumstances related to a customer change,
estimates of the recoverability of receivables would be further adjusted. After reviewing the collectability of the receivables the Company&#8217;s
allowance for credit losses was not material as of September 30, 2024 or June&#160;30, 2024.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 244; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->89<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_3" id="_SignificantAccountingPoliciesTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" continuedAt="_FairValueOfFinancialInstrumentsPolicy-c0_cont_1" escape="true" name="us-gaap:FairValueOfFinancialInstrumentsPolicy" id="ixv-38693"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Financial Instruments &#8212; Credit Losses
(&#8220;CECL&#8221;)</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

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assets measured at amortized cost, including loans, held-to-maturity debt securities and off-balance sheet credit exposures. The CECL
impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, that considers forecasts
of future economic conditions in addition to information about past events and current conditions. Based on this model, we analyze the
following criteria, as applicable in developing allowances for credit losses: historical loss information, the borrower&#8217;s ability
to make scheduled payments, the remaining time to maturity, the value of underlying collateral, projected future performance of the borrower
and macroeconomic trends.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

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Motors (the &#8220;Grafiti Holding Note&#8221;) at its amortized cost basis in the condensed consolidated balance sheets since management
has the intent and ability to hold the Grafiti Holding Note for the foreseeable future or until maturity or payoff. The Company reviews
its loans carried at amortized cost for expected credit losses under <i>ASC 326, Financial Instruments - Credit Losses</i>, on an ongoing
basis. The Company utilized probability-of-default (&#8220;PD&#8221;) and loss-given-default (&#8220;LGD&#8221;) methodologies to calculate
the allowance for expected credit losses.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_FairValueOfFinancialInstrumentsPolicy-c0_cont_4" id="_FairValueOfFinancialInstrumentsPolicy-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the PD&#215;LGD method, the loss rate is
a function of two components: (1) the lifetime default rate (&#8220;PD&#8221;); and (2) the loss given default (&#8220;LGD&#8221;). Due
to the Company&#8217;s limited operating history and lack of loss history, the Company derived its PD and LGD rates by considering average
historical default and recovery rates for corporate debt instruments, the borrower&#8217;s current financial position, and unsupportable
forecasts utilizing default studies and hybrid quantitative regression models provided by multiple industry leading sources. The Company
uses PD and LGD rates that correspond to the customer&#8217;s assumed credit rating and the contractual term of the note.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_FairValueOfFinancialInstrumentsPolicy-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The amortized cost of the Company&#8217;s Grafiti
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allowance for expected credit losses of $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllowanceForNotesAndLoansReceivableCurrent" scale="0" unitRef="usd" id="ixv-49482">108,568</ix:nonFraction>, as of June 30, 2024.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:RevenueFromContractWithCustomerPolicyTextBlock" id="ixv-38713"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Revenue Recognition</i></b></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_2" id="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognizes revenue when control is
transferred of the promised products or services to its customers, in an amount that reflects the consideration the Company expects to
be entitled to in exchange for those products or services. The Company derives revenue from the sale of software and software as a service.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_3" id="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">License Revenue Recognition</span></i></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

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whereby it grants a non-exclusive license for the use of its proprietary software. The contracts provide for either (i) a one year stated
term with a one year renewal option, (ii) a perpetual term or (iii) a two year term with the option to upgrade to a perpetual license
at the end of the term. The contracts may also provide for yearly on-going maintenance services for a specified price, which includes
maintenance services, designated support, and enhancements, upgrades and improvements to the software (the &#8220;Maintenance Services&#8221;),
depending on the contract. Licenses for on-premises software provide the customer with a right to use the software as it exists when made
available to the customer. All software provides customers with the same functionality and differ mainly in the duration over which the
customer benefits from the software.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 245; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_4" id="_SignificantAccountingPoliciesTextBlock-c0_cont_3"><ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_5" id="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The timing of the Company&#8217;s revenue recognition
related to the licensing revenue stream is dependent on whether the software licensing agreement entered into represents a good or service.
Software that relies on an entity&#8217;s IP and is delivered only through a hosting arrangement, where the customer cannot take possession
of the software, is a service. A software arrangement that is provided through an access code or key represents the transfer of a good.
Licenses for on-premises software represents a good and provide the customer with a right to use the software as it exists when made available
to the customer. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality
and differ mainly in the duration over which the customer benefits from the software. Revenue from distinct on-premises licenses is recognized
at a point in time when the software is made available to the customer.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_6" id="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Renewals or extensions of licenses are evaluated
as distinct licenses (i.e., a distinct good or service), and revenue attributed to the distinct good or service cannot be recognized until
(1) the entity provides the distinct license (or makes the license available) to the customer and (2) the customer is able to use and
benefit from the distinct license. Renewal contracts are not combined with original contracts, and, as a result, the renewal right is
evaluated in the same manner as all other additional rights granted after the initial contract. The revenue is not recognized until the
customer can begin to use and benefit from the license, which is typically at the beginning of the license renewal period. Therefore,
the Company recognizes revenue resulting from renewal of licensed software starting at the beginning of the license renewal period.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_7" id="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognizes revenue related to software
as a service evenly over the service period using a time-based measure because the Company is providing continuous service and the customer
simultaneously receives and consumes the benefits provided by the Company&#8217;s performance as the services are performed.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_8" id="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Contract Balances</span></i></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_9" id="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The timing of the Company&#8217;s revenue recognition
may differ from the timing of payment by its customers. The Company records a receivable when revenue is recognized prior to payment and
the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company
records deferred revenue until the performance obligations are satisfied. The Company had deferred revenue of $<ix:nonFraction contextRef="c7" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ContractWithCustomerLiabilityCurrent" scale="0" unitRef="usd" id="ixv-49483">151,377</ix:nonFraction> and $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ContractWithCustomerLiabilityCurrent" scale="0" unitRef="usd" id="ixv-49484">144,390</ix:nonFraction> as
of September 30, 2024 and June&#160;30, 2024, respectively, related to cash received in advance for product license and maintenance services
to be performed in future periods. The Company expects to satisfy its remaining performance obligations for these license and maintenance
services, and recognize the deferred revenue and related contract costs over the next twelve months. The Company recognized revenue of
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

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whether the customer could benefit from the good or service on its own or together with readily available resources. The Company allocates
revenue to each performance obligation based on its standalone selling price. The Company&#8217;s contracts with its customers outline
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is
recognized in income or expense in the period that the change is effective. Income tax benefits are recognized when it is probable that
the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred
tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. The Company
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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per common share were the same.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

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receivable, and accounts payable. The Company determines the estimated fair value of such financial instruments presented in these financial
statements using available market information and appropriate methodologies. These financial instruments are stated at their respective
historical carrying amounts, which approximate fair value due to their short-term nature.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

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to conform to September 30, 2024 presentation. The Company notes that these reclassifications only impacted the balance sheet and did
not impact cash flows or net loss.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

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pronouncements and concluded that they were not applicable to the condensed consolidated financial statements, except for the following:</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an annual and interim basis
for to enable investors to develop more decision-useful financial analyses. All public entities will be required to report segment information
in accordance with the new guidance starting in annual periods beginning after December 15, 2023. The Company is currently assessing potential
impacts of ASU 2023-07 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial
statements and disclosures as the Company currently only has one reportable segment and the ASU pertains to enhanced segment reporting
disclosures.<br/></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation
and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures. For entities
other than public business entities, the requirements will be effective for annual periods beginning after December 15, 2025. The guidance
will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company
is currently assessing potential impacts of ASU 2023-09 and does not expect the adoption of this guidance will have a material impact
on its condensed consolidated financial statements and disclosures.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<i>Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income
Statement Expenses</i>, that requires public companies to disclose, in interim and reporting periods, additional information about certain
expenses in the financial statements. For public business entities, it is effective for annual periods beginning after December 15, 2026,
and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective
basis or retrospective basis. The Company is currently evaluating the impact that the updated standard will have on the Company&#8217;s
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:RevenueFromContractWithCustomerTextBlock" id="ixv-38907"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 4 - Disaggregation of Revenue</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognizes revenue when control of
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be entitled to in exchange for those products or services. The Company derives revenue from software sales. The Company&#8217;s revenue
from contracts with customers are mainly sourced from the United Kingdom, Switzerland, France, and Italy.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_DisaggregationOfRevenueTableTextBlock-c0_cont_2" id="_DisaggregationOfRevenueTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<ix:continuation continuedAt="_DisaggregationOfRevenueTableTextBlock-c0_cont_3" id="_DisaggregationOfRevenueTableTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_DisaggregationOfRevenueTableTextBlock-c0_cont_4" id="_DisaggregationOfRevenueTableTextBlock-c0_cont_3"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">(1)</td><td style="text-align: justify"><ix:footnote id="ix_2_footnote" xml:lang="en-US">Software&#8217;s performance obligation is satisfied at a
point in time when access to the software is provided to the customer.</ix:footnote></td>
</tr></table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_DisaggregationOfRevenueTableTextBlock-c0_cont_4"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">(2)</td><td style="text-align: justify"><ix:footnote id="ix_3_footnote" xml:lang="en-US">Performance obligation from right to access software sales
is satisfied evenly over the service period using a time-based measure because the Company is providing continuous access to its service
and service is recognized over time.</ix:footnote></td>
</tr></table></ix:continuation></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 248; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="dmn:TheGrafitiHoldingNoteTextBlock" id="ixv-39084"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 5 - The Grafiti Holding Note</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 26, 2024, the Company purchased from Damon
Motors the Grafiti Holding Note with an original principal amount of $<ix:nonFraction contextRef="c73" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="0" unitRef="usd" id="ixv-49501">350,000</ix:nonFraction> (the &#8220;Grafiti Holding Note&#8221;). In accordance
with the terms of the Grafiti Holding Note, the Company must loan to Damon Motors, at Damon Motors&#8217;s request, additional funds up
to an aggregate principal amount, including the original principal amount, of $<ix:nonFraction contextRef="c151" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="0" unitRef="usd" id="ixv-49502">1,000,000</ix:nonFraction>. On September 25, 2024, the Grafiti Holding Note
was amended to increase the maximum principal amount available for borrowing to $<ix:nonFraction contextRef="c152" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="0" unitRef="usd" id="ixv-49503">1,150,000</ix:nonFraction>. The Grafiti Holding Note accrues interest
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declared due and payable by the Company upon the occurrence of an event of default, or (c) within three business days following termination
of the Damon Business Combination Agreement. Concurrent with the original principal amount provided to Damon Motors, the Company also
loaned an additional $<ix:nonFraction contextRef="c77" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LoansAssumed1" scale="0" unitRef="usd" id="ixv-49505">200,000</ix:nonFraction> to Damon Motors on June 26, 2024. During the three months ended September 30, 2024, the Company loaned Damon
Motors an additional $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LoansAssumed1" scale="0" unitRef="usd" id="ixv-49506">596,000</ix:nonFraction>. The principal balance of the Grafiti Holding Note was $<ix:nonFraction contextRef="c153" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="0" unitRef="usd" id="ixv-49507">1,146,000</ix:nonFraction> and $<ix:nonFraction contextRef="c76" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="0" unitRef="usd" id="ixv-49508">550,000</ix:nonFraction> as of September 30, 2024
and June 30, 2024, respectively. During the three months ended September 30, 2024 and September 30, 2023, the Company recognized $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestIncomeOther" scale="0" unitRef="usd" id="ixv-49509">24,066</ix:nonFraction>
and $<ix:nonFraction contextRef="c13" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestIncomeOther" scale="0" unitRef="usd" id="ixv-49510">0</ix:nonFraction> of interest income from the Grafiti Holding Note, respectively, which is included in the Other Income/Expense section of the condensed
consolidated statements of operations. The total interest accrued as of September 30, 2024 and June 30, 2024 was $<ix:nonFraction contextRef="c154" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-49511">24,614</ix:nonFraction> and $<ix:nonFraction contextRef="c155" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-49512">548</ix:nonFraction>, respectively,
and is included in the Other Current Assets line of the condensed consolidated balance sheets.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock" id="ixv-49513">Our note receivables balance was as follows:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">September&#160;30, <br/>
2024<br/>
 (Unaudited)</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, <br/>
2024<br/>
 (Audited)</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Note receivable, amortized cost</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllowanceForNotesAndLoansReceivableCurrent" scale="0" unitRef="usd" id="ixv-49517">108,568</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt">Note receivable, net</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c7" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesAndLoansReceivableNetCurrent" scale="0" unitRef="usd" id="ixv-49518">907,897</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesAndLoansReceivableNetCurrent" scale="0" unitRef="usd" id="ixv-49519">441,432</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Current note receivable, net</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c7" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesAndLoansReceivableNetCurrent" scale="0" unitRef="usd" id="ixv-49520">907,897</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesAndLoansReceivableNetCurrent" scale="0" unitRef="usd" id="ixv-49521">441,432</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt">Note receivable, net</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c7" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesAndLoansReceivableNetCurrent" scale="0" unitRef="usd" id="ixv-49522">907,897</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesAndLoansReceivableNetCurrent" scale="0" unitRef="usd" id="ixv-49523">441,432</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c0" continuedAt="_AllowanceForCreditLossesOnFinancingReceivablesTableTextBlock-c0_cont_1" escape="true" name="us-gaap:AllowanceForCreditLossesOnFinancingReceivablesTableTextBlock" id="ixv-49524">A roll forward of the Company&#8217;s allowance
for credit losses was as follows:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_AllowanceForCreditLossesOnFinancingReceivablesTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%">Balance at June 30, 2024</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllowanceForNotesAndLoansReceivableCurrent" scale="0" unitRef="usd" id="ixv-49525">108,568</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt">Provision</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProvisionForDoubtfulAccounts" scale="0" unitRef="usd" id="ixv-49526">129,535</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt">Balance at September 30, 2024 (Unaudited)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c7" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllowanceForNotesAndLoansReceivableCurrent" scale="0" unitRef="usd" id="ixv-49527">238,103</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There were neither charges against the allowance
nor recoveries of previously written off amounts for the three months ended September 30, 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s Grafiti Holding Note represents
a variable interest in Damon Motors. As such, the Company applied ASC 810 to assess whether the Company is the primary beneficiary and
Damon Motors should be consolidated. The Company determined they are not the primary beneficiary, as the Company does not have the power
to direct the activities that most significantly affect Damon Motors&#8217;s economic performance. The Company&#8217;s support to Damon
Motors, and the Company&#8217;s maximum exposure, consists only of the Grafiti Holding Note outlined above. The primary reason for the
financial support is to assist Damon Motors&#8217; operations until the close of the merger. As such, the Company concluded the Damon
Motors legal entity should not be consolidated.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 249; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->94<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:AccountsPayableAccruedLiabilitiesAndOtherLiabilitiesDisclosureCurrentTextBlock" id="ixv-39215"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 6 - Accrued Liabilities</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfAccruedLiabilitiesTableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfAccruedLiabilitiesTableTextBlock" id="ixv-49528">Accrued liabilities as of September&#160;30, 2024
and June 30, 2024 consisted of the following:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfAccruedLiabilitiesTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of <br/>
September&#160;30,</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of <br/>
June 30,</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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<br/>
(Unaudited)</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p></td><td style="padding-bottom: 1.5pt">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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 (Audited)</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Accrued bonus and commissions</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accrued interest expense</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Accrued professional fees</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Accrued sales and other indirect taxes payable</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 4pt">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c7" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccruedLiabilitiesCurrent" scale="0" unitRef="usd" id="ixv-49539">104,513</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccruedLiabilitiesCurrent" scale="0" unitRef="usd" id="ixv-49540">59,921</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:continuation></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:IncomeTaxDisclosureTextBlock" id="ixv-39310"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 7 - Income Taxes </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There is <span style="-sec-ix-hidden: hidden-fact-187"><span style="-sec-ix-hidden: hidden-fact-188">no</span></span> income tax provision or benefit for
the three months ended September&#160;30, 2024 or 2023 due to a history of losses and future projected losses. A full valuation allowance
on deferred tax assets has been recorded for both periods.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_LongTermDebtTextBlock-c0_cont_1" escape="true" name="us-gaap:LongTermDebtTextBlock" id="ixv-39320"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 8 - Long-Term Debt</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 26, 2024, the Company and Streeterville
Capital, LLC (&#8220;Streeterville&#8221; or &#8220;Investor&#8221;) entered into a note purchase agreement, pursuant to which the Company
agreed to sell, and Streeterville agreed to purchase, a secured promissory note in an aggregate original principal amount of $<ix:nonFraction contextRef="c90" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="0" unitRef="usd" id="ixv-49541">6,470,000</ix:nonFraction>
(the &#8220;Streeterville Note&#8221;). The Streeterville Note accrues interest on the outstanding balance of the note at the rate of
<ix:nonFraction contextRef="c156" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateStatedPercentage" scale="-2" unitRef="pure" id="ixv-49542">10</ix:nonFraction>% per annum, and all principal plus accrued interest is due and payable in December 2025. <ix:nonNumeric contextRef="c87" name="us-gaap:LongTermDebtDescription" id="ixv-49543">The Streeterville Note carries an original
issue discount of $<ix:nonFraction contextRef="c85" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentCarryingAmount" scale="0" unitRef="usd" id="ixv-49544">1,450,000</ix:nonFraction> and $<ix:nonFraction contextRef="c86" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromDebtNetOfIssuanceCosts" scale="0" unitRef="usd" id="ixv-49545">20,000</ix:nonFraction> of issuance costs to cover legal, accounting, due diligence, monitoring and other transaction
costs. On the same day, the Investor paid the purchase price of $<ix:nonFraction contextRef="c87" decimals="0" format="ixt:num-dot-decimal" name="dmn:InvestorPurchaseAmountReceived" scale="0" unitRef="usd" id="ixv-49546">5,000,000</ix:nonFraction> as follows: (a) $<ix:nonFraction contextRef="c88" decimals="0" format="ixt:num-dot-decimal" name="dmn:InvestorPurchaseAmountReceived" scale="0" unitRef="usd" id="ixv-49547">1,150,000</ix:nonFraction> to the Company; (b) $<ix:nonFraction contextRef="c157" decimals="0" format="ixt:num-dot-decimal" name="dmn:InvestorPurchaseAmountReceived" scale="0" unitRef="usd" id="ixv-49548">350,000</ix:nonFraction> to
Damon Motors as a senior secured loan from the Company to Damon Motors (the &#8220;Grafiti Holding Note&#8221;), and (c) $<ix:nonFraction contextRef="c90" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EscrowDeposit" scale="0" unitRef="usd" id="ixv-49549">3,500,000</ix:nonFraction> into
escrow, which will be distributed to the Company upon satisfaction of certain conditions including</ix:nonNumeric>: (a) consummation of the Business Combination;
(b) the combined company&#8217;s common shares being listed on Nasdaq; and (c) immediately following the closing of the Business Combination,
the combined company having no outstanding debt other than the Streeterville Note, certain other specified debts and trade payables incurred
in the ordinary course of business (the &#8220;Escrow Conditions&#8221;). Pursuant to the escrow agreement, if the Escrow Conditions have
not been satisfied by August 31, 2024 (the &#8220;Deadline Date&#8221;), the escrow agent may return the escrow amount to the Investor
and the Guaranties in favor of Streeterville (as defined below) to Damon Motors and Damon Motors Corporation, a Delaware corporation and
a wholly-owned subsidiary of Damon Motors. In accordance with the amendments to the escrow agreement, the Deadline Date has been extended
to November 30, 2024, Additionally, starting on the earlier of 13 months after the closing of the Business Combination or January 1, 2026,
the Investor may require the borrower to redeem up to one-sixth of the note&#8217;s initial principal and accrued interest monthly, and
any unexercised redemption amounts can be carried over to future months. The Company has also agreed to not issue or sell and equity securities
for capital raising purposes without the Investor&#8217;s prior consent. Additionally, the second amendment to the escrow agreement allows
for the release of funds at the discretion of the investor even if the funding conditions have not been satisfied. On September 23, 2024,
$<ix:nonFraction contextRef="c91" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EscrowDeposit" scale="0" unitRef="usd" id="ixv-49550">350,000</ix:nonFraction> of the funds placed in escrow were released to the Company. On November 20, 2024 the remaining $<ix:nonFraction contextRef="c158" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EscrowDeposit" scale="0" unitRef="usd" id="ixv-49551">3,150,000</ix:nonFraction> of the funds placed
in escrow were released to the Company.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>
</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_LongTermDebtTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfDebtInstrumentsTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfDebtInstrumentsTextBlock" id="ixv-49552">Long-Term Debt as of September 30, 2024 consisted of the following:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

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padding-bottom: 1.5pt">&#160;</td> <td style="vertical-align: top; width: 11%; text-align: center; padding-bottom: 1.5pt"><ix:nonNumeric contextRef="c160" format="ixt:date-month-day-year" name="us-gaap:LongTermDebtMaturityDate" id="ixv-49559">12/26/2025</ix:nonNumeric></td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td> <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right"><ix:nonFraction contextRef="c160" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebt" scale="0" unitRef="usd" id="ixv-49560">1,974,316</ix:nonFraction></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td> <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right"><ix:nonFraction contextRef="c93" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebt" scale="0" unitRef="usd" id="ixv-49561">1,506,561</ix:nonFraction></td><td style="width: 1%; 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font-weight: bold; text-align: left">&#160;</td></tr> </table></ix:continuation>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Debt discount and issuance costs in the amount
of $<ix:nonFraction contextRef="c159" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfDebtDiscountPremium" scale="0" unitRef="usd" id="ixv-49564">455,000</ix:nonFraction> related to the Streeterville Note was recorded as a contra liability within long-term debt, which will be amortized over the
term of the note. An additional $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfDebtDiscountPremium" scale="0" unitRef="usd" id="ixv-49565">101,500</ix:nonFraction> of debt discount was recorded as a contra liability within long-term debt during the three months
ended September 30, 2024 with the release of a portion of the funds placed in escrow. Additional debt discount and issuance costs will
be recorded as the Company receives the remaining portions of the Streeterville Note. Interest expense on long-term debt for the three
months ended September 30, 2024 totaled $<ix:nonFraction contextRef="c159" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestExpenseDebt" scale="0" unitRef="usd" id="ixv-49566">168,160</ix:nonFraction> which includes $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestExpenseDebt" scale="0" unitRef="usd" id="ixv-49567">50,405</ix:nonFraction> of interest expense, $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="dmn:AmortizedDebtDiscount" scale="0" unitRef="usd" id="ixv-49568">82,178</ix:nonFraction> of amortized debt discount and $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="dmn:MonitoringFeeAmortization" scale="0" unitRef="usd" id="ixv-49569">35,577</ix:nonFraction>
of monitoring fee amortization. There was <span style="-sec-ix-hidden: hidden-fact-189">no</span> interest expense in the three months ended September 30, 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had <span style="-sec-ix-hidden: hidden-fact-190">no</span> short-term or long-term debt
in the three months ended or as of September 30, 2023.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_1" escape="true" name="us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock" id="ixv-39404"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 9 - Stock Award Plans and Stock-Based
Compensation</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 11, 2024, the Company&#8217;s board of
directors adopted a 2024 Stock Incentive Plan (the &#8220;Plan&#8221;). The maximum aggregate number of common shares that may be issued
pursuant to the awards granted under the Plan (the &#8220;Share Reserve&#8221;) shall initially be <ix:nonFraction contextRef="c94" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant" scale="0" unitRef="shares" id="ixv-49570">10,000,000</ix:nonFraction>, and the Share Reserve shall
automatically increase on the first day of each calendar year beginning January 1, 2025, by a number of shares equal to the greatest of
(i) <ix:nonFraction contextRef="c95" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant" scale="0" unitRef="shares" id="ixv-49571">3,000,000</ix:nonFraction> shares, (ii) twenty percent (<ix:nonFraction contextRef="c96" decimals="2" format="ixt:num-dot-decimal" name="dmn:PercentageOfOutstandingCommonShares" scale="-2" unitRef="pure" id="ixv-49572">20</ix:nonFraction>%) of the outstanding common shares on the last day of the immediately preceding calendar
quarter, or (iii) such number of common shares determined by the committee delegated by the Company&#8217;s board of directors. As of
September 30, 2024, there were no un-exercised options granted to consultants of the Company and <ix:nonFraction contextRef="c161" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant" scale="0" unitRef="shares" id="ixv-49573">8,984,617</ix:nonFraction> options were available for
future grant under the Plan.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Incentive stock options granted under the Plan
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The exercise price per share for incentive stock options may not be less than <ix:nonFraction contextRef="c7" decimals="2" format="ixt:num-dot-decimal" name="dmn:PercentageOfExercisePrice" scale="-2" unitRef="pure" id="ixv-49575">110</ix:nonFraction>% of the estimated fair value of the underlying common
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September 30, 2024, there were <ix:nonFraction contextRef="c7" decimals="0" format="ixt:fixed-zero" name="us-gaap:EmployeeServiceShareBasedCompensationNonvestedAwardsTotalCompensationCostNotYetRecognizedStockOptions" scale="0" unitRef="usd" id="ixv-49579"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:fixed-zero" name="us-gaap:EmployeeServiceShareBasedCompensationTaxBenefitFromExerciseOfStockOptions" scale="0" unitRef="usd" id="ixv-49580">no</ix:nonFraction></ix:nonFraction> non-vested
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock" id="ixv-49584">See below for a summary of the stock options granted
under the Plan:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-205">&#8212;</div></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-207">&#8212;</div></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ConcentrationRiskDisclosureTextBlock" id="ixv-39604"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 10 - Credit Risk and Concentrations</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the three months ended September 30, 2024
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September&#160;30, 2024, three customers
represented approximately <ix:nonFraction contextRef="c166" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ConcentrationRiskPercentage1" scale="-2" unitRef="pure" id="ixv-49591">75</ix:nonFraction>% of total accounts receivable. As of September 30, 2023, four customers represented approximately <ix:nonFraction contextRef="c167" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ConcentrationRiskPercentage1" scale="-2" unitRef="pure" id="ixv-49592">77</ix:nonFraction>% of
total accounts receivable.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September&#160;30, 2024 and June 30, 2024,
the majority of cost of goods sold was related to related party expenses as discussed in Note 11. Therefore, there are no significant
concentrations of purchases or accounts payable.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:InvestmentTextBlock" id="ixv-39617"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 11 - Net Investments from Inpixon</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to the transaction on December 27, 2023,
the Company incurred expenses that were paid by Inpixon. The expenses incurred consist of salaries and benefits to certain employees of
Inpixon that provided services for the Company. Inpixon allocated expenses to the Company based on the estimated time spent by each Inpixon
employee. In addition, the Company recorded cost of sales for the use of Inpixon&#8217;s software. The Company also recorded adjustments
to these condensed consolidated financial statements to record cost of sales at market value based on the price Inpixon would charge third
parties for the use of the Inpixon&#8217;s software with industry consistent margins. The Company settled the amounts through equity.
The Company has recorded these amounts as a change in stockholders&#8217; equity (deficit) of $<ix:nonFraction contextRef="c13" decimals="0" format="ixt:num-dot-decimal" name="dmn:NetInvestmentsFromInpixon" scale="0" unitRef="usd" id="ixv-49593">32,193</ix:nonFraction> for the three months ended September
30, 2023.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock" id="ixv-39626"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 12 - Grafiti LLC Transactions</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Distributor Agreement</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 19, 2024, Grafiti Limited entered into
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30, 2024. Nadir Ali resigned as director and officer of Damon upon the closing of the Business Combination on November 13, 2024. Under
the Distributor Agreement, Grafiti LLC granted Grafiti Limited a non-exclusive, non-transferable right and license to market and distribute
SAVES (statistical analytics and visualization) products in the United Kingdom and other agreed-upon territories. Grafiti Limited will
pay Grafiti LLC the then-current prices for the products, subject to a discount of up to <ix:nonFraction contextRef="c169" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:RelatedPartyTransactionRate" scale="-2" unitRef="pure" id="ixv-49595">50</ix:nonFraction>% if certain revenue targets are met or other
arrangements agreed upon by the parties. The deemed effective date of the Distributor Agreement is retroactive to January 1, 2024, and
will remain in effect for one year from the effective date, automatically renewing for successive one-year periods unless either party
provides advance notice prior to the end of the current term to not extend. Either party may terminate the agreement without cause by
providing at least 90 days&#8217; prior written notice, or immediately for specified reasons, including an uncured breach or bankruptcy.
As of June 30, 2024 Grafiti Limited owed Grafiti LLC $<ix:nonFraction contextRef="c170" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableCurrent" scale="0" unitRef="usd" id="ixv-49596">42,896</ix:nonFraction> under the agreement which is included in the Accounts Payable line on the
condensed consolidated balance sheets. The Company has recorded the amounts related to the recognized revenue during the three months
ended September 30, 2024 and 2023 as cost of revenues on the Company&#8217;s condensed consolidated statement of operations of $<ix:nonFraction contextRef="c171" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostOfRevenue" scale="0" unitRef="usd" id="ixv-49597">39,647</ix:nonFraction>
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</div><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY GRAFITI HOLDING INC.) <br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS <br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2024 AND 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><ix:continuation id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Administrative Support Service Agreement </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 19, 2024, Grafiti Limited entered into
an Administrative Support Service Agreement with Grafiti LLC. Under the Administrative Support Service Agreement, Grafiti LLC agreed to
provide accounting, tax, and other administrative sales support services to Grafiti Limited for $<ix:nonFraction contextRef="c174" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RelatedPartyTransactionAmountsOfTransaction" scale="0" unitRef="usd" id="ixv-49600">5,080</ix:nonFraction> per month, with the amount subject
to a <ix:nonFraction contextRef="c175" decimals="2" format="ixt:num-dot-decimal" name="dmn:AnnualIncreasePercentage" scale="-2" unitRef="pure" id="ixv-49601">5</ix:nonFraction>% annual increase by Grafiti LLC. The Administrative Support Service Agreement is deemed to have commenced on January 1, 2024, and
remains in effect for one year from the effective date, automatically renewing for successive one-year periods unless either party provides
advance notice prior to the end of the current term to not extend. The Company has recorded these amounts as general and administrative
costs on the Company&#8217;s condensed consolidated statement of operations of $<ix:nonFraction contextRef="c176" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GeneralAndAdministrativeExpense" scale="0" unitRef="usd" id="ixv-49602">15,240</ix:nonFraction> and $<ix:nonFraction contextRef="c177" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GeneralAndAdministrativeExpense" scale="0" unitRef="usd" id="ixv-49603">0</ix:nonFraction> for the three months ended September 30,
2024 and 2023, respectively. As of September 30, 2024, Grafiti Limited owed Grafiti LLC $<ix:nonFraction contextRef="c178" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableCurrent" scale="0" unitRef="usd" id="ixv-49604">15,240</ix:nonFraction> under the agreement which is included
in the Accounts Payable line on the condensed consolidated balance sheets.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock" id="ixv-39666"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 13 - Commitments and
Contingencies</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Litigation</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Certain conditions may exist as of the date the
condensed consolidated financial statements are issued which may result in a loss to the Company, but which will only be resolved when
one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves
an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted
claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims,
as well as the perceived merits of the amount of relief sought or expected to be sought therein.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If the assessment of a contingency indicates that
it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would
be accrued in the Company&#8217;s financial statements. If the assessment indicates that a potentially material loss contingency is not
probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and an estimate
of the range of possible losses, if determinable and material, would be disclosed.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Loss contingencies considered remote are generally
not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters
will not materially and adversely affect the Company&#8217;s business, financial position, and results of operations or cash flows. However,
the performance of our Company&#8217;s business, financial position, and results of operations or cash flows may be affected by unfavorable
resolution of any particular matter.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Leases</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has a twelve month operating lease
for administrative offices in the United Kingdom for $<ix:nonFraction contextRef="c179" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseExpense" scale="0" unitRef="usd" id="ixv-49605">360</ix:nonFraction> per month which expires on April 30, 2025. The Company also has a storage space
lease that it retains for $<ix:nonFraction contextRef="c180" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseExpense" scale="0" unitRef="usd" id="ixv-49606">300</ix:nonFraction> per month that renews on an annual basis in October of each year.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->98<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS <br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_2" id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Advisory Services and Consulting Agreements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><span style="text-decoration:underline">Nadir Ali</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company entered into a consulting agreement
with Mr. Ali on September 25, 2024 pursuant to which it agreed to pay a fee of $<ix:nonFraction contextRef="c181" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfessionalFees" scale="0" unitRef="usd" id="ixv-49607">15,000</ix:nonFraction> per month for services rendered to the Company
since April 1, 2024 until the end of the month of the closing of the Business Combination pursuant to which Mr. Ali will advise on public
company reporting and compliance matters, business development, growth strategies and other operational matters as requested.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As compensation under the consulting agreement,
Mr. Ali is entitled to a fee of $<ix:nonFraction contextRef="c182" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForFees" scale="0" unitRef="usd" id="ixv-49608">325,000</ix:nonFraction> upon closing the Business Combination and his monthly fee will increase to $<ix:nonFraction contextRef="c183" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfessionalFees" scale="0" unitRef="usd" id="ixv-49609">54,167</ix:nonFraction> per month
beginning on the first of each month following the closing of the Business Combination through the remainder of the term of the agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unless otherwise terminated earlier pursuant to
the consulting agreement, the agreement will continue for a period of six months following the closing of the Business Combination which
may be extended for additional terms, upon mutual consent. The Company has the right to terminate the consulting agreement with 30 days&#8217;
notice; however, if it is terminated by the Company prior to the six month anniversary of the closing of the Business Combination (the
&#8220;Ali Guaranteed Period&#8221;) for any reason other than the gross negligence, recklessness or willful misconduct of Mr. Ali, the
monthly fee will continue to be paid for the remainder of the Ali Guaranteed Period. Mr. Ali has the right to terminate the consulting
agreement with 30 days&#8217; notice for specified reasons, including the Company&#8217;s failure to make timely payments, gross negligence,
recklessness, willful misconduct, or the filing of bankruptcy by the Company. In such cases, the monthly fee for the remainder of the
Ali Guaranteed Period will continue to be paid.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September 30, 2024, the Company owed Mr.
Ali $<ix:nonFraction contextRef="c182" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfessionalFees" scale="0" unitRef="usd" id="ixv-49610">30,000</ix:nonFraction> for services provided under the consulting agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><span style="text-decoration:underline">Melanie Figueroa</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company entered into a consulting agreement
on September 25, 2024 with Ms. Figueroa pursuant to which it agreed to pay a fee of $<ix:nonFraction contextRef="c184" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfessionalFees" scale="0" unitRef="usd" id="ixv-49611">15,000</ix:nonFraction> per month for services rendered to the Company
since April 1, 2024 until the end of the month of the closing of the Business Combination pursuant to which Ms. Figueroa will provide
advisory services with respect to her knowledge and expertise related to Company&#8217;s public company reporting and compliance matters
and corporate business development and growth strategies.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As compensation under the consulting agreement,
Ms. Figueroa is entitled to a fee of $<ix:nonFraction contextRef="c185" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForFees" scale="0" unitRef="usd" id="ixv-49612">175,000</ix:nonFraction> upon closing the Business Combination and her monthly fee will increase to $<ix:nonFraction contextRef="c186" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfessionalFees" scale="0" unitRef="usd" id="ixv-49613">29,167</ix:nonFraction> per month
beginning on the first of each month following the closing of the Business Combination through the remainder of the term of the agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unless otherwise terminated earlier pursuant to
the consulting agreement, the agreement will continue for a period of six months following the closing of the Business Combination which
may be extended for additional terms, upon mutual consent. The Company has the right to terminate the consulting agreement with 30 days&#8217;
notice; however, if it is terminated by the Company prior to the six month anniversary of the closing of the Business Combination (the
&#8220;Figueroa Guaranteed Period&#8221;) for any reason other than the gross negligence, recklessness or willful misconduct of Ms. Figueroa,
the monthly fee will continue to be paid for the remainder of the Figueroa Guaranteed Period. Ms. Figueroa has the right to terminate
the consulting agreement with 30 days&#8217; notice for specified reasons, including the Company&#8217;s failure to make timely payments,
gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by the Company. In such cases, the monthly fee for the
remainder of the Figueroa Guaranteed Period will continue to be paid.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September 30, 2024, the Company owed Ms.
Figueroa $<ix:nonFraction contextRef="c187" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfessionalFees" scale="0" unitRef="usd" id="ixv-49614">30,000</ix:nonFraction> for services provided under the consulting agreement.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 254; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->99<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS <br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><span style="text-decoration:underline">Wendy Loundermon</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company entered into a consulting agreement
with Mrs. Loundermon on September 25, 2024 pursuant to which it agreed to pay a fee of $<ix:nonFraction contextRef="c188" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfessionalFees" scale="0" unitRef="usd" id="ixv-49615">10,000</ix:nonFraction> per month for services rendered to the
Company since April 1, 2024 until the end of the month of the closing of the Business Combination pursuant to which Mrs. Loundermon will
provide advisory services with respect to her knowledge and expertise regarding the transition of the Company&#8217;s financial reporting
function to ensure continuity of business operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As compensation under the consulting agreement,
Mrs. Loundermon is entitled to a fee of $<ix:nonFraction contextRef="c189" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForFees" scale="0" unitRef="usd" id="ixv-49616">150,000</ix:nonFraction> upon closing the Business Combination and her monthly fee will increase to $<ix:nonFraction contextRef="c190" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfessionalFees" scale="0" unitRef="usd" id="ixv-49617">25,000</ix:nonFraction> per
month beginning on the first of each month following the closing of the Business Combination through the remainder of the term of the
agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unless otherwise terminated earlier pursuant to
the consulting agreement, the agreement will continue for a period of six months following the closing of the Business Combination which
may be extended for additional terms, upon mutual consent. The Company has the right to terminate the consulting agreement with 30 days&#8217;
notice; however, if it is terminated by the Company prior to the six month anniversary of the closing of the Business Combination (the
&#8220;Loundermon Guaranteed Period&#8221;) for any reason other than the gross negligence, recklessness or willful misconduct of Mrs.
Loundermon, the monthly fee will continue to be paid for the remainder of the Loundermon Guaranteed Period. Mrs. Loundermon has the right
to terminate the consulting agreement with 30 days&#8217; notice for specified reasons, including the Company&#8217;s failure to make
timely payments, gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by the Company. In such cases, the monthly
fee for the remainder of the Loundermon Guaranteed Period will continue to be paid.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September 30, 2024, the Company owed Mrs.
Loundermon $<ix:nonFraction contextRef="c191" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfessionalFees" scale="0" unitRef="usd" id="ixv-49618">20,000</ix:nonFraction> for services provided under the consulting agreement.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS <br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>




</div><ix:nonNumeric contextRef="c0" continuedAt="_SubsequentEventsTextBlock-c0_cont_1" escape="true" name="us-gaap:SubsequentEventsTextBlock" id="ixv-39798"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 14 - Subsequent Events</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Trust Shares Distribution</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As described in Note 1, on October 23, 2023, Parent
and the Company entered into a Separation and Distribution Agreement, pursuant to which all of the outstanding shares of Grafiti Limited
were transferred to the Company, such that on December 26, 2023, Grafiti Limited became a wholly-owned subsidiary of the Company. Following
the reorganization, and in connection with the spin-off of the Company from Parent, on December 27, 2023 (the &#8220;record date&#8221;),
all of the outstanding common shares of the Company (the &#8220;Trust Shares&#8221;) were transferred to the Grafiti Holding Inc. Liquidating
Trust (the &#8220;Trust&#8221;), to be held for the benefit of holders of the Parent&#8217;s common stock, preferred stock and those outstanding
warrants that are contractually entitled to participate in the distribution, on a pro rata basis as of the record date (collectively,
the &#8220;participating Parent securityholders&#8221;). On November 12, 2024, the Trust Shares were delivered to participating Parent
securityholders, on a pro rata at a ratio of <ix:nonFraction contextRef="c192" decimals="0" format="ixt:num-dot-decimal" name="dmn:SecurityHoldersOfProRataRatio" scale="0" unitRef="pure" id="ixv-49619">1</ix:nonFraction> for <ix:nonFraction contextRef="c193" decimals="0" format="ixt:num-dot-decimal" name="dmn:SecurityHoldersOfProRataRatio" scale="0" unitRef="pure" id="ixv-49620">50</ix:nonFraction> resulting in the distribution of <ix:nonFraction contextRef="c194" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesHeldInEmployeeTrustShares" scale="0" unitRef="shares" id="ixv-49621">3,536,746</ix:nonFraction> Trust Shares to participating Parent
securityholders.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Amalgamation</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Also as described in Note 1, on October 23, 2023,
the Company, Parent, Damon Motors, and Amalco Sub entered into the Damon Business Combination Agreement. On November 13, 2024, Damon Motors
and Amalco Sub amalgamated to continue as a wholly owned subsidiary of the Company (the &#8220;Amalgamation&#8221;). Following the Amalgamation,
the Company was renamed &#8220;Damon Inc.&#8221; (also referred to herein as the &#8220;combined company&#8221;). Pursuant to the Plan
of Arrangement under the laws of British Columbia, as contemplated in the Damon Business Combination Agreement, securityholders of Damon
Motors exchanged their securities of Damon Motors for amalgamation consideration consisting of:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(i) <ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="dmn:CommonStockSubordinateVotingShares" scale="0" unitRef="shares" id="ixv-49622">14,761,045</ix:nonFraction> common shares
of the Company, also known as &#8220;Subordinate Voting Shares&#8221;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(ii) <ix:nonFraction contextRef="c195" decimals="0" format="ixt:num-dot-decimal" name="dmn:CommonStockSubordinateVotingShares" scale="0" unitRef="shares" id="ixv-49623">1,391,181</ix:nonFraction> multiple voting
shares of the Company, which are convertible into common shares of the Company on a 1 for 1 basis, issued to Jay Giraud, the combined
company&#8217;s CEO and director, and its controlled entity,</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(iii) warrants to purchase
<ix:nonFraction contextRef="c196" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightOutstanding" scale="0" unitRef="shares" id="ixv-49624">2,186,498</ix:nonFraction> common shares of the Company at an exercise price of $<ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:WarrantExercisePriceIncrease" scale="0" unitRef="usdPershares" id="ixv-49625">7.81</ix:nonFraction> per share, with terms substantially similar to those of Damon Motors&#8217;s
warrants, issued to former Damon Motors warrant holders, and</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(iv) options to purchase <ix:nonFraction contextRef="c52" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesPurchaseOfAssets" scale="0" unitRef="shares" id="ixv-49626">1,942,127</ix:nonFraction>
common shares at exercise prices between $<ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:StockOptionExercisePriceDecrease" scale="0" unitRef="usdPershares" id="ixv-49627">0.57</ix:nonFraction> and $<ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:StockOptionExercisePriceIncrease" scale="0" unitRef="usdPershares" id="ixv-49628">12.73</ix:nonFraction>, issued to former Damon Motors option holders under the Company&#8217;s equity
incentive plans.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The exchanges are based on an exchange ratio determined
according to the formula in the Damon Business Combination Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The combined company commenced trading on the
Nasdaq Global Market on November 18, 2024 under the symbol &#8220;DMN&#8221;.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a result of the closing of the Business Combination,
a change in control of the Company has occurred, and Damon Motors became a wholly owned subsidiary of the Company. Following the issuance
of the amalgamation consideration pursuant to the Plan of Arrangement, the Company&#8217;s security holders immediately prior to the effective
time of the Amalgamation (the &#8220;Effective Time&#8221;) retained beneficial ownership of approximately <ix:nonFraction contextRef="c197" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:VariableInterestEntityOwnershipPercentage" scale="-2" unitRef="pure" id="ixv-49629">18</ix:nonFraction>% of the outstanding common
shares of the Company on a fully-diluted basis and Damon Motors security holders immediately prior to the Effective Time acquired beneficial
ownership of common shares amounting to approximately <ix:nonFraction contextRef="c198" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:VariableInterestEntityOwnershipPercentage" scale="-2" unitRef="pure" id="ixv-49630">82</ix:nonFraction>% of the outstanding common shares of the Company on a fully-diluted basis.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Creation and Conversion of Multiple Voting
Shares</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to the Effective Time, on November 12, 2024,
the Company filed a Notice of Alteration with the Province of British Columbia Registrar of Companies to amend its Notice of Articles
to, among other things, reflect the amended articles of the Company authorizing, among other things, the creation of a class of Multiple
Voting Shares and setting out the rights and restrictions attaching to the Multiple Voting Shares and the common shares.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 4, 2024, following the resignation
of Damon Jay Giraud, the former President, Chief Executive Officer, and Executive Chairman of the Company, all <ix:nonFraction contextRef="c199" decimals="0" format="ixt:num-dot-decimal" name="dmn:CommonStockSubordinateVotingShares" scale="0" unitRef="shares" id="ixv-49631">1,391,181</ix:nonFraction> Multiple Voting
Shares of the Company held by Mr. Giraud were converted into common shares on a one-for-one basis.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS <br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><ix:continuation continuedAt="_SubsequentEventsTextBlock-c0_cont_2" id="_SubsequentEventsTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Financing Agreements</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Streeterville June 2024 Note &#8211; Amended
Security Agreements</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 13, 2024, prior to the closing of
the Business Combination, (a) the Company entered into an amendment to the Security Agreement, dated June 26, 2024 by and between the
Company and Streeterville Capital LLC delivered in connection with the Streeterville Note in an aggregate principal amount of $<ix:nonFraction contextRef="c141" decimals="0" format="ixt:num-dot-decimal" name="dmn:AggregatePrincipalAmount" scale="0" unitRef="usd" id="ixv-49632">6,470,000</ix:nonFraction>,
whereby the Company granted to Streeterville a security interest in all right, title, interest, claims and demands to its assets, and
(b) Damon Motors entered into a security agreement with Streeterville, whereby Damon Motors granted to Streeterville a security interest
in all right, title, interest, claims and demands to its assets, and (c) Damon Motors entered into an IP security agreement with Streeterville,
whereby Damon Motors granted to Streeterville a security interest in certain of its intellectual property. Streeterville&#8217;s security
over the Company&#8217;s assets ranks pari passu with the security granted under the November 2024 Debt Financing (as described in greater
detail below) pursuant to an intercreditor agreement dated as of November 13, 2024 (the &#8220;Intercreditor Agreement&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i><span style="text-decoration:underline">November 2024 Debt Financing</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>East-West</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 13, 2024, the Company and East West
Utah limited liability company, an affiliate of Streeterville, entered into a note purchase agreement, pursuant to which the Company agreed
to sell, and East West agreed to purchase, a secured promissory note in an aggregate original principal amount of $<ix:nonFraction contextRef="c141" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIssuedPrincipal" scale="0" unitRef="usd" id="ixv-49633">8,385,000</ix:nonFraction> (the &#8220;East
West Note&#8221;) (the &#8220;East West Financing&#8221;). The East West Note carries an original issue discount of $<ix:nonFraction contextRef="c200" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-49634">1,885,000</ix:nonFraction>. For as
long as the East West funding conditions (as defined in the East West Note) are satisfied on each applicable funding date (unless waived
by East West), the proceeds from the East West Note will be funded in tranches in accordance with the following schedule: (a) $<ix:nonFraction contextRef="c201" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromNotesPayable" scale="0" unitRef="usd" id="ixv-49635">2,000,000</ix:nonFraction>
on January 31, 2025, (b) $<ix:nonFraction contextRef="c202" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromNotesPayable" scale="0" unitRef="usd" id="ixv-49636">1,500,000</ix:nonFraction> on April 30, 2025, (c) $<ix:nonFraction contextRef="c203" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromNotesPayable" scale="0" unitRef="usd" id="ixv-49637">1,500,000</ix:nonFraction> on July 31, 2025, and (d) $<ix:nonFraction contextRef="c204" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromNotesPayable" scale="0" unitRef="usd" id="ixv-49638">1,500,000</ix:nonFraction> on September 30, 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For each $<ix:nonFraction contextRef="c205" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares" id="ixv-49639">1.00</ix:nonFraction> in funds the Company raises in
the sale of any of its equity shares in a financing for the purpose of raising capital as part of any public offering of its equity securities
pursuant to a registration statement, at East West&#8217;s sole election, East West may reduce its next funding obligation by $<ix:nonFraction contextRef="c206" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares" id="ixv-49640">0.50</ix:nonFraction>. The
East West Note will mature on the date that is <ix:nonNumeric contextRef="c0" format="ixt-sec:durmonth" name="dmn:InitialMaturityDate" id="ixv-49641">18</ix:nonNumeric> months from issuance of the initial tranche of funding thereunder. For each $<ix:nonFraction contextRef="c7" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares" id="ixv-49642">1.00</ix:nonFraction> funded
by lender under the East West Note, an additional $<ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="dmn:AdditionalIssuedDiscountPerShare" scale="0" unitRef="usdPershares" id="ixv-49643">0.29</ix:nonFraction> in original issue discount will be added to the outstanding balance. It bears
interest at <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="srt:InterestBearingLiabilitiesAverageRatePaid" scale="-2" unitRef="pure" id="ixv-49644">10</ix:nonFraction>% per annum, which will increase to <ix:nonFraction contextRef="c193" decimals="2" format="ixt:num-dot-decimal" name="srt:InterestBearingLiabilitiesAverageRatePaid" scale="-2" unitRef="pure" id="ixv-49645">22</ix:nonFraction>% or the maximum permitted by applicable law upon the occurrence of an event of default
(as defined in the East West Note). In such an event, East West may declare the outstanding balance, multiplied by 110%, immediately due.
Upon a change of control, the balance, multiplied by 110%, will also become due.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Beginning on the date that is the earlier of (i)
thirteen months from the closing date of the Business Combination and (ii) January 1, 2026, East West shall have the right to require
the Company to redeem up to an aggregate of one sixth of the initial principal balance of the East West Note plus any interest accrued
thereunder each month (each monthly exercise, a &#8220;East West Monthly Redemption Amount&#8221;) by providing written notice to the
Company, provided however that if East West does not exercise the East West Monthly Redemption Amount in a corresponding month, then such
East West Monthly Redemption Amount shall be available for East West to redeem in any future month in addition to such future month&#8217;s
East West Monthly Redemption Amount.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the East West Financing, Damon
Motors Corporation, a Delaware corporation and a wholly-owned subsidiary of Damon (the &#8220;Damon Motors Subsidiary&#8221;), and Damon
Motors each entered into a guaranty, dated as of November 13, 2024, whereby Damon Motors and the Damon Motors Subsidiary guaranteed the
performance of the Company&#8217;s obligations under the East West Note.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
<br/>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS <br/>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><ix:continuation id="_SubsequentEventsTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Additionally, the Company&#8217;s obligations
under the East West Note are secured. On November 13, 2024, prior to the closing of the Business Combination, (a) Damon entered a security
agreement with East West whereby Damon granted to East West a security interest in all right, title, interest, claims and demands to its
assets, and (b) Damon Motors entered into a security agreement with East West whereby Damon Motors granted to East West a security interest
in all right, title, interest, claims and demands to its assets, and (c) Damon Motors entered into an IP security agreement with East
West whereby Damon Motors granted to East West a security interest in certain of its intellectual property.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Braebeacon</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 13, 2024, the Company and Braebeacon
Holdings Inc. (&#8220;BHI&#8221;) entered into a note purchase agreement (the &#8220;BHI Note Purchase Agreement&#8221;) pursuant to which
the Company agreed to sell, and BHI agreed to purchase, a secured promissory note in an aggregate original principal amount of $<ix:nonFraction contextRef="c207" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIssuedPrincipal" scale="0" unitRef="usd" id="ixv-49646">8,385,000</ix:nonFraction>
(the &#8220;BHI Note&#8221;) (the &#8220;BHI Financing&#8221;; together with the East West Financing, the &#8220;November 2024 Debt Financing&#8221;).
The BHI Note carries an original issue discount of $<ix:nonFraction contextRef="c208" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-49647">1,885,000</ix:nonFraction>. For as long as the BHI funding conditions (as defined in the BHI Note)
are satisfied on each applicable funding date (unless waived by BHI, the proceeds from the BHI Note will be funded in tranches in accordance
with the following schedule: (a) $<ix:nonFraction contextRef="c209" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromNotesPayable" scale="0" unitRef="usd" id="ixv-49648">2,000,000</ix:nonFraction> on January 31, 2025, (b) $<ix:nonFraction contextRef="c210" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromNotesPayable" scale="0" unitRef="usd" id="ixv-49649">1,500,000</ix:nonFraction> on April 30, 2025, (c) $<ix:nonFraction contextRef="c211" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromNotesPayable" scale="0" unitRef="usd" id="ixv-49650">1,500,000</ix:nonFraction> on July 31, 2025, and
(d) $<ix:nonFraction contextRef="c212" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromNotesPayable" scale="0" unitRef="usd" id="ixv-49651">1,500,000</ix:nonFraction> on September 30, 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Each $<ix:nonFraction contextRef="c213" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares" id="ixv-49652">1.00</ix:nonFraction> in funds the Company raises in the
sale of any of its equity shares in a financing for the purpose of raising capital as part of any public offering of its securities pursuant
to a registration statement, at BHI&#8217;s sole election, BHI may reduce its next funding obligation by $<ix:nonFraction contextRef="c214" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares" id="ixv-49653">0.50</ix:nonFraction>. For each $<ix:nonFraction contextRef="c215" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares" id="ixv-49654">1.00</ix:nonFraction> funded
by Lender under the BHI Note, an additional $<ix:nonFraction contextRef="c216" decimals="2" format="ixt:num-dot-decimal" name="dmn:AdditionalIssuedDiscountPerShare" scale="0" unitRef="usdPershares" id="ixv-49655">0.29</ix:nonFraction> in original issue discount will be added to the outstanding balance. The BHI Note will
mature on <ix:nonNumeric contextRef="c216" format="ixt-sec:durmonth" name="dmn:InitialMaturityDate" id="ixv-49656">18</ix:nonNumeric> months from issuance of the initial tranche of funding thereunder. It bears interest at <ix:nonFraction contextRef="c216" decimals="2" format="ixt:num-dot-decimal" name="srt:InterestBearingLiabilitiesAverageRatePaid" scale="-2" unitRef="pure" id="ixv-49657">10</ix:nonFraction>% per annum, which will increase
to <ix:nonFraction contextRef="c217" decimals="2" format="ixt:num-dot-decimal" name="srt:InterestBearingLiabilitiesAverageRatePaid" scale="-2" unitRef="pure" id="ixv-49658">22</ix:nonFraction>% or the maximum permitted by applicable law upon the occurrence of an event of default (as defined in the BHI Note). In such an
event, BHI may declare the outstanding balance, multiplied by 110%, immediately due. Upon a change of control, the balance, multiplied
by 110%, will also become due.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Beginning on the date that is the earlier of (i)
thirteen months from the closing date of the Business Combination and (ii) January 1, 2026, BHI shall have the right to require the Company
to redeem up to an aggregate of one sixth of the initial principal balance of the BHI Note plus any interest accrued thereunder each month
(each monthly exercise, a &#8220;BHI Monthly Redemption Amount&#8221;) by providing written notice to the Company, provided however that
if BHI does not exercise the BHI Monthly Redemption Amount in a corresponding month, then such BHI Monthly Redemption Amount shall be
available for BHI to redeem in any future month in addition to such future month&#8217;s BHI Monthly Redemption Amount.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the BHI Financing, the Damon
Motors Subsidiary and Damon Motors, each entered into a guaranty, dated as of November 13, 2024, whereby Damon Motors and the Damon Motors
Subsidiary guaranteed the performance of the Company&#8217;s obligations under the BHI Note.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Additionally, the Company&#8217;s obligations
under the BHI Note are secured. On November 13, 2024, prior to the closing of the Business Combination, (a) Damon entered a security agreement
with BHI whereby Damon granted to BHI a security interest in all right, title, interest, claims and demands to its assets, and (b) Damon
Motors entered into a security agreement with BHI whereby Damon Motors granted to BHI a security interest in all right, title, interest,
claims and demands to its assets, and (c) Damon Motors entered into an IP security agreement with BHI whereby Damon Motors granted to
BHI a security interest in certain of its intellectual property.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the Intercreditor Agreement, each
of Streeterville, East West and BHI have agreed to rank pari passu in connection with the above noted financing transactions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Streeterville Securities Purchase Agreement</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 20, 2024, the Company entered into
a securities purchase agreement with Streeterville Capital, LLC (&#8220;Streeterville&#8221;), pursuant to which the Company agreed to
issue and sell to Streeterville pre-paid purchases at an aggregate purchase price of up to $<ix:nonFraction contextRef="c218" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="0" unitRef="usd" id="ixv-49659">10,000,000</ix:nonFraction> for the purchase of the Company&#8217;s
common shares. Each pre-paid purchase includes an original issue discount of <ix:nonFraction contextRef="c218" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure" id="ixv-49660">7</ix:nonFraction>% and accrues interest at an annual rate of <ix:nonFraction contextRef="c219" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtConversionOriginalDebtInterestRateOfDebt" scale="-2" unitRef="pure" id="ixv-49661">8</ix:nonFraction>%. As consideration
for Streeterville&#8217;s commitment, the Company also agreed to issue <ix:nonFraction contextRef="c219" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtConversionConvertedInstrumentSharesIssued1" scale="0" unitRef="shares" id="ixv-49662">343,053</ix:nonFraction> common shares to Streeterville. For the initial pre-paid
purchase, which closed on December 20, 2024, Streeterville paid $<ix:nonFraction contextRef="c218" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InvestmentOwnedBalancePrincipalAmount" scale="0" unitRef="usd" id="ixv-49663">2,000,000</ix:nonFraction>, creating in an initial principal balance of $<ix:nonFraction contextRef="c218" decimals="0" format="ixt:num-dot-decimal" name="dmn:InitialPrePaidPrincipalBalanceAmount" scale="0" unitRef="usd" id="ixv-49664">2,140,000</ix:nonFraction>. Also,
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the indebtedness under the secured promissory note issued to Streeterville in June 2024 with an original principal amount of $<ix:nonFraction contextRef="c219" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtConversionOriginalDebtAmount1" scale="0" unitRef="usd" id="ixv-49667">6,470,000</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>NASDAQ Notice of Deficiency</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 7, 2025, the Company received a written
notice The Nasdaq Stock Market LLC notifying the Company that, for the 30 consecutive business days from November 18, 2024 to January
6, 2025, the Company&#8217;s Market Value of Listed Securities (&#8220;MVLS&#8221;) was below the minimum of $<ix:nonFraction contextRef="c220" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:EquityMethodInvestmentQuotedMarketValue" scale="6" unitRef="usd" id="ixv-49668">50</ix:nonFraction> million required for
continued listing on The Nasdaq Global Market. The Company has until July 7, 2025, to regain compliance. The Company intends to monitor
its MVLS and evaluate available options to resolve the deficiency. Additionally, the Company may consider applying to transfer the listing
of its securities to The Nasdaq Capital Market.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Maxim Financial Advisory Agreement</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective January 7, 2025, we entered into a Financial
Advisory Agreement with Maxim Group LLC (together with its affiliates and subsidiaries, &#8220;Maxim&#8221;). Pursuant to this agreement,
Maxim has been appointed to provide advisory services to the Company, including consultation on capital raising matters such as a private
placement of equity or equity-linked securities. As compensation for past advisory services following the listing of the Company on Nasdaq,
the Company has issued <ix:nonFraction contextRef="c221" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-49669">514,579</ix:nonFraction> common shares to Maxim Partners LLC, with piggyback registration rights. Maxim&#8217;s engagement will
terminate 90 days from the execution date.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="F_021"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"><b>DAMON
MOTORS INC.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"> CONDENSED
INTERIM UNAUDITED CONSOLIDATED BALANCE SHEETS</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">As of September
30, 2024 and June 30, 2024</span></p><div>

</div><p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">(Expressed
in United States dollars)</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,004,022</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">127,309</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">6,657,291</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,924,121</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">476,404</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">482,575</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">363,640</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">443,519</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">7,329</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">7,141</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">46,294,751</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">40,630,756</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">56,306,629</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">175,493</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(140,607,594</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
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  </table><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">Going Concern
(Note 1)</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">Commitments
and Contingencies (Note 12)</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">Subsequent
Events (Note 19)</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"><i>&#160;</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif"><i>The
accompanying notes are an integral part of these consolidated financial statements.</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 259; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->104<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><div><a id="F_022"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"><b>DAMON
MOTORS INC.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"> CONDENSED
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS</span></p><div>

</div><div style="border-bottom: Black 1.5pt solid; padding: 0in 0in 1pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">For the three
months ended September 30, 2024 and 2023</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">(Expressed
in United States dollars)</span></p>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>




</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,092,282</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">174,166</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">376,312</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,899,941</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,784,734</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">7,412,175</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif"><i>The
accompanying notes are an integral part of these consolidated financial statements.</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif"><i>&#160;</i></span></p><div>


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    </div><!-- Field: /Page --><div>

</div><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><div><a id="F_023"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"><b>DAMON
MOTORS INC.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"> CONDENSED
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS&#8217; DEFICIT</span></p><div>

</div><div style="border-bottom: Black 1.5pt solid; padding: 0in 0in 1pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">For the three
months ended September 30, 2024 and 2023</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">(Expressed
in United States dollars)</span></p>

</div><div>

</div><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="margin-top: 0; margin-bottom: 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">#</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
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    <td style="width: 30%; text-indent: -8.55pt; padding-left: 8.55pt">As of June 30, 2024</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">1,938,751</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">16,758,528</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">(140,607,594</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">(50,449,144</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -8.55pt; padding-left: 0.125in">Conversion of Simple Agreements for Future Equity (SAFEs) at maturity</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,200,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,200,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -8.55pt; padding-left: 8.55pt">Stock-based compensation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">16,295</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">16,295</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -8.55pt; padding-left: 8.55pt">Common share purchase warrants issued in connection with convertible promissory notes</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">287,387</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">287,387</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -8.55pt; padding-left: 8.55pt">Net loss</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(7,412,175</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; padding-bottom: 4pt; text-indent: -8.55pt; padding-left: 8.55pt">As of September 30, 2024</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -8.55pt; padding-left: 8.55pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -8.55pt; padding-left: 8.55pt">As of June 30, 2023</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11,829,386</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,285,788</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">16,758,528</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">71,590,087</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(106,639,346</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(24,469,441</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -8.55pt; padding-left: 8.55pt">Issuance of shares, net of issuance costs</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">95,380</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">260,999</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">260,999</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -8.55pt; padding-left: 8.55pt">Stock-based compensation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">204,159</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">204,159</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -8.55pt; padding-left: 8.55pt">Stock options exercised</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(129,642</td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">19,524</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  </table><div>

</div><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif"><i>The
accompanying notes are an integral part of these consolidated financial statements.</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->106<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><div><a id="F_024"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"><b>DAMON
MOTORS INC.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"> CONDENSED
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS</span></p><div>

</div><div style="border-bottom: Black 1.5pt solid; padding: 0in 0in 1pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">For the three
months ended September 30, 2024 and 2023</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">(Expressed
in United States dollars)</span></p>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>




</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: left">Operating activities</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">67,248</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">80,138</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">129,365</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">136,698</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">204,159</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">20,309</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(121,753</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 0pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 0pt">Changes in operating assets and liabilities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(25,763</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">24,756</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 0.125in">Funding receivable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,004,022</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(467,843</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 0.125in">Operating lease</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(145,735</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(67,583</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 0.125in">Customer deposits</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 0pt">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,759</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(3,083</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 0pt">Proceeds from convertible notes</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">555,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(37,837</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(282,031</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Supplemental
Cash Flow Information (Note 18)</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"><i>&#160;</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif"><i>The
accompanying notes are an integral part of these consolidated financial statements.</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><div><a id="F_025"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"><b>DAMON
MOTORS INC.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"> NOTES TO
THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</span></p><div>

</div><div style="border-bottom: Black 1.5pt solid; padding: 0in 0in 1pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">For the three
months ended September 30, 2024 and 2023</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">(Expressed
in United States dollars)</span></p>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif"><i>&#160;</i></span></p><div>




</div><p style="margin-top: 0; margin-bottom: 0"></p><div>



</div><p style="margin-top: 0; margin-bottom: 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">1.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">NATURE
                                            OF OPERATIONS AND GOING CONCERN</span></td>
</tr></table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><span style="text-decoration:underline">Nature
of operations</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Damon
Motors Inc. was incorporated on July 22, 2016, under the laws of British Columbia. The Company&#8217;s registered address is Suite 2300,
Bentall 5, 550 Burrard Street, Vancouver, British Columbia, V6C 2B5 and head office and principal address is 704 Alexander Street, Vancouver,
British Columbia, V6A 1E3, Canada. The Company is a leading light electric vehicle manufacturer currently focused on electric motorcycles
including proprietary electric powertrain, shifting and predictive awareness technologies. The Company has a single reportable segment
given that the Company is engaged in the manufacture of motorcycles in North America, and management views the business as a single reporting
segment. See Segment Reporting (Note 16).&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">On
April 26, 2021, the Company formed a wholly owned subsidiary, Damon Motors Corporation, a corporation organized and registered in the
state of Delaware, USA.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">These
condensed interim unaudited consolidated financial statements include the accounts of Damon Motors Inc. and Damon Motors Corporation,
collectively the &#8220;Company.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><span style="text-decoration:underline">Going
concern</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">The
accompanying condensed interim unaudited consolidated financial statements of the Company have been prepared assuming the Company will
continue as a going concern in accordance with U.S. GAAP. The going concern basis of presentation assumes that the Company will continue
in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities
and commitments in the normal course of business.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">The
Company is subject to a number of risks, including, but not limited to, the need for successful development of products, the need for
additional capital (or financing) to fund operating losses (see below), competition from substitute products and services from larger
companies, protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with changes
in electric automotive technology. The Company&#8217;s ability to continue as a going concern is dependent upon its ability to obtain
the necessary financing to fund its research and development, complete the construction of its manufacturing facility for the eventual
production of electrical motorcycles and meets its obligations and repay its liabilities arising from normal business operations when
they come due.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">The
Company has incurred net losses of $7,412,175 and utilized $2,160,571 of cash in operations for the three months ended September 30,
2024 and has accumulated a deficit as of September 30, 2024 of $148,019,769 and expects to incur future additional losses. These conditions
indicate material uncertainties that cast substantial doubt upon the Company&#8217;s ability to continue as a going concern within one
year after financial statement issuance date.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">When
substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about
the Company&#8217;s ability to continue as a going concern. The mitigating effect of management&#8217;s plans, however, is only considered
if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements
are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial
doubt about the entity&#8217;s ability to continue as a going concern within one year after the date that the financial statements are
issued.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->108<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"><b>DAMON
MOTORS INC.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">NOTES TO
THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</span></p><div>

</div><div style="border-bottom: Black 1.5pt solid; padding: 0in 0in 1pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">For the three
months ended September 30, 2024 and 2023</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">(Expressed
in United States dollars)</span></p>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif"><b>1.</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>NATURE
                                            OF OPERATIONS AND GOING CONCERN (continued)</b></span></td>
</tr></table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><span style="text-decoration:underline">Going
concern</span> (continued)</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Management&#8217;s
plans to address the uncertainty that the Company will continue as a going concern include the business combination as well as obtaining
associated debt and equity financing. There is no assurance that the Company&#8217;s plans to consummate the business combination will
be successful and the Company cannot provide assurance that the Company will secure financing in a timely manner, nor can they provide
assurance that the business combination will be completed. As such, the substantial doubt of the Company&#8217;s ability to continue
as a going concern has not been alleviated by management&#8217;s plans.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">2.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">BASIS
                                            OF PRESENTATION</span></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">a)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Basis
                                            of presentation</span></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">The
accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States (&#8220;U.S. GAAP&#8221;) and applicable rules and regulations of the Securities and Exchange
Commission (&#8220;SEC&#8221;) regarding financial reporting. Accordingly, they do not include all of the information and footnotes required
by U.S. GAAP for annual audited financial statements and should be read in conjunction with the Company&#8217;s annual audited consolidated
financial statements as at and for the year ended June 30, 2024.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">The
same accounting policies were used in the preparation of these unaudited condensed interim condensed interim unaudited consolidated financial
statements as for the most recent audited annual consolidated financial statements. These condensed interim consolidated financial statements
are unaudited and reflect adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary
to provide a fair statement of results for the interim periods in accordance with U.S. GAAP.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">b)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Basis
                                            of measurement</span></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">These
financial statements have been prepared on a historical cost basis except for certain financial instruments which are measured at their
fair value as explained in the accounting policies set out below. In addition, these financial statements have been prepared using the
accrual basis of accounting.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">c)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Consolidated
                                            statements</span></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">The
condensed interim unaudited consolidated financial statements incorporate the financial statements of the Company and its consolidated
subsidiary, Damon Motors Corporation, over which the Company has control. Control occurs when the Company has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power over the
investee to affect its returns. All intercompany transactions and balances between the Company and the subsidiary are eliminated upon
consolidation.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">&#160;</span></p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"><b>DAMON
MOTORS INC.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">NOTES TO
THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</span></p><div>

</div><div style="border-bottom: Black 1.5pt solid; padding: 0in 0in 1pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">For the three
months ended September 30, 2024 and 2023</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">(Expressed
in United States dollars)</span></p>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif"><b>2.</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>BASIS
                                            OF PRESENTATION (continued)</b></span></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">d)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Business
                                            combination with XTI Aerospace, Inc. (&#8220;XTI Aerospace&#8221; and formerly known as Inpixon)</span></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">On
October 23, 2023, Damon Motors Inc. (&#8220;Damon&#8221;) entered into a Business Combination agreement (&#8220;BCA&#8221;) with XTI
Aerospace (NASDAQ: XTIA), Grafiti Holding Inc. (&#8220;Grafiti&#8221;), a British Columbia corporation and wholly owned subsidiary of XTI
Aerospace , 1444842 B.C. Ltd., and a wholly owned subsidiary of Grafiti (&#8220;Amalco Sub&#8221;), pursuant to which it is proposed
that Amalco Sub and Damon amalgamate under the laws of British Columbia, Canada with the amalgamated company (the &#8220;Damon Surviving
Corporation&#8221;) continuing as a wholly owned subsidiary of Grafiti (the &#8220;Business Combination&#8221;). </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">The
Business Combination is subject to material conditions, including approval of the Business Combination by securities holders of Damon,
approval of the issuance of Grafiti Common Shares to Damon securities holders pursuant to the Business Combination Agreement by a British
Columbia court after a hearing upon the fairness of the terms and conditions of the Business Combination Agreement as required by the
exemption from registration provided by Section 3(a)(10) under the Securities Act of 1933, and approval of the listing of the Grafiti
Common Shares on the Nasdaq Stock Market (&#8220;Nasdaq&#8221;) under the ticker symbol DMN, after giving effect to the Business Combination.
</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">Upon
the consummation of the Business Combination (the &#8220;Closing&#8221;), both Grafiti Limited (formerly known as Inpixon UK Ltd.), a
subsidiary of Grafiti and the Damon Surviving Corporation will be wholly owned subsidiaries of Grafiti, which will adopt a new name as
determined by Damon. </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">Holders
of Grafiti Common Shares and warrants, including management of XTI Aerospace that hold Grafiti Common Shares immediately prior to the
closing of the Business Combination, are anticipated to retain approximately 18.75% of the outstanding capital stock of the combined
company, determined on a fully diluted basis. Damon shareholders are anticipated to hold approximately 81.25% of the combined company,
determined on a fully diluted basis. It is anticipated that public trading for the Grafiti Common Shares on the Nasdaq would begin following
the consummation of the Business Combination.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">Following
the signing of the Business Combination agreement, on October 26, 2023, Damon issued a convertible promissory note to XTI Aerospace in
an aggregate principal amount of $3.0 million (Note 8) together with the Share purchase Warrants (Note 9) pursuant to a private placement.
The convertible promissory note has a 12% annual interest rate, payable in arrears on the maturity date, June 15, 2024. The full principal
balance and interest on the convertible promissory note will automatically convert into common shares of Damon upon the public listing
of Damon or a successor issuer thereof on a national securities exchange (a &#8220;Public Company Event&#8221;). </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">On
June 15, 2024, the Company and XTI Aerospace signed a Letter of Agreement amending the maturity date of the notes to September 30, 2024.
</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">On
September 11, 2024, the Company and XTI Aerospace signed another Letter of Agreement amending the maturity date of the notes to October
31, 2024, subject to an additional tolling period of 30 days at the election of the Company upon notice by the Company to the note holders.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">&#160;</span></p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"><b>DAMON
MOTORS INC.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">NOTES TO
THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</span></p><div>

</div><div style="border-bottom: Black 1.5pt solid; padding: 0in 0in 1pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">For the three
months ended September 30, 2024 and 2023</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">(Expressed
in United States dollars)</span></p>

</div><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">3.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">SIGNIFICANT
                                            ACCOUNTING POLICIES</span></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><i>&#160;</i></span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">a)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Significant
                                            accounting policies</span></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.25pt; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">The
accounting policies followed in these condensed interim consolidated financial statements are consistent with those disclosed in Note
3 of the Company&#8217;s consolidated financial statements for the year ended June 30, 2024.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">b)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Critical
                                            accounting estimates and judgements in applying the Company&#8217;s accounting policies</span></td>
</tr></table><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.7pt; text-align: justify; text-indent: -35.7pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">The
preparation of condensed interim unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of expenses during the reporting periods. Management estimates are periodically
reviewed in light of changes in circumstances, facts and experience and noted that there has been no significant change in estimates
of judgements in the reporting periods. Areas of judgment that have the most significant effect on the amounts recognized in the condensed
interim unaudited consolidated financial statements are disclosed in Note 3 of the Company&#8217;s consolidated financial statements
for the year ended June 30, 2024. </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">c)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Reclassifications</span></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Certain
prior period amounts in the condensed interim unaudited consolidated financial statements and notes thereto have been reclassified to
conform to current period presentation. These reclassifications did not impact the previously reported net loss, stockholders&#8217;
equity or cash flows, as they represent a reorganization of the presentation of the financial statements rather than a change in the
underlying accounting principles or policies.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">d)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Recent
                                            accounting pronouncements not yet adopted</span></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">In
November 2023, the FASB issued ASU 2023-07, &#8220;Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures&#8221;,
which amends the disclosure to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant
segment expenses on an annual and interim basis for to enable investors to develop more decision-useful financial analyses. All public
entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after
December 15, 2023. The Company is currently assessing potential impacts of ASU 2023-06 and does not expect the adoption of this guidance
will have a material impact on its condensed consolidated financial statements and disclosures as disclosed in Note 16.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">In
December 2023, the FASB issued ASU 2023-09, &#8220;Income Taxes (Topic 740): Improvements to Income Tax Disclosures&#8221;, which
amends the disclosure to address investor requests for more transparency about income tax information through improvements to income
tax disclosures primarily related to the rate reconciliation and income taxes paid information and includes certain other amendments
to improve the effectiveness of income tax disclosures. For entities other than public business entities, the requirements will be
effective for annual periods beginning after December 15, 2025. The guidance will be applied on a prospective basis with the option
to apply the standard retrospectively. Early adoption is permitted. The Company is currently assessing potential impacts of ASU
2023-09 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial
statements and disclosures and the Company is in a loss position and not incurring any tax expenses.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>DAMON MOTORS
INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT ACCOUNTING POLICIES (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><b>d)</b></td><td style="text-align: justify"><b>Recent accounting pronouncements not yet adopted (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In November 2024, the FASB issued ASU
No. 2024-03, &#8220;Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation
of Income Statement Expenses&#8221;, that requires public companies to disclose, in interim and reporting periods, additional information
about certain expenses in the financial statements. For public business entities, it is effective for annual periods beginning after December
15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective
basis or retrospective basis. The Company is currently evaluating the impact that the updated standard will have on the Company&#8217;s
disclosures within the condensed consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"/><td style="width: 0.25in; text-align: left"><b>4.</b></td><td style="text-align: justify"><b>FUNDING RECEIVABLE</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Included in funding receivable is FY2024
Canadian Scientific Research &amp; Development (&#8220;SR&amp;ED&#8221;) tax credit receivable. On October 4, 2024, the Company received
the Notice of Assessment for 2024 SR&amp;ED tax credit refund amount of $1,004,022 (CAD$1,355,329) from CRA and the tax credit refund
was received in full on October 16, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company accounts for these credits
as a reduction to research and development costs and will recognize these claims when it is probable that the expense incurred qualify
for the government grant claim and that the Company has complied with all the conditions to realize the claim. Otherwise, the recognition
of government grant claim would be deferred until the recognition criteria are satisfied.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"/><td style="width: 0.25in; text-align: left"><b>5.</b></td><td style="text-align: justify"><b>PROPERTY AND EQUIPMENT,
                                            NET</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Construction<br/> in Progress</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Cost</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 40%; text-indent: -0.125in; padding-left: 0.125in">Balance, July 1, 2023</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">2,358,899</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">259,211</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">3,749,405</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in">Impairment</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in">Balance, June 30, 2024 and September 30, 2024</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-indent: -0.125in; padding-left: 0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">689,163</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">92,463</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">559,798</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">82,077</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">941,807</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>



</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"></p><div>

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</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>DAMON MOTORS
INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>




</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"/><td style="width: 0.25in; text-align: left"><b>5.</b></td><td style="text-align: justify"><b>PROPERTY AND EQUIPMENT,
                                            NET (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the three months ended September
30, 2024, the Company incurred amortization of right of use asset in the consolidated statements of operations of $129,365 (three months
ended September 30, 2023 &#8211; $136,698) which is included in the above table under depreciation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"/><td style="width: 0.25in; text-align: left"><b>6.</b></td><td style="text-align: justify"><b>ACCOUNTS PAYABLE AND
                                            ACCRUED LIABILITIES</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,305,806</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,343,360</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">6,657,291</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As at September 30, 2024, $207,350
(June 30, 2024 - $220,526) was related to severance and included in accrued wages.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Included in accrued liabilities and
other payables is an amount owing for the surrender and settlement of lease of Surrey manufacturing facility of $240,843 as of September
30, 2024 (June 30, 2024 - $237,452). On April 29, 2024 the Company requested payment deferment of the instalment payment due on March
1, 2024 and May 1, 2024 respectively to July 1, 2024. On September 6, 2024, the Lessor agreed to defer the payments due on July 1, 2024
to be paid on or before September 30, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On October 1, 2024, the Company and
the Lessor signed an amendment to the Surrender of Lease Agreement whereby the Lessor hereby agrees to a waiver of breach by the Company
of its payment obligations in subsection 3.1(e), (f) and (g) of the Surrender of Lease Agreement by the Tenant. In addition, the subsections
(e), (f) and (g) of Section 3.1 of the Surrender of Lease Agreement are deleted in their entirety and replaced, whereby the Company agrees
to pay the Lessor the instalment amount of Canadian dollars $108,333 for each instalment, 30 days, 60 days and 90 days respectively, following
the completion of the Business Combination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"/><td style="width: 0.25in; text-align: left"><b>7.</b></td><td style="text-align: justify"><b>LEASES</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">The
Company has operating leases for its office spaces and finance leases for its equipment trailer. </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">The
lease liability in connection with operating and finance leases are included in non-current lease liabilities and current portion of lease
liabilities on the consolidated balance sheets as follows:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Operating<br/> lease</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Finance<br/> leases</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">September 30,<br/> 2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Non-current portion of lease liabilities</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">175,493</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">178,008</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">353,501</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Current portion of lease liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">363,640</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">7,329</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">370,969</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt">Total lease liabilities</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">539,133</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">185,337</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">724,470</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>










</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 268; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->113<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>DAMON MOTORS
INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
                                                                                                                                               <tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"/><td style="width: 0.25in; text-align: left"><b>7.</b></td><td style="text-align: justify"><b>LEASES (continued)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Operating<br/> lease</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Finance<br/> leases</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30,<br/> 2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Non-current portion of lease liabilities</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">235,492</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">177,403</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">412,895</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Current portion of lease liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">443,519</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">7,141</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">450,660</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt">Total lease liabilities</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">679,011</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">184,544</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">863,555</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">The
right-of-use assets in connection with leases are included under property and equipment on the consolidated balance sheets and are separately
disclosed in Note 5.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">The
following lease costs are included in the consolidated statements of operations:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: right">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three months<br/> ended<br/> September&#160;30, <br/> 2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three months<br/> ended<br/> September&#160;30, <br/> 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: left">Finance lease costs:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; width: 76%; text-align: left">Amortization of right-of-use assets</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">10,386</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">11,835</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-align: left">Interest on lease liability</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,240</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,492</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Operating lease costs</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">145,735</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">216,832</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Rental income</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt">Total lease costs</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">158,361</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">173,406</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">The
future payments due under operating and finance leases as at September 30, 2024 is as follows:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: right">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Operating<br/> lease</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Finance<br/> leases</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Total</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: left">Undiscounted lease payments:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; width: 64%; text-align: left">2025</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">400,024</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">16,164</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">416,188</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">2026</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">181,767</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">183,697</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">365,464</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Total undiscounted lease payments</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">581,791</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">199,861</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">781,652</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt">Discount</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt">Lease liabilities</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>DAMON MOTORS
INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><div style="padding: 0in 0in 1pt">

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the three months ended September 30, 2024 and 2023</p>

<p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></div><div>


</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
                                                                                                                                               <tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"/><td style="width: 0.25in; text-align: left">8.</td><td style="text-align: justify">SHORT-TERM DEBT</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Funds advanced</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Foreign exchange adjustment</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(14,030</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(133,686</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">33,658</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">603</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(99,425</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in">Repayment of principal</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(916,539</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(916,539</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Debt settled via issuance of convertible promissory notes and common share purchase warrants (Note 9)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">-</td><td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Funds advanced</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">729,299</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">596,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Foreign exchange adjustment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11,900</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11,900</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal"><span style="text-decoration:underline">Promissory
note </span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On April 16, 2024, the Company signed
an agreement to issue as payment and settlement of professional fees owing, a promissory note in the aggregate amount of $542,753 with
an interest rate at 5.5% per annum in favour of Wilson Sonsini Goodrich &amp; Rosati Professional Corporation (&#8220;WSGR&#8221;). All
unpaid principal, together with any then unpaid and accrued interest and other amounts payable hereunder shall be due and payable on the
earliest of (i) September 1, 2024; (ii) the closing of a Debt Financing or Equity Financing; (iii) the closing of a Change of Control
transaction; (iv) the Company becomes cash flow positive and is in a position to make payment on the outstanding invoices; or (v) upon
the occurrence of an Event of Default. If all unpaid principal and accrued interest shall not be paid when otherwise due, the interest
rate per annum on the note shall increase from 5.5% per annum to 7% per annum.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On September 16, 2024, the Company
signed amendment to the promissory note agreement with WSGR to modify the due date September 1, 2024 above to October 31, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal"><span style="text-decoration:underline">Secured
promissory note </span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">On
August 5 2024, the Company issued a promissory note to arms-length parties with principal amount of $364,649 (CAD$500,000) secured against
future SR&amp;ED tax credit refund expected to be received from year-end tax returns for 2024 submitted to CRA and substantially all of
the assets of the Company. The loan accrues interest at a rate of 3% per month and matures on or before November 15, 2024.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">On
August 11, 2024, the Company issued another promissory note to arms-length parties with principal amount of $364,650 (CAD$500,000) secured
against substantially all of the assets of the Company on a pari passu basis with the promissory note issued on August 6, 2024. The loan
accrues interest at a rate of 3% per month and matures on or before November 15, 2024.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>


</div><!-- Field: Page; Sequence: 270; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->115<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>DAMON MOTORS
INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><div style="padding: 0in 0in 1pt">

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the three months ended September 30, 2024 and 2023</p>

<p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></div><div>


</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"/><td style="width: 0.25in; text-align: left">8.</td><td style="text-align: justify">SHORT-TERM DEBT (continued)</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal"><span style="text-decoration:underline">Senior
secured promissory note </span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On June 26, 2024 and June 28, 2024,
the Company issued a senior secured promissory note (&#8220;Senior Secured Note&#8221;) in the aggregate amount of $350,000 and $200,000
respectively (up to an aggregate principal amount of $1,000,000) with interest rate at 10.0% per annum in favour of Grafiti Holding Inc
(&#8220;Grafiti&#8221;). All unpaid principal, together with any then unpaid and accrued interest and other amounts payable hereunder
shall be due and payable on the earliest of (i) December 31, 2024; (ii) upon the occurrence of an event of default; (iii) within three
business days as defined in the Business Combination Agreement (&#8220;BCA&#8221;) following termination of the BCA by borrower or lender
pursuant to Section 9.1(b) of the BCA or by lender pursuant to Section 9.1(d) of the BCA. The Senior Secured Note is secured by substantially
all of the assets of the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On July 3, 2024, the Company received
an additional loan under the senior secured promissory note in the aggregate amount of $396,000. On September 25, 2024, the Company amended
the senior secured promissory note dated June 26, 2024 increasing the maximum aggregate principal amount of the note from $1,000,000 to
$1,150,000. On the same date, the Company drew down an additional $200,000 on the note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 21.3pt"><span style="font-weight: normal">The
weighted average interest rate on the debt is 17.2% as of September 30, 2024 (2023 &#8211; 14.9%).</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"/><td style="width: 0.25in; text-align: left">9.</td><td style="text-align: justify">CONVERTIBLE NOTES</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">$</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; font-weight: bold">Balance, July 1, 2023</td><td style="width: 1%; font-weight: bold">&#160;</td>
    <td style="width: 1%; font-weight: bold; text-align: left">&#160;</td><td style="width: 9%; font-weight: bold; text-align: right">14,727,183</td><td style="width: 1%; font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Funds advanced</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11,549,945</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Convertible note issued for settlement of debt</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,308,441</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Warrant bifurcated classified as liability (Note 10)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,086,240</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Warrant bifurcated classified as equity</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(674,034</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Interest accrued, net of capitalized interest paid</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,793,574</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Changes in fair value of financial liabilities</td><td>&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">13,011,887</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold">Balance, June 30, 2024</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">40,630,756</td><td style="font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Funds advanced</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">555,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Warrant bifurcated classified as equity</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(287,387</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Interest accrued</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">738,994</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Changes in fair value of financial liabilities</td><td>&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,657,388</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt; font-weight: bold">Balance, September 30, 2024</td><td style="padding-bottom: 4pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">46,294,751</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">In
July and August 2024, the Company issued four tranches of convertible promissory notes (&#8220;Tranche 19&#8221; to &#8220;Tranche 22&#8221;)
to arms-length parties with an aggregate principal amount of $555,000 at valuation cap of $125,000,000 and interest rate of 12% per annum,
payable in arrears on the maturity date, one year from issuance of the note. Any Principal which is not paid when due shall bear interest
at the rate of the lesser of (i) 16% per annum and (ii) the maximum amount permitted by the applicable law from the due date thereof until
the same is paid. The convertible promissory notes holders were also issued 202,820 common share purchase warrants to subscribe for, and
purchase of the Company common shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted
capitalization at closing date. </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">For
details of the terms and conditions of the common share purchase warrants issued, refer to Note 10.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


</div><!-- Field: Page; Sequence: 271; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->116<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>DAMON MOTORS
INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><div style="padding: 0in 0in 1pt">

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the three months ended September 30, 2024 and 2023</p>

<p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></div><div>


</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"/><td style="width: 0.25in; text-align: left">9.</td><td style="text-align: justify">CONVERTIBLE NOTES (continued)</td>
</tr></table><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Summary of the convertible notes issued
and their key terms are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: left"><span style="font-size: 8pt">Tranche</span></td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom"><span style="font-size: 8pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; vertical-align: bottom; text-align: center; font-weight: bold"><span style="font-size: 8pt">Date of&#160;issuance</span></td><td style="vertical-align: bottom; text-align: center; font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center"><span style="font-size: 8pt">Amount<br/>
    issued</span></td><td style="vertical-align: bottom; text-align: center; padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="vertical-align: bottom; text-align: center; font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center"><span style="font-size: 8pt">Valuation<br/>
    cap</span></td><td style="vertical-align: bottom; text-align: center; padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="vertical-align: bottom; text-align: center; font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center"><span style="font-size: 8pt">Interest<br/>
    rate</span></td><td style="vertical-align: bottom; white-space: nowrap; text-align: center; padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="vertical-align: bottom; text-align: center; font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center"><span style="font-size: 8pt">Interest
    due date</span></td><td style="vertical-align: bottom; text-align: center; font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center"><span style="font-size: 8pt">Maturity
    date</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-size: 8pt">$</span></td><td><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; width: 13%; text-align: left"><span style="font-size: 8pt">Tranche 1</span></td><td style="width: 0.5%"><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; width: 15%; vertical-align: top"><span style="font-size: 8pt">October to November 2022</span></td><td style="width: 0.5%"><span style="font-size: 8pt">&#160;</span></td>
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    <td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; width: 0.5%; text-align: left"><span style="font-size: 8pt">%<sup>(1)</sup></span></td><td style="width: 0.5%"><span style="font-size: 8pt">&#160;</span></td>
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    <td style="vertical-align: top; text-align: center; width: 15%"><span style="font-size: 8pt">October 31, 2024<sup>(7)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 2</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">July 1, 2023<sup>(2)</sup><br/> October 31, 2024 <sup>(7)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(7)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">February 2023</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">100,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(7)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 3</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">April to May 2023</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">1,900,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 1, 2023<sup>(2)</sup><br/> October 31, 2024 <sup>(7)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(7)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 4</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">September 16, 2023</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">2,500,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(3)(4)(6)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 5</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">September 30, 2023</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">375,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024 <sup>(7)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(7)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 6</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">August 10, 2023</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">1,025,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024 <sup>(3)(4)(6)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 7</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">September 13, 2023</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">1,020,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024 <sup>(3)(4)(6)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 8</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">September 26, 2023</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">2,705,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024 <sup>(3)(4)(6)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 9</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">September 30, 2023</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">200,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(3)(4)(7)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(7)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 10</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">October 26, 2023</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">4,275,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024 <sup>(3)(4)(6)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 11</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">December 15, 2023</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">350,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024 <sup>(3)(4)(6)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 12</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">March 12, 2024</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">775,208</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">March 11, 2025 <sup>(3)(5)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">March 11, 2025</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 13</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">March 26, 2024</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">88,391</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">March 25, 2025 <sup>(3)(5)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">March 25, 2025</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 14</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">April 5, 2024</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">304,945</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024 <sup>(3)(4)(6)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 15</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">April 15, 2024</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">1,500,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024 <sup>(3)(4)(6)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 16</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">April 26, 2024</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">150,000</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024 <sup>(3)(4)(6)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">October 31, 2024<sup>(6)</sup></span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 17</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: center; vertical-align: top"><span style="font-size: 8pt">May 1, 2024</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">76,228</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">April 30, 2025 <sup>(3)(5)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; padding-bottom: 1.5pt; text-align: left"><span style="font-size: 8pt">%</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 19</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">125</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">July 19, 2025 <sup>(3)(5)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 20</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">12</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">July 21, 2025 <sup>(3)(5)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: left"><span style="font-size: 8pt">Tranche 21</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="vertical-align: top; text-align: center"><span style="font-size: 8pt">July 29, 2025 <sup>(3)(5)</sup></span></td><td><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; ">
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    <td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: right"><span style="font-size: 8pt">125</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: right"><span style="font-size: 8pt">12</span></td><td style="padding-bottom: 1.5pt; white-space: nowrap; text-align: left"><span style="font-size: 8pt">%</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; vertical-align: top; text-align: center"><span style="font-size: 8pt">August 29, 2025 <sup>(3)(5)</sup></span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; font-weight: bold; text-align: left; padding-bottom: 4pt"><span style="font-size: 8pt">Balance, September 30, 2024</span></td><td style="font-weight: bold; padding-bottom: 4pt"><span style="font-size: 8pt">&#160;</span></td>
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    <td style="padding-bottom: 4pt; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-size: 8pt">&#160;</span></td>
    <td style="padding-bottom: 4pt; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="white-space: nowrap; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center; padding-bottom: 4pt"><span style="font-size: 8pt">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-size: 8pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: center; padding-bottom: 4pt"><span style="font-size: 8pt">&#160;</span></td></tr>
  </table><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;<span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">Note
1 - On April 25, 2023, the Tranche 1 convertible notes with aggregate principal amount of $700,000 has its terms amended to revise
the valuation cap from $350,000,000 to $125,000,000 and revise the interest rate from 8% per annum to 12% per annum, payable in
arrears on October 1, 2023. On October 11, 2023, the convertible notes holder with aggregate principal amount of $5,000,000 had its
terms amended to revise the valuation cap from $350,000,000 to $125,000,000 and the interest rate revised from 8% per annum to 12%
per annum, payable in arrears on October 1, 2023.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">Note
2 - The Company negotiated to defer payments of convertible debt interest and include the interest amount into the investment amount for
conversion on maturity. The agreement for the deferment of the interest due on July 1, 2023 for Tranche 2 of $29,264, and on October 1,
2023 for Tranche 1 and Tranche 3 of $76,438 and $100,537, respectively to maturity date.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">Note
3 - Any Principal which is not paid when due shall bear interest at the rate of the lesser of (i) 16% per annum and (ii) the maximum amount
permitted by the applicable law from the due date thereof until the same is paid. </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">Note
4 - Convertible promissory notes holders were also issued common share purchase warrants (Note 10) to subscribe for, and purchase of the
Company common shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization
at closing date.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">Note
5 - Convertible promissory notes holders were also issued common share purchase warrants (Note 10) to subscribe for, and purchase of the
Company common shares at the exercise price of $2.7364 per share.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">Note
6 - On June 15, 2024, the Company and the convertible promissory note holders entered into a Letter of Agreement amending the maturity
of the notes, June 15, 2024, to mature on September 30, 2024. The maturity date of the notes was further amended on September 11, 2024
to mature on October 31, 2024, subject to an additional tolling period of 30 days at the election of the Company upon notice by the Company
to the note holders.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">Note
7 - On June 26, 2024, the Company and the convertible promissory note holders entered into a Letter of Agreement amending the maturity
of the notes, June 30, 2024, to mature on September 30, 2024. The maturity date of the notes was further amended on September 11, 2024
to mature on October 31, 2024, subject to an additional tolling period of 30 days at the election of the Company upon notice by the Company
to the note holders.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>


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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->117<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>DAMON MOTORS
INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><div style="padding: 0in 0in 1pt">

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the three months ended September 30, 2024 and 2023</p>

<p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></div><div>


</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">9.</td><td style="text-align: justify">CONVERTIBLE NOTES (continued)</td>
</tr></table><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On September 11, 2024, the Company
and the convertible promissory note holders entered into a Letter of Agreement under the same term, further amending the maturity of the
notes, September 30, 2024 to mature on October 31, 2024, subject to an additional tolling period of 30 days at the election of the Company
upon notice by the Company to the note holders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">The
Company may not prepay the principal amount and the accrued and unpaid interest in whole or in part without the written consent of the
convertible noteholders. The convertible notes will rank pari passu in right of payment with respect to each other, and all payment to
each of the convertible noteholders will be made pro rata among the convertible noteholders based upon the aggregate outstanding principal
amount of the convertible promissory note immediately before any such payment.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal"><span style="text-decoration:underline">Conversion
events</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">In
the event of a change of control, the convertible noteholders would have the right to either:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font: normal 10pt Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">convert
principal and unpaid interest into shares at a conversion price which is lower of (i) the respective valuation cap (for Tranches 4 through
22, the valuation cap is reduced to $93,750,000 if event of default occurs prior to conversion) divided by the diluted capitalization
and (ii) discounted conversion price of 75% (with 2.5% increase in discount every 6 months from issuance date for Tranches 1 through
2) multiplied by the price per share ascribed to the common share in the change of control event; or</span></td>
</tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font: normal 10pt Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-weight: normal">require
the Company to repurchase their convertible notes in cash, in whole or in part, at a price equal to 100% of the principal amount of the
convertible notes plus accrued and unpaid interest (for Tranches 1 through 3 and at 25% redemption premium for Tranches 4 through 22)
thereon to the date of repurchase.</span></td>
</tr></table><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">In
the event of a qualified financing, which refers to the next transaction after the issue date and before the maturity date in which the
Company issues and sells equity securities, with the principal purpose of raising capital (for Tranches 1 through 3) or a Public Company
event, convertible notes include automatic mandatory conversion features resulting in the receipt of shares at a conversion price which
is lower of (i) the valuation cap (for Tranches 4 through 22), the cap price further reduced to $93,750,000 if event of default occurs
prior to conversion) divided by diluted capitalization immediately prior to the event of qualified financing or Public Company event and
(ii) the discounted conversion price of 25% (with 2.5% increase in discount every 6 months from issuance date for Tranches 1 through 3)
applied to the lowest price paid/offered for equity security subject to a cap price of $125,000,000 multiplied by a price per share of
the qualified financing or Public Company event.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">Diluted
capitalization refers to aggregate number of outstanding common shares immediately prior to the closing or occurrence of a qualified financing,
change of control, or Public Company event, as applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">In
the event that the convertible notes are not converted prior to maturity date, the Company is obligated to settle the convertible notes
by paying in cash equivalent to 100% of the convertible notes principal amount and the accrued and unpaid interest.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">As
the conversion features were not required to be bifurcated and as none of the components of convertible note were required to be classified
under equity, the Company made the election to measure the convertible notes subsequently at fair value through profit and loss.</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 273; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->118<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>DAMON MOTORS
INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><div style="padding: 0in 0in 1pt">

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the three months ended September 30, 2024 and 2023</p>

<p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></div><div>


</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">9.</td><td style="text-align: justify">CONVERTIBLE NOTES (continued)</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">At
inception, the proceeds from the convertible notes issued with detachable share purchase warrants for Tranches 4 to 11, Tranches 14 to
16 and Tranche 22 to were determined to be their fair values, were allocated between the convertible notes issued with detachable share
purchase warrants based on the residual method. During the three months ended September 30, 2024, the Company issued $555,000 of convertible
notes in Tranches 19 to 22. The fair value of these convertible notes of $267,613 was determined as discussed below, with the residual
amount of $287,387 (Note 10) allocated to the share purchase warrants assessed to meet the equity classification requirements and was
recorded as a component of additional paid-in capital.</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">Management
has determined that due to the complexity of the various embedded features and the short life expected of the notes, it will elect the
fair value option under ASC 825-10-1 as the instruments are eligible for the fair value election under ASC 825-10. As a result, the entire
convertible promissory note is carried at fair value and the difference between the aggregate fair value and aggregate unpaid principal
balance of the convertible notes for the three months ended September 30, 2024 totaling $4,657,388 (three months ended September 30, 2023
&#8211; $1,250,971) are accounted as changes in fair value of financial liabilities in the statements of operations. No amounts were recognized
in other comprehensive income as the changes in fair value due to credit risk were nominal.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">During
the three months ended September 30, 2024, the Company expensed $nil (three months ended September 30, 2023 &#8211; $280,000) in transaction
costs related to issuance of convertible promissory notes in the consolidated statements of operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">The
convertible notes are valued by management at each measurement date based on the Company&#8217;s estimated enterprise value implied by
the most comparable transaction and allocating the value to each of the Company&#8217;s equity-linked instruments (preferred shares, SAFE
agreements, convertible promissory notes, stock options and common shares) based on their respective characteristics and rights. In arriving
at the value attributable to each instrument, the Company applies an option pricing model. The Company&#8217;s model values the preferred
shares, SAFEs, convertible promissory notes, common shares, warrants and stock options as call options on the Company&#8217;s equity value
with exercise prices based on the conversion options of the respective instruments. The model used the following assumptions as at September
30, 2024 and June 30, 2024, including volatility, risk free rates and management&#8217;s best estimate of the expected time for the occurrence
of a conversion event as described below.</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.7pt; text-align: justify; text-indent: -35.7pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">September&#160;30, <br/> 2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30,<br/> 2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Annualized volatility</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-size: 10pt">70% &#8211; 90</span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-size: 10pt">70% &#8211; 90</span></td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Expected time to liquidity</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-size: 10pt">0.5 &#8211; 1.5 year</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-size: 10pt">0.5 &#8211; 1.5 year</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Dividend rate</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">0</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">0</td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Risk-free interest rate</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3.98</td><td style="padding-bottom: 1.5pt; text-align: left">%</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5.09</td><td style="padding-bottom: 1.5pt; text-align: left">%</td></tr>
  </table><div>



</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in">&#160;</p><div>


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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->119<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>DAMON MOTORS
INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><div style="padding: 0in 0in 1pt">

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the three months ended September 30, 2024 and 2023</p>

<p style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></div><div>


</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">10.</td><td style="text-align: justify">WARRANTS AND DERIVATIVE WARRANT LIABILITIES</td>
</tr></table><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">The
Company accounts for common share purchase warrants as either equity instruments or derivative liabilities depending on the specific terms
of the warrant agreement. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet
the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under
ASC 815, including whether the warrants are indexed to the Company&#8217;s own common shares. We classify derivative warrant liabilities
on the balance sheet at fair value, and changes in fair value during the periods presented in the statement of operations, which is revalued
at each balance sheet date subsequent to the initial issuance of the common share purchase warrant. For warrants that meet the criteria
for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">In
July and August 2024, in connection with the issuance of Tranche 19 through 22 convertible promissory notes to arms-length parties (Note
9), the Company issued 202,820 common share purchase warrants to the noteholders. Similarly, each warrant is exercisable anytime for 1
common share of the Company at an exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization
on closing date. The holder of the common share warrants can exercise the warrant either fully or partially at any time from issuance
date until its expiry, 5 years from issuance date.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">In
the event there is no effective registration statement or prospectus available for resale of shares under the warrant agreement within
180 days following the closing of the Public Company event, the warrant holder can exercise the warrants, in whole or in part, on a cashless
basis for the number of shares computed as:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 39.3pt"/><td style="width: 18pt"><span style="font-weight: normal">i.</span></td><td style="text-align: justify"><span style="font-weight: normal">the difference between the exercise price and volume-weighted average
price (&#8220;VWAP&#8221;) on trading day immediately preceding the date of notice of exercise provided notice is in accordance with section
2(a) of the note common share purchase agreement.</span></td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 39.3pt"/><td style="width: 18pt"><span style="font-weight: normal">ii.</span></td><td style="text-align: justify"><span style="font-weight: normal">the difference between the exercise price and, at holder&#8217;s option:
</span></td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 75.3pt"/><td style="width: 18pt"><span style="font-weight: normal">a.</span></td><td style="text-align: justify"><span style="font-weight: normal">VWAP on trading day immediately preceding the date of notice of exercise;
or </span></td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 75.3pt"/><td style="width: 18pt"><span style="font-weight: normal">b.</span></td><td style="text-align: justify"><span style="font-weight: normal">Bid price of the Company&#8217;s common share on principal trading market
on the date of notice of exercise.</span></td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 39.3pt"/><td style="width: 18pt"><span style="font-weight: normal">iii.</span></td><td style="text-align: justify"><span style="font-weight: normal">the difference between the exercise price and VWAP on date of notice
of exercise.</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">The
warrant holder for tranches 4 and tranches 6 through 11 may be entitled to additional 3% shares of the unexercised part of the warrant
(up to a maximum of 8%) that may be issued for each 30-day registration statement default past the registration deadline (i.e., 180 days
of Public Company event) along with liquidated damages up to a maximum of $250,000.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">The
warrant holder&#8217;s option for net cash settlement (equal to Black Scholes value) in the event a fundamental transaction occurs at
or before a Public Company event and which is within the control of the Company including approved by the Company&#8217;s Board. However,
if the transaction is outside the control of the Company or board, the warrant holder shall receive the same form and type of consideration
as received by common stockholders in connection with the fundamental transaction.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>


</div><!-- Field: Page; Sequence: 275; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->120<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>DAMON MOTORS
INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Expressed in United States dollars)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">10.</td><td style="text-align: justify">WARRANTS AND DERIVATIVE WARRANT LIABILITIES (continued)</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">Fundamental
transaction refers to one or more related transactions that results in (i) merger or consolidation of the Company with another, (ii) any
sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets, (iii) purchase
offer, tender offer or exchange offer to sell, tender or exchange their shares for other securities, cash or property and has been accepted
by the holders of 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company,
(iv) reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the
Common Shares are effectively converted into or exchanged for other securities, cash or property, or (v) a stock or share purchase agreement
or other business combination with another resulting in acquisition of 50% or more of the outstanding Common Shares or 50% or more of
the voting power of the common equity of the Company.</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">Upon
exercise, the holders will pay the Company the respective exercise price for each warrant exercised in exchange for one common share of
the Company and the fair value at the date of exercise and the associated non-cash liability will be reclassified to share capital. The
non-cash liability associated with any warrants that expire unexercised will be recorded as a gain in the consolidated statements of operations.
Unexercised warrants shall be exercised automatically on a cashless basis on the termination date.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -35.7pt"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal"><span style="text-decoration:underline">Liability-classified
warrants </span></span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">At
inception, the proceeds from the convertible notes were allocated between the convertible notes and the warrants based on the residual
method allocated to the warrants and for the warrants that did not meet the indexation and equity classification requirements, the warrants
are classified as derivative liabilities. The warrants are subsequently remeasured at fair value and accounted as changes in fair value
of derivative liabilities in the statements of operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><span style="font-weight: normal">The
fair value of derivative warrant liabilities was estimated by management at year end or each measurement date based on the Company&#8217;s
estimated enterprise value implied by the most comparable transaction and allocating the value to each of the Company&#8217;s equity-linked
instruments (preferred shares, SAFE agreements, convertible promissory notes, stock options and common shares) based on their respective
characteristics and rights. In arriving at the value attributable to each instrument, the Company applies an option pricing model. The
Company&#8217;s model values the preferred shares, SAFEs, convertible promissory notes, common shares, warrants and stock options as call
options on the Company&#8217;s equity value with exercise prices based on the conversion options of the respective instruments. The model
used the following assumptions as at September 30, 2024 and June 30, 2024, including volatility, risk free rates and management&#8217;s
best estimate of the expected time for the occurrence of a conversion event as described in Note 9 above.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->121<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"><b>DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">(Expressed in United States dollars)</p><div>



</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></p><div>

</div><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">10.</td><td style="text-align: justify">WARRANTS AND DERIVATIVE WARRANT LIABILITIES (continued)</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal"><span style="text-decoration:underline">Liability-classified
warrants </span>(continued)</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">Changes
in the value of the derivative liability related to the warrants for the three months ended September 30, 2024 and the year ended June
30, 2024 were as follows:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; padding-bottom: 4pt">Balance, June 30, 2024 and September 30, 2024</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">In
June 2024, the Company, with the consent of warrant holders, amended the terms of the common share purchase warrant to be indexed to the
Company&#8217;s equity. These warrants are reclassified from liability-classified warrants to equity-classified warrants and recorded
as a component of additional paid-in capital.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">The
warrants were initially classified as liability and elected to measure at fair value because they failed the fixed shares to fixed monetary
amount test in accordance with ASC 815 due to the provision in section 3b of the original warrants agreement whereby the warrants&#8217;
exercise price shall be reduced to lower exercise price on:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in">&#9679;</td><td style="text-align: justify"><span style="font-weight: normal">the issuance of new options or common share equivalents at an exercise
price that is less than the warrants&#8217; exercise price immediately before such issuance; or</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in"><span style="font-weight: normal">&#9679;</span></td><td style="text-align: justify"><span style="font-weight: normal">on the modification of any existing options or common share equivalents
at an exercise price that is less than the warrant&#8217;s exercise price immediately before such modification</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">Section
3b resulted in an adjustment to the warrants exercise price on change of existing equity-linked instruments which did not meet the definition
of a down-round feature as it was based on neither the sale nor the issuance of stock or a financial instrument. Instead, it was based
on the modification of existing instruments.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">Accordingly,
as the adjustment pursuant to section 3b of the warrant agreement was not a down-round feature as defined by ASU 2017-11, the warrants
failed to meet the requirements of ASC 815 of a fixed shares for fixed monetary amount and accordingly were not considered as Indexed
to the Company&#8217;s own stock pursuant to ASC 815.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">The
Company has amended the warrant agreements to remove section 3b. Additionally, the warrants exercise price is modified to make it fixed
at $2.7364 per common share. As a result of these changes to the warrant agreement, the warrants are eligible to pass the fixed shares
for fixed monetary amount test and considered as indexed to the Company&#8217;s own stock pursuant to ASC 815 and qualify for equity classification.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 277; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->122<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><p style="margin-top: 0; margin-bottom: 0"><b>DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">(Expressed in United States dollars)</p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">10.</td><td style="text-align: justify">WARRANTS AND DERIVATIVE WARRANT LIABILITIES (continued)</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal"><span style="text-decoration:underline">Equity-classified
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">In
connection with the issuance of Tranche 19 to Tranche 22 convertible promissory notes to arms-length parties (Note 9), the Company issued
common share purchase warrants to the noteholders. At inception, these warrants were assessed to meet the equity classification requirements
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The following table provides
the relevant information on the outstanding warrants as of September 30, 2024:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

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warrants <br/>
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exercisable</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">2.7364</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">27,857</td><td style="text-align: left"><sup>&#160;</sup></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">2.7364</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">2.7364</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in">Liability-classified warrants reclassified to equity-classified warrants</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,759,183</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">91,361</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2.7364</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">July 19, 2029</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">July 22, 2024</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">36,544</td><td style="text-align: left"><sup>&#160;</sup></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">36,544</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2.7364</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">July 21, 2029</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">7,309</td><td style="text-align: left"><sup>&#160;</sup></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">7,309</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2.7364</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">July 29, 2029</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  </table><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"><span style="font-weight: normal"><sup>(1)</sup></span></td><td style="text-align: justify"><span style="font-weight: normal">In June 2024, the Company, with the consent of warrant holders, amended
the terms of the common share purchase warrant to be indexed to the Company&#8217;s equity. As a result, these warrants are reclassified
from liability-classified warrants to equity-classified warrants and recorded as a component of additional paid-in capital</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Page; Sequence: 278; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->123<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"><b>DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">(Expressed in United States dollars)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">11.</td><td style="text-align: justify">FINANCIAL LIABILITY CONVERTIBLE TO EQUITY</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%">Balance, July 1, 2023</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">2,700,000</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Foreign exchange adjustment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(92,543</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">592,543</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold">Balance, June 30, 2024</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">3,200,000</td><td style="font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Converted to common shares (Note 13)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(3,200,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; padding-bottom: 4pt">Balance, September 30, 2024</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">From
August through September 2022, the Company entered into multiple SAFE agreements certain investors and received $2,005,213. The SAFEs
are recorded as a liability measured at fair value at inception and subsequently carried at fair value with changes in fair value recorded
in the statements of operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The SAFEs may be converted or paid
in cash on the occurrence of the following events/transactions before the maturity date:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 35.45pt"/><td style="width: 0.25in"><span style="font-size: 10pt; font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify">In the event of equity financing, the Company will automatically issue to the SAFE holders a number of
SAFE shares equal to the quotient obtained by dividing (i) the sum of the SAFE proceeds and the return amount (which is an amount determined
by applying a rate of return of 8% per annum, on a non-compounding basis, on the SAFE Proceeds as calculated from the issue date to, but
excluding, the date of expiration or termination of the SAFEs) by (ii) the conversion Price.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 35.45pt"/><td style="width: 0.25in"><span style="font-size: 10pt; font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify">In the event of liquidation, SAFE holders at their option have a right to receive either (i) cash payment
equivalent to the respective SAFE proceeds or (ii) automatically receive common shares (in the case of change of control) or listed securities
(in the case of a Public company event), as applicable, that is equal to the quotient obtained by dividing (i) the sum of the SAFE proceeds
and the return amount (which is an amount determined by applying a rate of return of 8% per annum, on a non-compounding basis, on the
SAFE Proceeds as calculated from the issue date to, but excluding, the date of expiration or termination of the SAFEs) by (ii) the liquidity
price, if the SAFE holders fails to select the cash option.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 35.45pt"/><td style="width: 0.25in"><span style="font-size: 10pt; font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="text-align: justify">If there is a dissolution event, the SAFE holders at their option have a right to receive either (i) cash
equivalent to the respective SAFE proceeds or (ii) automatically receive common shares that is equal to the quotient obtained by dividing
(i) the sum of the SAFE proceeds and the return amount (which is an amount determined by applying a rate of return of 8% per annum, on
a non-compounding basis, on the SAFE proceeds as calculated from the issue date to, but excluding, the date of expiration or termination
of the SAFEs) by (ii) the dissolution price, if the SAFE holders fails to select the cash option.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">At
maturity, the SAFE holders automatically receive common shares of the Company that are equal to the quotient obtained by dividing (i)
the sum of the SAFE proceeds and the return amount (which is an amount determined by applying a rate of return of 8% per annum, on a non-compounding
basis, on the SAFE proceeds as calculated from the issue date to, but excluding, the date of expiration or termination of the SAFEs) by
(ii) the maturity conversion price.</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">On
July 1, 2024, the SAFEs matured and the SAFE holders received 1,437,002 common shares (Note 13). </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 279; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->124<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><p style="margin-top: 0; margin-bottom: 0"><b>DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">(Expressed in United States dollars)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">11.</td><td style="text-align: justify">FINANCIAL LIABILITY CONVERTIBLE TO EQUITY (continued)</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">The
SAFEs are valued by management at each measurement date based on the Company&#8217;s estimated enterprise value implied by the most comparable
transaction and allocating the value to each of the Company&#8217;s equity-linked instruments (preferred shares, SAFE agreements, convertible
promissory notes, share purchase warrants, stock options and common shares) based on their respective characteristics and rights. In arriving
at the value attributable to each instrument, the Company applies an option pricing model. The Company&#8217;s model values the preferred
shares, SAFEs, common shares, and stock options as call options on the Company&#8217;s equity value with exercise prices based on the
conversion options of the respective instruments. </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">The
model used for the valuation of convertible promissory notes, share purchase warrants and SAFEs used certain assumptions as of September
30, 2024 and June 30, 2024, including volatility, risk free rates and management&#8217;s best estimate of the expected time for the occurrence
of a conversion event as described in Note 9 above.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">During the year ended June 30, 2024,
the common share price valuation estimate used for the SAFE valuation immediately prior to the conversion of the SAFEs was $3.77.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">12.</td><td style="text-align: justify">COMMITMENTS AND CONTINGENCIES</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">A summary of undiscounted liabilities
and future operating commitments as at September 30, 2024:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Total</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td>
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5 years</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left">Purchase obligations</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">1,490,185</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">&#160;&#160;&#160;&#160;-</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt"><span style="font-size: 10pt">Investment obligation <sup>(1)</sup></span></td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,000,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,000,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt">Total financial liabilities and commitments</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">2,611,529</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 14.15pt"><span style="font-weight: normal"><sup>(1)</sup></span></td><td style="text-align: justify"><span style="font-weight: normal">The Company entered into a strategic partnership arrangement with a
third-party. As part of the agreement, the Company agree to invest an aggregate amount of $1,000,000 in the third-party upon a future
financing and negotiation of terms that are agreed to by both parties during the term of the agreement. As at the date of these financial
statements no such arrangement has been made.</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">On
September 30, 2023, the Company signed a full surrender agreement with the Lessor of the Surrey manufacturing facility. Per the agreement,
cash consideration must be paid on or before the dates set forth in the agreement. In the event that the Company defaults on such payment
obligations, the Company will immediately have to pay the Lessor the full amount of all rent and other amounts, which would have otherwise
been payable by the Company during the term if the lease had not surrendered, less any cash consideration paid and any rent which the
Landlord recovers (or is reasonably expected to recover) from any replacement tenant(s) at the Premises over the balance of the initial
Term of the Lease. In circumstances where a replacement tenant has not yet been secured, then such rent will be estimated as of the date
of default by an appraiser, less any costs and expenses of such reletting, including brokerage fees, solicitor&#8217;s fees, tenant inducements
and of costs of alterations and repairs as may be necessary to relet the premises. On April 29, 2024 the Company requested payment deferment
of the 5th and 6th instalment payment due on March 1, 2024 and May 1, 2024 respectively to July 1, 2024. On September 6, 2024, the Lessor
agreed to further defer the payments due on July 1, 2024 to be paid on or before September 30, 2024. On October 1, 2024, the Company and
the Lessor signed an amendment to the Surrender of Lease Agreement whereby the Lessor hereby agrees to a waiver of breach by the Company
of its payment obligations in subsection 3.1(e), (f) and (g) of the Surrender of Lease Agreement by the Tenant and further delay payments
due (see Note 6).</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><!-- Field: Page; Sequence: 280; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->125<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"><b>DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">(Expressed in United States dollars)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>


</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">12.</td><td style="text-align: justify">COMMITMENTS AND CONTINGENCIES (continued)</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">The
Company met the eligibility criteria under the Small Business Venture Capital Act (the &#8220;Act&#8221;) and was registered as an Eligible
Business Corporation (&#8220;EBC&#8221;) in 2018. Under the Act, the Company was approved to raise up to $10 million through the issuance
of authorized equity capital whereby the investing shareholders received up to 30% of the amount invested as a tax credit against their
B.C. provincial taxes. Under this program, should the Company be out of compliance with the Act during the required five-year investment
hold period, it would be contingently liable to repay any tax credits previously issued to investors. At the date of these financial statements,
repayable tax credits are approximately $0.6 million. Management believes the Company is compliant with all relevant terms of the Act.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">13.</td><td style="text-align: justify">SHARE CAPITAL</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">a)</td><td style="text-align: justify">Authorized</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">The
authorized share capital of the Company consists of the following:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in"><span style="font-weight: normal">i.</span></td><td style="text-align: justify"><span style="font-weight: normal">An unlimited number of common shares (&#8220;common shares&#8221;) without
par value; and</span></td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in"><span style="font-weight: normal">ii.</span></td><td style="text-align: justify"><span style="font-weight: normal">An unlimited number of Class Seed preferred shares, Class A preferred
shares and Class B preferred shares (collectively, &#8220;preferred shares&#8221;) without par value, issuable in series.</span></td></tr></table><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">b)</td><td style="text-align: justify">Issued and outstanding</td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in"><span style="font-weight: normal">i.</span></td><td style="text-align: justify"><span style="font-weight: normal">As at September 30, 2024, the Company had 13,761,506 (June 30, 2024
&#8211; 12,324,504) common shares outstanding.</span></td></tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"/><td style="width: 0.25in"><span style="font-weight: normal">ii.</span></td><td style="text-align: justify"><span style="font-weight: normal">As at September 30, 2024 and June 30, 2024, the Company had 16,758,528
preferred shares outstanding.</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal"><span style="text-decoration:underline">Common
shares transactions</span></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On July 1, 2024, the Company issued
1,437,002 common shares in connection with the conversion of SAFE with an estimated fair value of $3,200,000 (Note 11).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="text-decoration:underline">Preferred shares transactions</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Preferred shares series</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Preferred<br/> share<br/> outstanding</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: left">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">#</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: justify">Series 1 Class Seed Preferred</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">926,392</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">961,502</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">Series 2 Class Seed Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">477,117</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">143,836</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Series 3 Class Seed Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,802,304</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">441,384</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">Series 4 Class Seed Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">157,381</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">102,754</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Series 5 Class Seed Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">364,324</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">302,498</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">Series 6 Class Seed Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,312,306</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,113,885</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Series 1 Class A Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,512,713</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">13,440,769</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">Series 2 Class A Preferred</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,578,780</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">29,841,488</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-bottom: 1.5pt">Series 2 Class B Preferred</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,627,211</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">25,241,971</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; padding-bottom: 4pt; padding-left: 5.4pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">16,758,528</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">71,590,087</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">During the three months ended September
30, 2024 and 2023, no preferred shares were issued.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><!-- Field: Page; Sequence: 281; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->126<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"><b>DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">(Expressed in United States dollars)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>


</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">13.</td><td style="text-align: justify">SHARE CAPITAL (continued)</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt"><span style="text-decoration:underline">Rights and privileges of preferred shareholders </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Preferred shareholders hold the option
to convert their preferred shares to common shares at any time based on a Conversion Price. The Conversion Price is initially equal to
the price of the first share issued in the preferred shares class. Thereafter the Conversion Price is symmetrically adjusted for common
share issuances to prevent anti-dilution. The anti-dilution clause maintains the relative rights of the common and preferred shareholders,
and its effect is that those relative rights remain the same immediately before and immediately after the issuance of common shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On any matter presented to the shareholders
of the Company for their action or consideration at any meeting of shareholders of the Company, each holder of outstanding preferred shares
is entitled to cast the number of votes equal to the number of whole common shares into which the preferred shares are convertible as
of the record date for determining shareholders entitled to vote on such matter.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company shall not declare, pay
or set aside any dividends on shares of any other class unless the holders of the preferred shares first receive, or simultaneously receive,
a dividend on each outstanding preferred share in an amount at least equal to the dividend received should the preferred shares be converted
to common shares as of the record date for determination of holders entitled to receive such dividend.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In the event of liquidation, dissolution
or winding up of the Company, before any payment shall be made to the holders of common shares by reason of their ownership thereof, the
holders of each series of preferred shares, shall be entitled to be paid out of the funds and assets available for distribution to its
shareholders, an amount per share equal to the greater of the original issue price for such series of preferred shares plus any dividends
declared but unpaid thereon, or such amount per share as would have been payable had all shares of such series of preferred shares been
converted into common shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">c)</td><td style="text-align: justify">Stock options</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On August 30, 2017 (and amended on
September 24, 2021), the Board adopted a Stock Option Plan which provides that the Board may from time to time, in its discretion, grant
to directors, officers, employees, and consultants, non-transferable stock options to purchase common shares of the Company. As per the
terms of the Stock Option Plan, the requisite vesting period of the employees is generally four years.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The
fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. During the three
months ended September 30, 2024, the Company issued nil (three months ended September 30, 2023 &#8211; nil) stock options.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">A
summary of the changes in the Company&#8217;s stock options is as follows:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Stock<br/>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; font-weight: bold; text-indent: -1.85pt; padding-left: 1.85pt">Outstanding, July 1, 2023</td><td style="width: 1%; font-weight: bold">&#160;</td>
    <td style="width: 1%; font-weight: bold; text-align: left">&#160;</td><td style="width: 9%; font-weight: bold; text-align: right">10,138,537</td><td style="width: 1%; font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -1.85pt; padding-left: 1.85pt">Expired</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(118,375</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -1.85pt; padding-left: 1.85pt">Cancelled</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(366,967</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt; text-indent: -1.85pt; padding-left: 1.85pt">Exercised</td><td>&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(399,738</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-indent: -1.85pt; padding-left: 1.85pt">Outstanding, June 30, 2024</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">9,253,457</td><td style="font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -1.85pt; padding-left: 1.85pt">Expired</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(16,934</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; text-indent: -1.85pt; padding-left: 1.85pt">Cancelled</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 282; Value: 1 --><div>
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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"><b>DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">(Expressed in United States dollars)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>


</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">13.</td><td style="text-align: justify">SHARE CAPITAL (continued)</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">During
the three months ended September 30, 2024, the Company expensed $16,295 (three months ended September 30, 2023 &#8211; $204,159) related
to the vesting of stock options.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">Cash
received by the Company upon the exercise of stock options during the three months ended September 30, 2024 amounted to $nil (three months
ended September 30, 2023 &#8211; $19,524).</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">14.</td><td style="text-align: justify">RELATED PARTY TRANSACTIONS</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Parties are considered to be related
if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party
in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common
significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction
when there is a transfer of resources or obligations between related parties.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As at September 30, 2024, $410,059
(2023 - $404,426) was due for remuneration payable to key management and included in accrued liabilities (Note 6).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">15.</td><td style="text-align: justify">INCOME TAXES</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As of September 30, 2024 and 2023,
the Company&#8217;s deferred tax liability was zero. Cumulative deferred tax assets are fully reserved as there is not sufficient evidence
to conclude it is more likely than not the deferred tax assets are realizable. No current liability for federal state income taxes has
been included in these condensed interim unaudited consolidated financial statements due to the loss for the periods.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="padding-left: 0in; width: 0.25in">16.</td><td style="text-align: justify">SEGMENT REPORTING</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">ASC 280 - Segment Reporting establishes
standards for reporting information about operating segments on a basis consistent with internal organization reporting used by the Company&#8217;s
chief operating decision maker, our CEO, for making operating decisions and assessing performance as the source for determining the Company&#8217;s
reportable segments. The Company is pre-revenue and pre-production and operates as a single reportable operating segment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The following table is our long-lived
assets information by geography as of September 30, 2024 and June 30, 2024:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">$</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">676,886</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -1.85pt; padding-left: 1.85pt">United States</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">356,106</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">461,534</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt; text-indent: -30.6pt; padding-left: 30.6pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">941,807</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">1,138,420</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Page; Sequence: 283; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->128<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"><b>DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">(Expressed in United States dollars)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">17.</td><td style="text-align: justify">FINANCIAL INSTRUMENTS AND RISK MANAGEMENT</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">a)</td><td style="text-align: justify">Fair value of financial assets and liabilities</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company reports all financial assets
and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Valuation techniques
used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance
establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy
are as follows:</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.5in; text-align: left">Level 1:</td><td style="text-align: justify">Inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Company has the ability to access at the measurement date.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.5in; text-align: left">Level 2:</td><td style="text-align: justify">Inputs are observable, unadjusted quoted prices in active markets
for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active,
or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets
or liabilities.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.5in; text-align: left">Level 3:</td><td style="text-align: justify">Inputs are unobservable inputs for the asset or liability. These
financial instruments are measured using management&#8217;s best estimate of fair value, where the inputs into the determination of fair
value require significant management judgment or estimation.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The level in the fair value hierarchy
within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement
in its entirety.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">All financial instruments are initially
measured and recognized at fair value, and thereafter recognized at cost, or amortized cost; except for convertible notes, warrants and
SAFEs which are subsequently measured at fair value through the statements of operations. As at September 30, 2024 and June 30, 2024,
the carrying values of cash, prepaids, deposits and other receivables, long-term deposits, accounts payable and accrued liabilities, and
customer deposits approximate their respective fair values due to the short-term nature of these instruments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">At September 30, 2024 and June 30,
2024, the convertible notes and SAFEs that are measured at fair value on a recurring basis are categorized as Level 3. For assets and
liabilities recognized at fair value on a recurring basis, the Company reassesses categorization to determine whether changes have occurred
between the hierarchy levels at the end of each reporting period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The fair value of these Level 3 financial
liabilities is determined using pricing models, discounted cash flow methodologies or similar techniques for which the determination of
fair value requires significant management judgment or estimation (see Note 9).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Areas of significant judgement are
the risk-free rate, volatility rate, dividend yield, term to liquidation, discount for lack of marketability, most recent financing rounds
and implied equity value per letter of intent.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">These valuations use assumptions and
estimates the Company believes would be made by a market participant in making the same valuation. The Company reassesses these assumptions
and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 284; Value: 1 --><div>
    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->129<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"><b>DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">(Expressed in United States dollars)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"><b>17.</b></td><td><b>FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">A significant increase/decrease in
some of those unobservable inputs would result in a significantly higher/lower fair value measurement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">During the three months ended September
30, 2024, the Company recognized fair value adjustments with respect to financial instruments categorized as Level 3 of $4,657,388 (three
months ended September 30, 2023 - $827,304) in the statements of operations as changes in fair value of financial liabilities. No amounts
were recognized in other comprehensive income as the changes in fair value due to credit risk were nominal.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">There were no transfers into or out
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">-</td><td style="font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(3,200,000</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">-</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>





</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"><b>DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">(Expressed in United States dollars)&#160;</p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"><b>17.</b></td><td><b>FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)</b></td></tr></table><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left">b)</td><td style="text-align: justify">Risk management</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company&#8217;s financial instruments
are exposed to certain financial risks, including credit risk, liquidity risk and market risk.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="text-decoration:underline">Liquidity risk</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company monitors its cash balances
and cash invested to ensure there is sufficient liquidity to meet its financial obligations as they come due. Liquidity management is
comprised of regular analysis, monitoring, and review of forecasted and actual cash flows and managing operation and capital finding requirements
on a planning and projected basis. The Company&#8217;s accumulated deficit and expected future losses cast substantial doubt upon the
Company&#8217;s ability to continue as a going concern (Note 1).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="text-decoration:underline">Market risk </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Market risk is the risk of loss that
may arise from changes in market factors such as foreign exchange rates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="text-decoration:underline">Foreign currency risk</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company&#8217;s lease liabilities
and various operating expenses on the financial statements are denominated in Canadian dollars, and therefore are exposed to fluctuations
in foreign currency exchange rates. The Company evaluated the exposure to foreign currency risk and concluded that it is not material.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">18.</td><td style="text-align: justify">SUPPLEMENTAL CASH FLOW INFORMATION</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Summary of non-cash investing and financing
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"><b>DAMON MOTORS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">For the three months ended September 30, 2024 and 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">(Expressed in United States dollars)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in">19.</td><td style="text-align: justify">SUBSEQUENT EVENTS</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In addition to subsequent events disclosed
elsewhere, the following events occurred after September 30, 2024, up to the date these financial statements were issued :</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt" width="100%"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">i.</td><td style="text-align: justify">On October 8, 2024, the Company secured $500,000 in funding from certain investors via issuance of convertible
promissory notes with a valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on maturity, October 7, 2025.
These convertible promissory notes holders were also issued 182,721 common share purchase warrants to subscribe for, and purchase of the
Company common shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization
at closing date. The holder of the common share warrants can exercise the warrant either fully or partially at any time from issuance
date until its expiry, 5 years from issuance date.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">ii.</td><td style="text-align: justify">On October 4, 2024, the Company received the Notice of Assessment for 2024 SR&amp;ED tax credit refund
amount of $1,004,022 (CAD$1,355,329) from CRA and the tax credit refund was received in full on October 16, 2024.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">iii.</td><td style="text-align: justify">On October 9, 2024, the Company issued promissory note to arms-length parties with principal amount of
$200,000. The loan accrues interest at a rate of 18% per annum and shall become due and payable in full on the earlier of (i) 60 days
from the funds are advanced; or (ii) five (5) business days following the completion of the liquidity event. The liquidity event refers
to the business combination with Grafiti Holding Inc (&#8220;Grafiti&#8221;), following which Damon will become a wholly owned subsidiary
of Grafiti and Grafiti&#8217;s securities will become listed and trading on the Nasdaq.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">iv.</td><td style="text-align: justify">On October 18, 2024, the Company secured $50,000 in funding from certain investors via issuance of convertible
promissory notes with a valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on maturity, October 17,
2025. These convertible promissory notes holders were also issued 18,272 common share purchase warrants to subscribe for, and purchase
of the Company common shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization
at closing date. The holder of the common share warrants can exercise the warrant either fully or partially at any time from issuance
date until its expiry, 5 years from issuance date.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"/><td style="width: 0.25in">v.</td><td style="text-align: justify">On November 11, 2024, the Company signed another amendment to the promissory note agreement with WSGR
to modify the due date of October 31, 2024 to December 15, 2024.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">PART II</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">INFORMATION NOT REQUIRED IN PROSPECTUS</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> <b>Item 13. Other Expenses of Issuance and Distribution</b></p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">The following table sets forth the costs and expenses,
payable by the registrant in connection with the registration of our common shares. All amounts are estimates except the Securities and
Exchange Commission registration fee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="text-align: center"><b>Amount to</b></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid"><b>Item</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><b>Be Paid*</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; padding-left: 9.25pt; text-indent: -9pt; width: 88%">Securities and Exchange Commission registration fee</td>
    <td style="vertical-align: bottom; width: 1%">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify; width: 1%">$</td>
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    <td style="vertical-align: bottom; width: 1%"/></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9.25pt; text-indent: -9pt">Blue Sky fees and expenses</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom; text-align: right">*</td>
    <td style="vertical-align: bottom">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; padding-left: 9.25pt; text-indent: -9pt">Legal fees and expenses</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom; text-align: right">*</td>
    <td style="vertical-align: bottom">&#160;</td></tr>
  <tr>
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    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom; text-align: right">*</td>
    <td style="vertical-align: bottom">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; padding-left: 9.25pt; text-indent: -9pt">Printing expenses</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
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    <td style="vertical-align: bottom">&#160;</td></tr>
  <tr>
    <td style="padding-bottom: 1.5pt; vertical-align: top; padding-left: 9.25pt; text-indent: -9pt">Miscellaneous</td>
    <td style="padding-bottom: 1.5pt; vertical-align: bottom">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; vertical-align: bottom">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; vertical-align: bottom; text-align: right">*</td>
    <td style="padding-bottom: 1.5pt; vertical-align: bottom">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="padding-bottom: 4pt; vertical-align: top; padding-left: 18.25pt; text-indent: -9pt">Total</td>
    <td style="padding-bottom: 4pt; vertical-align: bottom">&#160;</td>
    <td style="border-bottom: Black 4pt double; vertical-align: bottom; text-align: justify">$</td>
    <td style="border-bottom: Black 4pt double; vertical-align: bottom; text-align: right"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">1,955.86</p></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left">*</td><td style="text-align: justify">Estimates not presently known.</td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">We will bear all costs, expenses and fees in connection
with the registration of the securities, including with regard to compliance with state Securities or &#8220;blue sky&#8221; laws. The
Selling Securityholders, however, will bear all underwriting commissions and discounts, if any, attributable to their sale of the securities.
All amounts are estimates except the SEC registration fee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> <b>Item 14. Indemnification of Directors and Officers</b></p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Division 5 of Part&#160;5
of the&#160;<i>Business Corporations Act</i>&#160;(British Columbia) provides that a corporation may (a)&#160;indemnify an eligible party
against all eligible penalties to which the eligible party is or may be liable and (b)&#160;after the final disposition of an eligible
proceeding, pay the expenses (not including judgments, penalties, fines or amounts paid in settlement of a proceeding) actually and reasonably
incurred by an eligible party in respect of that proceeding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An &#8220;eligible party&#8221;
means an individual who (a)&#160;is or was a director or officer of the corporation, (b)&#160;is or was a director or officer of another
corporation (i)&#160;at a time when the other corporation is or was an affiliate of the corporation, or (ii)&#160;at the request of the
corporation, or (c)&#160;at the request of the corporation, is or was, or holds or held a position equivalent to that of, a director or
officer of a partnership, trust, joint venture or other unincorporated entity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An &#8220;eligible proceeding&#8221;
means a proceeding in which an eligible party or any of the heirs and personal or other legal representatives of the eligible party, by
reason of the eligible party being or having been a director or officer of, or holding or having held a position equivalent to that of
a director or officer of, the corporation or an associated corporation (a)&#160;is or may be joined as a party, or (b)&#160;is or may
be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A corporation must, after
the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by the eligible party in respect of
that proceeding if the eligible party (a)&#160;has not been reimbursed for those expenses, and (b)&#160;is wholly successful, on the merits
or otherwise, in the outcome of the proceeding or is substantially successful on the merits in the outcome of the proceeding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A corporation may pay, as
they are incurred in advance of the final disposition of an eligible proceeding, the expenses actually and reasonably incurred by an eligible
party in respect of that proceeding, provided the corporation first receives from the eligible party a written undertaking that, if it
is ultimately determined that the payment of expenses is prohibited, the eligible party will repay the amounts advanced.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Notwithstanding any of the
foregoing, a corporation must not indemnify an eligible party or pay the expenses of an eligible party if any of the following circumstances
apply:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">if the indemnity or payment is made under an earlier agreement
to indemnify or pay expenses and, at the time that the agreement to indemnify or pay expenses was made, the corporation was prohibited
from giving the indemnity or paying the expenses by its memorandum or articles;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">if the indemnity or payment is made otherwise than under an
earlier agreement to indemnify or pay expenses and, at the time that the indemnity or payment is made, the corporation is prohibited
from giving the indemnity or paying the expenses by its memorandum or articles;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">if, in relation to the subject matter of the eligible proceeding,
the eligible party did not act honestly and in good faith with a view to the best interests of the corporation or the associated corporation,
as the case may be;</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">in the case of an eligible proceeding other than a civil proceeding,
if the eligible party did not have reasonable grounds for believing that the eligible party&#8217;s conduct in respect of which the proceeding
was brought was lawful.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If an eligible proceeding
is brought against an eligible party by or on behalf of the corporation or by or on behalf of an associated corporation, the corporation
must not (a)&#160;indemnify the eligible party in respect of the proceeding or (b)&#160;pay the expenses of the eligible party in respect
of the proceeding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A corporation may purchase
and maintain insurance for the benefit of an eligible party or the heirs and personal or other legal representatives of the eligible party
against any liability that may be incurred by reason of the eligible party being or having been a director or officer of, or holding or
having held a position equivalent to that of a director or officer of, the corporation or an associated corporation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Articles provide that,
subject to the&#160;<i>Business Corporations Act</i>&#160;(British Columbia), (a) until the date and time that is the sixth anniversary
of 12:01 a.m. (Vancouver) on the closing date of the Business Combination (the &#8220;Effective Time&#8221;), the Company must indemnify
and use commercially reasonable efforts to purchase and maintain insurance for the benefit of its director, former directors or officers
of the Company and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be
liable, and the Company must, in advance of the final disposition of an eligible proceeding, pay the expenses actually and reasonably
incurred by such person in respect of that proceeding; and (b) after the Effective Time, the Company must indemnify an eligible party
and their respective heirs and personal or other legal representatives against all eligible penalties to which such eligible party is
or may be liable, and the Company must, must, after final disposition of an eligible proceeding, pay the expenses actually and reasonably
incurred by such person in respect of that proceeding. Each eligible party is deemed to have contracted with the Company on this term.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Articles also provide
that the Company may indemnify any person, subject to any restrictions in the&#160;<i>Business Corporations Act</i>&#160;(British Columbia).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Articles defines the following
terms: (1)&#160;an &#8220;eligible penalty&#8221; means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement
of, an &#8220;eligible proceeding&#8221;; (2)&#160;an &#8220;eligible party&#8221; means a director or former director of the Company;
(3)&#160;an &#8220;eligible proceeding&#8221; means a legal proceeding or investigative action (whether current, threatened, pending or
completed), in which an eligible party or any of the heirs and personal or other legal representatives of the eligible party, by reason
of the eligible party being or having been a director or alternate director of the Company (a)&#160;is or may be joined as a party, or
(b)&#160;is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding; and (4)&#160;&#8220;expenses&#8221;
has the meaning set out in the&#160;<i>Business Corporations Act</i>&#160;(British Columbia).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Articles provide that
the Company may purchase and maintain insurance for the benefit of any person (or his or her heirs or legal personal representatives)
who is or was a director, alternative director, officer, employee or agent, or held or holds such position or a position equivalent to
the foregoing (each, an &#8220;insured party&#8221;) with respect to (i)&#160;the Company; (ii)&#160;a corporation at a time when the
corporation was an affiliate of the Company; (iii)&#160;at the request of the Company, served in such capacity with respect to a corporation,
partnership, trust, joint venture or other unincorporated entity, against any liability that may be incurred by him or her acting in such
capacity<b>.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have entered into an indemnification
agreement with each of our officers and directors pursuant to which they will be indemnified by us, subject to certain limitations, for
any liabilities incurred by them in connection with their role as officers or directors of the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing
provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> <b>Item 15. Recent Sales of Unregistered Securities</b></p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Issuance of Options and Exercised Shares</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In August 2024, the Company
issued an aggregate of 1,015,383 common shares to Nadir Ali, then CEO and director of the Company, and certain members of the Parent&#8217;s
management team prior to the consummation of the merger transaction between XTI Aircraft Company and the Parent, which they acquired through
the exercise of stock options granted under the Company&#8217;s 2024 Stock Incentive Plan. Each transaction was exempt from the registration
requirements of the Securities Act pursuant to Section 4(a)(2) or Rule 701 of the Securities Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Issuance of the Amalgamation Consideration</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon the Closing, pursuant
to the Plan of Arrangement under the laws of British Columbia, as contemplated by the Business Combination Agreement, securityholders
of Damon Motors exchanged their securities of Damon Motors for amalgamation consideration (the &#8220;Amalgamation Consideration&#8221;)
consisting of: (i) 14,764,803 common shares of the Company; (ii) 1,391,181 multiple voting shares of the Company, which are convertible
into common shares of the Company on a 1 for 1 basis, issued to Jay Giraud, the Company&#8217;s then CEO and director, and its controlled
entity; (iii) warrants to purchase 2,186,478 common shares of the Company at an exercise price of $7.81 per share, with terms substantially
similar to those of Damon Motors&#8217;s warrants, issued to former Damon Motors warrant holders, and (iv) options to purchase 1,942,127
common shares at exercise prices between $0.57 and $12.73, issued to former Damon optionholders under the Company&#8217;s equity incentive
plans. The Amalgamation Consideration was issued pursuant to the exemption from registration provided by Section 3(a)(10) of the Securities
Act, on the basis that these securities were issued pursuant to the Plan of Arrangement, the fairness of which was approved by the Supreme
Court of British Columbia.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Note Financing in connection with the Business Combination</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In June 2024, the Company
issued a secured note to Streeterville in an aggregate original principal amount of $6,470,000. Subsequently, on the Closing Date, the
company issued two secured note, each in the aggregate original principal amount of $8,385,000, to two institutional investors. These
notes were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act, on the basis that these
notes have been issued to institutional accredited investors and the Company did not engage in any general solicitation in connection
with such offer and sale.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fees to be Paid to Former Financial Advisor</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 28, 2024, Damon
Motors entered into a further amendment to its engagement agreement with Joseph Gunnar &amp; Co., LLC (&#8220;Joseph Gunnar&#8221;) and
Mark Peikin (&#8220;Peikin&#8221;), as amended (the &#8220;Engagement Agreement&#8221;). Pursuant to the amendment, in lieu of the compensation
described in the Engagement Agreement, Peikin, as assignee of Joseph Gunnar, shall receive from Damon Motors a one-time fee of $1,000,000
in cash due and payable on the thirteen month anniversary of the closing of the Business Combination; and Damon Motors shall also cause
to be issued to Peikin, as assignee of Joseph Gunnar, the following amounts, any of which may be paid in common shares of the Company,
with each issuance further made pursuant to a resale registration statement to be filed within ten days of each payment date based on
the payment schedule below: (a) $600,000 on the 90-day anniversary of the Closing; (b) $400,000 on the 180-day anniversary of the Closing;
and (c) $300,000 on the 270-day anniversary of the Closing. The total of $2,300,000, of which up to $1,300,000 may potentially be paid
in securities as set forth above to Peikin shall fully satisfy all obligations of Damon Motors to Joseph Gunnar, which obligations Joseph
Gunnar has assigned to Peikin. The number of shares to calculate the USD value on each of the three issuances shall be calculated based
on the Nasdaq Market Price, which is defined as the lower of (i) the consolidated closing bid price for the business day immediately preceding
each date that any one of the three issuances are due and payable or (ii) the average of the consolidated closing bid price of the Company&#8217;s
common shares for the five trading days immediately preceding each date that any one of the three issuances are due and payable. Any common
shares to be issued to Peikin as described herein will be issued pursuant to the exemption from registration provided by Section 4(a)(2)
of the Securities Act, on the basis that these shares will be issued to an accredited investor and the Company did not engage in any general
solicitation in connection with such offer and sale.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">Securities Purchase Agreement with Streeterville</p><div>

</div><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 20, 2024, the
Company entered into the Securities Purchase Agreement with Streeterville and agreed to issue and sell to Streeterville one or more Pre-Paid
Purchases at an aggregate purchase price of up to $10,000,000 for the purchase of the Company&#8217;s common shares. As consideration
for Streeterville&#8217;s commitment, the Company also agreed to issue 343,053 common shares to Streeterville (the &#8220;Commitment Shares&#8221;)
The offer and sale of the Pre-Paid purchases, the Commitment Shares and the common shares issuable under the Pre-Paid Purchases were not
registered under the Securities Act, in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act, on the
basis that these securities are issued to an institutional accredited investor and the Company did not engage in any general solicitation
in connection with such offer and sale.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><i>Compensation Shares to Marketing
Service Provider</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 16, 2024, the
Company issued 401,884 common shares to a marketing service provider for its past services to Damon Motors. The offer and sale of the
shares were not registered under the Securities Act, in reliance on an exemption from registration under Section 4(a)(2) of the Securities
Act, on the basis that these securities are issued to an entity accredited investor and the Company did not engage in any general solicitation
in connection with such offer and sale.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-weight: normal"><i>Financial Advisory Agreement with
Maxim</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On January 7, 2025, the Company
entered into a Financial Advisory Agreement with Maxim Group LLC (together with its affiliates and subsidiaries, &#8220;Maxim&#8221;).
As compensation for past advisory services following the listing of the Company on Nasdaq, the Company issued 514,579 common shares to
Maxim Partners LLC, with piggyback registration rights. The offer and sale of the shares to Maxim Partners LLC were not registered under
the Securities Act, in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act, on the basis that these
securities are issued to an institutional accredited investor and the Company did not engage in any general solicitation in connection
with such offer and sale.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 291; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->4<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 96px; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item 16.</b></span></td>
    <td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exhibits</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid; text-align: left; white-space: nowrap; width: 9%; vertical-align: bottom"><b>Exhibit<br/>
 Number</b></td>
    <td style="width: 1%">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; white-space: nowrap; width: 90%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exhibit Description</b></span></td></tr>
  <tr>
    <td style="text-align: left; vertical-align: top">&#160;</td>
    <td colspan="2">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="text-align: left; white-space: nowrap; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.1+</span></td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: justify; vertical-align: top"><a href="http://www.sec.gov/Archives/edgar/data/1529113/000101376223005597/ea187106ex2-1_inpixon.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Separation Agreement, dated as of October 23, 2023, between Grafiti Holding Inc. and Inpixon (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Inpixon on October 23, 2023)</span></a></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: left">&#160;</td>
    <td colspan="2" style="text-align: justify">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="text-align: left; white-space: nowrap; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.2+</span></td>
    <td style="text-align: justify; vertical-align: bottom">&#160;</td>
    <td style="text-align: justify; vertical-align: top"><a href="http://www.sec.gov/Archives/edgar/data/1529113/000101376223005597/ea187106ex2-2_inpixon.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Business Combination Agreement among Inpixon, Grafiti Holding Inc., 1444842 B.C. Ltd and Damon Motors, Inc., dated as of October 23, 2023 (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Inpixon on October 23, 2023)</span></a></td></tr>
  <tr>
    <td style="text-align: left; white-space: nowrap; vertical-align: top">&#160;</td>
    <td style="text-align: justify; vertical-align: bottom">&#160;</td>
    <td style="text-align: justify; vertical-align: top">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="text-align: left; white-space: nowrap; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.3</span></td>
    <td style="text-align: justify; vertical-align: bottom">&#160;</td>
    <td style="text-align: justify; vertical-align: top"><a href="https://www.sec.gov/Archives/edgar/data/1529113/000121390024055284/ea020839501ex2-1_xtiaero.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment to Business Combination Agreement, dated as of June 18, 2024, among XTI Aerospace, Inc., Grafiti Holding Inc., 1444842 B.C. Ltd. and Damon Motors Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by XTI Aerospace, Inc. on June 24, 2024)</span></a></td></tr>
  <tr>
    <td style="text-align: left; white-space: nowrap; vertical-align: top">&#160;</td>
    <td style="text-align: justify; vertical-align: bottom">&#160;</td>
    <td style="text-align: justify; vertical-align: top">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="text-align: left; white-space: nowrap; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.4</span></td>
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    <td style="text-align: justify; vertical-align: top"><a href="http://www.sec.gov/Archives/edgar/data/2000640/000121390024082388/ea021499001ex2-4_grafiti.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Second Amendment to Business Combination Agreement, dated as of September 26, 2024, among XTI Aerospace, Inc., Grafiti Holding Inc., 1444842 B.C. Ltd. and Damon Motors Inc. (incorporated by reference to Exhibit 2.4 to Amendment No. 1 to the Registration Statement on Form 10 filed by the Registrant on September 26, 2024)</span></a></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: left">&#160;</td>
    <td colspan="2" style="text-align: justify">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="text-align: left; white-space: nowrap; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.1</span></td>
    <td style="text-align: justify; vertical-align: bottom">&#160;</td>
    <td style="text-align: justify; vertical-align: top"><a href="http://www.sec.gov/Archives/edgar/data/1529113/000101376223005597/ea187106ex2-1_inpixon.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Articles of Grafiti Holding Inc. (incorporated by reference to Exhibit A in Exhibit 2.1 to the Current Report on Form 8-K filed by XTI Aerospace, Inc. (<i>f/k/a</i> Inpixon) on October 23, 2023)</span></a></td></tr>
  <tr>
    <td style="text-align: left; white-space: nowrap; vertical-align: top">&#160;</td>
    <td style="text-align: justify; vertical-align: bottom">&#160;</td>
    <td style="text-align: justify; vertical-align: top">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="text-align: left; white-space: nowrap; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.2</span></td>
    <td style="text-align: justify; vertical-align: bottom">&#160;</td>
    <td style="text-align: justify; vertical-align: top"><a href="https://www.sec.gov/Archives/edgar/data/2000640/000121390024109877/ea022401501ex3-1_damon.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certificate of Incorporation and Note of Articles dated December 6, 2024 (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q filed by the Registrant on December 18, 2024)</span></a></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: left">&#160;</td>
    <td colspan="2" style="text-align: justify">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/2000640/000121390024099365/ea022140801ex4-1_damon.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured Promissory Note, dated as of November 13, 2024, issued to East West Capital, LLC (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)</span></a></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: left">&#160;</td>
    <td colspan="2" style="text-align: justify">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.2</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/2000640/000121390024099365/ea022140801ex4-2_damon.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured Promissory Note, dated as of November 13, 2024, issued to Braebeacon Holdings, Inc. (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)</span></a></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: left">&#160;</td>
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  <tr style="background-color: #CCEEFF">
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  <tr style="vertical-align: top; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
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    <td style="text-align: justify">&#160;</td>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ea022759101ex23-1_damon.htm">Consent of Marcum LLP for Damon Inc. (formerly Grafiti Holding Inc.)</a></span></td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ea022759101ex23-2_damon.htm">Consent of Marcum LLP for Damon Motors Inc.</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ea022759101ex23-3_damon.htm">Consent of BDO Canada LLP for Damon Motors Inc.</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.4*</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><a href="ea022759101ex5-1_damon.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consent of Norton Rose Fulbright Canada LLP (included in Exhibit 5.1)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td>
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<tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
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    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Calculation Linkbase Document.</span></td></tr>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.DEF</span></td>
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    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Label Linkbase Document.</span></td></tr>
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    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Presentation Linkbase Document.</span></td></tr>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">104</span></td>
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).</span></td></tr>

<tr style="vertical-align: top; ">
    <td style="text-align: justify; width: 9%">&#160;</td>
    <td style="text-align: justify; width: 1%">&#160;</td>
    <td style="text-align: justify; width: 90%">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">107*</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ea022759101ex-fee_damon.htm">Filing Fee Table</a></span></td></tr>
</table><div>

</div><p style="margin: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Filed herewith.</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">+</span></td>
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of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">#</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 296; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> <b>Item 17. Undertakings</b></p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The undersigned registrant
hereby undertakes:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A.To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(i) To
include any prospectus required by section 10(a)(3) of the Securities Act;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(ii) To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Notwithstanding the foregoing,
any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in
the maximum aggregate offering price set forth in the &#8220;<i>Calculation of Registration Fee</i>&#8221; table in the effective registration
statement; and</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(iii) To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">B. That,
for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">C. To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 297; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">D. That,
for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part
of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used
after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is
part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">E. That,
for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the
securities, that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(iii) The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(iv) Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">F. Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">SIGNATURES</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements
of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Vancouver, Province of British Columbia, on January 16, 2025.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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    <td style="width: 40%"><b>DAMON INC.</b></td>
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    <td>&#160;</td>
    <td>&#160;</td>
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</div><div><a id="poa"></a></div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">POWER OF ATTORNEY</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">KNOW ALL PERSONS BY THESE
PRESENTS, that each person whose signature appears below hereby constitutes and appoints Dominique Kwong and Baljinder Bhullar, and each
of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, including
post-effective amendments, and registration statements filed pursuant to Rule 462 under the Securities Act, and to file the same, with
all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent and each of them, full power and authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith and about the premises, as fully for all intents and purposes as they, he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and agent or any of them, or their, his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements
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{"company-data": {"conformed-name": "Damon Inc.", "cik": "0002000640", "assigned-sic": "7371", "organization-name": "06 Technology", "irs-number": "000000000", "state-of-incorporation": "A1", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-284324", "film-number": "25536494"}, "business-address": {"street1": "704 ALEXANDER STREET", "city": "VANCOUVER", "state": "A1", "zip": "V6A 1E3", "phone": "4087022167"}, "mail-address": {"street1": "704 ALEXANDER STREET", "city": "VANCOUVER", "state": "A1", "zip": "V6A 1E3"}, "former-company": {"former-conformed-name": "Grafiti Holding Inc.", "date-changed": "20231109"}}
As filed with the Securities and Exchange Commission
on January 16, 2025
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
DAMON INC.
(Exact name of registrant as specified in its charter)
British Columbia
3751
Not Applicable
(State or jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
704 Alexander Street,
Vancouver, British Columbia V6A 1E3
(408) 702-2167
(Address and telephone number of registrant's principal executive offices and principal place of business)
Dominique Kwong
Interim Chief Executive Officer
Damon Inc.
704 Alexander Street,
Vancouver, British Columbia V6A 1E3
(408) 702-2167
Copy to:
Kevin Friedmann, Esq.
Norton Rose Fulbright US LLP
1045 W. Fulton Market,
Suite 1200
Chicago, IL 60607
(312) 964-7763
(Name, address and telephone number of agent for
service)
Approximate date of commencement
of proposed sale to the public:
As soon as practicable following the effective date of this Registration Statement.
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box:
☒
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.
☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
☐
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging
growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting
company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☒
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act.
☐
The Registrant hereby amends
this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
The information in
this preliminary prospectus is not complete and may be changed. These securities may not be sold by the selling securityholders until
the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus is not an
offer to sell these securities and we are not soliciting an offer to buy these securities in any state or jurisdiction where the offer
or sale is not permitted.
Preliminary Prospectus
SUBJECT TO COMPLETION,
DATED JANUARY 16, 2025
DAMON INC.
RESALE OF UP TO
18,514,579 COMMON SHARES
BY THE SELLING SECURITYHOLDERS
This prospectus relates to
the resale by Streeterville Capital, LLC ("Streeterville") of up to 18,000,000 of common shares, no par value ("common
shares"), of Damon Inc. ("Damon", the "Company"), consisting of (i) 343,053 common shares issued to Streeterville
pursuant to a Securities Purchase Agreement, dated as of December 20, 2024 (the "Securities Purchase Agreement"), between
Damon and Streeterville, and (ii) 17,656,947 common shares potentially issuable to Streeterville in satisfaction of pre-paid purchase
balances outstanding from time to time under the Securities Purchase Agreement, subject to such limitation as may be required pursuant
to Nasdaq Listing Rule 5635(d) and a beneficial ownership limitation equal to 9.99% of the common shares outstanding from time to time.
Under the Securities Purchase
Agreement, the Company may issue and sell one or more pre-paid purchases (each, a "Pre-Paid Purchase"), in the aggregate purchase
amount of up to $10 million. Upon the terms and subject to the conditions of each Pre-Paid Purchase, Streeterville, at its sole discretion,
has the right, but not the obligation, to take delivery of common shares from the Company, and the Company will issue to Streeterville,
common shares in satisfaction of all or a portion of the outstanding balance of such Pre-Paid Purchase, but not exceeding the outstanding
balance of such Pre-Paid Purchase (the "Purchase Shares"). Any delivery of the 17,656,947 Purchase Shares registered for resale
pursuant to the registration statement of which this prospectus is a part will reduce the outstanding balance of any Pre-Paid Purchase
at a rate that will depend upon the timing of a delivery request by Streeterville and will fluctuate based on the trading price of our
common shares. The number of common shares that may actually be acquired by Streeterville pursuant to the Securities Purchase Agreement
is not currently known and is subject to satisfaction of certain conditions and other limitations, including the limitations specified
above.
This prospectus also relates
to the resale from time to time of up to 514,579 common shares by Maxim Partners LLC ("Maxim"), which were issued to Maxim
pursuant to a Financial Advisory Agreement dated as of January 7, 2025 (the "Financial Advisory Agreement), between Maxim Group
LLC, an affiliate of Maxim, and the Company, in consideration of financial advisory services rendered to the Company by Maxim Group LLC
following the Company's initial listing on the Nasdaq Global Market ("Nasdaq").
Streeterville and Maxim are
each referred to in this prospectus sometimes as a "Selling Securityholder", or collectively as the "Selling Securityholders".
We are not selling any of
our common shares under this prospectus, and we will not receive any of the proceeds from the sale of common shares by the Selling Securityholders.
We will bear all costs, expenses and fees in connection with the registration of the common shares. The Selling Securityholders will bear
all commissions and discounts, if any, attributable to their respective sales of the common shares.
Our common shares are traded on Nasdaq under the ticker symbol "DMN."
On January 15, 2025, the closing sale price of our common shares as reported by Nasdaq was $0.72 per share.
Investing in our
common shares involves risks that are described in the "Risk Factors" section beginning on page 9 of this
prospectus.
Neither the Securities and
Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this prospectus
or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is       , 2025.
TABLE OF CONTENTS
Page
ABOUT THIS PROSPECTUS
ii
TRADEMARKS, TRADE NAMES
    AND SERVICE MARKS
ii
MARKET AND INDUSTRY
    DATA
ii
SELECTED DEFINITIONS
iii
Cautionary Statement
    Regarding Forward-Looking Statements
v
PROSPECTUS SUMMARY
1
THE OFFERING
8
Risk Factors
9
USE OF PROCEEDS
48
DETERMINATION OF OFFERING
    PRICE
48
DIVIDEND POLICY
48
MARKET INFORMATION
48
Unaudited Pro Forma
    Condensed Combined Financial Information
49
Management's Discussion
    and Analysis of Financial Condition and Results of Operations of DAMON (FORMERLY, GRAFITI HOLDING)
62
Management's Discussion
    and Analysis of Financial Condition and Results of Operations of DAMON MOTORS
80
BUSINESS
101
Management
117
Executive and Director
    Compensation
123
CERTAIN RELATIONSHIPS
    AND RELATED PARTY TRANSACTIONS
135
PRINCIPAL SHAREHOLDERS
138
Selling Securityholders
139
Description of Capital
    Stock
141
SECURITIES ACT RESTRICTIONS
    ON RESALE OF COMMON STOCK
144
PLAN OF DISTRIBUTION
145
LEGAL MATTERS
148
EXPERTS
148
Where You Can Find More
    Information
148
INDEX TO CONSOLIDATED
    FINANCIAL STATEMENTS
F-1
i
ABOUT
THIS PROSPECTUS
You should rely only on the
information contained in this prospectus or in any applicable prospectus supplement prepared by us or on our behalf. Neither we nor the
Selling Securityholders have authorized anyone to provide any information or to make any representations other than those contained in
this prospectus, any accompanying prospectus supplement or any free writing prospectus we have prepared. We and the Selling Securityholders
take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This
prospectus is an offer to sell only the securities offered hereby and only under circumstances and in jurisdictions where it is lawful
to do so. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this
prospectus, any applicable prospectus supplement or any related free writing prospectus. This prospectus is not an offer to sell securities,
and it is not soliciting an offer to buy securities, in any jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus or any prospectus supplement is accurate only as of the date on the front of those documents
only, regardless of the time of delivery of this prospectus or any applicable prospectus supplement, or any sale of a security. Our business,
financial condition, results of operations and prospects may have changed since those dates.
This prospectus is part of
a registration statement on Form S-1 that we filed with the SEC using the "shelf" registration process. Under this shelf registration
process, the Selling Securityholders hereunder may, from time to time, sell the securities offered by them described in this prospectus.
We will not receive any proceeds from the sale by such Selling Securityholders of the common shares offered by them described in this
prospectus.
A prospectus supplement may
also add, update or change information included in this prospectus. Any statement contained in this prospectus will be deemed to be modified
or superseded for purposes of this prospectus to the extent that a statement contained in such prospectus supplement modifies or supersedes
such statement. Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement
so superseded will be deemed not to constitute a part of this prospectus. You should rely only on the information contained in this prospectus,
any applicable prospectus supplement or any related free writing prospectus. See "
Where You Can Find More Information
."
This prospectus contains summaries
of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete
information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to
herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus
is a part, and you may obtain copies of those documents as described in the section entitled under "
Where You Can Find More Information
."
As used in this prospectus,
unless otherwise indicated or the context otherwise requires, references to "we," "us," "our," the
"Company," "Registrant," and "Damon" refer to Damon Inc. and its subsidiaries.
TRADEMARKS, TRADE
NAMES AND SERVICE MARKS
We own and have rights to
trademarks, trade names and service marks used in connection with the operation of our business. Other trademarks, trade names and service
marks appearing in this prospectus are the property of their respective owners. Solely for convenience, trademarks and trade names referred
to in this prospectus may appear without the
®
or ™ symbols, but such references
are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its
rights to these trademarks and trade names. We do not intend our use or display of other companies' trade names, trademarks or service
marks to imply a relationship with, or endorsement or sponsorship of them by, any other companies.
MARKET AND INDUSTRY
DATA
This prospectus contains statistical
data, estimates and information concerning our industries, including market positions and the size and growth rates of the markets in
which we participate, that are based on independent industry publications and reports or other publicly available information, as well
as other information based on our internal sources. Although our management believes the market and industry data included in this prospectus
are reliable and are based on reasonable assumptions, this data involves many assumptions and limitations, and you are cautioned not to
give undue weight to these estimates. Management has not independently verified the accuracy or completeness of the data contained in
these industry publications and reports. The industries in which we operate are subject to a high degree of uncertainty and risk due to
a variety of factors, including those described in the section titled "
Risk Factors
" and "
Cautionary Statement
Regarding Forward-Looking Statements
." These and other factors could cause results to differ materially from those expressed
in these publications and reports.
ii
SELECTED DEFINITIONS
When used in this prospectus,
unless the context otherwise requires:
●
"
Articles
"
refers to the existing articles of the Company currently in effect;
●
"
BCBCA
"
refers to the British Columbia Business Corporations Act;
●
"
Board
"
refers to the board of directors of the Company;
●
"
Business Combination
"
refers to the amalgamation of Merger Sub with and into Damon Motors, with Damon Motors surviving the amalgamation as a wholly owned subsidiary
of the Company and the other transactions contemplated by the Business Combination Agreement;
●
"
Business Combination Agreement
"
refers to the Business Combination Agreement, dated as of October 23, 2023, among Damon Motors, Merger Sub, Parent and the Company, as
amended;
●
"
Charter
"
refers to the existing certificate of incorporation and Notice of Articles of the Company currently in effect;
●
"
Closing
"
refers to the closing of the Business Combination;
●
"
common shares
"
refers to common shares of the Company, no par value per share;
●
"Company" refers to Damon Inc., a British Columbia corporation. The Company was named "Grafiti
Holding Inc." prior to the Closing, and changed its corporate name to "Damon Inc." following the Closing.
●
"
Damon
"
refers to the Company under the name
"
Damon Inc.
"
;
●
"
Damon Motors
"
refers to Damon Motors Inc., a British Columbia corporation, which became a wholly-owned subsidiary of the Company upon the Closing;
●
"
Distribution
"
refers to distribution of Grafiti Holding
'
s common shares by the
Trust for the benefit of the holders of Parent stock and other Parent securities on a certain record date on a pro rata, one for one basis,
as described in the Separation and Distribution Agreement and our registration statement on Form 10-12B declared effective by the Commission
on November 12, 2024;
●
"
Exchange Act
"
refers to the Securities Exchange Act of 1934, as amended;
●
"
GAAP
"
refers to accounting principles generally accepted in the United States of America;
●
"
Grafiti Limited Business
"
refers to the business conducted by Grafiti Limited and its direct and indirect subsidiaries, including the business related to the provision
of a comprehensive set of data analytics and statistical visualization solutions for engineers and scientists;
●
"
Grafiti Holding
"
refers to the Company under the name
"
Grafiti Holding Inc.
"
prior to the Closing;
●
"
Grafiti Limited
"
refers to Grafiti Limited, a United Kingdom limited company, previously named Inpixon Limited;
●
"
JOBS Act
"
refers to the Jumpstart Our Business Startups Act of 2012;
●
"
Merger Sub
"
refers to 1444842 B.C. Ltd., a British Columbia corporation;
iii
●
"
Nasdaq
"
refers to The Nasdaq Global Market;
●
"
Shareholders
"
refers to the shareholders of the Company;
●
"Solutions Divestiture" refers to the divestiture of any business lines and other assets and
liabilities of the Parent that were not associated with its real time location services and analytics business, including its Shoom, SAVES
and Game Your Game lines of business and investment securities, as applicable by any lawful means, including a sale to one or more third
parties, spin off, plan of arrangement, merger, reorganization, or any combination of the foregoing, which was required as a condition
for the consummation of the merger transaction between XTI Aircraft Company and Parent, pursuant to the Agreement and Plan of Merger,
dated as of July 24, 2023, among XTI, Parent, and Superfly Merger Sub, Inc.
●
"
Parent
"
refers to XTI Aerospace, Inc. a Nevada corporation, previously named Inpixon;
●
"
Registration Rights Agreement
"
refers to the Registration Rights Agreement, dated as of December 20, 2024, between Damon and Streeterville;
●
"
Sarbanes-Oxley Act
"
refers to the Sarbanes-Oxley Act of 2002;
●
"
SEC
"
or
"
Commission
"
refers to the United States Securities and Exchange Commission;
●
"
Securities Act
"
refers to the Securities Act of 1933, as amended;
●
"
Securities Purchase Agreement
"
refers to the Securities Purchase Agreement, dated as of December 20, 2024, between Damon and Streeterville;
●
"
Separation
"
refers to a series of transactions by Parent and certain of Parent's subsidiaries as result of which Parent
'
s
Grafiti Limited Business was held by Grafiti Holding and was separated from the remainder of Parent
'
s
businesses, on the terms and subject to the conditions of the Separation and Distribution Agreement;
●
"
Separation and Distribution Agreement
"
refers to the Separation and Distribution Agreement, dated as of October 23, 2023, between Parent and the Company;
●
"
Streeterville
"
refers to Streeterville Capital, LLC, a Utah limited liability company;
●
"
Trust
"
refers to the Grafiti Holding Inc. Liquidating Trust.
iv
Cautionary Statement
Regarding Forward-Looking Statements
This prospectus, each prospectus
supplement and the information incorporated by reference in this prospectus and each prospectus supplement, contain "forward-looking
statements" within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and as defined in the United
States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such
as "may," "will," "should," "could," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "predicts," "potential," or "continue,"
or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements
about our market opportunity, our strategies, ability to improve and expand our capabilities, competition, expected activities and expenditures
as we pursue our business plan, the adequacy of our available cash resources, regulatory compliance, plans for future growth and future
operations, the size of our addressable market, market trends, and the effectiveness of the Company's internal control over financial
reporting. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance, or achievements. Actual results may differ materially from the projections discussed in these
forward-looking statements. The economic environment within which we operate could materially affect our actual results. Forward-looking
statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These risks and other factors
include, but are not limited to, those listed under "
Risk Factors
." Additional factors that could materially affect
these forward-looking statements and/or projections include, among other things:
(i) the risk that the price
of common shares of Damon may be volatile due to a variety of factors, including changes in the highly competitive industries in which
Damon operates, variations in performance across competitors, changes in laws, regulations, and technologies that may impose additional
costs and compliance burdens on Damon's operations, global supply chain disruptions and shortages, and macro-economic and social
environments affecting Damon's businesses;
(ii) the inability to implement
Damon's business plans, forecasts, and other expectations, or identify and realize additional opportunities;
(iii) the risk that Damon
has not achieved sales and production capacity at a mass-production facility, and that Damon and its current and future collaborators
may be unable to successfully develop and market Damon's motorcycles or solutions, or may experience significant delays in doing
so;
(iv) the risk that Damon may
never achieve or sustain profitability;
(v) the risk that Damon may
be unable to raise additional capital on acceptable terms to finance its operations and remain a going concern;
(vi) the risk that Damon continues
to experience difficulties in expanding its operations or, if its operations are expanded, managing its growth;
(vii) any adverse changes
in U.S. or Canadian general economic, business, market, financial, political, or legal conditions, including as a consequence of the ongoing
uncertainties relating to inflation and interest rates;
(viii) any inability to successfully
and economically manufacture and distribute Damon's motorcycles at scale;
(ix) reliance on key management
and any inability to attract and/or retain key personnel;
(x) any inability to raise
additional funds to meet its capital requirements and pursue its growth strategy when and in the amounts needed;
(xi) any inability to secure
adequate insurance coverage or a potential increase in insurance costs;
(xii) the
risk of potential litigation resulting in the diversion of management's time and attention and the Company's resources needed to address
any such litigation that may arise; and
(xiii) any
inability to secure adequate insurance coverage or a potential increase in insurance costs.
Management has included projections
and estimates in this prospectus, which are based primarily on management's experience in the industry, assessments of our results
of operations, discussions and negotiations with third parties, and a review of information filed by our competitors with the SEC or otherwise
publicly available.
You are cautioned that any
such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results
may differ materially from those projected in the forward-looking statements as a result of various factors. We caution readers not to
place undue reliance on any such forward-looking statements, which speak only as at the date made. Except as required by law, we disclaim
any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements
or to reflect the occurrence of anticipated or unanticipated events.
v
PROSPECTUS SUMMARY
This summary highlights
selected information that is presented in greater detail elsewhere, or incorporated by reference, in this prospectus. It does not contain
all of the information that may be important to you and your investment decision. Before investing in our securities, you should carefully
read this entire prospectus, the applicable prospectus supplement and any related free writing prospectus, including the matters
set forth under the section captioned "Risk Factors" and the financial statements and related notes and other information
that we incorporate by reference herein. Each of the risk factors could adversely affect our business, operating results and financial
conditions, as well as adversely affect the value of an investment in our securities.
Corporate History
Spin-Off
We were incorporated under
the laws of British Columbia, Canada on October 17, 2023. Through our wholly-owned subsidiary Grafiti Limited which was transferred to
us on December 26, 2023 by our former parent company, XTI Aerospace Inc., we operate a business in the United Kingdom ("UK")
providing a comprehensive set of data analytics and statistical visualization solutions for engineers and scientists. On December 27,
2023 (the "record date"), we were spun off by the Parent, by means of a transfer of all of our then outstanding common shares
held by the Parent (the "spinoff shares") to the Grafiti Holding Inc. Liquidating Trust, to be held for the benefit of holders
of the Parent's common stock, preferred stock and those outstanding warrants that were contractually entitled to participate in
the distribution (collectively, the "participating securityholders"), on a pro rata basis as of the record date. As described
in further detail in our registration statement on Form 10-12B filed in connection with the spinoff and declared effective by the Commission
on November 12, 2024 (the "Form 10"), for U.S. federal income tax purposes we believe that the transfer by the Parent of the
spinoff shares to the trust was treated as a taxable distribution by the Parent to the participating securityholders of the spinoff shares
on the record date and the subsequent transfer by the participating securityholders of the spinoff shares to the Trust on the same date.
The Trust held the spinoff shares until the effective date of the Form 10-12B registration statement on November 12, 2024, promptly following
which the trust delivered the spinoff shares to the participating securityholders, as beneficiaries of the trust, pro rata in accordance
with their ownership of shares or underlying shares of the Parent's common stock as of the record date.
The Business Combination and Related
Transactions
On November 13, 2024, we completed
a business combination transaction with Damon Motors, a motorcycle manufacturing company that aims to transform the motorcycle industry
by building a smart and technologically advanced motorcycle, resulting in Damon Motors becoming our wholly-owned subsidiary. Upon completion
of the Business Combination with Damon Motors, we changed our corporate name to "Damon Inc." For further information about
these transactions, please refer to the current report on Form 8-K filed by the us with the SEC on November 18, 2024.
The rights of holders of our
common shares are governed by our Charter, our Articles, and the BCBCA. For more details, please refer to the section titled "
Description
of Capital Stock
." The Company's common shares commenced trading on Nasdaq on November 18, 2024.
The Business Combination was
accounted for using the acquisition method (as a reverse acquisition), with goodwill and other identifiable intangible assets recorded
in accordance with accounting principles generally accepted in the United States, as applicable. Under this method of accounting, Grafiti
Holding is treated as the "acquired" company for financial reporting purposes. Damon Motors was determined to be the accounting
acquirer because after the Business Combination, Damon Motors will control the Board of Directors, management of the combined company,
and the preexisting shareholders of Damon Motors have majority voting rights of the combined company. For accounting purposes, the acquirer
is the entity that has obtained control of another entity and, thus, consummated a business combination.
1
Overview of Our Business
Our Motorcycle Development and Manufacturing
Business Through Damon Motors
We, through our wholly-owned
subsidiary Damon Motors and its subsidiaries, design and produce motorcycles aimed at transforming the motorcycle industry by building
a smart and technologically advanced motorcycle. Damon Motors is developing the technology and investing in the capabilities to lead the
industry transformation in the high-performance electric motorcycle market. With decades of combined management and engineering experience
across the team's careers, and a commitment to low carbon personal mobility solutions, Damon Motors is introducing existing enthusiasts
to high-performance electric products while bringing new riders to the motorcycle community with first of its kind advances in zero emissions
motorcycle performance, safety, connectivity and AI.
Founded in 2017, Damon Motors
started reimagining the future of motorcycling by means of advanced safety design, electric vehicle powertrain technology and user experience.
In 2019, Damon Motors took its first alpha prototype motorcycles and safety systems into the field to test the concept. In 2021, Damon
Motors expanded its operations and expertise with an R&D facility in San Rafael, California to accelerate the engineering and development
of its HyperDrive platform drive unit and the HyperSport motorcycle. Through core technology advancements, Damon Motors electric motorcycles
are in prototype phase of product validation.
Damon Motors's electric
vehicles are developed with a set of proprietary design principles that elevate the brand, deliver differentiated riding experiences and
bring emotion to electric propulsion. The initial product portfolio of motorcycle models will be built upon and utilize a single powertrain
platform called HyperDrive™. As a patented, monocoque-constructed battery-chassis, HyperDrive houses a proprietary 150 kW 6-phase
liquid cooled IPM motor-gearbox and proprietary electronics. This platform approach establishes a capital-efficient path to grow the product
line to meet a wide range of future segments and price points, while also supporting a wide range of future motorcycle models and power
sizes that share as much as 85 percent common parts. By using the frame of the battery as the motorcycle's chassis, HyperDrive also
achieves valuable weight and cost reduction advantages. With 150 kW of power at its disposal, HyperDrive has been specifically designed
to compete with the performance of market leaders in the high-performance motorcycle market, whether internal combustion or electric.
Thanks to the energy modularity designed into it, HyperDrive-based motorcycles can be detuned in power, energy and thus cost to support
500 – 1500cc power equivalent classes of motorcycles in both the North American and European markets, with price points ranging
from $20,000 - $80,000.
The HyperDrive platform is
contrasted by the smaller, less powerful and lower cost HyperLite platform, currently in its early design phase. HyperLite will be developed
using a very similar design architecture as HyperDrive, enabling the production of a range of light weight, low to medium cost motorcycles
and scooters with milder levels of horsepower that are more common in overseas and developing markets. With these two platforms paired
with Damon Motors's three patented cornerstone technologies, CoPilot™, Shift™ and its AI-enabled cloud platform. Damon
Motors's long-term objective is to build a premium, high-tech, electric motorcycle company that rivals the largest incumbents in
both profit and annual volume, by providing a technologically enhanced riding experience that is not currently available from other manufacturers.
CoPilot provides a novel rider
assistance and warning system integrated into the motorcycle. Shift allows the handlebars and foot pegs to mechatronically adjust on the
fly, addressing issues of ergonomic comfort and allowing users to select different riding positions for changing conditions such as a
lower, more aerodynamic position for highway use or a more upright position for urban use. Its AI-enabled cloud will collect environmental
and situational data that, paired with over-the-air software updates, can drive a continual loop of collision warning improvements, with
an aim to further reduce accident probability over time.
The commercial production
of Damon Motors's motorcycles is expected to commence after passing various internal and external tests and undergoing a self-certification
process required for US-bound vehicle homologation. These tests include: the completion of Damon Motors's ride quality and long-term
durability testing, completion of FCC Title 47 certification for the onboard charger, completion of UN 38.3 battery testing, completion
of Damon Motors's internal battery testing, extreme temperature operation verification, brake testing per FMVSS, and an internal
and external review of FMVSS compliance with Damon Motors engineering subcontractor TUV of Germany.
2
Our SAVES Distribution Business Through
Grafiti Limited
We, through our wholly-owned
subsidiary Grafiti Limited, distribute in the UK and certain other European countries data analytics and visualization software products
referred to as "SAVES" primarily for scientists and engineers. Grafiti Limited's products can be downloaded to a user's
desktop. These products help scientific research in the health and life sciences domain in the discovery of new drugs, in the study of
the efficacy of established drugs and therapies, and in epidemic propagation research, among other applications. Engineers use our products
for a multitude of applications which include, but are not limited to, conducting surface modelling analysis and curve fitting in order
to design new engineering processes, studying signal attenuation and propagation in radio engineering. Potential automobile and motorcycle
applications could include surface panel design for aerodynamics, aesthetic symmetry, and calculated asymmetry among others. We believe
the Grafiti Limited regression analysis product could also be used for predicting vehicle sharing demand and pricing trends in various
markets based on a wide range of variables.
Grafiti Limited's strategy
is to build a broader, long term customer base by increasing its sales of Grafiti Limited's product offerings which will include
cloud and Macintosh compatible data analytics and statistical visualization software products. We believe this will enable the Grafiti
Limited business to focus on generating more recurring revenues in the future.
Grafiti Limited was formed
by the Parent on May 13, 2020 as a distribution arm for its SAVES products in the UK market and part of the European market.
Summary Risk Factors
Our business is subject to
numerous risks and uncertainties, including those highlighted in the section titled "
Risk Factors
," that represent
challenges that we face in connection with the successful implementation of our strategy and the growth of our business. In particular,
the following risks, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could
cause a decline in the price of our common shares and result in a loss of all or a portion of your investment:
●
Sales of a substantial number of our securities in the public
market by the Selling Securityholders and/or by our existing securityholders could cause the price of our common shares to fall.
●
The Selling Securityholders may purchase common shares at
a price below the current trading price of the shares, and may experience a positive rate of return based on the current trading price.
Future investors in the Company may not experience a similar rate of return.
●
We may be required to make cash payments or issue a substantial
number of common shares under the Securities Purchase Agreement, which could reduce the amount of cash available to fund our operations
or dilute the ownership percentage held by our investors.
●
Our common shares are listed on Nasdaq, but we cannot guarantee that we will be able to satisfy the applicable listing standards going forward.
●
Damon is an early-stage company with a limited operating history
and a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future.
●
Damon's success will depend on its ability to economically
produce its vehicles at scale, and its ability to produce vehicles of sufficient quality and appeal to customers on schedule and at a
scale that is unproven.
●
To carry out its proposed business plan, Damon will require
a significant amount of capital and it may be unable to reduce and adequately control the costs associated with operating its business.
●
Damon does not currently have arrangements in place that will
allow it to fully execute its business plan and may experience significant delays in the design, manufacture, finance, regulatory approval,
launch, transportation and delivery of its motorcycles.
●
Damon may not be able to accurately estimate the supply and
demand for its vehicles, which could result in a variety of inefficiencies in its business and hinder its ability to generate revenue.
3
●
Damon has received only a limited number of reservations for
its vehicles, all of which may be cancelled and are fully refundable, and there is no assurance that such reservations will be converted
into sales.
●
If Damon fails to manage future growth effectively, it may
not be able to produce, market, service and sell (or lease) its motorcycles successfully.
●
Damon's business and prospects depend significantly
on its ability to build its brand and service its motorcycles. Damon may not succeed in continuing to establish, maintain and strengthen
the Damon brand, and its brand and reputation could be harmed by negative publicity regarding its company or products.
●
The motorcycle market is highly competitive, and Damon may
not be successful in competing in this industry, which may depend upon consumer's willingness to adopt electric motorcycles.
●
Damon may be adversely affected by the complexity, uncertainties
and changes in automotive or internet related Canadian regulations or similar regulations of any countries it is selling motorcycles
into.
●
Damon is dependent on its suppliers, some of which are single
or limited source suppliers, and the inability of these suppliers to deliver necessary components of Damon's vehicles at prices
and volumes acceptable to Damon would have a material adverse effect on its business, financial condition, operating results and prospects.
●
Damon depends on certain key personnel, and its success will
depend on its continued ability to retain and attract qualified management, technical and vehicle engineering and sales personnel.
●
Damon is and will be dependent on its manufacturing facilities
and complex machinery.
●
Dependence on a single licensor for our SAVES products and
potential adverse changes to terms could negatively impact our financial condition and results of operations.
●
Global economic conditions, including inflation and any other
financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially
and adversely affect Damon's business, financial condition, results of operations and prospects.
●
Damon's risk management efforts may not be effective
which could result in unforeseen losses.
●
Damon is subject to risks related to customer credit.
●
Damon's sales and operating results may fluctuate from
quarter-to-quarter and from year-to-year as they are affected, among other things, by the seasonal nature of Damon's products,
fluctuation in Damon's operating costs and prevailing market conditions.
●
Adverse judgments or settlements in legal proceedings, including those that may arise relating to the Business Combination, could materially harm our business, financial condition, operating results, and cash flows.
●
Damon's patent applications may not result in issued
patents, which may have a material adverse effect on its ability to prevent others from interfering with the commercialization of Damon's
products.
●
Damon may need to defend itself against patent or trademark
infringement claims, which may be time-consuming and would cause Damon to incur substantial costs.
●
Our international business exposes us to geo-political and
economic factors, trade tariffs, legal and regulatory requirements, fluctuations in exchange rates, public health and other risks associated
with doing business in foreign countries.
4
●
The lack of availability, reduction or elimination of government
and economic incentives or government policies which are favorable for electric vehicles and Canadian produced vehicles could have a
material adverse effect on Damon's business, financial condition, operating results and prospects.
●
The construction and operation of Damon's assembly facility
in San Rafael, or other assembly facilities that Damon may seek to establish in the future, are or will be subject to regulatory approvals,
and may be subject to delays, cost overruns or may not produce expected benefits.
●
Damon's vehicles are subject to motor vehicle standards
and the failure to satisfy such mandated safety standards would have a material adverse effect on Damon's business, financial condition,
operating results and prospects.
●
Failure of information security and privacy concerns could
subject Damon to penalties, damage its reputation and brand, and harm its business, financial condition, operating results and prospects.
●
Damon may become subject to product liability claims and recalls,
which could harm Damon's financial condition and liquidity if it is not able to successfully defend or insure against such claims.
●
The growth of our SAVES distribution business is dependent
on increasing sales to our existing customers and obtaining new customers.
●
Defects, errors, or vulnerabilities in our SAVES products
or services that we sell or the failure of such products or services to prevent a security breach, could harm our reputation and adversely
affect our results of operations.
Corporate Information
Our principal executive offices
are located at 704 Alexander Street, Vancouver, British Columbia, Canada, and our telephone number is (408) 702-2167. Our website address
is
https://damon.com/
. The information contained on, or that can be accessed through, our website is not incorporated by reference
in this prospectus and should not be considered to be part of this prospectus.
December 2024 Securities Purchase Agreement
On December 20, 2024, we entered
into a Securities Purchase Agreement with Streeterville Capital, LLC. Under the agreement, the Company agreed to issue and sell to Streeterville
one or more pre-paid purchases at an aggregate purchase price of up to $10,000,000 (the "Total Commitment Amount") for the
purchase of the Company's common shares. As consideration for Streeterville's commitment, the Company also agreed to issue
343,053 common shares to Streeterville (the "Commitment Shares").
Each pre-paid purchase includes
an original issue discount of 7% and accrues interest at an annual rate of 8%. For the initial pre-paid purchase, which closed on December
20, 2024 (the "Initial Closing Date"), Streeterville paid $2,000,000, creating in an initial principal balance of $2,140,000.
Pursuant to the Securities
Purchase Agreement and a registration rights agreement entered into on the same date, the Company agreed to file a registration statement
on Form S-1 under the Securities Act, to register the resale of 18,000,000 common shares, including the Commitment Shares and common shares
issuable pursuant to the pre-paid purchases (the "Registration Statement"). The registration statement of which this prospectus
is a part has been filed to satisfy such obligation. If the Registration Statement is not declared effective within 60 days of the Initial
Closing Date, the outstanding balance of the pre-paid purchase will automatically increase by 2%, with further increases of 2% for each
subsequent 30-day period that the Registration Statement remains ineffective. If the Registration Statement is declared effective within
90 days of the Initial Closing Date and no default has occurred, and if requested by the Company, Streeterville will fund $1,000,000 for
a second pre-paid purchase.
5
Within a committed two-year
period, and subject to certain specified conditions, the Company may request the issuance of additional pre-paid purchases to Streeterville,
with each purchase amount no less than $250,000, provided that the total outstanding balance of all pre-paid purchases does not exceed
$3,000,000.
The proceeds from the pre-paid
purchases are expected to be used for working capital and other corporate purposes. However, $100,000 from the initial pre-paid purchase
funding, and 15% of the funding from subsequent pre-paid purchases, shall be used to repay the indebtedness under the secured promissory
note issued to Streeterville in June 2024 with an original principal amount of $6,470,000.
Following the funding of each
pre-paid purchase, Streeterville has the right, but not the obligation, to purchase from the Company its common shares not exceeding (i)
the outstanding balance of the funded amount, and (ii) 9.99% beneficial ownership of the Company's outstanding common shares. The
purchase price of the common shares will be the lower of (i) $1.50 or (ii) 90% of the lowest daily VWAP during the ten consecutive trading
days immediately prior to the purchase notice date, but not less than the floor price, which is equal to 20% of the "Minimum Price"
as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing. Under the Securities Purchase Agreement, the Company agrees
to seek shareholder approval for the issuance of common shares up to the Total Commitment Amount (the "Required Shareholder Approval").
Until such approval is obtained, the Company will not request additional pre-paid purchases that may cause the total amount of common
shares issuable to exceed the limits set under Nasdaq Listing Rule 5635(d) (the "Exchange Cap").
The outstanding pre-paid purchases,
unless reduced by the Company's sale of common shares to Streeterville as described, will remain outstanding and may be repaid in
cash at the Company's option. There is no maturity date for the outstanding balance of the pre-paid purchases. However, if the Company
fails to obtain the Required Shareholder Approval at its initial shareholder meeting, any remaining outstanding balance above the Exchange
Cap must be repaid in cash. Additionally, if certain triggering events occur, including (a) the VWAP of the Company's common shares
falling below the floor price for at least five trading days within a seven-trading-day period, or (b) the Company having issued 75% of
the shares under the Exchange Cap, the Company must make monthly cash repayments of $350,000 in principal plus any accrued unpaid interest
until the outstanding balance is fully repaid or the triggering event conditions are resolved. In an event of default as specified in
the pre-paid purchase, Streeterville may accelerate repayment, requiring the outstanding balance to become immediately due, with a 10%
increase to the principal and interest accruing at a rate of 18% per annum.
Financial Advisory Agreement with Maxim
On
January 7, 2025, we entered into a Financial Advisory Agreement with Maxim Group LLC (together with its affiliates and subsidiaries, "Maxim").
Pursuant to this agreement, Maxim has been appointed to provide advisory services to the Company, including consultation on capital raising
matters such as a private placement of equity or equity-linked securities. As compensation for past advisory services following the listing
of the Company on Nasdaq, the Company has issued 514,579 common shares to Maxim Partners LLC, with piggyback registration rights. Maxim's
engagement will terminate 90 days from the execution date.
6
Emerging Growth Company
Damon is an "emerging
growth company," as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, Damon is eligible to take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging
growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any
golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less
active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of
the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging
growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
Damon intends to take advantage of the benefits of this extended transition period.
Damon will remain an emerging
growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the
initial public offering of our securities, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds
$700 million as of the end of the prior fiscal year's second fiscal quarter; and (2) the date on which we have issued more than
$1.00 billion in non-convertible debt securities during the prior three-year period. References herein to "emerging growth company"
have the meaning associated with it in the JOBS Act.
Smaller Reporting Company
Damon is a "smaller
reporting company" as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. Damon will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of its common equity held by non-affiliates exceeds
$700 million as of the prior September 30th or (2) the market value of its common equity exceeds $250 million and its annual revenues
exceeds $100 million during such fiscal year.
7
THE OFFERING
Common shares offered by the Selling Securityholders
18,514,579 common shares, 17,656,947 of which are issuable to Streeterville from time to time in satisfaction of Pre-Paid Purchases under the Securities Purchase Agreement
Common shares outstanding prior to this offering
22,030,884 common shares (as of the date of this filing)
Use of proceeds
We will not receive any proceeds from the sale of common shares by the Selling Securityholders pursuant to this prospectus.
Risk factors
You should carefully read the section titled "
Risk Factors
" beginning on page 9
and the other information included in this prospectus for a discussion of factors you should consider carefully before deciding to invest in our common shares.
Nasdaq symbol for our common shares
"DMN"
8
RISK FACTORS
You should carefully consider
the risks and uncertainties described below and the other information in this prospectus before making an investment in our common shares.
Our business, financial condition, results of operations, or prospects could be materially and adversely affected if any of these risks
occurs, and as a result, the market price of our common shares could decline and you could lose all or part of your investment. This prospectus
also contains forward-looking statements that involve risks and uncertainties. See "
Cautionary Statement Regarding Forward-Looking
Statements
." Our actual results could differ materially and adversely from those anticipated in these forward-looking statements
as a result of certain factors, including those set forth below.
Risks Related to this Offering by the Selling Securityholders
Sales of a substantial number of our
securities in the public market by the Selling Securityholders and/or by our existing securityholders could cause the price of our common
shares to fall.
The Selling Securityholders
can sell, under this prospectus, up to 18,514,579 common shares constituting approximately 84% of our issued and outstanding common shares
as of this filing, consisting of (a) up to 343,053 common shares issued in a private placement to Streeterville (the "Commitment
Shares"), (b) up to 17,656,947 common shares (the "Purchase Shares") issuable to Streeterville under the pre-paid purchases
consummated pursuant to the Securities Purchase Agreement, and (c) up to 514,579 common shares issued in a private placement to Maxim
(the "Maxim Shares"). The sale of all or a portion of the securities being offered in this prospectus could result in a significant
decline in the public trading price of our securities. Despite such a decline in the public trading price, the Selling Securityholders
may still experience a positive rate of return on the securities they purchased, given that the Commitment Shares and the Maxim Shares
were issued to the Selling Securityholders for non-cash consideration, and due to the price at which Purchase Shares may be sold and issued
to Streeterville under the Securities Purchase Agreement. See "
The Selling Securityholders may purchase common shares at a price
below the current trading price of the shares, and may experience a positive rate of return based on the current trading price. Future
investors in the Company may not experience a similar rate of return.
" below.
Sales of a substantial number
of our common shares in the public market by the Selling Securityholders and/or by our other existing securityholders, or the perception
that those sales might occur, could depress the market price of our common shares and could impair our ability to raise capital through
the sale of additional equity securities.
The Selling Securityholders have acquired
and may purchase common shares at a price below the current trading price of the shares, and may experience a positive rate of return
based on the current trading price. Future investors in the Company may not experience a similar rate of return.
Under the Securities Purchase
Agreement, following the funding of each Pre-Paid Purchase, Streeterville has the right, but not the obligation, to purchase from the
Company its common shares not exceeding (i) the outstanding balance of the funded amount, and (ii) 9.99% beneficial ownership of the Company's
outstanding common shares. The purchase price of the common shares will be the lower of (i) $1.50 or (ii) 90% of the lowest daily VWAP
during the ten consecutive trading days immediately prior to the purchase notice date, but not less than the floor price, which is equal
to 20% of the "Minimum Price" as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing of the Pre-Paid
Purchase. Under the Securities Purchase Agreement, the Company has agreed to seek shareholder approval for the issuance of common shares
for up to the total commitment amount of up to $10 million of Pre-Paid Purchases (the "Required Shareholder Approval"). Until
such approval is obtained, the Company will not request additional Pre-Paid Purchases that may cause the total amount of common shares
issuable to exceed the limits set under Nasdaq Listing Rule 5635(d) (the "Exchange Cap").
This prospectus relates to
the offer and resale from time to time by the Selling Securityholders of up to 18,514,579 common shares constituting approximately 84%
of our issued and outstanding common shares as of the date of this prospectus, consisting of (a) up to 343,053 common shares issued in
a private placement to Streeterville, (b) up to 17,656,947 common shares issuable to Streeterville under the pre-paid purchases consummated
pursuant to the Securities Purchase Agreement, and (c) up to 514,579 common shares issued in a private placement to Maxim.
9
Due to the pricing mechanism
explained above, Streeterville may acquire our common shares at a price below, or even substantially below, the current trading price
once the Required Shareholder Approval is obtained. Additionally, the Commitment Shares and the Maxim Shares were issued to the Selling
Securityholders for non-cash consideration. These factors may create an economic incentive for the Selling Securityholders to sell promptly
after the effectiveness of the registration statement to which this prospectus is a part, which could put downward pressure on the market
price of our shares. As a result, other investors may experience dilution or a decline in the value of their holdings, and future investors
in the Company may face a less favorable investment opportunity.
Public securityholders who
have or will purchase our common shares at current trading price may not be able to experience the same positive rates of return on securities
they purchase, due to the low price at which the Selling Securityholders may purchase our common shares.
Risks Relating to the Transactions under the Securities Purchase
Agreement
We may be required to make cash payments
or issue a substantial number of common shares under the Securities Purchase Agreement, which could reduce the amount of cash available
to fund our operations or dilute the ownership percentage held by our investors.
Subject to the terms and conditions
in the Securities Purchase Agreement, the Company may issue and sell up to $10,000,000 of Pre-Paid Purchases of its common shares within
a committed two-year period. As part of this agreement, the Company has issued 343,053 common shares to Streeterville as consideration
for its commitment.
Under the Securities Purchase
Agreement, following the funding of each Pre-Paid Purchase, Streeterville has the right, but not the obligation, to purchase from the
Company its common shares not exceeding (i) the outstanding balance of the funded amount, and (ii) 9.99% beneficial ownership of the Company's
outstanding common shares. The purchase price of the common shares will be the lower of (i) $1.50 or (ii) 90% of the lowest daily VWAP
during the ten consecutive trading days immediately prior to the purchase notice date, but not less than the floor price, which is equal
to 20% of the "Minimum Price" as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing of the Pre-Paid
Purchase. Under the Securities Purchase Agreement, the Company has agreed to seek shareholder approval for the issuance of common shares
for up to the total commitment amount of up to $10 million of Pre-Paid Purchases. Until such approval is obtained, the Company will not
request additional Pre-Paid Purchases that may cause the total amount of common shares issuable to exceed the limits set under Nasdaq
Listing Rule 5635(d) (the "Exchange Cap").
Each pre-paid purchase accrues
interest at an annual rate of 8% and includes an original issue discount of 7%. If the registration statement on Form S-1, to which this
prospectus is a part, is not declared effective within 60 days of December 20, 2024, i.e., February 18, 2025, the outstanding balance
of the pre-paid purchase will automatically increase by 2%, with further increases of 2% for each subsequent 30-day period that the registration
statement remains ineffective.
If the Company fails to obtain
the Required Shareholder Approval at its initial shareholder meeting, any remaining outstanding balance above the Exchange Cap must be
repaid in cash. Additionally, if certain triggering events occur, including (a) the VWAP of the Company's common shares falling
below the floor price for at least five trading days within a seven-trading-day period, or (b) the Company having issued 75% of the shares
under the Exchange Cap, the Company must make monthly cash repayments of $350,000 in principal plus any accrued unpaid interest until
the outstanding balance is fully repaid or the triggering event conditions are resolved. Additionally, if the Company fails to meet certain
conditions under the Securities Purchase Agreement, it may be required to make cash payments.
If Streeterville exercises
its right to purchase common shares under the Pre-Paid Purchases, the shares may be issued at a price significantly below the prevailing
market price. This could lead to substantial dilution of other investors' ownership percentages and potentially decrease the value
of their investment. This dilution, combined with the potential for downward pressure on the Company's share price if the Selling
Securityholders promptly sell the shares in the open market, could reduce the market value of the Company's common shares and adversely
affect its ability to raise additional capital on favorable terms.
10
Furthermore, the cash payment
obligations under the Securities Purchase Agreement, if triggered, could significantly reduce the cash available to fund the Company's
operations or make necessary investments. This would adversely affect the Company's financial condition and limit its ability to
pursue growth opportunities, adversely affecting its business prospects.
Risks Relating to Our Business
The Company has incurred significant
costs associated with the Business Combination and will continue to incur significant costs associated with operating as a public reporting
company.
The Company has incurred substantial,
non-recurring costs related to the consummation of the Business Combination and expects to continue incurring significant expenses as
it operates as a public reporting company. These costs include legal, financial advisory, accounting and auditing, banking, and consulting
fees, as well as expenses for regulatory filings, SEC fees, printing, and mailing. Additionally, the Company may incur further costs to
retain key employees and engage new employees to support its transition to operating as a public reporting entity. These expenses are
either the responsibility of the party incurring them during the Business Combination or will be paid by the Company following the Closing.
Damon is an early-stage company with
a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future. There is no guarantee
that Damon will achieve or sustain profitability.
Damon has incurred losses
since its inception and expects to continue to incur operating and net losses each quarter until such time as it achieves sufficient sales
and production capacity at an assembly facility, which is not expected until 2026. Even if Damon is able to successfully develop, produce
and sell its vehicles, there can be no assurance that they will be commercially successful. Damon's potential profitability is dependent
upon the successful development, production, commercialization and acceptance of its vehicles, which has not yet occurred, and may never
occur.
Prior to the Closing, Damon
(formerly Grafiti Holding) incurred a net loss of approximately US$1.3 million for the fiscal year ended June 30, 2024 and approximately
US$1.6 million during the quarter ended September 30, 2024, and had an accumulated deficit of approximately US$3.3 million as of September
30, 2024. Damon Motors incurred a net loss of approximately US$34.0 million for the fiscal year ended June 30, 2024 and approximately
$7.4 million during the quarter ended September 30, 2024, and had an accumulated deficit of approximately $148.0 million as of September
30, 2024. Following the Closing, we anticipate continuing to generate a significant loss for the current fiscal year, due to the factors
discussed below.
Damon expects to continue
to incur significant expenditures in connection with the execution of its business strategy, including, without limitation, as a result
of: continuing to design and develop and beginning to manufacture its existing and planned vehicles; equipping and expanding its pilot,
support research and development and mass-production manufacturing facilities to produce its vehicles in California, and potentially in
international locations, and subsequently ramping-up production capacity at such facilities; building up inventories of parts and components
for its vehicles; developing or securing motorcycle charging partnerships; expanding its design, research, development, maintenance and
repair capabilities; increasing its sales and marketing activities and developing its distribution infrastructure; designing and implementing
a show room network; expanding its general and administrative functions to support its growing operations.
Because it will incur the
costs and expenses from these efforts before it receives any incremental revenues with respect thereto, Damon's losses in future
periods may be significant. In addition, Damon may find that these efforts are more expensive than currently anticipated, including by
reason of delays in product development and commercialization, or that these efforts may not result in revenues, which would further increase
its losses. Damon's ability to produce revenues will depend, in part, on its ability to finalize and begin commercial start of production
of its HyperSport vehicle, which is not expected to occur until 2026.
Management does not expect
its SAVES distribution business to greatly expand. The Company's ability to generate positive cash flow from operations in this
business is dependent upon sustaining certain cost reductions and generating sufficient revenues. Our ability to achieve profitability
with respect to the SAVES distribution business is more challenging when sales slow due to adverse economic conditions, notwithstanding
our cost reduction efforts, because our cost reduction efforts may not be sufficient to offset declining gross profit.
11
For the reasons discussed
above, there is no guarantee that Damon will reach profitability in the near term or at all, which could materially and adversely affect
its business, financial condition, and results of operations.
Damon has a limited operating history
which makes it difficult to evaluate its future business prospects and may increase investment risk.
Damon's limited operating
history makes evaluating its business and future prospects difficult. Damon Motors began operations in 2017 and has not yet begun mass
production or the commercial delivery of its first motorcycle. If Damon does not successfully address these risks, its business, financial
condition, operating results and prospects will be materially and adversely harmed. Damon has a very limited operating history, and as
it attempts to transition from research and development activities to production and sales, it is difficult, if not impossible, to forecast
its future results, and management has limited insight into trends that may emerge and affect its business. Damon intends to derive a
substantial portion of its revenue from the sale of its electric motorcycles, none of which have reached commercialization stage to date.
If actual results differ materially from management's estimates in future periods, Damon's business, financial condition,
operating results and prospects may be materially adversely affected.
Damon is currently in concept
phase of second vehicle, the HyperFighter, which is scheduled for delivery in 2028. Damon's motorcycles require significant investment
prior to commercial introduction and may never be successfully developed, produced, commercialized or accepted. There are no assurances
that Damon will be able to successfully develop its models in a timely manner, or secure future business from recreational customers.
Damon has encountered, and
expects to continue to encounter, risks and uncertainties frequently experienced by early-stage companies in rapidly changing markets,
including risks related to its ability to, among other things:
●
design and produce safe, reliable and quality vehicles on an ongoing basis;
●
build a well-recognized and respected brand;
●
establish and expand its customer base;
●
continue to make significant investments in research, development, manufacturing, marketing and sales;
●
successfully market its vehicles and its other services;
●
properly price its services and successfully anticipate the take-rate and usage of such services by users;
●
improve and maintain its operational efficiency;
●
maintain a reliable, secure, high-performance and scalable technology infrastructure;
●
hire, integrate, retain and motivate professional and technical talent, including key members of management;
●
anticipate and adapt to changing market conditions, including technological developments and changes in
competitive landscape; and
●
navigate an evolving and complex regulatory environment.
If Damon fails to address
any or all of these risks and challenges, its business, financial condition, operating results and prospects may be materially adversely
affected.
12
Damon will initially depend on revenue
generated from a single model of vehicle and in the foreseeable future will be significantly dependent on a limited number of models.
Damon's motorcycle business
will initially depend substantially on the sales and success of its HyperSport motorcycles, which will be its only volume manufactured
vehicle in the market for an extended period of time, and in the foreseeable future will be significantly dependent on a limited number
of vehicles. Damon will rely on sales from the HyperSport motorcycles, among other sources of financing, for the capital that will be
required to develop and commercialize those subsequent models. To the extent that (i) production of Damon's motorcycles is delayed,
interrupted or reduced, (ii) Damon's product variety and motorcycles do not meet customer expectations or do not align with projected
timelines, cost and volume targets, or (iii) any of Damon's vehicles are not well-received by the market for any reason, Damon's
revenue and cash flow would be adversely affected. In any such case, Damon may need to seek additional financing earlier than it expects,
which financing may not be available to it in a timely manner and on commercially reasonable terms, or at all, and Damon's business,
financial condition, operating results and prospects may be materially adversely affected.
Damon's success will depend
on its ability to economically produce its vehicles at scale, and its ability to produce vehicles of sufficient quality and appeal to
customers on schedule and at a scale that is unproven.
Damon's business success
will depend in large part on its ability to economically produce, market and sell its motorcycles at sufficient capacity to meet the demands
of its customers. Damon will need to scale its production capacity in order to successfully implement its business strategy, and plans
to do so in the future by, among other things, completing the development and ramp-up of capacity at an assembly facility in San Rafael,
California. Damon has no experience in mass-production of its motorcycles. Damon does not know whether it will be able to develop efficient,
automated, low-cost production capabilities and processes, or whether it will be able to secure reliable sources of supply from suppliers
and manufacturers, in each case that will enable it to meet the quality, price, engineering, design and production standards, as well
as the production volumes, required to successfully mass market its motorcycles and meet its business objectives and customer needs.
Even if Damon is successful
in developing mass-production capability and processes and can reliably source supplies in sufficient volume, it does not know whether
it will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond its control,
such as problems with suppliers and manufacturers, or in time to meet the commercialization schedules of future vehicles or to satisfy
the requirements of its customers. Damon's ability to effectively reduce its cost structure over time is limited by the fixed nature
of many of its planned expenses in the near-term, and its ability to reduce long-term expenses is constrained by its need to continue
investment in its business strategy.
If Damon fails to develop
and scale such mass-production capability and processes within its projected costs and timelines, Damon's business, financial condition,
operating results and prospects may be materially adversely affected.
Damon may be unable to reduce and
adequately control the costs associated with operating its business.
Damon will require significant
capital to develop and grow its business and it expects to incur significant costs which will impact its profitability, including research
and development expenses as new models are rolled out and existing models improved, raw material procurement costs, selling and distribution
expenses as it builds its brand and markets its vehicles and general and administrative expenses as it scales its operations. In addition,
Damon may incur significant costs in connection with its services and honoring its commitments under its service and warranty packages.
Damon's ability to become profitable in the future will not only depend on its ability to successfully market its vehicles and other
products and services, but also its ability to control its costs. If Damon is unable to design, manufacture, market, sell and distribute
and service its vehicles and services in a cost-efficient manner, its business, financial condition, operating results and prospects may
be materially adversely affected.
To carry out its proposed business
plan to develop, manufacture, sell and service electric motorcycles, Damon will require a significant amount of capital.
Damon's capital expenditures
will continue to be significant in the foreseeable future as it expands its business and its level of capital expenditures will be significantly
affected by customer demand for its products and services. The fact that Damon has a limited operating history means it has limited historical
data on the demand for its products and services. As a result, its future capital requirements are uncertain and actual capital requirements
may be materially different from those it currently anticipates. Damon expects that it will ultimately need to seek additional equity
or debt financing to finance its capital expenditures, though the timing or amount of any such capital expenditures cannot be predicted
with certainty at this time. The sale of additional equity or equity-linked securities would dilute Damon's shareholders, while
the incurrence of indebtedness would result in increased debt service obligations and covenants that potentially restrict its operations.
13
There is no assurance that
such additional financings will be available to Damon in a timely manner or on terms that are favorable, or at all. Damon's ability
to obtain the necessary financing to carry out its business plan is subject to a number of factors, including general market conditions
and investor acceptance of its business plan. These factors may cause the timing, amount, terms and conditions of such financing to be
unattractive or unavailable to Damon. If Damon is unable to secure sufficient financing if and when needed or desired, it may have to
significantly reduce its spending, delay or cancel its planned activities or substantially change its current corporate structure and
its business, financial condition, operating results and prospects may be materially adversely affected.
Damon may experience significant delays
in the design, manufacture, finance, regulatory approval, launch, transportation and delivery of its motorcycles.
Damon's business will
depend in large part on its ability to execute on its plans to design, manufacture, finance, obtain regulatory approval for, launch, transport
and deliver its vehicles, and any delay associated therewith could materially adversely affect Damon's business, financial condition,
operating results and prospects, and could cause liquidity constraints and reputational damage.
Vehicle manufacturers often
experience delays in the design, manufacture and commercial launch of new products. Damon has no experience to date in high volume manufacturing
of its vehicles. Even if it is successful in developing high-volume manufacturing capability and processes and in reliably sourcing its
component supply, Damon cannot guarantee that it will be able to do so in a manner that avoids significant delays and cost overruns or
in time to meet its vehicle commercialization schedules or in satisfaction of customer expectations or requirements. Further, Damon will
also rely on third-party suppliers for the provision and development of the key components and materials used in its vehicles. To the
extent Damon's suppliers experience any delays in providing it with or developing necessary components, it could experience delays
in delivering on its timelines. Further, prior to mass production of its vehicles, Damon will need such vehicles to be fully designed,
engineered and approved for sale according to differing requirements, including, but not limited to, regulatory requirements, in the different
jurisdictions in which it intends to commercialize them.
Damon does not currently have arrangements
in place that will allow it to fully execute its business plan.
To sell its motorcycles as
envisioned, Damon will need to enter into agreements and arrangements that are not currently in place. These include entering into manufacturing
agreements for Damon's current and future electric motorcycles not yet in development and acquiring additional manufacturing capability,
arranging for the transportation of HyperSport motorcycles, and obtaining battery and other essential supplies in the quantities that
Damon requires. If Damon is unable to enter into such agreements or is only able to do so on terms that are unfavorable, Damon may not
be able to fully carry out its business plans as currently contemplated or at all.
If Damon is unable to design, develop,
manufacture and sell new electric motorcycles and services that address additional market opportunities, its business, financial condition,
operating results and prospects may suffer.
Damon may not be able to successfully
design, develop, manufacture and sell new electric motorcycles and services, address new market segments or develop a significantly broader
customer base. To date, Damon has focused its business on the development and sale of the HyperSport Premier and HyperSport HS motorcycles,
which have targeted mainly affluent super sport motorcycle market. Damon will need to address additional markets and expand its customer
demographic to further grow its business. If Damon fails to address additional market opportunities, its business, financial condition,
operating results and prospects may be materially adversely affected.
Damon may not be able to accurately
estimate the supply and demand for its vehicles, which could result in a variety of inefficiencies in its business and hinder its ability
to generate revenue. If Damon fails to accurately predict its manufacturing requirements, Damon could incur additional costs or experience
delays.
It is difficult for management
to predict Damon's future revenues and appropriately budget for its expenses, and management has limited insight into trends that
may emerge and affect Damon's business. Damon will be required to provide forecasts of its demand to its suppliers several months
prior to the scheduled delivery of vehicles to its prospective customers. Currently, there is no historical basis for making judgments
about the demand for Damon's vehicles or its ability to design, develop, manufacture and sell vehicles, or its profitability in
the future. If Damon overestimates its requirements, its suppliers may have excess inventory, which indirectly would increase its costs.
If Damon underestimates its requirements, its suppliers may have inadequate inventory, which could interrupt manufacturing of its vehicles
and result in delays in deliveries and revenues or negatively impact its ongoing relationships with its suppliers. In addition, lead times
for materials and components that its suppliers order may vary significantly and depend on factors such as the specific supplier, contract
terms and demand for each component at a given time. If Damon fails to order sufficient quantities of product components in a timely manner,
the delivery of vehicles to its customers could be delayed, and its business, financial condition, operating results and prospects may
be materially adversely affected.
14
Damon has received only a limited
number of reservations for its vehicles, all of which may be cancelled and are fully refundable, and there is no assurance that such reservations
will be converted into sales.
As of September 30, 2024,
Damon had unfulfilled reservations for more than 3,297 HyperSport and HyperFighter motorcycles, which were placed with fully refundable
deposits. Damon's customers may cancel their reservations without penalty and for any reason until they place an order for their
motorcycle, at which point the deposit becomes non-refundable and the customer is required to pay an additional non-refundable deposit.
Damon has experienced cancellations in the past, and further customers may cancel their reservations for many reasons outside of its control,
including changes in government subsidies and economic incentives. The potentially long wait from the time a reservation is made until
the time the vehicle is delivered could also impact user decisions on whether to ultimately make a purchase, due to potential changes
in preferences, competitive developments and other factors. In addition, any further delays in the expected start of production of the
HyperSport line of motorcycles or other upcoming models could result in significant reservation cancellations. No assurance can be given
that reservations will not be cancelled and will ultimately result in the final purchase, delivery and sale or lease of motorcycles. Accordingly,
the number of reservations has significant limitations as a measure of demand for Damon's products, including demand for particular
body styles, models or trim levels, or for future motorcycle sales.
If Damon fails to manage future growth
effectively, it may not be able to produce, market, service and sell (or lease) its motorcycles successfully.
Damon plans to expand its
operations in the near future in connection with the planned production of its motorcycles, which will require it to hire and train new
personnel, accurately forecast production and revenue, control expenses and investments in anticipation of expanded operations, establish
new or expand current design, production and sales and service facilities, implement and enhance administrative infrastructure, systems
and processes, address new markets and establish international operations. If Damon fails to efficiently manage its growth, its business,
financial condition, operating results and prospects may be materially adversely affected.
Damon expects to experience
significant and rapid growth in the scope and complexity of its business, which may place a significant strain on Damon's senior
management team and its financial and other resources. Such growth, if experienced, may expose Damon to greater costs and other risks
associated with growth and expansion. Damon may be required to hire a broad range of additional employees, including other support personnel,
among others, in order to successfully advance its operations. Damon may be unsuccessful in these efforts or may be unable to project
accurately the rate or timing of these increases.
Damon's ability to manage
its growth effectively will require Damon to continue to improve its operations, to improve financial and management information systems,
and to train, motivate, and manage future employees. This growth may place a strain on Damon's management and operational resources.
The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions
necessary to effectively service and manage Damon's business, or the failure to manage growth effectively, could have a materially
adverse effect on Damon's business, financial condition, and results of operations. In addition, difficulties in effectively managing
the budgeting, forecasting, and other process control issues presented by such a rapid expansion could harm Damon's business, financial
condition, and results of operations.
15
Damon has very limited experience
servicing its motorcycles. If it is unable to address the service requirements of its future customers, Damon's business may be
materially and adversely affected.
Damon has limited experience
in servicing its motorcycles, and it expects to be required to increase its servicing capabilities as it scales its operations and continues
to grow, including by building Damon experience centers in the U.S. and Canada. Servicing electric vehicles is different than servicing
vehicles with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques. Although
Damon believes the experience it has gained developing and operating prototypes of its motorcycles positions it well to service its motorcycles
and future products, Damon has no after-sale experience of maintaining and servicing motorcycles for its customers at scale, and there
is no guarantee Damon will be able to do so. There can be no assurance that Damon's service arrangements will adequately address
the service requirements of Damon's customers to their satisfaction, or that Damon and its partners will have sufficient resources
to timely meet ongoing service requirements at scale. In addition, Damon anticipates the level and quality of the services it plans to
provide its customers will have a direct impact on the success of its brand, reputation and ongoing sales. Failure to address the servicing
requirements of its customers could harm Damon's reputation or materially adversely affect its business, financial condition, operating
results and prospects.
Damon's customers will
also depend on Damon's customer support team to resolve technical and operational issues relating to the software integrated in
its vehicles. Damon's ability to provide effective customer support is largely dependent on its ability to attract, train and retain
qualified personnel with experience in supporting customers on platforms such as Damon's platform. As it continues to grow, additional
pressure may be placed on Damon's customer support team, and Damon may be unable to respond quickly enough to accommodate short-term
increases in customer demand for technical support. Damon may also be unable to modify the future scope and delivery of its technical
support to compete with changes in the technical support provided by its competitors. Increased customer demand for support, without corresponding
revenue, could increase costs and negatively affect Damon's results of operation. If Damon is unable to successfully address the
servicing requirements of its customers or establish a market perception that it maintains high-quality support, it may be subject to
claims from its customers, including for breach of warranties, loss of revenue or damages, and its business, financial condition, operating
results and prospects may be materially adversely affected.
Damon's motorcycles may not
perform in line with customer expectations.
Damon's vehicles, including
the HyperSport line of motorcycles, may not perform in line with customers' expectations. For example, Damon's vehicles may
not have the durability or longevity of other vehicles in the market and may not be as easy and convenient to repair as other vehicles
in the market. Any product defects or any other failure of Damon's vehicles to perform as expected could harm its reputation and
result in adverse publicity, harm to the Damon brand and reputation, lost revenue, delivery delays, product recalls, product liability
claims, significant warranty and other expenses, and could have a material adverse impact on Damon's business, financial condition,
operating results and prospects. Additionally, problems and defects experienced by other electric consumer vehicles could by association
have a negative impact on perception and customer demand for Damon's vehicles.
Further, Damon's vehicles
may contain defects in components, software, design and manufacture that may cause them not to perform as expected or that may require
repairs, recalls or design changes, any of which would require significant financial and other resources to successfully navigate and
resolve. Damon initially plans to deliver its vehicles without CoPilot ADAS, and thereafter to deliver its vehicles with CoPilot ADAS
with limited functionality, with the goal to activate additional features over time. There is no guarantee that the CoPilot ADAS will
ultimately perform in line with expectations. Damon's vehicles use a substantial amount of software code to operate and software
products are inherently complex and often contain defects and errors when first introduced. Efforts to remedy any issues Damon observes
in its products could significantly distract management's attention from other important business objectives, may not be timely,
may hamper production or may not be to the satisfaction of its customers. Further, while extensive internal testing has been performed
on Damon's vehicles' software and hardware systems, Damon's limited operating history and limited field data reduce
its ability to evaluate and predict the long-term quality, reliability, durability and performance characteristics of its vehicles. There
can be no assurance that Damon will be able to detect and resolve any defects in its vehicles prior to their sale to customers. If any
of Damon's vehicles fail to perform as expected, deliveries may have to be delayed, product recalls initiated and servicing or updates
under warranty provided at Damon's expense, which could adversely affect Damon's brand in its target markets and its business,
financial condition, operating results and prospects may be materially adversely affected.
16
Sales will depend in part on Damon's
ability to establish and maintain confidence in its business prospects among customers, analysts and others within its industry.
Consumers may be less likely
to purchase Damon's products if they do not believe that its business will succeed or that its operations, including service and
customer support operations, will continue for many years. Similarly, suppliers and other third parties will be less likely to invest
time and resources in developing business relationships with Damon if they are not convinced that its business will succeed. Accordingly,
to build, maintain and grow its business, Damon must establish and maintain confidence among customers, suppliers, analysts and other
parties with respect to its liquidity and business prospects. Maintaining such confidence may be particularly difficult as a result of
many factors, including Damon's limited operating history, others' unfamiliarity with its products, uncertainty regarding
the future of electric vehicles, any prior or future delays in scaling production, delivery and service operations to meet demand, competition
and Damon's production and sales performance compared with market expectations. Some of these factors are outside of Damon's
control, and any negative perceptions about Damon's business prospects, even if exaggerated or unfounded, would likely harm its
business and make it more difficult to raise additional capital in the future. In addition, a significant number of new electric vehicle
companies have recently entered the automotive industry, which is an industry that has historically been associated with significant barriers
to entry and a high rate of failure. If these new entrants or other manufacturers of electric vehicles go out of business, produce vehicles
that do not perform as expected or otherwise fail to meet expectations, such failures may have the effect of increasing scrutiny of others
in the industry, including Damon, and further challenging customer, supplier and analyst confidence in Damon's business prospects.
Damon's business and prospects
depend significantly on its ability to build its brand. Damon may not succeed in continuing to establish, maintain and strengthen the
Damon brand, and its brand and reputation could be harmed by negative publicity regarding its company or products.
Damon's business and
prospects are heavily dependent on its ability to develop, maintain and strengthen the "Damon" brand. If Damon fails to establish,
maintain and strengthen its brand, it may lose the opportunity to build a critical mass of customers. Promoting and positioning the "Damon"
brand will likely depend significantly on Damon's ability to provide high quality vehicles and services and engage with its customers
as intended and Damon has limited experience in these areas. In addition, Damon expects that its ability to develop, maintain and strengthen
the "Damon" brand will also depend heavily on the success of its user development and branding efforts. Such efforts mainly
include building a community of online and offline users engaged with Damon through its mobile application and Damon stores as well as
other branding initiatives and events. Such efforts may be non-traditional and may not achieve the desired results. To promote the "Damon"
brand, Damon may be required to change its user development and branding practices, which could result in substantially increased expenses,
including the need to use traditional media such as television, radio and print. If Damon does not develop and maintain a strong brand,
its business, financial condition, operating results and prospects may be materially and adversely impacted.
In addition, if incidents
with Damon's business, vehicles or services occur or are perceived to have occurred, whether or not such incidents are Damon's
fault, Damon could be subject to adverse publicity. In particular, given the popularity of social media, posts and opinions regarding
Damon, whether true or not, could quickly proliferate and harm consumer perceptions and confidence in the "Damon" brand. Further,
there is the risk of potential adverse publicity related to Damon's manufacturing or other partners, whether or not such publicity
is related to their collaboration with Damon. Damon's ability to successfully position its brand could also be adversely affected
by perceptions about the quality of its partners' vehicles. In addition, from time-to-time, Damon's vehicles are evaluated
and reviewed by third parties. Any negative reviews or reviews which compare Damon unfavorably to competitors could adversely affect consumer
perception about Damon's vehicles.
17
The motorcycle market is highly competitive,
and Damon may not be successful in competing in this industry.
The motorcycle market is highly
competitive, and Damon expects it will become even more so in the future. Currently, Damon's principal competition for its vehicles
comes principally from manufacturers of motorcycles with internal combustion engines powered by gasoline, including in the premium and
other segments of its business. Damon cannot assure that customers will choose its vehicles over those of its competitors' internal
combustion-engine motorcycles. Although Damon intends to strategically enter into the market in the premium electric vehicle segment,
it similarly expects this segment will become more competitive in the future as additional competitors enter into it, both from established
brands and new entrants from various regions of the globe.
Many of Damon's current
and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than Damon and
may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their
products. Based on publicly available information, a number of Damon's competitors already have displayed prototype electric motorcycles
and have announced target availability and production timelines, while others have launched pilot programs or full commercial offerings
in certain markets.
Notably, Damon expects competition
in its industry to intensify in the future in light of increased demand and regulatory push for alternative fuel vehicles, continuing
globalization and consolidation in the worldwide motorcycle industry. Factors affecting competition include, among others, product quality
and features, innovation and development time, pricing, reliability, safety, fuel and energy economy, customer service (including breadth
of service network) and financing terms. Damon's ability to successfully compete in the motorcycle industry will be fundamental
to its future success in existing and new markets and its market share. There can be no assurance that Damon will be able to compete successfully
in the markets in which it operates. If Damon's competitors introduce new models or services that successfully compete with or surpass
the quality, price, performance or availability of Damon's vehicles or services, Damon may be unable to satisfy existing customers
or attract new customers at the prices and levels that would allow it to generate attractive rates of return on its investment. Increased
competition could result in lower vehicle unit sales, price reductions and revenue shortfalls, loss of customers and loss of market share,
which may materially adversely affect Damon's business, financial condition, operating results and prospects.
There may be unanticipated obstacles
to the execution of Damon's business model.
Damon's business plans
may change significantly. Damon's business model is capital intensive. Damon believes that its chosen activities and strategies
are achievable in light of current economic and legal conditions with the skills, background, and knowledge of Damon's principals
and advisors. Damon's management reserves the right to make significant modifications to its stated strategies depending on future
events.
Damon's proposed plan
of operation and prospects will depend largely upon its ability to successfully establish Damon's presence in a timely fashion,
retain and continue to hire skilled management, technical, marketing, and other personnel, and attract and retain significant numbers
of quality business partners and corporate clients. There can be no assurance that Damon will be able to successfully implement its business
plan or develop or maintain future business relationships, or that unanticipated expenses, problems or technical difficulties which would
result in material delays in implementation will not occur.
Demand in the motorcycle industry
is highly volatile.
Volatility of demand in the
motorcycle industry may materially and adversely affect Damon's business, financial condition, operating results and prospects.
The markets in which Damon will be competing have been subject to considerable volatility in demand in recent periods. Demand for motorcycle
sales depends to a large extent on general, economic, political and social conditions in a given market and the introduction of new motorcycles
and technologies. As a new start-up manufacturer, Damon will have fewer financial resources than more established motorcycle manufacturers
to withstand changes in the market and disruptions in demand.
18
Damon's ability to generate
meaningful product revenue will depend upon consumer's willingness to adopt electric motorcycles.
Damon's growth will
greatly depend upon the adoption by consumers of, and Damon is subject to an elevated risk of any reduced demand for, alternative fuel
motorcycles in general and electric motorcycles in particular. If the market for electric motorcycles does not develop as expected or
develops more slowly than expected, Damon's business, financial condition, operating results and prospects may be materially adversely
affected. The market for alternative fuel motorcycles is relatively new, rapidly evolving, characterized by rapidly changing technologies,
price competition, additional competitors, evolving government regulation and industry standards, frequent new motorcycle announcements
and changing consumer demands and behaviors. Factors that may influence the adoption of alternative fuel motorcycles, and specifically
electric motorcycles, include:
●
perceptions about electric motorcycle quality, safety (in particular with respect to lithium-ion battery
packs), design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric
motorcycles;
●
perceptions about motorcycle safety in general, in particular safety issues that may be attributed to
the use of advanced technology, including motorcycle electronics and braking systems;
●
the limited range over which electric motorcycles may be driven on a single battery charge;
●
the decline of an electric motorcycle's range resulting from deterioration over time in the battery's
ability to hold a charge or short-term declines resulting from adverse weather conditions;
●
concerns about electric grid capacity and reliability, which could derail Damon's efforts to promote
electric motorcycles as a practical solution to motorcycles which require gasoline;
●
the availability of alternative fuel motorcycles, including plug-in hybrid electric motorcycles;
●
improvements in the fuel economy of the internal combustion engine;
●
the availability of service for electric motorcycles;
●
the environmental consciousness of consumers;
●
volatility in the cost of oil and gasoline;
●
government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;
●
access to charging stations, standardization of electric motorcycle charging systems and consumers'
perceptions about convenience and cost to charge an electric motorcycle;
●
the availability of tax and other governmental incentives to purchase and operate electric motorcycles
or future regulation requiring increased use of nonpolluting motorcycles;
●
perceptions about and the actual cost of alternative fuel; and
●
macroeconomic factors.
The influence of any of the
factors described above may cause current or potential customers not to purchase Damon's electric motorcycles, which would materially
adversely affect Damon's business, operating results, financial condition and prospects.
19
The transportation industry has significant
barriers to entry that Damon must overcome in order to manufacture and sell its electric motorcycles at scale.
The transportation industry
is characterized by significant barriers to entry, including large capital requirements, investment costs of developing, designing, manufacturing
and distributing vehicles, long lead times to bring vehicles to market from the concept and design stage, the need for specialized design
and development expertise, regulatory requirements, establishing a brand name and image and the need to establish sales and service locations.
Since Damon is focused on electric motorcycles, it faces a variety of added challenges to entry that a traditional motorcycle manufacturer
would not encounter, including additional costs of developing and producing an electric powertrain that has comparable performance to
a traditional internal combustion engine in terms of range and power, inexperience with servicing electric vehicles, regulations associated
with the transport of batteries, the need to establish or provide access to sufficient charging locations and unproven high-volume customer
demand for fully electric motorcycles. If Damon is not able to overcome these barriers, its business, financial condition, operating results
and prospects may be materially adversely affected, and its ability to grow its business may be harmed.
Damon's planned distribution
model is different from the predominant current distribution model for motorcycle manufacturers, which makes evaluating its business,
financial condition, operating results and prospects difficult.
Damon's planned distribution
model is not common in the automotive industry today, particularly in North America. Damon plans to conduct vehicle sales directly to
customers rather than through dealerships, primarily through Damon's website, subject to obtaining applicable dealer licenses and
equivalent permits in such jurisdictions. Further, generally all Damon vehicles will be made to order. This model of vehicle distribution
is relatively new and unproven, and subjects Damon to substantial risk as it requires, in the aggregate, significant expenditures and
provides for slower expansion of distribution and sales systems than may be possible by utilizing the traditional dealer franchise system.
For example, Damon may not be able to utilize long established sales channels developed through a franchise system to increase its sales
volume. Moreover, Damon will be competing with companies with well established distribution channels. Damon's success will depend
in large part on Damon's ability to effectively develop its own sales channels and marketing strategies.
Implementing such distribution
model is subject to numerous significant challenges, including obtaining licenses or equivalent permits and approvals from government
authorities, and there is no assurance that Damon will be able to obtain such licenses, permits and approvals. Further, there are substantial
automotive franchise laws in place in many jurisdictions around the world and Damon may be exposed to significant franchise dealer litigation
risks.
If Damon's direct sales
and leasing model does not develop as expected or develops more slowly than expected, it may be required to modify or abandon its sales
and leasing model, which could materially and adversely affect its business, financial condition, operating results and prospects.
Damon's marketing programs may
not be successful.
Damon believes its brand is
critical to its business. Damon will incur costs and expend other resources in its marketing efforts to raise brand awareness and attract
and retain customers. These initiatives may not be successful, resulting in expenses incurred without the benefit of revenues or growth.
Additionally, most, if not all, of Damon's competitors have greater financial resources, which enable them to spend significantly
more than Damon is able to on marketing and advertising. Should Damon's competitors increase spending on marketing and advertising
or Damon's marketing funds decrease for any reason, or should its advertising and promotions be less effective than its competitors,
there could be a material adverse effect on Damon's results of operations and financial condition.
Damon is dependent on its suppliers,
some of which are single or limited source suppliers, and the inability of these suppliers to deliver necessary components of Damon's
vehicles at prices and volumes acceptable to Damon would have a material adverse effect on its business, financial condition, operating
results and prospects.
Damon is dependent on third-party
suppliers and manufacturers to supply and manufacture parts and components, sub-assemblies and assemblies included in its vehicles, and
it expects to continue to rely on third parties to supply and manufacture such parts and components, sub-assemblies and assemblies in
the future. While Damon obtains parts and components, sub-assemblies and assemblies from multiple sources whenever possible, some of the
parts and components, sub-assemblies and assemblies used in its vehicles are purchased from a single source.
20
Damon intends to mitigate
supply chain risk by entering into long-term supply agreements with key manufacturers and suppliers where appropriate, including where
there is a single source supplier, but has not secured such long-term supply agreements to date, and there can be no assurance that it
will be able to do so on terms that are acceptable to Damon, or at all. Further, the supplier agreements Damon may enter into with key
suppliers in the future may contain provisions where such agreements can be terminated in various circumstances, including potentially
without cause. While Damon believes that it may be able to establish alternate supply relationships and can obtain or potentially engineer
replacement components for some of its single source components, it may be unable to do so in the short-term or at all, or at prices,
volumes or quality levels that are acceptable to it. Changes in business conditions, pandemics, governmental changes, political conflict
and other factors beyond Damon's control, or that it does not presently anticipate, could affect its ability to receive components
from its suppliers.
Any disruption in the supply
of parts and components, sub-assemblies and assemblies, whether or not from a single source supplier, could temporarily disrupt manufacturing
of Damon's vehicles until an alternative supplier is able to supply the required material. Changes in business conditions, unforeseen
circumstances, governmental changes, and other factors beyond Damon's control or which it does not presently anticipate, could also
affect Damon's suppliers' ability to deliver components to Damon on a timely basis and ultimately, Damon's ability to
economically produce and distribute its vehicles.
In particular, Damon's
vehicles contain electronics, microprocessors control modules, and other computer chips. As a result of the supply chain disruptions commencing
with the ongoing COVID-19 pandemic, there has been a surge in demand for semiconductor microchips, which led to a worldwide supply shortage
at the end of 2020 and into 2022 in the transportation industry. Damon is dependent on its suppliers to deliver many components that contain
these microchips, and a shortage of microchips could disrupt Damon's operations and its ability to timely deliver vehicles to customers.
Damon is closely monitoring the availability of these components, assessing the supply chain and production impacts and seeking potential
alternatives.
Also, if any of Damon's
suppliers become economically distressed or go bankrupt, Damon may be required to provide substantial financial support or take other
measures to ensure supplies of components or materials, which could increase its costs, affect its liquidity or cause production disruptions.
The inability of any of Damon's
suppliers to deliver necessary parts and components, sub-assemblies and assemblies according to Damon's schedule and at prices,
volumes or quality levels acceptable to Damon, Damon's inability to efficiently manage these parts and components, sub-assemblies
and assemblies, or the termination or interruption of any material supply arrangement could materially adversely affect Damon's
business, financial condition, operating results or prospects. Further, as the scale of Damon's vehicle production increases, Damon
will need to accurately forecast, purchase, warehouse and transport components to its manufacturing facilities and servicing locations
internationally and at much higher volumes. If it is unable to accurately match the timing and quantities of component purchases to its
actual needs or successfully implement automation, inventory management and other systems to accommodate the increased complexity in its
supply chain, Damon may incur unexpected production disruption, storage, transportation and write-off costs.
Any of the foregoing may materially
adversely affect Damon's business, financial condition, operating results or prospects.
If Damon's suppliers fail to
use ethical business practices and comply with applicable laws and regulations, Damon's brand image could be harmed due to negative
publicity.
Damon's core values,
which include developing high quality electric motorcycles while operating with integrity, are an important component of the Damon brand
image, which makes Damon's reputation sensitive to allegations of unethical business practices. Damon does not control its suppliers
or their business practices. Accordingly, there is no assurance of compliance on the part of Damon's suppliers with ethical business
practices, such as environmental responsibilities, fair wage practices, and compliance with child labor laws, among others. A lack of
demonstrated compliance could lead Damon to seek alternative suppliers, which could increase its costs and results in delayed delivery
of its products, product shortages or other disruptions of its operations.
21
Violation of labor or other
laws by Damon's suppliers or the divergence of a supplier's labor or other practices from those generally accepted as ethical
in the markets in which Damon operates could also attract negative publicity for Damon and its brand. If Damon, or other manufacturers
in the industry in which Damon operates, encounters similar problems in the future, the Damon brand and Damon's business, financial
condition, operating results and prospects may be materially adversely affected.
Damon could experience cost increases
or disruptions in supply of raw materials or other components used in its vehicles.
Damon incurs significant costs
related to procuring raw materials required to manufacture and assembling its vehicles. Damon uses various raw materials in its vehicles
including aluminum, steel, carbon fiber, non-ferrous metals such as copper, lithium, nickel, and cobalt. The prices for these raw materials
fluctuate depending on factors beyond Damon's control including market conditions and global demand for these materials and could
adversely affect Damon's business, financial condition, operating results and prospects. Damon's business will also depend
on the continued supply of battery cells for its vehicles. Battery cell manufacturers may refuse to supply electric vehicle manufacturers
to the extent they determine that their vehicles are not sufficiently safe. Damon is exposed to multiple risks related to availability
and pricing of quality lithium-ion battery cells. These risks include:
●
the inability or unwillingness of current battery cell manufacturers to build or operate battery cell
manufacturing plants to supply the numbers of lithium-ion cells required to support the growth of the electric or plug-in hybrid vehicle
industry as demand for such cells increases;
●
disruption in the supply of cells due to quality issues or recalls by the battery cell manufacturers;
and
●
an increase in the cost or decrease in the availability of raw materials used in battery cells, such as
lithium, nickel, cobalt, used in lithium-ion cells.
Further, currency fluctuations,
tariffs or shortages in petroleum and other economic or political conditions may result in significant increases in freight charges and
raw material costs. Substantial increases in the prices for Damon's raw materials or components would increase its operating costs
and could reduce its margins. In addition, a growth in popularity of electric vehicles without a significant expansion in battery cell
production capacity could result in shortages which would result in increased materials costs to Damon, and its business, financial condition,
operating results and prospects may be materially adversely affected.
Increased freight and shipping costs
or disruptions in transportation and shipping infrastructure could materially adversely affect Damon's business, financial condition,
operating results and prospects.
Damon intends to utilize air,
sea and ground freight via third-party freight services for the transportation of supplies to its facilities and assembled vehicles to
its customers. Adverse fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation
and shipping infrastructure at important shipping and delivery points for Damon's products, as well as for parts and components,
sub-assemblies and assemblies used in Damon's vehicles could materially adversely affect Damon's business, financial condition,
operating results and prospects. For example, delivery delays or increases in transportation costs (including through increased energy
costs, increased carrier rates or driver wages as a result of driver shortages, a decrease in transportation capacity, or work stoppages
or slowdowns) could significantly decrease Damon's ability to make vehicle sales and earn revenues. Labor shortages or work stoppages
in the transportation industry or long-term disruptions to the national and international transportation infrastructure that lead to delays
or interruptions of deliveries or which would necessitate Damon securing alternative shipping suppliers could also increase Damon's
costs or otherwise materially adversely affect its business, financial condition, operating results and prospects.
Damon depends on certain key personnel,
and its success will depend on its continued ability to retain and attract qualified management, technical and vehicle engineering and
sales personnel.
Damon's success will
depend on the efforts, abilities, continued service and performance of Damon's senior management team and key management, technical,
vehicle engineering and sales personnel, and in particular from Dom Kwong, interim Chief Executive Officer, Bal Bhullar, Chief Financial
Officer, and Derrek Dorresteyn, Chief Technology Officer. A number of these key employees have significant experience in the motorcycle
and electric vehicle manufacturing industry. If any key personnel were to terminate their employment with, or cease providing services
to, Damon, the risks described in this section may be heightened and Damon may have difficulty or may not be able to locate and hire a
suitable replacement. Damon has not obtained any "key person" insurance on certain key personnel at this time.
22
Damon's directors and executive
officers may have other business interests and obligations to other entities.
None of Damon's directors
or officers will be required to manage Damon as their sole and exclusive function and they may have other business interests and may engage
in other activities in addition to those relating to Damon, provided that such activities do not compete with the business of Damon or
otherwise breach their agreements with Damon. Damon is dependent on its directors and officers to successfully operate Damon. Their other
business interests and activities could divert time and attention from operating Damon's business.
Potential conflicts of interest
may arise in the course of Damon's operations involving any member of management's interest, or an affiliate company's
interest, as well as their respective interests in other potential unrelated activities. While Damon does have processes and procedures
in place to identify, analyze or monitor conflicts of interest, there is no assurance that such processes and procedures will identify
or disclose every conflict of interest that may arise.
Damon's business may be adversely
affected by labor and union activities.
Although none of Damon's
employees are currently represented by a labor union, it is common throughout the motorcycle industry generally for many employees at
motorcycle companies to belong to a union, which can result in higher employee costs and increased risk of work stoppages. Damon also
directly and indirectly depends upon other companies with unionized work forces, such as parts suppliers and trucking and freight companies.
If a work stoppage occurs within Damon's business or that of Damon's key suppliers, it could delay the manufacture and sale
of Damon's electric motorcycles and may have a material adverse effect on Damon's business, financial condition, operating
results and prospects. Additionally, if Damon expands its business to include full in-house manufacturing of motorcycles, Damon's
employees might join or form a labor union and Damon may be required to become a union signatory.
Damon has undergone recent
reductions in force and may undergo additional reductions in force in the future. However, any headcount reduction may not result in anticipated
cost savings and could have negative or unanticipated impacts on Damon's business.
To reduce operating expenses,
Damon reduced its headcount, approximately 50% in early 2023 to late 2024 and Damon may seek to undergo additional workforce restructurings
in the future. Damon may not realize the anticipated benefits, savings and improvements in its cost structure from such restructurings
because of unforeseen difficulties, delays or unexpected costs. In particular, headcount reductions could lead to disruptions to operations,
material delays in research and development, attrition beyond planned layoffs and increased challenges to hire and retain qualified personnel.
If Damon is unable to realize the expected operational efficiencies and cost savings from past or future restructurings, Damon's
operating results and financial condition would be adversely affected.
Damon is or may be subject to risks
associated with strategic alliances and acquisitions.
Damon has entered into and
may in the future enter into strategic alliances, including joint ventures or minority equity investments, with various third parties
to further Damon's business purpose from time-to-time. These alliances could subject Damon to a number of risks, including risks
associated with sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic
alliances, any of which may materially and adversely affect its business. Damon may have limited ability to monitor or control the actions
of these third parties and, to the extent any of these strategic third parties suffer negative publicity or harm to their reputation from
events relating to their business, Damon may also suffer negative publicity or harm to its reputation by virtue of its association with
any such third party.
23
In addition, although Damon
does not have any current acquisition plans, if appropriate opportunities arise, Damon may acquire additional assets, products, technologies
or businesses that are complementary to its existing business. In addition to a potential requirement for shareholder approval, Damon
may also have to obtain approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable
laws and regulations, which could result in increased delay and costs, and may derail its business strategy if Damon fails to do so. Further,
past and future acquisitions and the subsequent integration of new assets and businesses into Damon (including the Business Combination)
may require significant attention from Damon's management and could result in a diversion of resources from its existing business,
which in turn could have an adverse effect on Damon's business operations. Acquired assets or businesses may not generate the expected
financial results. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities,
the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential
unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.
We may not be able to successfully
integrate the business and operations of entities that we have acquired or may acquire in the future into our ongoing business operations,
which may result in our inability to fully realize the intended benefits of these acquisitions, or may disrupt our current operations,
which could have a material adverse effect on our business, financial position and results of operations.
Integrating the technology
and operations acquired in connection with the Business Combination and any potential future acquisitions involves complex operational,
technological and personnel-related challenges, which are time-consuming and expensive and may disrupt our ongoing business operations.
Furthermore, integration involves a number of risks, including, but not limited to:
●
difficulties or complications in combining the companies' operations;
●
differences in controls, procedures and policies, regulatory standards and business cultures among the
combined companies;
●
the diversion of management's attention from our ongoing core business operations;
●
increased exposure to certain governmental regulations and compliance requirements;
●
the potential increase in operating costs;
●
the potential loss of key personnel;
●
the potential loss of key customers or suppliers who choose not to do business with the combined business;
●
difficulties or delays in consolidating the acquired companies' technology platforms, including
implementing systems designed to maintain effective disclosure controls and procedures and internal control over financial reporting for
the combined company and enable the Company to continue to comply with U.S. GAAP and applicable U.S. securities laws and regulations;
●
unanticipated costs to successfully integrate operations, technologies, personnel of acquired businesses
and other assumed contingent liabilities;
●
difficulty comparing financial reports due to differing financial or internal reporting systems;
●
making any necessary modifications to internal financial control standards to comply with the Sarbanes-Oxley
Act of 2002 and the rules and regulations promulgated thereunder; or
●
possible tax costs or inefficiencies associated with integrating the operations of the combined company.
24
These factors could cause
us to not fully realize the anticipated financial or strategic benefits of future acquisitions which could have a material adverse effect
on our business, financial condition and results of operations.
Even if we are able to successfully
operate the acquired businesses, we may not be able to realize the revenue and other synergies and growth that we anticipate from these
acquisitions in the time frame that we currently expect, and the costs of achieving these benefits may be higher than what we currently
expect, because of certain risks:
●
the possibility that the acquisition may not further our business strategy as we expected;
●
the possibility that we may not be able to expand the reach and customer base for the acquired companies'
current and future products as expected;
●
the possibility that we may have entered a market with no prior experience and may not succeed in the
manner expected; and
●
the possibility that the carrying amounts of goodwill and other purchased intangible assets may not be
recoverable.
As a result of these risks,
the acquisitions and integration may not contribute to our earnings as expected, we may not achieve expected revenue synergies or return
on invested capital when expected, or at all, and we may not achieve the other anticipated strategic and financial benefits of such acquisitions.
Manufacturing in collaboration with
partners is subject to risks.
Damon has agreed to a partnership
with Auteco, for the manufacturer of a lower-cost global electric motorcycle (HyperLite) in the future. Damon intends to be paid by Auteco
for each vehicle it assembles and sells on a per-vehicle basis monthly for the first five years of production. In addition, Damon has
established a strategic partnership with Indika Energy for manufacturing, licensing and distribution in Indonesia, with the ability to
expand that partnership to all of Southeast Asia. Damon may enter into similar with third party manufacturers in the future for its vehicles.
Collaboration with third parties for the manufacturing of vehicles is subject to risks with respect to operations that are outside Damon's
control. Damon could experience delays to the extent its partners do not meet agreed upon timelines or experience capacity constraints.
There is a risk of potential disputes with manufacturing partners, and Damon could be affected by adverse publicity related to its partners
whether or not such publicity is related to their collaboration with Damon. Damon's ability to successfully build a premium brand
could also be adversely affected by perceptions about the quality of its manufacturing partners' vehicles. In addition, although
Damon is involved in each step of the supply chain and manufacturing process, given Damon's reliance on its partners to meet Damon's
quality standards, there can be no assurance that Damon will be able to successfully maintain such quality standards if outsourced manufacturing
is adopted.
Damon may be unable to enter
into new agreements or extend existing agreements with third-party manufacturing partners on terms and conditions acceptable to Damon
and therefore may need to contract with other third parties or significantly add to its own production capacity. There can be no assurance
that in such an event Damon would be able to partner with other third parties or establish or expand its own production capacity to meet
its needs on acceptable terms or at all. The expense and time required to complete any transition, and to assure that vehicles manufactured
at facilities of new third-party partners comply with Damon's quality standards and regulatory requirements, may be greater than
anticipated. The occurrence of any of the foregoing may materially adversely affect Damon's business, financial condition, operating
results and prospects.
Manufacturing at Damon's leased
facility presents inherent risk.
Damon is currently developing
its battery and motorcycle assembly lines at its leased facility in San Rafael, California, in the greater San Francisco area. While Damon
expects to be ready for initial production in 2026, there can be no assurance that Damon will be able to complete the build-out on schedule
and within budget, and more generally that Damon will be able to establish and expand production capacity to satisfy current reservations
or future anticipated demand. This risk extends to supply chain and manufacturing quality risk, which could lead to lower volumes or lower
quality than expected by customers. Further, if Damon is able to scale its manufacturing to meet demand, Damon may need to lease a larger
facility, and there is no guarantee that Damon will be able to do so on terms satisfactory to Damon.
25
The delivery of HyperSport
and subsequent motorcycles to Damon's future customers and the revenue derived therefrom depends on Damon's ability to source
and fulfill the required vehicle manufacturing capacity, and it will depend on the ability of a future lessor to build and outfit future
manufacturing facility. A future lessor's ability to fulfill its obligations is outside of Damon's control and depends on
a variety of factors including the lessor's operations, financial condition and geopolitical and economic risks. If a future lessor
is unable to fulfill its obligations or is only able to partially fulfill its obligations, Damon will not be able to manufacture and sell
its HyperSport and other motorcycles in the volumes anticipated within the timeframe that Damon anticipates, if at all.
Damon is and will be dependent on
its manufacturing facilities. If one or more of its current or future manufacturing facilities become inoperable, capacity constrained
or if operations are disrupted, its business, financial condition, operating results and prospects may be materially adversely affected.
Damon's future revenue
will be dependent on its manufacturing facilities. To the extent that Damon experiences any operational risk including, among other things,
natural or man-made disasters, including earthquakes, flooding, fire and power outages, or by health epidemics or pandemics, and labor
work force and work stoppages, resulting in any of its current or future manufacturing facilities becoming inoperable or capacity constrained,
Damon will be required to make capital expenditures even though it may not have available resources at such time. Additionally, there
is no guarantee that the proceeds available from Damon's insurance policies would be sufficient to cover such capital expenditures.
As a result, Damon's insurance coverage and available resources may prove to be inadequate for events that may cause any of its
current or future manufacturing facilities to become inoperable or capacity constrained, or any significant disruption to its operations.
Any disruption in Damon's manufacturing processes could result in delivery delays, scheduling problems, increased costs, or production
interruption, which, in turn, may result in its customers deciding to purchase products from its competitors. Damon is and will be dependent
on its current and future manufacturing facilities which will in the future require a high degree of capital expenditures. If Damon's
current or future assembly facilities becomes inoperative, capacity constrained or if operations are disrupted, its business, financial
condition, operating results and prospects may be materially adversely affected.
Damon relies on complex machinery
for its operations, and production of its vehicles involves a significant degree of risk and uncertainty in terms of operational performance,
safety, security and costs.
Damon relies heavily on complex
machinery for its operations and its production will involve a significant degree of uncertainty and risk in terms of operational performance,
safety, security, and costs. Damon's contemplated and its partners' manufacturing facilities make use of large-scale machinery
combining many components. The manufacturing plant components are likely to suffer unexpected malfunctions from time-to-time and will
depend on repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of the manufacturing
facility components may significantly affect operational efficiency. Operational performance and costs can be difficult to predict and
are often influenced by factors outside of Damon's control, including, but not limited to, scarcity of natural resources, environmental
hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining
governmental permits, damages or defects in electronic systems, industrial accidents, pandemics, fire, seismic activity, and natural disasters.
There is no guarantee that adverse events will not occur in the future, or that Damon will be able to contain such events without damage
or delay. Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment,
damage to manufacturing facilities, vehicles, supplies, tools and materials, monetary losses, delays and unanticipated fluctuations in
production, environmental damage, administrative fines, increased insurance costs, and potential legal liabilities, all which could have
a material adverse effect on Damon's business, financial condition, operating results or prospects. Although Damon generally carries
insurance to cover such operational risks, there is no assurance that such insurance coverage will be sufficient to cover potential costs
and liabilities arising therefrom. A loss that is uninsured or exceeds policy limits may require Damon to pay substantial amounts, which
could adversely affect Damon's business, financial condition, operating results and prospects.
Damon's business may be negatively
impacted by depreciation of equipment.
Damon expects to continue
to invest significantly in what it believes is state of the art tooling, machinery and other manufacturing equipment for the product lines
where the HyperSport and subsequent HyperDrive powertrain platforms based vehicles are manufactured/assembled, and Damon will depreciate
the cost of such equipment over its expected useful life. Additionally, Damon expects manufacturing partners will be investing in their
production lines in support of Damon's vehicle delivery goals. However, manufacturing technology may evolve rapidly, and Damon or
its partners may decide to update its manufacturing process with cutting-edge equipment more quickly than expected. Moreover, as Damon
ramps the commercial production of its vehicles, Damon's experience may cause it to discontinue the use of already installed equipment
in favor of different or additional equipment. The useful life of any equipment that would be retired early as a result would be shortened,
causing the depreciation on such equipment to be accelerated, and to the extent such equipment is owned by us, Damon's results of
operations could be negatively impacted.
26
Misconduct by employees of Damon or
third-party service providers could cause significant losses to Damon.
Misconduct by employees of
Damon or third-party service providers could cause significant losses to Damon. Losses could also result from actions by third party service
providers, including, without limitation, failing to recognize trades and misappropriating assets. In addition, employees and third-party
service providers may improperly use or disclose confidential information, which could result in litigation or serious financial harm,
including limiting Damon's business prospects or future marketing activities. No assurances can be given that the due diligence
performed by Damon will identify or prevent any such misconduct.
Dependence on a single licensor for
our SAVES products and potential adverse changes to terms could negatively impact our financial condition and results of operations.
All of our revenues from the
SAVES distribution business have been derived from the sale of product licenses we purchase from the licensor. The Parent acquired an
exclusive license to use, market, distribute, and develop the SAVES products pursuant to an exclusive software license and distribution
agreement, by and among the Parent, Cranes Software International Ltd. and Systat Software, Inc., as amended on June 30, 2020 and February
22, 2021, and has licensed the SAVES products to us. In connection with the spin out and as reported in the current report on Form 8-K
filed by the Parent on February 23, 2024, the Parent sold 100% of the equity interest in Grafiti LLC, then a wholly-owned subsidiary of
the Parent which holds the exclusive license to develop and sell the SAVES products, along with other assets and businesses, to an entity
controlled by Nadir Ali, the former Chief Executive Officer and former sole director of the Company prior to the consummation of the Business
Combination.
As the licensor, Grafiti LLC
has and its successors will have significant negotiating power over us and rapid, significant, or adverse changes in sales terms and conditions,
such as competitive pricing as well as reducing the level of purchase discounts and rebates this or any new vendor makes available to
us, may reduce the profit we can earn on these vendors' products and result in loss of revenue and profitability. Our gross profit
could be negatively impacted if we are unable to pass through the impact of these changes to our distributors, resellers and customers.
Additionally, significant changes in vendor payment terms or payment arrangements could negatively impact our liquidity and financial
condition.
Our competitors in the technology
distribution industry can take more market share by reducing prices on our most profitable vendor products, causing us to reduce prices
on such products.
The technology distribution
industry is characterized by intense competition, based primarily on product availability, credit terms and availability, price, effectiveness
of information systems and e-commerce tools, speed of delivery, ability to tailor specific solutions to customer needs, quality and depth
of product lines and training, service and support. Our customers are not required to purchase any specific volume of products from us
and may move business if pricing is reduced by competitors, resulting in lower sales. As a result, we must be extremely flexible in determining
when to reduce prices to maintain market share and sales volumes and when to allow our sales volumes to decline to maintain our desired
level of profitability for our products. We compete with a variety of regional, national and international distributors and resellers,
some of which may have greater financial resources than us. Many of our competitors compete principally on the basis of price and may
have lower costs or accept lower selling prices than we do and, therefore, we may need to reduce our prices. In addition, vendors may
choose to market their products directly to end-users, rather than through distributors such as us, and this could adversely affect our
business, financial condition and results of operations.
27
Our competitiveness in the technology
distribution industry depends significantly on our ability to keep pace with the rapid changes in our industry. Failure by us to anticipate
and meet our customers' technological needs could adversely affect our competitiveness and growth prospects.
We operate and compete in
the technology distribution industry which is characterized by rapid technological innovation, changing customer needs, evolving industry
standards and frequent introductions of new products, product enhancements, services and distribution methods. Our success depends on
our ability to develop expertise with these new products, product enhancements, services and distribution methods and to implement solutions
that anticipate and respond to rapid changes in technology, the industry, and customer needs. The introduction of new products, product
enhancements and distribution methods could decrease demand for current products or render them obsolete. Sales of products and services
can be dependent on demand for specific product categories, and any change in demand for or supply of such products could have a material
adverse effect on our net sales if we fail to adapt to such changes in a timely manner.
We offer one vendor's
product offerings and are dependent on our customers demand for this vendor's products. There can be no assurances that consumer
or commercial demand for our future products will meet, or even approach, our expectations. In addition, our pricing and marketing strategies
may not be successful. Lack of customer demand, a change in marketing strategy and changes to our pricing models could dramatically alter
our financial results. Unless we are able to release location based products that meet a significant market demand, we will not be able
to improve our financial condition or the results of our future operations.
The growth of our SAVES distribution
business is dependent on increasing sales to our existing customers and obtaining new customers, which, if unsuccessful, could limit our
financial performance.
Our ability to increase revenues
from existing customers by identifying additional opportunities to sell more of our products and services and our ability to obtain new
customers depends on a number of factors, including our ability to offer high quality products and services at competitive prices, meeting
customers' needs and expectations, the strength of our competitors and the capabilities of our sales and marketing departments.
If we are not able to continue to increase sales of our products and services to existing customers or to obtain new customers in the
future, we may not be able to increase our revenues and could suffer a decrease in revenues as well.
If our SAVES products fail to satisfy
customer demands or to achieve increased market acceptance, our results of operations, financial condition and growth prospects could
be materially adversely affected.
The market acceptance of our
products are critical to our continued success. Demand for our SAVES products is affected by a number of factors beyond our control, including
continued market acceptance, the timing of development and release of new products by competitors, technological change, and growth or
decline in the statistical analytics and visualization market. If we are unable to continue to meet customer demands or to achieve more
widespread market acceptance of our products, our business operations, financial results and growth prospects will be materially and adversely
affected.
Defects, errors, or vulnerabilities
in our SAVES products or services that we sell or the failure of such products or services to prevent a security breach, could harm our
reputation and adversely affect our results of operations.
Because the SAVES products
we sell are complex, they have contained and may contain software design errors or software bugs that are not detected until after their
commercial release and deployment by customers. Defects may cause such products to be vulnerable to security attacks, cause them to fail
to help secure information or temporarily interrupt customers' networking traffic. Because the techniques used by hackers to access
sensitive information change frequently and generally are not recognized until launched against a target, we may be unable to anticipate
these techniques and provide a solution in time to protect customers' data. In addition, defects or errors in our subscription updates
or products could result in a failure to effectively update customers' products and thereby leave customers vulnerable to advanced
persistent threats (APTs) or security attacks.
28
Any defects, errors or vulnerabilities
in the products we sell could result in:
●
expenditure of significant financial and product development resources in efforts to analyze, correct,
eliminate, or work-around errors or defects or to address and eliminate vulnerabilities;
●
delayed or lost revenue;
●
loss of existing or potential customers or partners;
●
increased warranty claims compared with historical experience, or increased cost of servicing warranty
claims, either of which would adversely affect gross margins; and
●
litigation, regulatory inquiries, or investigations that may be costly and harm our reputation
Our SAVES business relies on a limited
number of key customers, the importance of which may vary dramatically from year to year, and a loss of one or more of these key customers
may adversely affect our operating results.
During the year ended June 30, 2024, Grafiti Limited had one customer
that accounted for 11% of revenue and during the year ended June 30, 2023, Grafiti Limited had one customer that accounted for 16% of
revenue. During the quarter ended September 30, 2024, Grafiti Limited has two customers that accounted for a total of 30% of revenue.
Each of these customers may or may not continue to be a significant contributor to revenue from our SAVES business in 2025. No customer
accounted for more than 10% of our gross revenue from the SAVES business during the fiscal year ended June 30, 2022. The loss of a significant
amount of business from one of our major customers could materially and adversely affect our results of operations until such time, if
ever, as we are able to replace the lost business. Significant customers or projects in any one period may not continue to be significant
customers or projects in other periods. To the extent that we are dependent on any single customer, we are subject to the risks faced
by that customer to the extent that such risks impede the customer's ability to stay in business and make timely payments to us.
A delay in the completion of our customers'
budget processes could delay purchases of our SAVES products and services and have an adverse effect on our business, operating results
and financial condition.
We rely on our customers to
purchase products and services from us to maintain and increase our earnings, however, customer purchases are frequently subject to budget
constraints, multiple approvals, and unplanned administrative, processing and other delays. If sales expected from a specific customer
are not realized when anticipated or at all, our results could fall short of public expectations and our business, operating results and
financial condition could be materially adversely affected.
If we cannot collect our receivables
or if payment is delayed, our SAVES distribution business may be adversely affected by our inability to generate cash flow, provide working
capital or continue our business operations.
Our SAVES distribution business
depends on our ability to successfully obtain payment from our customers of the amounts they owe us for products received from us and
any work performed by us. The timely collection of our receivables allows us to generate cash flow, provide working capital and continue
our business operations. Our customers may fail to pay or delay the payment of invoices for a number of reasons, including financial difficulties
resulting from macroeconomic conditions or lack of an approved budget. An extended delay or default in payment relating to a significant
account will have a material and adverse effect on the aging schedule and turnover days of our accounts receivable. If we are unable to
timely collect our receivables from our customers for any reason, our business and financial condition could be adversely affected.
If our SAVES products fail to satisfy
customer demands or to achieve increased market acceptance, our results of operations, financial condition and growth prospects could
be materially adversely affected.
The market acceptance of our
SAVES products are critical to our continued success. Demand for our products is affected by a number of factors beyond our control, including
continued market acceptance, the timing of development and release of new products by competitors, technological change, and growth or
decline in the statistical analytics and visualization market. If we are unable to continue to meet customer demands or to achieve more
widespread market acceptance of our products, our business operations, financial results and growth prospects will be materially and adversely
affected.
29
Defects, errors, or vulnerabilities
in the SAVES products or services that we sell or the failure of such products or services to prevent a security breach, could harm our
reputation and adversely affect our results of operations.
Because the SAVES products
we sell are complex, they have contained and may contain software design errors or software bugs that are not detected until after their
commercial release and deployment by customers. Defects may cause such products to be vulnerable to security attacks, cause them to fail
to help secure information or temporarily interrupt customers' networking traffic. Because the techniques used by hackers to access
sensitive information change frequently and generally are not recognized until launched against a target, we may be unable to anticipate
these techniques and provide a solution in time to protect customers' data. In addition, defects or errors in our subscription updates
or products could result in a failure to effectively update customers' products and thereby leave customers vulnerable to advanced
persistent threats (APTs) or security attacks.
Any defects, errors or vulnerabilities
in the products we sell could result in:
●
expenditure of significant financial and product development resources in efforts to analyze, correct,
eliminate, or work-around errors or defects or to address and eliminate vulnerabilities;
●
delayed or lost revenue;
●
loss of existing or potential customers or partners;
●
increased warranty claims compared with historical experience, or increased cost of servicing warranty
claims, either of which would adversely affect gross margins; and
●
litigation, regulatory inquiries, or investigations that may be costly and harm our reputation
Insurance and contractual protections
related to our SAVES distribution business may not always cover lost revenue, increased expenses or liquidated damages payments, which
could adversely affect our financial results.
Although we maintain insurance
and intend to obtain warranties from suppliers, obligate subcontractors to meet certain performance levels and attempt, where feasible,
to pass risks we cannot control to our customers, the proceeds of such insurance or the warranties, performance guarantees or risk sharing
arrangements may not be adequate to cover lost revenue, increased expenses or liquidated damages payments that may be required in the
future.
Risks Related to Economic Conditions
Global economic conditions, including
inflation, could materially adversely impact demand for Damon's products and services.
Damon's operations and
performance depend significantly on economic conditions. Motorcycles are generally considered discretionary items for consumers. Many
factors impact discretionary spending, including general economic conditions, inflation, unemployment, credit markets and consumer confidence
in future economic conditions. Global economic conditions continue to be uncertain, particularly in light of high inflation and recent
instability in the U.S. banking system. Consumer purchases of discretionary items tend to be suppressed during recessionary periods when
disposable income is lower, or during periods of economic instability or uncertainty when consumer confidence is low, which may make potential
customers more likely to forgo or to postpone purchasing Damon's vehicles, or to purchase less expensive product offerings, which
may be less profitable to Damon.
Any financial or economic crisis,
or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially and adversely affect Damon's
business, financial condition, results of operations and prospects.
The global financial markets
experienced significant disruptions in 2008 and the Canadian, United States, European and other economies went into recession. The recovery
from the lows of 2008 and 2009 was uneven and the global financial markets are facing new challenges, including and supply chain shortages
or disruptions, and future potential economic slowdowns. It is unclear whether these challenges will be contained and what effects they
each may have. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies that have
been adopted by the central banks and financial authorities of some of the world's leading economies. Economic conditions in China
are sensitive to global economic conditions. Recently there have been signs that the rate of China's economic growth is declining.
Any prolonged slowdown in China's economic development might lead to tighter credit markets, increased market volatility, sudden
drops in business and consumer confidence and dramatic changes in business and consumer behaviors.
30
Sales of high-end and luxury
consumer products, such as Damon's performance electric motorcycles, depend in part on discretionary consumer spending and are even
more exposed to adverse changes in general economic conditions. In response to their perceived uncertainty in economic conditions, consumers
might delay, reduce or cancel purchases of Damon's electric vehicles and Damon's business, financial condition, operating
results and prospects may be materially adversely affected.
Damon faces risks related to natural
disasters, health epidemics and other outbreaks, which could significantly disrupt its operations.
Damon's business could
be adversely affected by the effects of local or global outbreaks, and epidemics or pandemics. Damon's business operations could
be disrupted if any of its employees are suspected of having contracted any contagious and virulent viruses or other diseases, since it
could require its employees to be quarantined or its offices to be disinfected. In addition, to the extent that any such outbreak, epidemic
or pandemic would have detrimental effects on general economic conditions Damon's business, financial condition, operating results
or prospects may be materially adversely affected.
Damon's headquarters
and Damon-operated locations, as well as certain of Damon's vendors and customers, are located in areas which have been and could
be subject to natural disasters such as floods, hurricanes, tornadoes, fires or earthquakes. Adverse weather conditions or other extreme
changes in the weather, including resulting electrical and technological failures, may disrupt Damon's business and may adversely
affect Damon's ability to continue its operations. These events also could have indirect consequences such as increases in the costs
of insurance if they result in significant loss of property or other insurable damage. Any of these factors, or any combination thereof,
could adversely affect Damon's operations.
Although Damon has data hosted
in offsite locations, Damon's backup system does not capture data on a real-time basis and Damon may be unable to recover certain
data if a server fails. Damon cannot assure that any backup systems will be adequate to protect it from the effects of fire, floods, typhoons,
earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events. Any of the foregoing
events may give rise to interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause
the loss or corruption of data or malfunctions of software or hardware as well as adversely affect Damon's ability to provide services
on its platform.
Damon's risk management efforts
may not be effective which could result in unforeseen losses.
Damon could incur substantial
losses and its business operations could be disrupted if Damon is unable to effectively identify, manage, monitor, and mitigate financial
risks, such as credit risk, interest rate risk, prepayment risk, liquidity risk, and other market-related risks, as well as operational
risks related to its business, assets and liabilities. Damon's risk management policies, procedures, and techniques, including its
scoring methodology, may not be sufficient to identify all of the risks Damon is exposed to, mitigate the risks Damon has identified or
identify additional risks to which Damon may become subject in the future.
Damon is subject to risks related
to customer credit.
Damon has partnered to offer
leasing and financing of its vehicles to potential customers within the U.S. and is working to establish partnerships outside the U.S.
through other third-party financing partners, Damon currently has no agreements in place with any potential financing partners. Damon
cannot provide any assurance that such third-party financing partners would be able or willing to provide such services on terms acceptable
to Damon or its customers, or to provide such services at all. Further, because Damon has not yet sold any vehicles and no secondary market
for its vehicles exists, the future resale value of its vehicles is difficult to predict, and the possibility that resale values could
be lower than expected increases the difficulty of providing leasing terms that appeal to potential customers through such third-party
financing partners. Damon believes that the ability to offer attractive leasing and financing options is particularly relevant to customers
in the luxury motorsport vehicle segments in which Damon will compete, and if Damon is unable to offer its customers an attractive option
to finance the purchase of or lease HyperSport motorcycles or planned future models, such failure could substantially reduce the pool
of potential customers and decrease demand for Damon's vehicles.
31
Further, offering leasing
and financing alternatives to customers could expose Damon to risks commonly associated with the extension of consumer credit. Competitive
pressure and challenging markets could increase credit risk through leases and loans to financially weak customers, extended payment terms,
and leases and loans into new and immature markets, and any such credit risk could be further heightened in light of the economic uncertainty
and any economic recession or other downturn, including by reason of a disease outbreak, such as the COVID-19 pandemic. If Damon is unable
to provide leasing and financing arrangements that appeal to potential customers, or if the provision of such arrangements exposes it
to excessive consumer credit risk, Damon's business, financial condition, operating results and prospects may be materially adversely
affected.
Motorcycle retail sales depend heavily
on affordable interest rates and availability of credit for financing and a substantial increase in interest rates could materially and
adversely affect Damon's business, financial condition, operating results and prospects.
In certain regions, including
North America and Europe, financing for new vehicle sales was available at relatively low interest rates in recent years due to, among
other things, expansive government monetary policies. Interest rates began to rise sharply in early 2022, and market rates for new vehicle
financing have increased as well. Higher interest rates make Damon's vehicles less affordable to customers and could steer customers
to less expensive vehicles that would be less profitable for Damon compared to premium vehicles. Additionally, if consumer interest rates
remain high or increase further, or if financial service providers further tighten lending standards or restrict their lending to certain
classes of credit, customers may not desire or be able to obtain financing to purchase or lease Damon's vehicles.
Fluctuations in exchange rates could
have a material and adverse effect on Damon's results of operations.
Damon reports its financial
results in U.S. dollars and anticipates that a material portion of its sales and operating costs will be realized in currencies other
than the U.S. dollar. If the value of any of said currencies depreciates relative to the U.S. dollar, Damon's foreign currency revenue
will decrease when translated to U.S. dollar for reporting purposes. Alternatively, if the value of any of these currencies appreciates
relative to the U.S. dollar, Damon's operating costs will increase when translated to U.S. dollar for reporting purposes. Although
these risks may sometimes be naturally hedged by a match in Damon's sales and operating costs denominated in the same currency,
fluctuations in foreign currency exchange rates could create discrepancies between Damon's sales and its operating costs in a given
currency which may have a material adverse effect on Damon's business, financial condition, operating results and prospects.
Fluctuations in foreign currency
exchange rates could also have a material adverse effect on the relative competitive position of Damon's products in markets where
they face competition from manufacturers who are less affected by such fluctuations in exchange rates. The value of the U.S. dollar against
the Canadian dollar and other currencies is affected by changes in various political and economic conditions. It is difficult to predict
how market forces or government policy may impact the exchange rate between U.S. dollars and other currencies in the future. Changes in
currency exchange rates can have impacts on the costs of imported goods for motorcycle assembly, and it can change the relative value
or demand for motorcycles abroad.
Damon's sales and operating
results may fluctuate from quarter-to-quarter and from year-to-year as they are affected, among other things, by the seasonal nature of
Damon's products, fluctuation in Damon's operating costs and prevailing market conditions.
Damon's future sales
and operating results may experience substantial fluctuations from quarter-to-quarter and year-to-year. It is anticipated that sales for
motorcycles in the principal markets in which Damon operates will be highest in spring and summer. In addition, Damon's revenues
and operating costs will fluctuate from period-to-period with the pace at which it increases its production capacity and designs, develops
and produces new vehicles. As a result of these fluctuations in revenues and expenses, along with other factors that are beyond Damon's
control, including general economic conditions, changes in consumer preferences, weather conditions, vehicle sales mix, changes in the
cost or availability of raw materials or labor, discretionary spending habits and currency exchange rate fluctuations, Damon may not be
able to accurately predict its quarterly and annual sales and operating results, which are likely to fluctuate significantly from period-to-period.
Sales and operating results in any period should not be considered indicative of the results to be expected for any future period.
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Risks Related to Technology
Damon's motorcycles rely on
software and hardware that is highly technical, and if these systems contain errors, bugs or vulnerabilities, or if Damon is unsuccessful
in addressing or mitigating technical limitations in its systems, its business, financial condition, operating results and prospects could
be materially adversely affected.
Damon's vehicles rely
on software and hardware, including software and hardware developed or maintained by third parties, that is highly technical and complex
and will require modification and updates over the life of the vehicles. In addition, the performance of the software solutions included
in Damon's vehicles depends on the ability of such software and hardware to store, retrieve, process and manage immense amounts
of data. Damon's software and hardware may contain errors, bugs or vulnerabilities, and its systems are subject to certain technical
limitations that may compromise Damon's ability to meet its objectives. Some errors, bugs or vulnerabilities inherently may be difficult
to detect and may only be discovered after the code has been released for external or internal use. Errors, bugs, vulnerabilities, design
defects or technical limitations may be found within Damon's software and hardware. Although Damon attempts to remedy any issues
it observes in its vehicles and software as effectively and rapidly as possible, such efforts may not be timely, may hamper production
or may not be to the satisfaction of Damon's customers. Additionally, if Damon is able to deploy updates to the software addressing
any issues, but such updates cannot or are not installed by its customers, such customers' software will be subject to these vulnerabilities
until they install such updates. If Damon is unable to prevent or effectively remedy errors, bugs, vulnerabilities or defects in its software
and hardware, Damon may suffer damage to its reputation, loss of customers, loss of revenue or liability for damages, any of which may
materially adversely affect Damon's business, financial condition, operating results and prospects.
There are complex software and technology
systems that need to be developed by Damon and in coordination with vendors and suppliers to reach production for its vehicles, and there
can be no assurance such systems will be successfully developed or integrated.
Damon's vehicles and
operations will use a substantial amount of complex third-party and in-house software and hardware. The development and integration of
such advanced technologies are inherently complex, and Damon will need to coordinate with its vendors and suppliers to reach production
for its vehicles. Defects and errors may be revealed over time and Damon's control over the performance of third-party services
and systems may be limited. Thus, Damon's potential inability to develop and integrate the necessary software and technology systems
may harm its competitive position.
Damon relies on third-party
suppliers to develop a number of emerging technologies for use in its products, including battery technology and the use of different
battery cell chemistries. Certain of these technologies and chemistries are not today, and may not ever be, commercially viable. There
can be no assurances that Damon's suppliers will be able to meet the technological requirements, production timing, and volume requirements
to support Damon's business plan. In addition, the technology may not comply with the cost, performance useful life and warranty
characteristics that are anticipated. As a result, Damon's business plan could be significantly impacted, and Damon may incur significant
liabilities under warranty claims which may materially adversely affect Damon's business, financial condition, operating results
and prospects.
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Damon's industry and its technology
are rapidly evolving and may be subject to unforeseen changes. Developments in alternative technologies or improvements in the internal
combustion engine may materially and adversely affect the demand for its electric vehicles.
Damon will operate in the
electric vehicle industry, which is rapidly evolving and may not develop as anticipated. The regulatory framework governing the industry
is currently uncertain and may remain uncertain for the foreseeable future. As the industry in which Damon operates and Damon's
business develop, Damon may need to modify its business model or change its vehicles and services. These changes may be costly and may
not achieve expected results, which could have a material adverse effect on Damon's business, financial condition, operating results
and prospects.
Further, Damon may be unable
to keep up with changes in electric vehicle technology or alternatives to electricity as a fuel source and, as a result, its competitiveness
may suffer. Damon's research and development efforts may not be sufficient to adapt to changes in electric vehicle technology. As
technologies change, Damon plans to upgrade or adapt its vehicles and introduce new models in order to continue to provide vehicles with
the latest technology, in particular safety technology and battery technology, which could involve substantial costs and lower its return
on investment for existing vehicles. There can be no assurance that Damon will be able to compete effectively with alternative vehicles
or source and integrate the latest technology into its vehicles, against the backdrop of Damon's rapidly evolving industry. Even
if Damon is able to keep pace with changes in technology and develop new models, Damon is subject to the risk that its prior models will
become obsolete more quickly than expected, potentially reducing its return on investment.
Developments in alternative
technologies, such as advanced diesel, ethanol, fuel cells or compressed natural gas, or improvements in the fuel economy of the internal
combustion engine, may materially and adversely affect Damon's business, financial condition, operating results and prospects in
ways not currently anticipated. For example, relatively inexpensive fuel, such as compressed natural gas, may emerge as consumers'
preferred alternative to petroleum-based propulsion.
Damon may face challenges providing
charging solutions.
Demand for Damon's vehicles
will depend in part on the availability of charging infrastructure. While the prevalence of charging stations has been increasing, charging
station locations are significantly less widespread than gas stations. Some potential customers may choose not to purchase an electric
vehicle because of the lack of a more widespread service network or charging infrastructure at the time of sale. Although Damon intends
to offer the ability to use alternative current and direct current charging infrastructure, allowing customers to use existing charging
infrastructure and standards to charge their motorcycles, Damon has very limited experience in the actual provision of charging solutions
to customers and providing these services is subject to challenges, which include dependence on existing charging networks and installation
providers in appropriate areas. Damon's ability to generate customer loyalty and grow its business could be impaired by a lack of
satisfactory access to charging infrastructure. To the extent Damon is unable to meet customer expectations or experiences difficulties
in providing charging solutions, demand for its vehicles may suffer, and Damon's business, financial condition, operating results
and prospects may be materially and adversely affected.
If Damon were to pursue development
of a proprietary charging solution, Damon would face significant challenges and barriers, including successfully navigating the complex
logistics of rolling out a network and teams in appropriate areas, resolving issues related to inadequate capacity or overcapacity in
certain areas, addressing security risks and risks of damage to vehicles, securing agreements with third-party providers to roll out and
support a network of charging solutions in appropriate areas, obtaining any required permits and land use rights and filings, and providing
sufficient financial resources to successfully roll out the proprietary charging solution, which could require diverting such resources
from Damon's other important business initiatives. In addition, Damon's limited experience in providing charging solutions
could contribute to additional unanticipated challenges that would hinder its ability to provide such solutions or make the provision
of such solutions costlier than anticipated.
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The range of Damon's electric
motorcycles on a single charge decline over time, which may negatively influence potential customers' decisions whether to purchase
its motorcycles.
The battery life and range
of Damon's motorcycles may vary or decline over time, like other vehicles that use current battery technology, including due to
factors outside of Damon's control. Factors such as rider behaviour, usage, speed, terrain, time and stress patterns may also impact
the battery's ability to hold a charge, which may decrease Damon's motorcycles' range before needing to recharge or
could require Damon to limit vehicles' battery charging capacity, including via over-the-air or other software updates, for safety
reasons or to protect battery capacity, which could further decrease Damon's vehicles' range between charges. Such decreases
in or limitations of battery capacity and therefore range, whether imposed by deterioration, software limitations or otherwise, could
also lead to customer complaints or warranty claims, including claims that prior knowledge of such decreases or limitations would have
affected customers' purchasing decisions. In addition, Damon cannot guarantee that battery life and range deterioration will not
be greater than what is currently anticipated, nor that Damon will be able to improve the performance of its battery packs, or increase
its vehicles' range, in the future. Any deterioration above the expected level could affect Damon's reputation or could materially
adversely affect its business, financial condition, operating results and prospects.
Damon's vehicles make use of
lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame.
The battery packs that Damon
produces make use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke
and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. While the battery pack has been designed to
passively contain any single cell's release of energy without spreading to neighboring cells, a field or testing failure of Damon's
vehicles or other battery packs that it produces could occur, which could result in bodily injury or death and could subject Damon to
lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive. Also, negative public perceptions
regarding the suitability of lithium-ion cells for automotive applications or any future incident involving lithium-ion cells such as
a vehicle or other fire, even if such incident does not involve Damon's vehicles, could materially adversely affect Damon's
business, financial condition, operating results and prospects.
In addition, once Damon begins
mass manufacturing of its vehicles, it will be required to store a significant number of lithium-ion cells at its facilities. While safety
procedures related to the handling of the cells have been implemented, any mishandling of battery cells, or safety issue or fire related
to cells, may cause damage, injury and disruption to the operation of its facilities. Such damage or injury could lead to adverse publicity
and potentially a safety recall.
Damon may be subject to risks associated
with assisted driving technology.
Damon's vehicles are
being designed to offer some assisted driving functionality through Damon's CoPilot ADAS, including forward crash warning functionalities.
Through research and development, Damon plans to continue to update and improve its assisted driving technology. Assisted driving technologies
are subject to risks and there have been accidents and fatalities associated with such technologies. The safety of such technologies depends
in part on driver interactions, and drivers may not be accustomed to using or adapting to such technologies. To the extent accidents associated
with Damon's assisted driving systems occur, Damon could be subject to liability, negative publicity, government scrutiny, and further
regulation. Moreover, any incidents related to assisted driving systems of Damon's competitors could adversely affect the perceived
safety and adoption of Damon's vehicles and assisted driving technology more broadly. Any of the foregoing could materially and
adversely affect Damon's business, financial condition, operating results and prospects.
Risks Related to Intellectual Property
Damon's patent applications
may not result in issued patents, which may have a material adverse effect on its ability to prevent others from interfering with the
commercialization of Damon's products.
The registration and enforcement
of patents involves complex legal and factual questions, and the breadth and effectiveness of patented claims is uncertain. Damon cannot
be certain that it is the first to file patent applications on the inventions it wishes to protect, nor can it be certain that its pending
patent applications will result in issued patents or that any of its issued patents will afford sufficient protection against someone
creating competing products, or as a defensive portfolio against a competitor who claims that Damon is infringing such competitor's
patents. In addition, patent applications filed in foreign countries are subject to laws, rules and procedures that may differ from those
of applicable in Canada or the U.S., and thus there is no certainty that foreign patent applications, if any, will result in issued patents
in those foreign jurisdictions or that such patents can be effectively enforced, even if they relate to patents issued in Canada or the
U.S.
35
Damon may need to defend itself against
patent or trademark infringement claims, which may be time-consuming and would cause Damon to incur substantial costs.
Companies, organizations or
individuals, including Damon's competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent,
limit or interfere with Damon's ability to make, use, develop, sell or market its motorcycles or components, which could make it
more difficult for Damon to operate its business. From time-to-time, Damon may receive communications from third parties that allege its
products are covered by their patents or trademarks or other intellectual property rights. Companies holding patents or other intellectual
property rights may bring suits alleging infringement of such rights or otherwise assert their rights.
In addition, various "non-practicing
entities" that own patents and other intellectual property rights often attempt to aggressively assert their rights in order to
extract value from technology companies. Furthermore, from time-to-time Damon may introduce or acquire new products and services, including
in areas where Damon historically has not competed, which could increase Damon's exposure to patent and other intellectual property
claims from competitors and non-practicing entities.
Damon may receive notice letters
from patent holders alleging that certain of its products and services infringe their patent rights. Defending patent and other intellectual
property litigation is costly and can impose a significant burden on management and employees, and there can be no assurances that favourable
final outcomes will be obtained in all cases. In addition, plaintiffs may seek, and Damon may become subject to, preliminary or provisional
rulings in the course of any such litigation, including potential preliminary injunctions requiring Damon to cease some or all of its
operations. Damon may decide to settle such lawsuits and disputes on terms that are unfavorable to it. Similarly, if any litigation to
which Damon is a party is resolved adversely, Damon may be subject to an unfavorable judgment that may not be reversed upon appeal. The
terms of such a settlement or judgment may require Damon to cease some or all of its operations or pay substantial amounts to the other
party. In addition, Damon may have to seek a license to continue practices found to be in violation of a third party's rights, which
may not be available on reasonable terms, or at all, and may significantly increase Damon's operating costs and expenses. As a result,
Damon may also be required to develop alternative non-infringing technology or practices or discontinue the practices. The development
of alternative non-infringing technology or practices could require significant effort and expense or may not be feasible. Damon's
business, financial condition, and results of operations could be adversely affected as a result of an unfavorable resolution of the disputes
and litigation referred to above.
If Damon is determined to
have infringed upon a third party's intellectual property rights, Damon may be required to do things that include one or more of
the following:
●
cease making, using, selling or offering to sell processes, goods or services that incorporate or use
the third-party intellectual property;
●
pay substantial damages;
●
seek a license from the holder of the infringed intellectual property right, which license may not be
available on reasonable terms or at all;
●
redesign its motorcycles or other goods or services to avoid infringing the third-party intellectual property;
or
●
establish and maintain alternative branding for its products and services.
In the event of a successful
claim of infringement against Damon and its failure or inability to obtain a license to the infringed technology or other intellectual
property right, its business, financial condition, operating results and prospects may be materially adversely affected. In addition,
any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management
attention.
36
Risks Related to Regulation and
Taxation
Our international business exposes
us to geo-political and economic factors, legal and regulatory requirements, public health and other risks associated with doing business
in foreign countries.
We currently provide, and
plan to continue providing, our products and services to customers internationally. These risks differ from and potentially may be greater
than those associated with our domestic business.
Our international business
is sensitive to changes in the priorities and budgets of international customers and geo-political uncertainties, which may be driven
by changes in threat environments and potentially volatile worldwide economic conditions, various regional and local economic and political
factors, risks and uncertainties, as well as Canadian, U.S., and UK foreign policy.
Our international sales are
also subject to local government laws, regulations and procurement policies and practices, which may differ from the UK Government regulations,
including regulations relating to import-export control, investments, foreign exchange controls and repatriation of earnings, as well
as to varying currency, geo-political and economic risks. Our international contracts may include industrial cooperation agreements requiring
specific in-country purchases, manufacturing agreements or financial support obligations, known as offset obligations, and provide for
penalties if we fail to meet such requirements. Our international contracts may also be subject to termination at the customer's
convenience or for default based on performance, and may be subject to funding risks. We also are exposed to risks associated with using
foreign representatives and consultants for international sales and operations and teaming with international subcontractors, partners
and suppliers in connection with international programs. As a result of these factors, we could experience award and funding delays on
international programs and could incur losses on such programs, which could negatively affect our results of operations and financial
condition.
We are also subject to a number
of other risks including:
●
the absence in some jurisdictions of effective laws to protect our intellectual property rights;
●
multiple and possibly overlapping and conflicting tax laws;
●
restrictions on movement of cash;
●
the burdens of complying with a variety of national and local laws;
●
political instability;
●
currency fluctuations;
●
longer payment cycles;
●
restrictions on the import and export of certain technologies;
●
price controls or restrictions on exchange of foreign currencies; and
●
trade barriers.
37
In addition, our international
operations (or those of our business partners) could be subject to natural disasters such as earthquakes, tsunamis, flooding, typhoons
and volcanic eruptions that disrupt manufacturing or other operations. There may be conflict or uncertainty in the countries in which
we operate, including public health issues (for example, an outbreak of a contagious disease such as 2019-Novel Coronavirus (2019-nCoV),
avian influenza, measles or Ebola), safety issues, natural disasters, fire, disruptions of service from utilities, nuclear power plant
accidents or general economic or political factors. For example, as a result of the Coronavirus outbreak, our ability to source internal
connection cables for certain of our sensors has been delayed, which will require us to source these components from other vendors at
a higher price that may result in an increase in our costs to produce our products In the event our customers are materially impacted
by these events, it may impact anticipated orders and planned shipments for our products. With respect to political factors, the United
Kingdom's 2016 referendum, commonly referred to as "Brexit," has created economic and political uncertainty in the European
Union. Also, the European Union's General Data Protection Regulation imposes significant new requirements on how we collect, process
and transfer personal data, as well as significant fines for non-compliance. Any of the above risks, should they occur, could result in
an increase in the cost of components, production delays, general business interruptions, delays from difficulties in obtaining export
licenses for certain technology, tariffs and other barriers and restrictions, longer payment cycles, increased taxes, restrictions on
the repatriation of funds and the burdens of complying with a variety of foreign laws, any of which could ultimately have a material adverse
effect on our business.
The lack of availability, reduction
or elimination of government and economic incentives or government policies which are favorable for electric vehicles and Canadian produced
vehicles could have a material adverse effect on Damon's business, financial condition, operating results and prospects.
Any reduction, elimination
or discriminatory application of government subsidies and economic incentives because of policy changes, the reduced need for such subsidies
and incentives due to the perceived success of electric motorcycles, fiscal tightening or other reasons may result in the diminished competitiveness
of the alternative fuel motorcycle industry generally or Damon's electric motorcycles in particular. This could materially adversely
affect the growth of the alternative fuel motorcycle markets and Damon's business, financial condition, operating results and prospects.
Damon's vehicles also
benefit from government policies including tariffs on imported motorcycles to both Europe and the U.S. However, trade dynamics can change
quickly between regions, and this advantage could become a disadvantage with new regulations or duties. Additionally, the amount of subsidies
provided for purchasers of certain new energy motorcycles in various regions (both at national and local levels) could be reduced in the
future, increasing the net cost experienced by customers. These policies are subject to change and are beyond Damon's control. There
is no assurance that any changes would be favourable to Damon's business. Any of the foregoing could materially adversely affect
Damon's business, financial condition, operating results and prospects.
Damon's business could be adversely
affected by trade tariffs or other trade barriers.
Damon plans to initially build
Damon motorcycles in California and will be shipping those motorcycles globally. It is not clear what impact changes to tariffs may have
or what actions other governments may take in the future. In the future, tariffs could potentially impact Damon's raw material prices.
In addition, changes in tariffs could have a material adverse effect on global economic conditions and the stability of global financial
markets. Any of these factors could have a material adverse effect on Damon's business, financial condition, operating results and
prospects.
The construction and operation of
Damon's assembly facility in San Rafael, or other assembly facilities that Damon may seek to establish in the future, are or will
be subject to regulatory approvals, and may be subject to delays, cost overruns or may not produce expected benefits.
Damon's leased manufacturing
facility in San Rafael, California is subject to broad and strict government supervision and approval procedures, including, but not limited
to, the project approvals and filings, construction land and project planning approval, environment protection approval, pollution discharge
permits, work safety approvals, fire protection approvals, and the completion of inspection and acceptance by relevant authorities. As
a result, Damon may be subject to administrative uncertainty regarding the construction within a specified time frame, fines or the suspension
of work. Damon may face similar challenges with respect to any additional facilities it seeks to establish in the future to scale manufacturing
capacity or otherwise. Any of the foregoing may have a material adverse impact on Damon's business, financial condition, operating
results or prospects.
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Damon's vehicles are subject
to motor vehicle standards and the failure to satisfy such mandated safety standards would have a material adverse effect on Damon's
business, financial condition, operating results and prospects.
All vehicles sold must comply
with various standards of the market where the vehicles were sold. Rigorous testing and the use of approved materials and equipment are
among the requirements for achieving such standards. Vehicles must pass various tests and undergo a certification process, before receiving
delivery from the factory, being sold, or being used in any commercial activity, and such certification is also subject to periodic renewal.
Damon expects to begin the process of obtaining certifications for the HyperSport in 2025/2026. If Damon's certification efforts
fail, or a certified vehicle has a defect resulting in quality or safety accidents, or consistent failure of compliance with certification
requirements is discovered, the approval can be withheld, suspended or even revoked. With effect from the date of revocation or during
suspension of certification, any vehicle that fails to satisfy the requirements for certification may not continue to be delivered, sold,
exported or used in any commercial activity. Failure by Damon to have the HyperSport or any future model electric vehicle satisfy motor
vehicle standards would have a material adverse effect on Damon's business, financial condition, operating results and prospects.
Damon is subject to anti-corruption,
anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and noncompliance with such laws can subject Damon
to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which
could materially adversely affect Damon's business, results of operations, financial condition and reputation.
Damon is subject to anti-corruption,
anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which
Damon conducts activities, including the U.S. Foreign Corrupt Practices Act ("FCPA"), the Corruption of Foreign Public Officials
Act (Canada) ("CFPOA"), the U.K. Bribery Act 2010 and other similar anti-corruption, anti-bribery, anti-money laundering,
financial and economic sanctions, laws and regulations. The FCPA, the CFPOA and the U.K. Bribery Act 2010 prohibit Damon and its officers,
directors, employees and business partners acting on Damon's behalf, including agents, from corruptly offering, promising, authorizing
or providing anything of value to a "foreign official" for the purposes of influencing official decisions or obtaining or
retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts
that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. The
UK Bribery Act also prohibits non-governmental "commercial" bribery and soliciting or accepting bribes. A violation of these
laws or regulations could harm the Damon brand and adversely affect Damon's business, financial condition, operating results and
prospects.
Damon has direct or indirect
interactions with officials and employees of government agencies and state-owned affiliated entities in the ordinary course of business.
These interactions subject Damon to an increased level of compliance-related concerns. Damon is in the process of implementing policies
and procedures designed to ensure compliance by it and its directors, officers, employees, representatives, consultants, agents and business
partners with applicable anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations.
However, Damon's policies and procedures may not be sufficient, and its directors, officers, employees, representatives, consultants,
agents, and business partners could engage in improper conduct for which Damon may be held responsible.
Non-compliance with anti-corruption,
anti-bribery, anti-money laundering or financial and economic sanctions laws and regulations could subject Damon to whistleblower complaints,
adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures
and legal expenses, all of which could harm the Damon brand and materially adversely affect Damon's business, financial condition,
operating results and prospects. In addition, changes in economic sanctions laws in the future could adversely impact Damon's business
and investments in Damon's securities.
39
Damon is subject to numerous environmental,
health and safety laws and any breach of such laws may have a material adverse effect on Damon's business, financial condition,
operating results and prospects.
Damon is subject to numerous
environmental, health and safety laws, including statutes, regulations, bylaws and other legal requirements. These laws relate to the
generation, use, handling, storage, transportation and disposal of regulated substances, including hazardous substances (such as batteries),
dangerous goods and waste, emissions or discharges into soil, water and air, including noise and odors (which could result in remediation
obligations), and occupational health and safety matters, including indoor air quality. These legal requirements vary by location and
can arise under federal, provincial, state or municipal laws. Any breach of such laws, regulations, directives or requirements would have
a material adverse effect on Damon's business, financial condition, operating results and prospects.
Damon may be adversely affected by
the complexity, uncertainties and changes in automotive or internet related Canadian regulations or similar regulations of any countries
it is selling motorcycles into.
Damon operates in the motorcycle
and internet industry, both of which are extensively regulated by various governments. Regulations on vehicle homologation requirements
may change over time, and potentially diverge in various regions, driving the need for increased vehicle variants, or discontinuation
(temporary or permanent) of existing vehicle models.
In addition, Damon's
mobile applications are also regulated by various regulations, for example there are regulations related to the collection and sharing
of data. If Damon's mobile applications were found to be violating the regulations, Damon may be subject to administrative penalties,
including warning, service suspension or removal of Damon's mobile applications from the relevant mobile application store, which
may materially adversely affect Damon's business, financial condition, operating results and prospects.
Risks Related to Cybersecurity and Privacy
Damon's inability to leverage
vehicle and customer data could impact the servicing of its products, its software algorithms and impact research and development.
Damon will rely on data collected
from the use of its vehicles, including vehicle data and data related to battery usage statistics. Damon will use this data in connection
with the servicing and normal course software updates of its products, its software algorithms and the research, development and analysis
of its motorcycles. Damon's inability to obtain this data or the necessary rights to use this data or Damon's inability to
properly analyze or use this data could result in Damon's inability to adequately service its vehicles or delay or otherwise negatively
impact its research and development efforts. Any of the foregoing could materially adversely affect Damon's business, financial
condition, operating results and prospects.
Failure of information security and
privacy concerns could subject Damon to penalties, damage its reputation and brand, and harm its business, financial condition, operating
results and prospects.
Damon faces significant challenges
with respect to information security and privacy, including the storage, transmission and sharing of confidential information. Damon collects,
transmits and stores confidential and private information of its customers, such as personal information, including names, accounts, user
IDs and passwords, and payment or transaction related information. In certain jurisdictions, Damon is also subject to certain laws and
regulations, such as "Right to Repair" laws, which require Damon to provide third-party access to its network or vehicle systems.
Damon is required by the laws
of its various operating regions to ensure the confidentiality, integrity, availability and authenticity of the information of its customers
and suppliers, which is also essential to maintaining their confidence in its vehicles and services. Damon intends to implement strict
information security policies and deploy advanced measures to implement the policies, including, among others, advanced encryption technologies.
However, advances in technology, an increased level of sophistication and diversity of Damon's vehicles and services, an increased
level of expertise of hackers, new discoveries in the field of cryptography or others can still result in a compromise or breach of the
measures that are used by Damon. If Damon is unable to protect its systems, and hence the information stored in its systems, from unauthorized
access, use, disclosure, disruption, modification or destruction, such problems or security breaches could cause a loss, give rise to
Damon's liabilities to the owners of confidential information or even subject Damon to fines and penalties. In addition, complying
with various laws and regulations could cause Damon to incur substantial costs or require Damon to change its business practices, including
its data practices, in a manner adverse to its business.
Any unauthorized control or manipulation
of Damon's vehicles' systems could result in loss of confidence in Damon and its vehicles and harm its business.
Damon's vehicles contain
complex information technology systems and built-in data connectivity to accept and install periodic remote updates to improve or update
functionality. Damon has designed, implemented and tested security measures intended to prevent unauthorized access to its information
technology networks and its vehicles and related systems. However, hackers may attempt to gain unauthorized access to modify, alter and
use such networks, vehicles and systems to gain control of or to change Damon's solutions' functionality, user interface and
performance characteristics, or to gain access to data stored in or generated by the vehicles. Future vulnerabilities could be identified
and Damon's efforts to remediate such vulnerabilities may not be successful. Any unauthorized access to or control of Damon's
vehicles, or any loss of customer data, could result in legal claims or proceedings and remediation of such problems could result in significant,
unplanned capital expenditures. In addition, regardless of their veracity, reports of unauthorized access to its technology systems or
data, as well as other factors that may result in the perception that Damon's vehicles, technology systems or data are capable of
being "hacked," could materially adversely affect Damon's brand and its business, financial conditions, operating results
and prospects.
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Damon is subject to information technology
and cybersecurity risks to operational systems, security systems, infrastructure, integrated software in its motorcycles and customer
data processed by it, and any material failure, weakness, interruption, cyber event, incident or breach of security could prevent Damon
from effectively operating its business, harm its reputation or materially adversely affect its business, financial condition, operating
results and prospects.
Damon is at risk for interruptions,
outages and breaches of: (i) operational systems, including business, financial, accounting, product development, data processing or production
processes, owned by it or its third-party vendors or suppliers; (ii) facility security systems, owned by it or its third-party vendors
or suppliers; (iii) transmission control modules or other in-product technology, owned by it or its third-party vendors or suppliers;
(iv) the integrated software in Damon's vehicles; or (v) customer or driver data that Damon processes or Damon's third-party
vendors or suppliers process on its behalf. Such cyber incidents could materially disrupt operational systems; result in loss of intellectual
property, trade secrets or other proprietary or competitively sensitive information; compromise certain information of customers, employees,
suppliers or others; jeopardize the security of Damon's facilities; or affect the performance of transmission control modules or
other in-product technology and the integrated software in Damon's vehicles. A cyber incident could be caused by disasters, insiders
(through inadvertence or with malicious intent) or malicious third parties (including nation-states or nation-state supported actors)
using sophisticated, targeted methods to circumvent firewalls, encryption and other security defences, including hacking, fraud, trickery,
social engineering or other forms of deception. The techniques used by cyber attackers change frequently and may be difficult to detect
for long periods of time.
Although Damon maintains information
technology measures designed to protect it against intellectual property theft, data breaches and other cyber incidents, such measures
will require updates and improvements, and there is no guarantee that such measures will be adequate to detect, prevent or mitigate cyber
incidents. Any implementation, maintenance, segregation and improvement of Damon's systems may require significant management time,
support and cost. Moreover, there are inherent risks associated with developing, improving, expanding and updating current systems, including
the disruption of Damon's data management, procurement, production execution, finance, supply chain and sales and service processes.
These risks may affect Damon's ability to manage its data and inventory, procure parts or supplies or produce, sell, deliver and
service its vehicles, adequately protect its intellectual property or achieve and maintain compliance with, or realize available benefits
under, applicable laws, regulations and contracts. Damon cannot be sure that these systems upon which it relies, including those of its
third-party vendors or suppliers, will be effectively implemented, maintained or expanded as planned. If Damon does not successfully implement,
maintain or expand these systems as planned, its operations may be disrupted, Damon's ability to accurately and timely report its
financial results could be impaired, and deficiencies may arise in Damon's internal control over financial reporting, which may
impact Damon's ability to certify its financial results. Moreover, Damon's proprietary information or intellectual property
could be compromised or misappropriated, and its reputation may be adversely affected. If these systems do not operate as expected, Damon
may be required to expend significant resources to make corrections or find alternative sources for performing these functions.
A significant cyber incident
could impact Damon's manufacturing capacity or production capability, harm its reputation, cause Damon to breach its contractual
arrangements with other parties or subject Damon to regulatory actions or litigation, any of which could materially adversely affect its
business, financial condition, operating results or prospects. In addition, Damon's insurance coverage for cyberattacks may not
be sufficient to cover all the losses it may experience as a result of a cyber incident.
Damon also collects, uses,
discloses, stores, transmits and otherwise processes customer and employee and others' data as part of its business and operations,
which may include personal data or confidential or proprietary information. Damon uses its vehicles' electronic systems to log information
about each vehicle's use, such as charge time, battery usage, mileage and rider behavior, in order to aid it in vehicle diagnostics,
repair and maintenance, as well as to help it customize and optimize the riding experience. Damon's users may object to the use
of this data, which may harm Damon's business. Damon also works with partners and third-party service providers or vendors that
may in the course of their business relationship with Damon collect, store and process such data on Damon's behalf and in connection
with Damon's vehicles and services. There can be no assurance that any security measures that Damon or its third-party service providers,
vendors, or suppliers have implemented will be effective against current or future security threats. While Damon has developed systems
and processes designed to protect the availability, integrity, confidentiality and security of Damon's, Damon's customers',
and employees' and others' data, such security measures or those of its third-party service providers, vendors or suppliers
could fail and result in unauthorized access to or disclosure, acquisition, encryption, modification, misuse, loss, destruction or other
compromise of such data. If a compromise of such data were to occur, Damon may become liable under its contracts with other parties and
under applicable law for damages and incur penalties and other costs to respond to, investigate and remedy such an incident. Laws in all
50 states of the U.S., in Canada and in Europe require Damon to provide notice to individuals, customers, regulators, credit reporting
agencies and others when certain sensitive information has been compromised as a result of a security breach or where a security breach
creates a real risk of significant harm to an individual. Such laws are inconsistent and compliance if there is a widespread data breach
could be costly. Depending on the facts and circumstances of such an incident, these damages, penalties, fines and costs could be significant.
Any such event could harm Damon's reputation and result in litigation against it, or otherwise materially adversely affect its business,
financial condition, operating results and prospects.
41
Risks Related to Litigation, Product Warranty and Recalls
Adverse judgments or settlements in legal
proceedings, including those that may arise relating to the Business Combination, could materially harm our business, financial condition,
operating results, and cash flows.
We may be a party to claims
that arise from time to time in the ordinary course of our business, which may include those related to, for example, contracts, sub-contracts,
protection of confidential information or trade secrets, adversary proceedings arising from customer bankruptcies, employment of our workforce
and immigration requirements, or compliance with any of a wide array of state and federal statutes, rules, and regulations that pertain
to different aspects of our business. In addition, we may deem it advisable to initiate expensive litigation to protect our business interests.
We also face litigation risk related to the Business Combination. Business combinations often give rise to claims and legal proceedings,
including shareholder lawsuits. Any shareholder claims or lawsuits alleging inadequate disclosure, breach of fiduciary duty, adequacy
of consideration or other claims in connection with the Business Combination could lead to costly litigation and diversion of management's
time and attention from our business.
Furthermore, while we maintain
insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject
to various exclusions as well as deductibles and caps on amounts of coverage. Even if we believe a claim is covered by insurance, insurers
may dispute our entitlement to coverage for a variety of potential reasons, which may affect the timing and, if the insurers prevail,
the amount of our available insurance coverage for a particular claim.
There is a risk that we will not be successful or otherwise be able
to satisfactorily resolve any such claims or litigation. In addition, litigation and other legal claims are subject to inherent uncertainties.
Those uncertainties include, but are not limited to, litigation costs and attorneys' fees, unpredictable judicial or jury decisions,
and the differing laws and judicial proclivities regarding damage awards among the jurisdictions in which we operate. Unexpected outcomes
in such legal proceedings, or changes in management's evaluation or predictions of the likely outcomes of such proceedings (possibly resulting
in changes in established reserves), could have a material adverse effect on our business, financial condition, results of operations,
and cash flows.
Damon may become subject to product
liability claims, which could harm Damon's financial condition and liquidity if it is not able to successfully defend or insure
against such claims.
Damon may become subject to
product liability claims, which could harm Damon's business, financial condition, operating results and prospects. The motorcycle
industry experiences significant product liability claims and Damon faces inherent risk of exposure to claims if its motorcycles do not
perform as expected or malfunction resulting in personal injury or death. Damon's risks in this area are particularly pronounced
given the limited field experience of its motorcycles. A successful product liability claim against Damon could require it to pay a substantial
monetary award. Moreover, a product liability claim could generate substantial negative publicity about Damon's motorcycles and
business and inhibit or prevent commercialization of other future motorcycle candidates which could harm the Damon brand and have a material
and adverse effect Damon's business, financial condition, operating results and prospects. Damon plans to seek adequate product
liability insurance for all its motorcycles, but any such insurance might not be sufficient to cover all potential product liability claims
and may not be available on terms satisfactory to Damon. Any lawsuit seeking significant monetary damages either in excess of such liability
coverage, or outside of such liability coverage, may harm the Damon brand and have a material adverse effect on Damon's business,
financial condition, operating results and prospects. Damon may not be able to secure additional product liability insurance coverage
on commercially acceptable terms or at reasonable costs when needed, particularly if it faces liability for its products and is forced
to make a claim under its product liability insurance policy(ies).
Damon's warranty reserves may
be insufficient to cover future warranty claims which could adversely affect its business, financial condition, operating results and
prospects.
As Damon's vehicles
enter production, Damon will need to maintain warranty reserves to cover warranty-related claims. If Damon's warranty reserves are
inadequate to cover future warranty claims on its vehicles, Damon's business, financial condition, operating results and prospects
could be materially and adversely affected. Damon expects to record and adjust warranty reserves based on changes in estimated costs and
actual warranty costs. However, Damon has limited operating experience with its vehicles, and therefore no experience with warranty claims
for these vehicles or with estimating warranty reserves, which renders necessary reserves hard to predict. In the future, Damon may become
subject to significant and unexpected warranty expenses. There can be no assurances that then-existing warranty reserves will be sufficient
to cover all claims.
42
Damon may be compelled to undertake
product recalls or take other actions, which could adversely affect its brand image and financial performance.
If Damon's vehicles
are subject to recalls in the future, Damon may be subject to adverse publicity, damage to its brand and liability for costs. In the future,
Damon may at various times, voluntarily or involuntarily, initiate a recall if any of its vehicles, including any systems or parts sourced
from its suppliers, prove to be defective or noncompliant with applicable laws and regulations. Such recalls, whether voluntary or involuntary
or caused by systems or components engineered or manufactured by Damon or its suppliers, could involve significant expense and could materially
adversely affect the Damon brand image in the target markets of Damon, as well as Damon's business, financial condition, operating
results and prospects.
Damon Motors is currently involved
in a dispute with the lessor of Damon Motors's former manufacturing facility in Surrey, British Columbia.
In April 2023, Damon Motors
received a notice of default from a property management company related to Damon Motors's lease of a facility in Surrey, British
Columbia. Damon Motors had planned to commence its initial manufacturing at the facility before relocating operations to its new facility
in San Rafael, California. The notice of default asserts a breach of the lease and seeks approximately CAD$4.3 million in damages, in
addition to accruing interest and other costs. Damon Motors executed a settlement agreement effective on June 30, 2023, whereby it subsequently
settled the amount owing with an issuance of convertible notes and instalments of cash payments. Should Damon Motors default under the
terms of the settlement agreement, Damon Motors could be forced to pay a substantial monetary sum to the property management company and
may also suffer reputational or other harm.
Damon Motors was in compliance
with the settlement and has agreed with the lessor to extend the terms of the agreement on any further payments as follows (a) 1/3 of
the remaining settlement amount on or before the date that is thirty days following completion of the Business Combination; (b) 1/3 of
the remaining settlement amount on or before the date that is sixty days following completion of the Business Combination; and (c) 1/3
of the remaining settlement amount on or before the date that is ninety days following completion of the Business Combination. Damon Motors
has not yet made any of the three scheduled payments under the agreement. The parties are negotiating ways to mitigate damages to the
lessor and reduce Damon Motors' liability; however, there is no guarantee that a resolution will be reached soon or at all.
Risks Related to Ownership of Our Common Shares
We are eligible to be treated as an
"emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, and we cannot be certain if the reduced
disclosure requirements applicable to emerging growth companies will make our common shares less attractive to investors.
We are an "emerging
growth company", as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be
an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public
companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, (2) reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved. In addition, as an emerging growth company, we are only required to
provide two years of audited financial statements and two years of selected financial data in this prospectus. We could be an emerging
growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value
of our common shares held by non-affiliates exceeds $700.0 million as of any June 30 before that time or if we have total annual gross
revenue of $1.07 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company
as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any three-year period before that
time, we would cease to be an emerging growth company immediately. Even after we no longer qualify as an emerging growth company, we may
still qualify as a "smaller reporting company" which would allow us to take advantage of many of the same exemptions from
disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, not being required to provide selected financial data in the registration statements and periodic reports that we file with the SEC,
and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if
investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares
less attractive as a result, and if our common shares become publicly traded, such trading market may be less active than it otherwise
could be if we were not to take advantage of such exemptions, and our share price may be more volatile.
43
Our independent registered
public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until
the later of our second annual report or the first annual report required to be filed with the SEC following the date we are no longer
an "emerging growth company" as defined in the JOBS Act. We cannot assure you that there will not be material weaknesses or
significant deficiencies in our internal controls in the future.
Under the JOBS Act, emerging
growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.
We have irrevocably elected to take advantage of this extended transition period, and therefore, our financial statements may not be comparable
to those of companies that comply with such new or revised accounting standards.
We do not intend to pay cash dividends
to our shareholders.
We do not intend to pay cash
dividends to our shareholders. We currently intend to retain any future earnings for funding growth and, therefore, do not expect to pay
any cash dividends in the foreseeable future.
Indemnification of our officers and
directors may cause us to use corporate resources to the detriment of our shareholders.
Our Articles eliminate the
personal liability of our directors for monetary damages arising from a breach of their fiduciary duty as directors to the fullest extent
permitted by British Columbia law. This limitation does not affect the availability of equitable remedies, such as injunctive relief or
rescission. Until October 17, 2028, our Articles require us to indemnify our directors and officers to the fullest extent permitted by
British Columbia law, including in circumstances in which indemnification is otherwise discretionary under British Columbia law.
Under British Columbia law,
we may indemnify our directors or officers or other persons who were, are or are threatened to be made a named defendant or respondent
in a proceeding because the person is or was our director, officer, employee or agent, if we determine that the person:
●
conducted himself or herself in good faith, reasonably believed, in the case of conduct in his or her
official capacity as our director or officer, that his or her conduct was in our best interests, and, in all other cases, that his or
her conduct was at least not opposed to our best interests; and
●
in the case of any criminal proceeding, had no reasonable cause to believe that his or her conduct was
unlawful.
These persons may be indemnified
against expenses, including attorneys' fees, judgments, fines, excise taxes and amounts paid in settlement, actually and reasonably
incurred by the person in connection with the proceeding. If the person is found liable to the corporation, no indemnification will be
made unless the court in which the action was brought determines that the person is fairly and reasonably entitled to indemnity in an
amount that the court will establish.
44
If we fail to establish and maintain
an effective system of internal controls, we may not be able to report our financial results accurately or prevent fraud. Any inability
to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our
common shares.
Effective internal controls
are necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent
fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business
and reputation with investors may be harmed. Notwithstanding our diligence, certain internal controls deficiencies may not be detected.
As a result, any internal control deficiencies may adversely affect our financial condition, results of operations and access to capital.
Reporting company compliance may make
it more difficult to attract and retain officers and directors.
The Sarbanes-Oxley Act and
rules implemented by the SEC have required changes in corporate governance practices of public companies. As a reporting company, these
rules and regulations will increase our compliance costs and make certain activities more time consuming and costly. As a reporting company,
these rules and regulations may make it more difficult and expensive for us to maintain our director and officer liability insurance and
we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive
officers, and to maintain insurance at reasonable rates, or at all.
Our share price may be volatile.
Our common shares have only recently become publicly traded, the market
price of our common shares is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of
which are beyond our control, including the following:
●
our ability to execute our business plan;
●
changes in our industry;
●
competitive pricing pressures;
●
our ability to obtain working capital financing;
●
additions or departures of key personnel;
●
sales of our common shares;
●
operating results that fall below expectations;
●
regulatory developments;
●
economic and other external factors;
●
period-to-period fluctuations in our financial results;
●
our inability to develop or acquire new or needed technologies or successfully integrate acquired businesses;
●
the public's response to press releases or other public announcements by us or third parties, including
filings with the SEC;
●
changes in financial estimates or ratings by any securities analysts who follow our common shares, our
failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common shares;
●
the development and sustainability of an active trading market for our common shares; and
●
any future sales of our common shares by our officers, directors and significant shareholders.
In addition, the securities
markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of
publicly traded companies. These market fluctuations may also materially and adversely affect the market price of our common shares, if
our common shares become publicly traded.
45
There may be future sales or other
dilution of our equity, which may adversely affect the market price of our common shares.
We are generally not restricted
from issuing additional common shares, including any securities that are convertible into or exchangeable for, or that represent the right
to receive, common shares. The market price of our common shares could decline as a result of sales of common shares or securities that
are convertible into or exchangeable for, or that represent the right to receive, common shares or the perception that such sales could
occur.
Prior to the Business Combination,
there was no prior market for our common shares and an active trading market for such securities may not develop or be sustained, which
may cause our shares to trade at a discount and make it difficult to sell the shares.
Prior to the Business Combination,
there was not a public trading market for our common shares. We cannot predict the extent to which investor interest in our Company will
lead to the development of, or sustain, an active trading market or how liquid that market might be. An active public market for our common
shares may not develop or be sustained, which would make it difficult for our shareholders to sell their common shares at a price that
is attractive to them, or at all.
If securities or industry analysts
do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume
could decline.
The trading market for our
common shares will depend, in part, on the research and reports that securities or industry analysts publish about us or our business.
We do not have any control over these analysts or the content that they publish about us. If our financial performance fails to meet analyst
estimates or one or more of the analysts who cover us downgrade our common shares or change their opinion of our common shares, our share
price would likely decline.
Our common shares are listed on Nasdaq,
but we cannot guarantee that we will be able to satisfy the applicable listing standards going forward.
The Nasdaq Stock Market LLC
requires listed companies to comply with certain standards in order to remain listed. On January 7, 2025, we received a letter from the
Nasdaq staff providing notification that, for the previous 30 consecutive business days, the Company's Market Value of Listed Securities
("MVLS") was below the minimum of $50 million required for continued listing on The Nasdaq Global Market pursuant to Nasdaq
Listing Rule 5450(b)(2)(A) (the "MVLS Requirement"). The notice has no immediate impact on the listing of the Company's
securities on The Nasdaq Global Market at this time.
In accordance with Nasdaq
Listing Rule 5810(c)(3)(C), the Company has been provided an initial period of 180 calendar days, or until July 7, 2025, to regain compliance
with the MVLS Requirement. To regain compliance, the MVLS of the Company's common shares must be $50 million or more for a minimum
of 10 consecutive business days at any time before July 7, 2025. During this period, the Company's securities will continue to trade
on The Nasdaq Global Market.
46
If the Company does not regain
compliance with the MVLS Requirement by July 7, 2025, Nasdaq will provide a written notification to the Company that our common shares
are subject to delisting. At that time, the Company may appeal the Staff's delisting determination to a Hearings Panel (the "Panel").
However, there can be no assurance that, if the Company receives a delisting notice and appeals the delisting determination to the Panel,
such appeal would be successful.
The Company intends to monitor
its MVLS between now and July 7, 2025, and may, if appropriate, evaluate available options to resolve the deficiency under the MVLS Requirement
and regain compliance with the MVLS Requirement. Additionally, the Company may consider applying to transfer the listing of its securities
to The Nasdaq Capital Market (provided that it then satisfies the requirements for continued listing on that market). However, there can
be no assurance that the Company will be able to regain or maintain compliance with Nasdaq listing criteria.
Delisting from the Nasdaq
Global Market or any Nasdaq market could make trading our common shares more difficult for investors, potentially leading to declines
in our share price and liquidity. In addition, without a Nasdaq market listing, 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 and the trading volume
and liquidity of our shares could decline. Delisting from Nasdaq could 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 transaction
consideration or the value accorded our common shares by other parties. Further, if we are delisted, we would also incur additional costs
under state blue sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity
of our common shares and the ability of our shareholders to sell our common shares in the secondary market. We cannot assure you that
our common shares, if delisted from Nasdaq, will be listed on another national securities exchange or quoted on an over-the counter quotation
system. If our common shares are delisted, they may come within the definition of "penny stock" as defined in 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.
47
USE OF PROCEEDS
All of the common shares offered
by the Selling Securityholders will be sold by them for their respective accounts. We will not receive any of the proceeds from these
sales.
The Selling Securityholders
will pay any underwriting fees, discounts, selling commissions, stock transfer taxes and certain legal expenses incurred by such Selling
Securityholders in disposing of their common shares, and we will bear all other costs, fees and expenses incurred in effecting the registration
of such securities covered by this prospectus, including, without limitation, all registration and filing fees, Nasdaq listing fees and
fees and expenses of our counsel and our independent registered public accountants.
DETERMINATION OF
OFFERING PRICE
We cannot currently determine
the price or prices at which our common shares may be sold by the Selling Securityholders under this prospectus.
DIVIDEND POLICY
We have never declared or
paid any cash dividends on our common shares to date and do not intend to pay cash dividends. We anticipate that we will retain all available
funds and any future earnings, if any, for use in the operation of our business and do not anticipate paying cash dividends in the foreseeable
future. In addition, future debt instruments may materially restrict our ability to pay dividends on our common shares. Payment of future
cash dividends, if any, will be at the discretion of the board of directors after taking into account various factors, including our financial
condition, operating results, current and anticipated cash needs, the requirements of then-existing debt instruments and other factors
the board of directors deems relevant.
MARKET INFORMATION
Our common shares are listed on Nasdaq under the symbols "DMN."
As of January 15, 2025, there were approximately 482 holders of record of our common shares. This includes Cede & Co., which
holds shares on behalf of the beneficial owners of the Company's common shares. Because brokers and other institutions hold many
of our shares on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these record holders.
48
UNAUDITED PRO FORMA
CONDENSED COMBINED AND CONSOLIDATED COMBINED
FINANCIAL INFORMATION
The following unaudited pro
forma condensed combined and consolidated financial information presents the combination of the financial information of the Company and
subsidiaries (also referred to as "Grafiti" or "Pubco" in this unaudited pro forma condensed combined and consolidated
financial information) and Damon Motors adjusted to give effect to the Business Combination and related transactions. The following unaudited
pro forma condensed combined and consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X.
Defined terms included below have the same meaning as terms defined and included elsewhere in this prospectus.
The historical financial information
of Damon Motors was derived from the unaudited condensed consolidated financial statements of Damon Motors as of and for the three months
ended September 30, 2024, and the audited consolidated financial statements of Damon Motors as of and for the year ended June 30, 2024,
included in our filings with the SEC. The historical financial information of Grafiti consists of carve-out financial statements of Grafiti
limited ("Grafiti UK"), as Grafiti is the parent non-operating holding company of Grafiti UK, and the operations of Grafiti
following the carve-out from XTI (defined below). The unaudited pro forma financial information has been prepared utilizing the unaudited
carve-out financial statements of Grafiti UK, adjusted to reflect the equity structure of Grafiti and the reorganization as a result of
the spin-off of Grafiti from XTI Aerospace, Inc., ("XTI", formerly named Inpixon) for all operating results prior to December
27, 2023, as incorporated in the financial statements of Grafiti as of and for the year ended June 30, 2024. The historical financial
information of Grafiti was derived from the unaudited condensed consolidated financial statements of Grafiti as of and for the three months
ended September 30, 2024, and the audited consolidated financial statements of Grafiti as of and for the year ended June 30, 2024, included
in our filings with the SEC. The unaudited pro forma financial information has been prepared on a basis consistent with the financial
statements of Damon Motors and Grafiti, respectively. This information should be read together with the financial statements of Damon
Motors and related notes as well as the financial statements of Grafiti and related notes, the section titled
"Management's
Discussion and Analysis of Financial Condition and Results of Operations of Damon (Formerly, Grafiti Holding),
" "
"Management's
Discussion and Analysis of Financial Condition and Results of Operations of Damon Motors"
and other information included in
this prospectus, as applicable. The unaudited pro forma condensed combined and consolidated financial information is prepared using the
reporting currency of the United States Dollar.
The Business Combination was
accounted for using the acquisition method (as a reverse acquisition), with goodwill and other identifiable intangible assets recorded
in accordance with accounting principles generally accepted in the United States ("US GAAP" or "GAAP"), as applicable.
Under this method of accounting, Grafiti is treated as the "acquired" company for financial reporting purposes. Damon Motors
was determined to be the accounting acquirer because after the Business Combination, Damon Motors will control the Board of Directors,
management of the combined company, and the preexisting shareholders of Damon Motors have majority voting rights of the combined company.
For accounting purposes, the acquirer is the entity that has obtained control of another entity and, thus, consummated a business combination.
Under the acquisition method of accounting (as a reverse acquisition), Damon Motors's assets and liabilities were recorded at carrying
value and the assets and liabilities associated with Grafiti were recorded at estimated fair value as of the acquisition date. The excess
of the purchase price over the estimated fair values of the net assets acquired, if applicable, was recognized as goodwill. Significant
estimates and assumptions were used in determining the preliminary purchase price allocation reflected in the unaudited pro forma condensed
combined and consolidated financial statements. The process of valuing the net assets of Grafiti immediately prior to the Business Combination
for purposes of presentation within this unaudited pro forma condensed combined and consolidated financial information is preliminary.
As the unaudited pro forma condensed combined and consolidated financial statements have been prepared based on these preliminary estimates,
the final amounts recorded may differ materially from the information presented.
The unaudited pro forma condensed
combined and consolidated balance sheet as of September 30, 2024 combines the historical balance sheets of Damon Motors and Grafiti on
a pro forma basis as if the Business Combination and related transactions had been consummated on September 30, 2024. The unaudited pro
forma condensed combined and consolidated statement of operations for the three months ended September 30, 2024, and for the year ended
June 30, 2024 gives pro forma effect to the Business Combination and related transactions as if they had occurred on July 1, 2023, the
beginning of the earliest period presented.
These unaudited pro forma
condensed combined and consolidated financial statements are for informational purposes only. They do not purport to indicate the results
that would have been obtained had the Business Combination and related transactions actually been completed on the assumed date or for
the period presented, or which may be realized in the future. The pro forma adjustments are based on the information currently available
and the assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. Actual results may differ
materially from the assumptions within the accompanying unaudited pro forma condensed combined and consolidated financial information.
49
Description of the Spin-Off
On October 23, 2023, XTI and
Grafiti entered into a Separation & Distribution Agreement pursuant to which XTI contributed the assets and liabilities of Grafiti
UK, a wholly owned subsidiary of XTI, to the then newly formed XTI wholly owned subsidiary Grafiti. Following this contribution, all outstanding
common shares of Grafiti owned by XTI were transferred to a newly-created liquidating trust, titled the Grafiti Holding Inc. Liquidating
Trust (the "Trust") which holds the Grafiti common shares for the benefit of the participating XTI shareholders and certain
other XTI security holders of record as of December 27, 2023 (the "Record Date") who are hereby entitled to participate in
the spin-off distribution of Grafiti common shares following the effectiveness of the Form 10-12B registration statement which was declared
effective by the U.S. Securities and Exchange Commission on November 12, 2024. On November 12, 2024, prior to the closing of the Business
Combination,
the Trust Shares were delivered to participating Parent securityholders, on a
pro rata at a ratio of 1 for 50 resulting in the distribution of 3,536,746 Trust Shares to participating Parent securityholders.
Description of the Business Combination Agreement
On October 23, 2023, a Business
Combination Agreement was entered into among XTI, Grafiti, 1444842 B.C. Ltd., a British Columbia corporation and a newly formed wholly-owned
subsidiary of Grafiti ("Amalco Sub"), and Damon Motors, pursuant to which Damon Motors combined and merged with Amalco Sub
with Damon Motors continuing as the surviving entity.
The historical operations
of Damon Motors and Grafiti are the continued operations of Pubco, however, the historical operations of Grafiti will not form a material
part of Pubco's business. The surviving entity was renamed Damon Inc., and was approved for Direct Listing on the Nasdaq Global
Market. The common shares of Damon Inc. are expected to begin trading under the ticker symbol "DMN" on the Nasdaq Global Market
on November 18, 2024.
Pursuant to the Business Combination
Agreement, each share of Damon Motors common and preferred stock issued and outstanding immediately prior to the Effective Time were automatically
converted into becoming the right to receive a number of Pubco common shares (the "Consideration").
Pursuant to the Business Combination
Agreement, each warrant to purchase the common and preferred stock of Damon Motors at the consummation of the Business Combination ceased
to represent a right to acquire shares of Damon Motors common and preferred stock and are assumed to be converted into warrants to purchase
the common shares of Pubco.
Following the consummation
of the Business Combination, the holders of the historical outstanding capital stock of Damon Motors now own approximately 77.8% of the
outstanding capital stock of Pubco and approximately 81.5% on a fully diluted basis. Following the consummation of the Business Combination,
the holders of the historical outstanding capital stock of Grafiti now own approximately 22.2% of the outstanding capital stock of Pubco
and approximately 18.5% on a fully dilutive basis.
XTI Aerospace Inc. Convertible Note
Immediately following the
execution of the Business Combination Agreement, XTI Aerospace Inc. purchased a convertible note from Damon Motors in an aggregate principal
amount of $3,000,000 (the "Bridge Note") together with the Bridge Note Warrant (as defined below) pursuant to a private placement,
for a purchase price of $3,000,000. The Bridge Note has a 12% annual interest rate, payable in arrears on the maturity date of June 15,
2024. On June 15, 2024, Damon extended the maturity date of the Bridge Note to September 30, 2024. On September 11, 2024, Damon Motors
further extended the maturity date of the Bridge Note to October 31, 2024, subject to an additional tolling period of 30 days upon notice
by Damon Motors to the note holders, which was provided by Damon Motors on October 31, 2024, anticipating that the Business Combination
was going to be consummated in mid-November. The agreement states that the full principal balance and interest on the Bridge Note will
automatically convert into common shares of Damon Motors upon the public listing of Damon Motors or a successor issuer thereof on a national
securities exchange (a "Public Company Event"). The number of shares issued upon conversion due to a Public Company Event
will equal the quotient obtained by dividing (x) the outstanding principal and unpaid accrued interest on the date of a Public Company
Event (or within ten trading days of a direct listing), if any, by (y) the lesser of the then applicable conversion price or public company
event conversion price. The Bridge Note contains customary covenants relating to Damon Motors's financials and operations. XTI received
a five-year warrant to purchase 1,096,321 Damon Motors common shares in connection with the Bridge Note ("Bridge Note Warrant")
at an exercise price of $2.7364 as defined by the Bridge Note Warrant, in each case subject to adjustments for dividends, splits and subsequent
equity sales by Damon Motors. The Bridge Note Warrant contains a cashless exercise option if the warrant shares are not covered by an
effective registration statement within 180 days following the consummation of the Public Company Event, and also a full ratchet price
protection feature. Following the consummation of the Business Combination, the Bridge Note was converted into Pubco common shares upon
its consummation and the Bridge Note Warrant became exercisable for Pubco common shares. As of September 30, 2024, the Bridge Note is
included within the Convertible Notes balance on Damon Motors's historical balance sheet. The unaudited pro forma condensed combined
and consolidated financial statements include a pro forma adjustment for the conversion of these notes, as well as the Third Party Bridge
Notes and Warrants discussed below, to common equity of Pubco at the close of the Business Combination in adjustment D in Note 4.
50
Third Party Bridge Notes and Warrants
Damon Motors has issued convertible
promissory notes of an aggregate principal amount of $25,189,772 with a fair value of $46,533,359 ("Third Party Bridge Notes")
and 6,061,918 warrants ("Third Party Bridge Note Warrants") from third parties, inclusive of the Bridge Note from XTI. The
Third Party Bridge Notes have terms consistent with the Bridge Note from XTI. The Third Party Bridge Notes have an interest rate of 12%
per annum, payable in arrears on maturity, one year after the issuance date. Any principal which is not paid when due shall bear interest
at the rate of the lesser of (i) 16% per annum and (ii) the maximum amount permitted by the applicable law from the due date thereof until
the same is paid. The Third Party Bridge Notes have the same terms and conversions as all of the Company's convertible notes issued
subsequent to June 2023 which are also outstanding as of September 30, 2024 for Damon Motors. Each warrant related to the Third Party
Bridge Note Warrants is exercisable anytime for 1 common share of Damon Motors at an exercise price of $2.7364, which is equal to the
quotient of the valuation cap of $125,000,000 and the diluted capitalization on the closing date of the Third Party Bridge Notes. The
holder of the common share warrants can exercise the warrant either fully or partially at any time from issuance date until its expiry,
5 years from issuance date. The terms and conditions for the warrants issued subsequent to September 30, 2024, are the same as those issued
by Damon Motors during the three months ended September 30, 2024, and during the year ended June 30, 2024. Following the consummation
of the Business Combination, the Third Party Bridge Notes were converted into Pubco common shares upon its consummation and the Third
Party Bridge Note Warrants became exercisable for Pubco common shares. Of the Third Party Bridge Notes and Warrants, an aggregate principal
amount of $24,639,772 in notes with a fair value of $46,294,751 and 5,860,925 warrants were issued prior to September 30, 2024. The unaudited
pro forma condensed combined and consolidated financial statements include a pro forma adjustment for additional convertible promissory
notes with aggregate gross proceeds of $550,000 and 200,993 of associated common share purchase warrants which were issued subsequent
to September 30, 2024 (see adjustment
A
in Note 4).
Grafiti Promissory Note - Streeterville Capital, LLC
On June 26, 2024, Grafiti
and Streeterville Capital, LLC ("Streeterville") entered into a promissory note agreement (the "Grafiti Promissory Note")
for an amount up to $6,470,000 bearing an interest rate of 10% per annum and due 18 months after the issue date. In connection with the
close of the Business Combination, Streeterville will pay an aggregate amount of $5,000,000 in consideration for the Promissory Note of
which $1,300,000 was sent directly to Grafiti, $550,000 was sent directly to Damon Motors (see
'Grafiti Holding Note - Damon
Motors Inc.'
below) and $3,500,000 was initially sent to an escrow account. Of the remaining $1,470,000 under the Promissory
Note, $1,450,000 relates to original issue discount ("OID") and $20,000 relates to issuance costs to cover legal, accounting,
due diligence, monitoring and other transaction costs. Streeterville will be unconditionally obligated to release to Pubco the amount
held in escrow upon completion of the certain Business Combination Agreement, and listing of the combined company on a national securities
exchange. On September 18, 2024, Grafiti and Streeterville executed an amendment to the escrow agreement that allows for the release of
funds at the discretion of the investor even if the funding conditions have not been satisfied. On September 23, 2024, an additional $350,000
was released to Grafiti from the escrow account, of which $200,000 was loaned to Damon Motors on that date and will eliminate along with
the remainder of the promissory note accounted for within the pro forma adjustment J in Note 4. As of September 30, 2024, Grafiti included
the amount of proceeds received from Streeterville (amount not held in escrow) in its 'Long-term debt, net' financial statement
line item, net of the pro rated OID and issuance costs, at an amount of $1,974,316. The unaudited pro forma condensed combined and consolidated
financial statements include a pro forma adjustment for the $3,150,000 remaining in escrow as of September 30, 2024 which will soon be
released to the combined Company following the consummation of the merger (see adjustment
C
in Note 4).
Grafiti Holding Note - Damon Motors Inc.
On June 26, 2024, concurrent
with the Grafiti and Streeterville Capital, LLC promissory note described above, Grafiti Holding purchased from Damon Motors the Grafiti
Holding Note with an original principal amount of $350,000 (the "Grafiti Holding Note"). In accordance with the terms of the
Grafiti Holding Note, Grafiti Holding must loan to Damon Motors, at Damon Motors's request, additional funds up to an aggregate
principal amount, including the original principal amount, of $1,000,000. The Grafiti Holding Note accrues interest at a rate of 10% per
year. The debt and accrued and unpaid interest is due and payable the earlier of (a) December 31, 2024, (b) when declared due and payable
by Grafiti upon the occurrence of an event of default, or (c) within three business days following termination of the Business Combination
Agreement. Concurrent with the original principal amount provided to Damon Motors, Grafiti also loaned an additional $200,000 to Damon
Motors on June 28, 2024. On July 3, 2024, Damon Motors received an additional loan under the note in the aggregate amount of $396,000.
On September 25, 2024, Damon Motors and Grafiti amended the note agreement to increase the maximum aggregate principal amount able to
be funded from $1,000,000 to $1,150,000. On the same date, Grafiti loaned Damon Motors an additional $200,000. As of September 30, 2024,
the principal balance of the Grafiti Holding Note was $1,146,000 with interest accrued of $24,614.
51
The aggregate amount of $1,170,614
is included on the Damon Motors September 30, 2024 balance sheet within the 'Current portion of debt' financial statement
line item. Grafiti carried the loan receivable from Damon Motors in connection with this agreement on its September 30, 2024 balance sheet
at an amount of $907,897, which is net of the allowance for credit losses of $238,103, and recorded the related loan interest receivable
of $24,614 within the 'Prepaid expenses and other current assets' financial statement line item. The unaudited pro forma condensed
combined and consolidated financial statements include a pro forma adjustment for the elimination of the proceeds loaned from Grafiti
to Damon Motors, inclusive of the interest accrued through September 30, 2024, to account for the impact of this agreement following the
close of the Business Combination (see adjustment J in Note 4).
Third Party Subordinate Promissory Notes
On August 5, 2024, and August
11, 2024, Damon Motors issued promissory notes to arms-length parties both with principal amounts of $364,650 (CAD$500,000). The August
5, 2024, note is secured against future Scientific Research and Experimental Development ("SR&ED") tax credit refunds
expected to be received from 2024 year-end tax returns for 2024 submitted to the Canadian Revenue Authority ("CRA"). The August
11, 2024, note is secured against substantially all of the assets of Damon Motors and ranks pari passu with the note issued on August
6, 2024, and both promissory notes issued in August are ranked in subordination to the Promissory Note agreement entered into with Streeterville.
Both promissory notes (the "Subordinate Promissory Notes") accrue interest at a rate of 3% per month and mature on or before
November 15, 2024. These notes are included within the 'Current portion of debt' in Damon Motors's historical balance
sheet and remain in the unaudited pro forma condensed combined and consolidated financial statements as of September 30, 2024.
Third Party Short-Term Promissory Note
On October 9, 2024, the Company
issued a promissory note to arms-length parties with a principal amount of $200,000, net of the OID of $12,500. The note accrues interest
at a rate of 12% per annum and shall become due and payable in full on the earlier of (i) 60 days from the funds are advanced; or (ii)
five (5) business days following the completion of the liquidity event. The liquidity event refers to the consummation of the Business
Combination with Grafiti, following which Damon Motors will become a wholly owned subsidiary of Grafiti and Grafiti's securities
will become listed and trading on the Nasdaq, as discussed above. The unaudited pro forma condensed combined and consolidated financial
statements include a pro forma adjustment for these additional promissory notes issued with aggregate proceeds of $200,000, net of issuance
costs of $12,500 (see adjustments B and BB, respectively, in Note 4).
52
UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED
BALANCE SHEET
AS OF SEPTEMBER 30, 2024
Grafiti
(Historical)
Damon Motors
(Historical)
Subsequent Financing Transactions
Transaction Accounting Adjustments
Pro Forma Combined
Assets
Current Assets
Cash
$
175,292
$
113,549
$
550,000
A
$
3,150,000
C
$
3,538,841
200,000
B
(650,000
)
G
Accounts receivable, net of allowances
55,865
—
—
—
55,865
Note receivable, net of $238,103 allowance for credit losses
907,897
—
—
(907,897
)
J
—
Funding receivable
—
1,004,022
—
—
1,004,022
Prepaid expenses and other current assets
101,335
115,806
—
(24,614
)
J
192,527
Total Current Assets
1,240,389
1,233,377
750,000
1,567,489
4,791,255
Premises lease deposits
—
127,309
—
—
127,309
Property and equipment, net
2,276
941,807
—
—
944,083
Goodwill
—
—
—
2,216,491
I
2,216,491
Customer list
—
—
—
80,000
I
80,000
Other assets
265
—
—
—
265
Total Assets
$
1,242,930
$
2,302,493
$
750,000
$
3,863,980
$
8,159,403
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts payable and accrued liabilities
$
1,076,638
$
6,657,291
$
—
$
357,000
G
$
9,590,929
1,500,000
G
Customer deposits
—
476,404
—
—
476,404
Current portion of operating lease liabilities
—
363,640
—
—
363,640
Current portion of finance lease liabilities
—
7,329
—
—
7,329
Current portion of debt
—
2,507,214
—
(1,170,614
)
J
1,336,600
Deferred revenue
151,377
—
—
—
151,377
Promissory note - current, net of $12,500 unamortized discount
—
—
200,000
B
—
200,000
Convertible notes
—
46,294,751
238,608
A
(46,533,359
)
D
—
Total Current Liabilities
1,228,015
56,306,629
438,608
(45,846,973
)
12,126,279
Non-current portion of operating lease liabilities
—
175,493
—
—
175,493
Non-current portion of finance lease liabilities
—
178,008
—
—
178,008
Long-term debt, net
1,974,316
—
—
3,150,000
C
5,124,316
Other non-current liabilities
—
—
—
1,000,000
G
1,000,000
Total Liabilities
3,202,331
56,660,130
438,608
(41,696,973
)
18,604,096
Stockholders' Equity (Deficit)
Preferred shares without par value, unlimited shares authorized, 16,758,528 shares issued and outstanding as of September 30, 2024
—
71,590,087
—
(71,590,087
)
F
—
Common Stock - 4,615,384 shares authorized, issued and outstanding as of September 30, 2024
743,637
—
—
(743,637
)
E
—
Common shares without par value, unlimited shares authorized 13,761,506 shares issued and outstanding as of September 30, 2024
—
5,138,751
—
46,533,359
D
124,599,287
1,371,115
E
71,590,087
F
1,000,000
G
(3,330,516
)
H
2,296,491
I
Additional paid-in capital
627,478
16,933,294
311,392
A
(627,478
)
E
17,244,686
Accumulated other comprehensive (loss) income
(11,050
)
—
—
11,050
H
—
Accumulated deficit
(3,319,466
)
(148,019,769
)
—
(357,000
)
G
(152,288,666
)
(2,500,000
)
G
(1,650,000
)
G
3,319,466
H
238,103
J
Total Stockholders' Equity (Deficit)
(1,959,401
)
(54,357,637
)
311,392
45,560,953
(10,444,693
)
Total Liabilities and Stockholders' Equity
$
1,242,930
$
2,302,493
$
750,000
$
3,863,980
$
8,159,403
53
UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024
Grafiti
(Historical)
Damon Motors
(Historical)
Subsequent Financing Transactions
Transaction Accounting Adjustments
Pro Forma Combined
Revenues
$
101,969
$
—
$
—
$
—
$
101,969
Cost of Revenues
39,647
—
—
—
39,647
Gross Profit
62,322
—
—
—
62,322
Operating Expenses:
Research and development
—
57,221
—
—
57,221
Sales and marketing
43,322
174,166
—
—
217,488
Depreciation
—
67,248
—
—
67,248
General and administrative
224,614
790,027
—
—
1,014,641
Transaction costs
1,085,297
748,541
—
—
1,833,838
Amortization of intangibles
—
—
—
4,000
EE
4,000
Provision for credit losses
129,535
—
—
(129,535
)
HH
—
Foreign currency transaction loss
—
62,738
—
—
62,738
Total Operating Expenses
1,482,768
1,899,941
—
(125,535
)
3,257,174
Loss from Operations
(1,420,446
)
(1,899,941
)
—
125,535
(3,194,852
)
Other Income (Expense):
Interest (expense)/income, net
(144,094
)
—
—
—
(144,094
)
Change in fair value of financial liabilities
—
(4,657,388
)
—
4,657,388
DD
—
Finance expense
—
(854,846
)
(16,500
)
AA
755,494
FF
(353,227
)
(6,375
)
BB
(152,250
)
GG
—
(78,750
)
GG
Total Other Income (Expense)
(144,094
)
(5,512,234
)
(22,875
)
5,181,882
(497,321
)
Loss before tax
(1,564,540
)
(7,412,175
)
(22,875
)
5,307,417
(3,692,173
)
Income tax provision
—
—
—
—
—
Net Loss
$
(1,564,540
)
$
(7,412,175
)
$
(22,875
)
$
5,307,417
$
(3,692,173
)
Net Loss Per Share - Basic and Diluted
Basic and Diluted
(0.39
)
(0.54
)
(0.18
)
Weighted Average Shares Outstanding
Basic and Diluted
4,006,706
13,745,886
20,767,746
54
UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2024
Grafiti
(Historical)
Damon Motors
(Historical)
Subsequent Financing Transactions
Transaction Accounting Adjustments
Pro Forma Combined
Revenues
$
336,562
$
—
$
—
$
—
$
336,562
Cost of Revenues
82,084
—
—
—
82,084
Gross Profit
254,478
—
—
—
254,478
Operating Expenses:
Research and development
—
4,550,229
—
—
4,550,229
Sales and marketing
174,061
986,137
—
—
1,160,198
Depreciation
—
303,424
—
—
303,424
General and administrative
402,625
4,296,231
—
—
4,698,856
Gain from release of lease obligation, net
—
(42,297
)
—
—
(42,297
)
Share based compensation
627,478
—
—
—
627,478
Transaction costs
280,789
1,626,519
—
4,507,000
CC
6,414,308
Amortization of intangibles
—
—
—
16,000
EE
16,000
Provision for credit losses
108,568
—
—
(108,568
)
HH
—
Foreign currency transaction (gain)
—
(235,871
)
—
—
(235,871
)
Total Operating Expenses
1,593,521
11,484,372
—
4,414,432
17,492,325
Loss from Operations
(1,339,043
)
(11,484,372
)
$
—
(4,414,432
)
(17,237,847
)
Other Income (Expense):
Change in fair value of financial liabilities
—
(18,424,992
)
—
18,424,992
DD
—
Loss on debt settlement
—
(785,377
)
—
—
(785,377
)
Finance expense
(9,314
)
(3,273,507
)
(66,000
)
AA
1,859,574
FF
(2,451,247
)
(25,500
)
BB
(609,000
)
GG.
(12,500
)
BB
(315,000
)
GG
Total Other Income (Expense)
(9,314
)
(22,483,876
)
(104,000
)
19,360,566
(3,236,624
)
Loss before tax
(1,348,357
)
(33,968,248
)
(104,000
)
14,946,134
(20,474,471
)
Income tax provision
—
—
—
—
—
Net Loss
$
(1,348,357
)
$
(33,968,248
)
$
(104,000
)
$
14,946,134
$
(20,474,471
)
Net Loss Per Share - Basic and Diluted
Basic and Diluted
(0.37
)
(2.79
)
(0.99
)
Weighted Average Shares Outstanding
Basic and Diluted
3,600,001
12,180,571
20,767,746
55
NOTES TO UNAUDITED
PRO FORMA CONDENSED COMBINED AND CONSOLIDATED
FINANCIAL INFORMATION
Note 1. Basis of Presentation
The unaudited pro forma condensed
combined and consolidated financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings,
or cost savings that may be associated with the spin-off and the Business Combination. The unaudited pro forma condensed combined and
consolidated financial information is not necessarily indicative of what the actual results of operations and financial position would
have been had the spin-off and the Business Combination and related transactions taken place on the dates indicated, nor are they indicative
of the future consolidated results of operations or financial position of the post-combination company. They should be read in conjunction
with the historical financial statements and notes thereto of Damon Motors and Grafiti.
Unaudited Pro Forma Condensed Combined
and Consolidated Balance Sheet & Unaudited Pro Forma Pro Forma Condensed Combined and Consolidated Statement of Operations
The historical financial information
of Damon Motors was derived from the unaudited condensed consolidated financial statements of Damon Motors as of and for the three months
ended September 30, 2024, and the audited consolidated financial statements of Damon Motors as of and for the year ended June 30, 2024,
included elsewhere in this prospectus. The historical financial information of Grafiti consists of the carve-out financial statements
of Grafiti UK, as Grafiti is the parent non-operating holding company of Grafiti UK and the operations of Grafiti following the carve-out
from XTI on December 27, 2023, and was derived from the unaudited condensed consolidated financial statements of Grafiti as of and for
the three months ended September 30, 2024, and the audited financial statements of Grafiti as of and for the year ended June 30, 2024,
included elsewhere in this prospectus. See Note 4 for further information regarding the pro forma adjustments contemplated in calculating
the unaudited pro forma condensed combined and consolidated balance sheet as of September 30, 2024, and unaudited pro forma condensed
combined and consolidated statement of operations for the three months ended September 30, 2024, and for the year ended June 30, 2024.
Note 2. Accounting Policies and Reclassifications
Following the consummation
of the Business Combination, management will now perform a comprehensive review of the two entities' accounting policies. As a result
of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have
a material impact on the financial statements of Pubco. Based on its initial analysis, management did not identify any differences that
would have a material impact on the unaudited pro forma condensed combined and consolidated financial information. As a result, the unaudited
pro forma condensed combined and consolidated financial information does not assume any differences in accounting policies.
Note 3. Estimated Purchase Price Consideration
Estimated purchase price of
$337,090 related to the Business Combination is comprised of the following components:
Equity consideration
$
337,090
Total consideration
$
337,090
The estimated fair value of
common shares of $337,090 included in the total equity consideration is based on the income and market approach valuation methods. The
valuation takes the average value of the discounted cash flow analysis under the income approach, guideline trading multiples under the
market approach, and guideline transaction multiples under the market approach.
The Business Combination is
considered a reverse acquisition. As such, the acquisition-date fair value of the consideration transferred is calculated based on the
number of equity interests Damon Motors would have had to issue to shareholders of Grafiti to obtain the same ownership interest in Pubco.
Any excess of the consideration transferred was allocated to goodwill as shown in adjustment I.
56
Note 4.
Adjustments to Unaudited Pro Forma
Condensed Combined and Consolidated Financial Information
The unaudited pro forma condensed
combined and consolidated financial information has been prepared to illustrate the effect of the Business Combination and related transactions
and has been prepared for informational purposes only.
The following unaudited pro
forma condensed combined and consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X. The
unaudited pro forma condensed combined and consolidated financial information has been prepared to illustrate the effect of the Business
Combination and related transactions and has been prepared for informational purposes only. The Company includes subsequent financing
transactions and transaction accounting adjustments in the unaudited pro forma condensed combined and consolidated financial information
as if they had occurred as of September 30, 2024.
The pro forma basic and diluted
earnings per share amounts presented in the unaudited pro forma condensed combined and consolidated statement of operations are based
upon the number of Pubco Common shares outstanding, assuming the Business Combination and related transactions occurred on July 1, 2023.
Adjustments related to Subsequent Financing Transactions of Grafiti
and Damon Motors to Unaudited Pro Forma Condensed Combined and Consolidated Balance Sheet
The pro forma adjustments
for subsequent financing transactions represent significant transactions completed by Grafiti and Damon Motors subsequent to September
30, 2024 as follows:
A. To account for Damon Motors's
issuance of convertible promissory notes that were issued with an aggregate total of 200,993 warrant shares on October 8, 2024 and October
18, 2024, and aggregate gross proceeds received of $550,000. The convertible notes consist of funding from certain investors who were
issued common share purchase warrants to subscribe for and purchase Damon Motors common shares that were entered into subsequent to September
30, 2024, and were determined to be equity-classified warrants. The convertible notes are expected to be converted to equity at the close
of the Business Combination and are subsequently accounted for within the pro forma adjustment in
Note D
. At inception, the proceeds
were allocated between the convertible notes issued and the associated warrants based on the residual method. The fair value of the warrants
was determined to be $311,392 which was recorded within the 'Additional paid-in capital' financial statement line item, and
the residual of $238,608 was allocated to the value of the convertible notes and recorded within the 'Convertible notes' financial
statement line item.
B. To record proceeds received,
net of issuance costs of $12,500, from the promissory note issued by Damon Motors on October 9, 2024 in the amount of $200,000. The note
accrues interest at a rate of 12% per annum and becomes due and payable in full on the earlier of (i) 60 days from the funds are advanced;
or (ii) five (5) business days following the completion of the liquidity event
1
(see
Note BB
).
Transaction Accounting Adjustments to Unaudited Pro Forma Condensed
Combined and Consolidated Balance Sheet
The transaction accounting
adjustments included in the unaudited pro forma condensed combined and consolidated balance sheet as of September 30, 2024 are as follows:
C. To record proceeds of $3,150,000,
net of the pro rated OID, for Grafiti in connection with the Grafiti Promissory Note dated June 26, 2024, whereby $3,500,000 of the initial
principal amount was placed into escrow to be released to PubCo at the close of the Business Combination. On September 18, 2024, Grafiti
and Streeterville executed an amendment to the escrow agreement that allows for the release of funds at the discretion of the investor
even if the funding conditions have not been satisfied. On September 23, 2024, $350,000 of the amount held in escrow was released to Grafiti,
of which $200,000 was loaned to Damon Motors on that date and will eliminate along with the remainder of the promissory note accounted
for within the pro forma adjustment in Note J. The note bears interest at an annual rate of 10% and the note shall be due 18 months after
the close of the Business Combination. The $1,850,000 of aggregate proceeds to-date were received by Grafiti prior to September 30, 2024,
and therefore the related obligation is included in the 'Long-term debt' financial statement line item on Grafiti's
September 30, 2024 balance sheet at an amount of $1,974,316, which is net of the unamortized pro rated OID and issuance costs.
1
A liquidity event is defined as the business combination with
Grafiti Holding Inc ("Grafiti"), following which Damon Motors will become a wholly owned subsidiary of Grafiti and Grafiti's
securities will become listed and trading on the Nasdaq.
57
D. To convert all of Damon
Motors's convertible notes outstanding as of September 30, 2024 and those related to subsequent financing transactions described
above, inclusive of $755,494 of accrued interest thereon (see adjustment in Note FF), and the related warrants issued to common equity
of Pubco at the close of the Business Combination, which had a total fair value of $46,533,359 when aggregated as of September 30, 2024.
The previously incurred losses recognized for these instruments due to their change in fair value for both the three months ended September
30, 2024, and year ended June 30, 2024, is accounted for within the pro forma adjustment in Note DD.
E. To convert all of Grafiti's
common shares of $1,371,115 to common equity of Pubco at the close of the Business Combination, which is inclusive of the $627,478 of
share-based compensation expense recorded to Additional paid-in capital of Grafiti for its stock options which were granted on June 11,
2024 and were exercised on various dates between August 21, 2024 and September 4, 2024.
F. To convert all Damon Motors's
Preferred Shares of $71,590,087 to common equity of Pubco at the close of the Business Combination.
G. Represents the amount of
total estimated transaction costs expected which were expensed at the close of the Business Combination of $4,507,000, of which $357,000
and $4,150,000 was estimated to have been incurred by Grafiti and Damon Motors in connection with the Business Combination, respectively.
These costs are inclusive of costs related to the transaction (advisory, banking, printing, legal and accounting fees, as well as employee
incentive amounts incurred in connection to the Business Combination).
Grafiti estimated transaction
costs of $357,000 to be incurred subsequent to September 30, 2024 will be paid upon the agreed upon payment terms with the third parties
and the adjustment is recorded within 'Accounts payable and accrued liabilities'. Damon Motors's estimated transaction
costs of $200,000 to be incurred subsequent to September 30, 2024 will be paid upon the agreed upon payment terms with the third parties
and the adjustment is recorded within 'Accounts payable and accrued liabilities';
$1,300,000 in costs are expected
to be paid in registered securities in three installments starting 90 days following the close of the Business Combination and the adjustment
is recorded within 'Accounts payable and accrued liabilities'; $1,000,000 in costs are expected to be paid in cash thirteen
months following the close of the Business Combination which is recorded within 'Other non-current liabilities' financial
statement line item; $1,000,000 in costs were paid at the close of the Business Combination related to equity issuances of which the adjustment
is recorded in 'Common Shares without par value' and costs for advisory fees of $650,000 that was paid immediately upon close
of the Business Combination for which the adjustment is recorded within 'Cash'.
H. Reflects the eliminations
of Grafiti's historical accumulated deficit and accumulated other comprehensive loss as an adjustment to additional paid-in capital
as part of the reverse acquisition.
58
I. Represents adjustments
for the estimated preliminary purchase price allocation for the Business Combination. The preliminary calculation of total consideration
is presented below as if the Business Combination was consummated on September 30, 2024:
Fair Value
Equity consideration
$
337,090
Total consideration
$
337,090
Assets acquired:
Cash and cash equivalents
$
175,292
Accounts receivable
55,865
Note receivable, net of $238,103 allowance for credit losses
907,897
Prepaid expenses and other current assets
101,335
Property and equipment
2,276
Other assets
265
Customer list
80,000
Goodwill
2,216,491
Total assets acquired
3,539,421
Liabilities assumed:
Accounts payable
972,125
Accrued liabilities
104,513
Deferred revenue
151,377
Fair value of debt assumed
1,974,316
Total liabilities assumed
3,202,331
Estimated fair value of net assets acquired
$
337,090
In connection with the Business
Combination, the Company will recognize approximately $80,000 of identifiable intangible assets and $2,216,491 of goodwill, which represents
the excess purchase price over fair value of identifiable net assets acquired, pursuant to the preliminary purchase price allocation.
Goodwill will not be amortized, but instead will be tested for impairment at least annually or more frequently if certain indicators are
present. In the event that the value of goodwill or other intangible assets have become impaired, an accounting charge for impairment
during the period in which the determination is made may be recognized. The goodwill is not anticipated to be deductible for tax purposes.
In addition, the Company recorded an adjustment to common shares of $2,296,491 to reflect the value of the consideration for the transaction
pursuant to the additional goodwill and intangible assets identified in the preliminary purchase price allocation.
Below is a summary of intangible
assets identified and acquired in the Business Combination based on the preliminary purchase price allocation:
Identified Intangible Assets
Fair Value
Useful Life
(Years)
Customer list
$
80,000
5
Total
$
80,000
J. Reflects the intercompany
elimination of the promissory note secured by Damon Motors from Grafiti, in connection with the Grafiti Promissory Note, following the
close of the Business Combination. As of September 30, 2024, Damon Motors had received $1,170,614, inclusive of the interest accrued,
from Grafiti in connection with the promissory note agreement dated June 26, 2024. As of September 30, 2024, Grafiti carried a loan receivable
of $907,897, net of the allowance for credit losses of $238,103, and interest receivable of $24,614 included in the 'Prepaid expenses
and other current assets' financial statement line item, in connection with this agreement.
59
Adjustments related to Subsequent Financing Transactions of Grafiti
and Damon Motors to Unaudited Pro Forma Condensed Combined and Consolidated Statements of Operations
The adjustments related to
subsequent financing transactions of Grafiti and Damon Motors included in the unaudited pro forma condensed combined and consolidated
statements of operations for the year ended June 30, 2024 and for the three months ended September 30, 2024 are as follows:
AA. To record interest incurred
for the three months ended September 30, 2024, on Damon Motors convertible promissory notes issued subsequent to September 30, 2024 disclosed
in adjustment A for an amount of $16,500 assuming the convertible promissory notes had been issued on July 1, 2023. Additionally, to record
interest incurred for the year ended June 30, 2024 on Damon Motors convertible promissory notes issued subsequent to September 30, 2024
disclosed in adjustment A for an amount of $66,000 assuming the convertible promissory notes had been issued on July 1, 2023. This incremental
interest expense is also eliminated with the previously incurred interest expense included in Damon Motors's consolidated statement
of operations for the year ended June 30, 2024, through adjustment FF.
BB. To record interest incurred
for the three months ended September 30, 2024 on Damon Motors promissory notes issued subsequent to September 30, 2024 disclosed in adjustment
B
for an amount of $6,375, assuming the promissory notes had been issued on July 1, 2023. Additionally, to record interest incurred
for the year ended June 30, 2024 on Damon Motors promissory notes disclosed in adjustment
B
for an amount of $25,500, and the related
issuance costs of $12,500, assuming the promissory notes had been issued on July 1, 2023.
Transaction Accounting Adjustments to Unaudited Pro Forma Condensed
Combined and Consolidated Statement of Operations
The transaction accounting
adjustments included in the unaudited pro forma condensed combined and consolidated statement of operations for the year ended June 30,
2024 and for the three months ended September 30, 2024 are as follows:
CC. Reflects the estimated
transaction costs of $4,507,000 to be expensed as if incurred on July 1, 2023, the date the Business Combination occurred for the purposes
of the unaudited pro forma condensed combined and consolidated statement of operations. This is a non-recurring item. Below represents
a summary of the transaction costs associated with the Business Combination.
Grafiti Transaction Costs:
Third party fees (legal, accounting, investment, etc.)
$
357,000
Estimated Grafiti transaction costs
357,000
Damon Motors Transaction Costs:
Third party fees (legal, accounting, investment, etc.)
3,500,000
Advisory Fees
650,000
Estimated Damon Motors transaction costs
4,150,000
Total Estimated Transaction Costs
$
4,507,000
None of the transaction costs
above have been incurred as of September 30, 2024. As such, $4,507,000 was expensed on the unaudited pro forma condensed consolidated
statement of operations for the year ended June 30, 2024. These costs will not affect the Company's income statement beyond 12 months
after the acquisition date.
DD. Represents adjustment
to remove the loss due to the change in fair value related to Damon Motors's convertible notes and SAFE financial liabilities, as
these instruments are assumed to have been converted into common equity as if the Business Combination had taken place on July 1, 2023.
For the year ended June 30, 2024, Damon Motors recorded a loss of $13,011,887, a loss of $592,543 for their convertible notes and SAFE
financial liabilities, and a loss of $4,820,562 on warrant liabilities, respectively, for a total adjustment of $18,424,992. For the three
months ended September 30, 2024, an adjustment for the loss incurred of $4,657,388 was also presented as the related instruments are assumed
to have been converted into common equity as if the Business Combination had taken place on July 1, 2023.
60
EE. Represents incremental
adjustments to record amortization of intangible assets acquired as if the Business Combination had taken place on July 1, 2023. The following
table is a summary of information related to certain intangible assets acquired, including information used to calculate the amortization
expense for each period presented:
Identified Intangible Assets
Fair Value
Years of
Amortization
For the
Three Months Ended
September 30,
2024
For the Year Ended
June 30,
2024
Customer list
$
80,000
5
$
4,000
$
16,000
Total amortization expense
$
4,000
$
16,000
FF. Represents adjustment
to eliminate interest expense on the convertible notes outlined in adjustment A and adjustment AA for the three months ended September
30, 2024 and for the year ended June 30, 2024 of $755,494 and $1,859,574, respectively, as these instruments are assumed to have been
converted into common equity as if the Business Combination had taken place on July 1, 2023.
GG. Represents adjustment
to record: (1) the amortization of the unamortized prorated debt discount and issuance costs of $152,250; and (2) the interest incurred
of $78,750 related to the amount held in escrow to be released to Pubco upon completion of the certain Business Combination Agreement,
and listing of the combined company on a national securities exchange under the terms of the Grafiti Promissory Note with Streeterville
LLC as outlined in adjustment C for the three months ended September 30, 2024. Additionally, adjustment GG represents adjustment to record:
(1) the amortization of the unamortized prorated debt discount and issuance costs of $609,000; and (2) the interest incurred of $315,000
related to the amount held in escrow to be released to Pubco upon completion of the certain Business Combination Agreement, and listing
of the combined company on a national securities exchange under the terms of the Grafiti Promissory Note with Streeterville LLC as outlined
in adjustment C for the year ended June 30, 2024.
HH. Represents an adjustment
to eliminate the current expected credit loss provision recorded for the Grafiti Promissory Note loaned to Damon Motors outlined in Adjustment
J
in the amounts of $129,535 and $108,568 for the three months ended September 30, 2024 and for the year ended June 30, 2024, respectively,
as this financing will become an intercompany loan upon closing of the Business Combination.
Note 5. Net Loss per Share
Net loss per share was calculated
using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination
and the related transactions, assuming the shares were outstanding since July 1, 2023. As the Business Combination and the related transactions
are being reflected as if they had occurred at the beginning of the earliest period presented, the calculation of weighted average shares
outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Business Combination and related
transactions have been outstanding for the entirety of all periods presented.
The unaudited pro forma condensed
combined and consolidated financial information has been prepared for the three months ended September 30, 2024 and for the year ended
June 30, 2024:
Three Months Ended
September 30,
2024
(1)
Year Ended
June 30,
2024
(1)
Pro forma net loss
$
(3,692,173
)
$
(20,474,471
)
Weighted average shares outstanding - basic and diluted
20,767,746
20,767,746
Pro forma net loss per share - basic and diluted
$
(0.18
)
$
(0.99
)
Excluded securities:
(2)(3)
Options
1,942,161
1,942,161
Warrants
2,186,498
2,186,498
(1)
Pro forma net loss per share includes the related pro forma adjustments as referred to within the section "Unaudited Pro Forma Condensed Combined and Consolidated Financial Information."
(2)
The potentially dilutive outstanding securities were excluded from the computation of pro forma net loss per share, basic and diluted, because their effect would have been anti-dilutive.
(3)
The potentially dilutive outstanding securities of Damon Motors to be exchanged for securities of Pubco are adjusted to reflect the exchange ratio associated with the Business Combination.
61
Management's
Discussion and Analysis of Financial Condition
and Results of Operations OF Damon (FOrMERLY, GRAFITI HOLDING)
The following discussion
and analysis of the financial condition and results of operations should be read in conjunction with the accompanying interim unaudited
condensed consolidated financial statements of Damon (formerly, Grafiti Holding) as of September 30, 2024, consolidated financial statements
of Grafiti Holding for the fiscal years ended June 30, 2024, 2023 and 2022, and related notes included elsewhere in this prospectus. Some
of the information contained in this discussion and analysis or set forth elsewhere, including information with respect to its plans and
strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions.
You should read the "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors" for a discussion
of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
Unless otherwise indicated
herein, the following management's discussion and analysis provides information concerning the consolidated financial condition
and results of operations of Grafiti Holding and its subsidiaries prior to the Closing of Business Combination.
References to "Fiscal
2024," "Fiscal 2023" and "Fiscal 2022" are to Grafiti Holding's fiscal years ended June 30, 2024,
2023 and 2022, respectively.
Overview of Our Business
Our Motorcycle Development and Manufacturing
Business Through Damon Motors
We, through our wholly-owned
subsidiary Damon Motors and its subsidiaries, design and produce motorcycles aimed at transforming the motorcycle industry by building
a smart and technologically advanced motorcycle. Damon Motors is developing the technology and investing in the capabilities to lead the
industry transformation in the high-performance electric motorcycle market. With decades of combined management and engineering experience
across the team's careers, and a commitment to low carbon personal mobility solutions, Damon Motors is introducing existing enthusiasts
to high-performance electric products while bringing new riders to the motorcycle community with first of its kind advances in zero emissions
motorcycle performance, safety, connectivity and AI.
Founded in 2017, Damon Motors
started reimagining the future of motorcycling by means of advanced safety design, electric vehicle powertrain technology and user experience.
In 2019, Damon Motors took its first alpha prototype motorcycles and safety systems into the field to test the concept. In 2021, Damon
Motors expanded its operations and expertise with an R&D facility in San Rafael, California to accelerate the engineering and development
of its HyperDrive platform drive unit and the HyperSport motorcycle. Through core technology advancements, Damon Motors electric motorcycles
are in prototype phase of product validation.
Damon Motors's electric
vehicles are developed with a set of proprietary design principles that elevate the brand, deliver differentiated riding experiences and
bring emotion to electric propulsion. The initial product portfolio of motorcycle models will be built upon and utilize a single powertrain
platform called HyperDrive™. As a patented, monocoque-constructed battery-chassis, HyperDrive houses a proprietary 150 kW 6-phase
liquid cooled IPM motor-gearbox and proprietary electronics. This platform approach establishes a capital-efficient path to grow the product
line to meet a wide range of future segments and price points, while also supporting a wide range of future motorcycle models and power
sizes that share as much as 85 percent common parts. By using the frame of the battery as the motorcycle's chassis, HyperDrive also
achieves valuable weight and cost reduction advantages. With 150 kW of power at its disposal, HyperDrive has been specifically designed
to compete with the performance of market leaders in the high-performance motorcycle market, whether internal combustion or electric.
Thanks to the energy modularity designed into it, HyperDrive-based motorcycles can be detuned in power, energy and thus cost to support
500 – 1500cc power equivalent classes of motorcycles in both the North American and European markets, with price points ranging
from $20,000 - $80,000.
62
The HyperDrive platform is
contrasted by the smaller, less powerful and lower cost HyperLite platform, currently in its early design phase. HyperLite will be developed
using a very similar design architecture as HyperDrive, enabling the production of a range of light weight, low to medium cost motorcycles
and scooters with milder levels of horsepower that are more common in overseas and developing markets. With these two platforms paired
with Damon Motors's three patented cornerstone technologies, CoPilot™, Shift™ and its AI-enabled cloud platform. Damon
Motors's long-term objective is to build a premium, high-tech, electric motorcycle company that rivals the largest incumbents in
both profit and annual volume, by providing a technologically enhanced riding experience that is not currently available from other manufacturers.
CoPilot provides a novel rider
assistance and warning system integrated into the motorcycle. Shift allows the handlebars and foot pegs to mechatronically adjust on the
fly, addressing issues of ergonomic comfort and allowing users to select different riding positions for changing conditions such as a
lower, more aerodynamic position for highway use or a more upright position for urban use. Its AI-enabled cloud will collect environmental
and situational data that, paired with over-the-air software updates, can drive a continual loop of collision warning improvements, with
an aim to further reduce accident probability over time.
The commercial production
of Damon Motors's motorcycles is expected to commence after passing various internal and external tests and undergoing a self-certification
process required for US-bound vehicle homologation. These tests include: the completion of Damon Motors's ride quality and long-term
durability testing, completion of FCC Title 47 certification for the onboard charger, completion of UN 38.3 battery testing, completion
of Damon Motors's internal battery testing, extreme temperature operation verification, brake testing per FMVSS, and an internal
and external review of FMVSS compliance with Damon Motors engineering subcontractor TUV of Germany.
Our SAVES Distribution Business Through
Grafiti Limited
We, through our wholly-owned
subsidiary Grafiti Limited, distribute in the UK and certain other European countries data analytics and visualization software products
referred to as "SAVES" primarily for scientists and engineers. Grafiti Limited's products can be downloaded to a user's
desktop. These products help scientific research in the health and life sciences domain in the discovery of new drugs, in the study of
the efficacy of established drugs and therapies, and in epidemic propagation research, among other applications. Engineers use our products
for a multitude of applications which include, but are not limited to, conducting surface modelling analysis and curve fitting in order
to design new engineering processes, studying signal attenuation and propagation in radio engineering. Potential automobile and motorcycle
applications could include surface panel design for aerodynamics, aesthetic symmetry, and calculated asymmetry among others. We believe
the Grafiti Limited regression analysis product could also be used for predicting vehicle sharing demand and pricing trends in various
markets based on a wide range of variables.
Grafiti Limited's strategy
is to build a broader, long term customer base by increasing its sales of Grafiti Limited's product offerings which will include
cloud and Macintosh compatible data analytics and statistical visualization software products. We believe this will enable the Grafiti
Limited business to focus on generating more recurring revenues in the future.
Grafiti Limited was formed
by the Parent on May 13, 2020 as a distribution arm for its SAVES products in the UK market and part of the European market.
63
Recent Events
Trust Shares Distribution in connection
with Spin-Off of Grafiti Holding
On October 23, 2023, Parent
and Grafiti Holding entered into a Separation and Distribution Agreement, pursuant to which all of the outstanding shares of Grafiti Limited
were transferred to Grafiti Holding, such that on December 26, 2023, Grafiti Limited became a wholly-owned subsidiary of Grafiti Holding.
Grafiti Limited was formed by the Parent on May 13, 2020 as a distribution arm for its SAVES products in the United Kingdom market and
part of the European market. Following the reorganization, and in connection with the spin-off of Grafiti Holding from Parent, on December
27, 2023 (the "record date"), all of the outstanding common shares of the Company (the "Trust Shares") were transferred
to the Trust, to be held for the benefit of holders of the Parent's common stock, preferred stock and those outstanding warrants
that are contractually entitled to participate in the distribution, on a pro rata basis as of the record date (collectively, the "participating
Parent securityholders"). On November 12, 2024, the Trust Shares were delivered to participating Parent securityholders, on a pro
rata at a ratio of 1 for 50 resulting in the distribution of 3,536,746 Trust Shares to participating Parent securityholders.
Completion of Business Combination
On October 23, 2023, the Company,
Parent, Damon Motors, and 1444842 B.C. LTD ("Amalco Sub") entered into a Business Combination Agreement (as amended by the
First Amendment to the Business Combination Agreement dated June 18, 2024 and the Second Amendment to the Business Combination Agreement
dated September 26, 2024, the "Damon Business Combination Agreement"). On November 13, 2024, Damon Motors and Amalco Sub amalgamated
to continue as a wholly owned subsidiary of the Company (the "Amalgamation"). Following the Amalgamation, the Company was
renamed "Damon Inc." (also referred to herein as the "combined company"). Pursuant to the Plan of Arrangement
under the laws of British Columbia, as contemplated in the Damon Business Combination Agreement, securityholders of Damon Motors exchanged
their securities of Damon Motors for amalgamation consideration consisting of:
(i) 14,764,803 common shares
of the Company, also known as "Subordinate Voting Shares,"
(ii) 1,391,181 multiple voting
shares of the Company, which are convertible into common shares of the Company on a 1 for 1 basis, issued to Jay Giraud, the combined
company's CEO and director at the Closing, and its controlled entity,
(iii) warrants to purchase
2,186,498 common shares of the Company at an exercise price of $7.81 per share, with terms substantially similar to those of Damon Motors's
warrants, issued to former Damon Motors warrant holders, and
(iv) options to purchase 1,942,127
common shares at exercise prices between $0.57 and $12.73, issued to former Damon Motors optionholders under the Company's equity
incentive plans.
The exchanges are based on
an exchange ratio determined according to the formula in the Damon Business Combination Agreement.
The combined company commenced
trading on the Nasdaq Global Market on November 18, 2024, under the symbol "DMN".
As a result of the closing
of the Business Combination, a change in control of the Company has occurred, and Damon Motors became a wholly owned subsidiary of the
Company. Following the issuance of the amalgamation consideration pursuant to the Plan of Arrangement, the Company's security holders
immediately prior to the effective time of the Amalgamation (the "Effective Time") retained beneficial ownership of approximately
18% of the outstanding common shares of the Company on a fully-diluted basis and Damon Motors security holders immediately prior to the
Effective Time acquired beneficial ownership of common shares amounting to approximately 82% of the outstanding common shares of the Company
on a fully-diluted basis.
64
Following the resignation
of Jay Giraud from all officer and director positions with the Company as of December 4, 2024, all the multiple voting shares held by
Mr. Giraud and his wholly-owned company were converted automatically into common shares on a one-for-one basis. After giving effect to
the conversion and as of the date of this filing, the Company has 22,030,884 common shares outstanding, with no multiple voting shares
remaining outstanding.
Creation of Multiple Voting Shares
and Adoption of Amended Articles
Prior to the Effective Time,
on November 12, 2024, the Company's shareholders authorized amendments to the Company's articles. These amendments included,
among other things, the creation of a class of Multiple Voting Shares and the establishment of the rights and restrictions applicable
to the Multiple Voting Shares and common shares. On the same date, the Company filed a Notice of Alteration with the Registrar of Companies
for the Province of British Columbia to amend its Notice of Articles to reflect the creation of the Multiple Voting Shares.
Financing Agreements
Streeterville June 2024 Note –
Amended Security Agreements
On November 13, 2024, prior
to the closing of the Business Combination, (a) the Company entered into an amendment to the Security Agreement, dated June 26, 2024 between
the Company and Streeterville Capital LLC delivered in connection with the a secured promissory note in an aggregate original principal
amount of $6,470,000 (the "Streeterville Note") issued to Streeterville Capital, LLC ("Streeterville"), whereby
the Company granted to Streeterville a security interest in all right, title, interest, claims and demands to its assets, and (b) Damon
Motors entered into a security agreement with Streeterville, whereby Damon Motors granted to Streeterville a security interest in all
right, title, interest, claims and demands to its assets, and (c) Damon Motors entered into an IP security agreement with Streeterville,
whereby Damon Motors granted to Streeterville a security interest in certain of its intellectual property. Streeterville's security
over the Company's assets ranks pari passu with the security granted under the November 2024 Debt Financing (as described in greater
detail below) pursuant to an intercreditor agreement dated as of November 13, 2024 (the "Intercreditor Agreement").
November 2024 Debt Financing
East-West
On November 13, 2024, the
Company and East West Utah limited liability company, an affiliate of Streeterville, entered into a note purchase agreement, pursuant
to which the Company agreed to sell, and East West agreed to purchase, a secured promissory note in an aggregate original principal amount
of $8,385,000 (the "East West Note") (the "East West Financing"). The East West Note carries an original issue
discount of $1,885,000. For as long as the East West funding conditions (as defined in the East West Note) are satisfied on each applicable
funding date (unless waived by East West), the proceeds from the East West Note will be funded in tranches in accordance with the following
schedule: (a) $2,000,000 on January 31, 2025, (b) $1,500,000 on April 30, 2025, (c) $1,500,000 on July 31, 2025, and (d) $1,500,000 on
September 30, 2025.
For each $1.00 in funds the
Company raises in the sale of any of its equity shares in a financing for the purpose of raising capital as part of any public offering
of its equity securities pursuant to a registration statement, at East West's sole election, East West may reduce its next funding
obligation by $0.50. The East West Note will mature on the date that is 18 months from issuance of the initial tranche of funding thereunder.
For each $1.00 funded by lender under the East West Note, an additional $0.29 in original issue discount will be added to the outstanding
balance. It bears interest at 10% per annum, which will increase to 22% or the maximum permitted by applicable law upon the occurrence
of an event of default (as defined in the East West Note). In such an event, East West may declare the outstanding balance, multiplied
by 110%, immediately due. Upon a change of control, the balance, multiplied by 110%, will also become due.
Beginning on the date that
is the earlier of (i) thirteen months from the closing date of the Business Combination and (ii) January 1, 2026, East West shall have
the right to require the Company to redeem up to an aggregate of one sixth of the initial principal balance of the East West Note plus
any interest accrued thereunder each month (each monthly exercise, a "East West Monthly Redemption Amount") by providing written
notice to the Company, provided however that if East West does not exercise the East West Monthly Redemption Amount in a corresponding
month, then such East West Monthly Redemption Amount shall be available for East West to redeem in any future month in addition to such
future month's East West Monthly Redemption Amount.
65
In connection with the East
West Financing, Damon Motors Corporation, a Delaware corporation and a wholly-owned subsidiary of Damon (the "Damon Motors Subsidiary"),
and Damon Motors each entered into a guaranty, dated as of November 13, 2024, whereby Damon Motors and the Damon Motors Subsidiary guaranteed
the performance of the Company's obligations under the East West Note.
Additionally,
the Company's obligations under the East West Note are secured. On November 13, 2024, prior to the closing of the Business Combination,
(a) Damon entered a security agreement with East West whereby Damon granted to East West a security interest in all right, title, interest,
claims and demands to its assets, and (b) Damon Motors entered into a security agreement with East West whereby Damon Motors granted to
East West a security interest in all right, title, interest, claims and demands to its assets, and (c) Damon Motors entered into an IP
security agreement with East West whereby Damon Motors granted to East West a security interest in certain of its intellectual property.
Braebeacon
On
November 13, 2024, the Company and Braebeacon Holdings Inc. ("BHI") entered into a note purchase agreement (the "BHI
Note Purchase Agreement") pursuant to which the Company agreed to sell, and BHI agreed to purchase, a secured promissory note in
an aggregate original principal amount of $8,385,000 (the "BHI Note") (the "BHI Financing"; together with
the East West Financing, the "November 2024 Debt Financing"). The BHI Note carries an original issue discount of $1,885,000.
For as long as the BHI funding conditions (as defined in the BHI Note) are satisfied on each applicable funding date (unless waived by
BHI, the proceeds from the BHI Note will be funded in tranches in accordance with the following schedule: (a) $2,000,000 on January
31, 2025, (b) $1,500,000 on April 30, 2025, (c) $1,500,000 on July 31, 2025, and (d) $1,500,000 on September 30, 2025.
Each
$1.00 in funds the Company raises in the sale of any of its equity shares in a financing for the purpose of raising capital as part
of any public offering of its securities pursuant to a registration statement, at BHI's sole election, BHI may reduce its next funding
obligation by $0.50. For each $1.00 funded by Lender under the BHI Note, an additional $0.29 in original issue discount will
be added to the outstanding balance. The BHI Note will mature on 18 months from issuance of the initial tranche of funding thereunder.
It bears interest at 10% per annum, which will increase to 22% or the maximum permitted by applicable law upon the occurrence
of an event of default (as defined in the BHI Note). In such an event, BHI may declare the outstanding balance, multiplied by 110%, immediately
due. Upon a change of control, the balance, multiplied by 110%, will also become due.
Beginning
on the date that is the earlier of (i) thirteen months from the closing date of the Business Combination and (ii) January 1, 2026, BHI
shall have the right to require the Company to redeem up to an aggregate of one sixth of the initial principal balance of the BHI Note
plus any interest accrued thereunder each month (each monthly exercise, a "BHI Monthly Redemption Amount") by providing written
notice to the Company, provided however that if BHI does not exercise the BHI Monthly Redemption Amount in a corresponding month, then
such BHI Monthly Redemption Amount shall be available for BHI to redeem in any future month in addition to such future month's BHI
Monthly Redemption Amount.
In
connection with the BHI Financing, the Damon Motors Subsidiary and Damon Motors, each entered into a guaranty, dated as of November 13,
2024, whereby Damon Motors and the Damon Motors Subsidiary guaranteed the performance of the Company's obligations under the BHI
Note.
Additionally,
the Company's obligations under the BHI Note are secured. On November 13, 2024, prior to the closing of the Business Combination,
(a) Damon entered a security agreement with BHI whereby Damon granted to BHI a security interest in all right, title, interest, claims
and demands to its assets, and (b) Damon Motors entered into a security agreement with BHI whereby Damon Motors granted to BHI a security
interest in all right, title, interest, claims and demands to its assets, and (c) Damon Motors entered into an IP security agreement with
BHI whereby Damon Motors granted to BHI a security interest in certain of its intellectual property.
Pursuant
to the Intercreditor Agreement, each of Streeterville, East West and BHI have agreed to rank pari passu in connection with the above noted
financing transactions.
66
December 2024 Securities Purchase Agreement
On December 20, 2024, we entered
into a Securities Purchase Agreement with Streeterville Capital, LLC. Under the agreement, the Company agreed to issue and sell to Streeterville
one or more pre-paid purchases at an aggregate purchase price of up to $10,000,000 for the purchase of the Company's common shares.
As consideration for Streeterville's commitment, the Company also agreed to issue 343,053 common shares to Streeterville.
Each pre-paid purchase includes
an original issue discount of 7% and accrues interest at an annual rate of 8%. For the initial pre-paid purchase, which closed on December
20, 2024, Streeterville paid $2,000,000, creating in an initial principal balance of $2,140,000.
Pursuant to the Securities
Purchase Agreement and a registration rights agreement entered into on the same date, the Company agreed to file a registration statement
on Form S-1 under the Securities Act, to register the resale of 18,000,000 common shares, including the Commitment Shares and common shares
issuable pursuant to the pre-paid purchases (the "Registration Statement"). If the Registration Statement is not declared
effective within 60 days of the Initial Closing Date, the outstanding balance of the pre-paid purchase will automatically increase by
2%, with further increases of 2% for each subsequent 30-day period that the Registration Statement remains ineffective. If the Registration
Statement is declared effective within 90 days of the Initial Closing Date and no default has occurred, and if requested by the Company,
Streeterville will fund $1,000,000 for a second pre-paid purchase.
Within a committed two-year
period, and subject to certain specified conditions, the Company may request the issuance of additional pre-paid purchases to Streeterville,
with each purchase amount no less than $250,000, provided that the total outstanding balance of all pre-paid purchases does not exceed
$3,000,000.
The proceeds from the pre-paid
purchases are expected to be used for working capital and other corporate purposes. However, $100,000 from the initial pre-paid purchase
funding, and 15% of the funding from subsequent pre-paid purchases, shall be used to repay the indebtedness under the secured promissory
note issued to Streeterville in June 2024 with an original principal amount of $6,470,000.
Following the funding of each
pre-paid purchase, Streeterville has the right, but not the obligation, to purchase from the Company its common shares not exceeding (i)
the outstanding balance of the funded amount, and (ii) 9.99% beneficial ownership of the Company's outstanding common shares. The
purchase price of the common shares will be the lower of (i) $1.50 or (ii) 90% of the lowest daily VWAP during the ten consecutive trading
days immediately prior to the purchase notice date, but not less than the floor price, which is equal to 20% of the "Minimum Price"
as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing. Under the Securities Purchase Agreement, the Company agrees
to seek shareholder approval for the issuance of common shares up to the Total Commitment Amount (the "Required Shareholder Approval").
Until such approval is obtained, the Company will not request additional pre-paid purchases that may cause the total amount of common
shares issuable to exceed the limits set under Nasdaq Listing Rule 5635(d).
The outstanding pre-paid purchases,
unless reduced by the Company's sale of common shares to Streeterville as described, will remain outstanding and may be repaid in
cash at the Company's option. There is no maturity date for the outstanding balance of the pre-paid purchases. However, if the Company
fails to obtain the Required Shareholder Approval at its initial shareholder meeting, any remaining outstanding balance above the Exchange
Cap must be repaid in cash. Additionally, if certain triggering events occur, including (a) the VWAP of the Company's common shares
falling below the floor price for at least five trading days within a seven-trading-day period, or (b) the Company having issued 75% of
the shares under the Exchange Cap, the Company must make monthly cash repayments of $350,000 in principal plus any accrued unpaid interest
until the outstanding balance is fully repaid or the triggering event conditions are resolved. In an event of default as specified in
the pre-paid purchase, Streeterville may accelerate repayment, requiring the outstanding balance to become immediately due, with a 10%
increase to the principal and interest accruing at a rate of 18% per annum.
67
Critical Accounting Estimates
Our financial statements are
prepared in accordance with U.S. Generally Accepted Accounting Principles. Our discussion and analysis of its financial condition and
operating results require us to make judgments, assumptions and estimates that affect the amounts reported. We base our estimates on historical
experience, current trends, and various other assumptions we believe to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and liabilities. We believe that the following accounting estimates
are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult,
subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.
Revenue Recognition
The Company recognizes revenue
when control of the promised products or services is transferred to its customers, in an amount that reflects the consideration the Company
expects to be entitled to in exchange for those products or services. Our licenses are sold as perpetual or term licenses and the arrangements
may include maintenance services which are accounted for as separate performance obligations. In determining how revenue should be recognized,
a five-step process is used, which requires judgment and estimates within the revenue recognition process. The most critical judgements
required in applying ASC 606
Revenue Recognition from Customers
, and our revenue recognition policy relate to the determination
of distinct performance obligations.
●
Revenue from licenses for on-premises software is recognized at a point in time when the software is made
available to the customer.
●
Software as a service revenue is recognized over time over the service period using a time-based measure,
as the Company is providing continuous service and the customer simultaneously receives and consumes the benefits provided by the Company's
performance as the services are performed.
We also consider whether an
arrangement has any discounts, material rights, or specified future upgrades that may represent additional performance obligations. Discounts
have not historically been significant, but we continue to monitor and evaluate these estimates based on historical experience, anticipated
performance, and our best judgment. Renewals or extensions of licenses are evaluated as distinct licenses (i.e., a distinct good or service),
and revenue attributed to the distinct service cannot be recognized until (1) the entity provides the distinct license (or makes the license
available) to the customer and (2) the customer is able to use and benefit from the distinct license. If any of these judgments were to
change it could cause a material increase or decrease in the amount of revenue we report in a particular period.
Long-Lived Assets - Impairment Assessments
Long-lived assets are grouped
for recognition and measurement of impairment at the lowest level for which identifiable cash flows are largely independent of the cash
flows of other assets. The impairment test for long-lived assets requires us to assess the recoverability of our long-lived assets by
comparing their net carrying value to the sum of undiscounted estimated future cash flows directly associated with and arising from our
use and eventual disposition of the assets. If the net carrying value of a group of long-lived assets exceeds the sum of related undiscounted
estimated future cash flows, we would be required to record an impairment charge equal to the excess, if any, of net carrying value over
fair value.
When assessing the recoverability
of our long-lived assets, which include property and equipment, we make assumptions regarding estimated future cash flows and other factors.
Some of these assumptions involve a high degree of judgment and bear a significant impact on the assessment conclusions. Included among
these assumptions are estimating undiscounted future cash flows, including the projection of comparable sales, operating expenses, capital
requirements for maintaining property and equipment and residual value of asset groups. We formulate estimates from historical experience
and assumptions of future performance, based on business plans and forecasts, recent economic and business trends, and competitive conditions.
In the event that our estimates or related assumptions change in the future, we may be required to record an impairment charge.
68
We evaluate the remaining
useful lives of long-lived assets whenever events or circumstances indicate that a revision to the remaining period of amortization is
warranted. Such events or circumstances may include (but are not limited to): the effects of obsolescence, demand, competition, and/or
other economic factors including the stability of the industry in which we operate, known technological advances, legislative actions,
or changes in the regulatory environment. If the estimated remaining useful lives change, the remaining carrying amount of the long-lived
assets would be amortized prospectively over that revised remaining useful life. We have determined that there were no events or circumstances
during the years ended June 30, 2024, 2023 or 2022, which would indicate a revision to the remaining amortization period related to any
of our long-lived assets. Accordingly, we believe that the current estimated useful lives of long-lived assets reflect the period over
which they are expected to contribute to future cash flows and are therefore deemed appropriate.
Based on its assessments,
the Company has not recorded any impairment of long-lived assets during the years ended June 30, 2024, 2023 and 2022 or the three months
ended September 30, 2024 and 2023.
Deferred Income Taxes
In accordance with ASC 740
"Income Taxes" ("ASC 740"), management routinely evaluates the likelihood of the realization of its income tax
benefits and the recognition of its deferred tax assets. In evaluating the need for any valuation allowance, management will assess whether
it is more likely than not that some portion, or all, of the deferred tax asset may not be realized on a jurisdictional basis. Ultimately,
the realization of deferred tax assets is dependent upon the generation of future taxable income during those periods in which temporary
differences become deductible and/or tax credits and tax loss carry-forwards can be utilized. In performing its analyses, management considers
both positive and negative evidence including historical financial performance, previous earnings patterns, future earnings forecasts,
tax planning strategies, economic and business trends and the potential realization of net operating loss carry-forwards within a reasonable
timeframe. To this end, management considered (i) that we have had historical losses in the prior years and cannot anticipate generating
a sufficient level of future profits in order to realize the benefits of our deferred tax asset; (ii) tax planning strategies; and (iii)
the adequacy of future income as of June 30, 2024, June 30, 2023 and June 30, 2022, based upon certain economic conditions and historical
losses through June 30, 2024, June 30, 2023 and June 30, 2022. After consideration of these factors, management deemed it appropriate
to establish a full valuation allowance with respect to the deferred tax assets for the Company.
A liability for "unrecognized
tax benefits" is recorded for any tax benefits claimed in the Company's tax filings that do not meet these recognition and
measurement standards. As of June 30, 2024, June 30, 2023 and June 30, 2022, no liability for unrecognized tax benefits was required to
be reported. The guidance also discusses the classification of related interest and penalties on income taxes. The Company's policy
is to record interest and penalties on uncertain tax positions as a component of income tax expense. No interest or penalties were recorded
during the years ended June 30, 2024, 2023 and 2022 or the three months ended September 30, 2024 and 2023.
69
RESULTS OF OPERATIONS
Three Months Ended September 30, 2024
compared to the Three Months Ended September 30, 2023
The following table sets forth
selected consolidated financial data as a percentage of our revenue and the percentage of period-over-period change:
For the Three Months Ended
September 30, 2024
September 30, 2023
(in thousands, except percentages)
Amount
% of Revenues
Amount
% of Revenues
$Change
%Change
Revenues
$
101,969
100
%
$
97,908
100
%
$
4,061
4
%
Cost of revenues
$
39,647
39
%
$
23,805
24
%
$
15,842
67
%
Gross profit
$
62,322
61
%
$
74,103
76
%
$
(11,781
)
(16
)%
Operating expenses
$
1,482,768
1,454
%
$
77,795
79
%
$
1,404,973
1,806
%
Loss from operations
$
(1,420,446
)
(1,393
)%
$
(3,692
)
(4
)%
$
(1,416,754
)
(38,374
)%
Other Income/(Expense)
$
(144,094
)
(141
)%
$
-
-
%
$
(144,094
)
100
%
Income tax benefit (provision)
$
-
-
%
$
-
-
%
$
-
-
%
Net loss
$
(1,564,540
)
(1,534
)%
$
(3,692
)
(4
)%
$
(1,560,848
)
(42,276
)%
Revenues
Revenues for the three months
ended September 30, 2024 were $101,969 compared to $97,908 for the comparable period in the prior year for an increase of $4,061, or approximately
4% and relatively flat over the two periods.
Gross Margin
Cost of revenues for the three
months ended September 30, 2024 were $39,647 compared to $23,805 for the comparable period in the prior year for an increase of $15,842
due to the higher revenues during the period and due to the revised terms of the technology licensing arrangement post the spin-off.
The gross profit margin for
the three months ended September 30, 2024 was 61% compared to 76% for the three months ended September 30, 2023. This lower margin in
the three months ended September 30, 2024 is due to the revised terms of the technology licensing arrangement post the spin-off.
Operating Expenses
Operating expenses for the
three months ended September 30, 2024 were $1,482,768 and $77,795 for the comparable period ended September 30, 2023 for an increase of
$1,404,973 primarily due to $1,085,297 of accounting, legal and other costs of the pending business combination with Damon Motors, $129,535
provision for credit losses on the promissory note Damon Motors issued to the Company in June 2024 (the "Damon Motors Note Issued
to Damon") and $169,701 of other professional fees.
Other Income/(Expense)
Other income and expense for
the three months ended September 30, 2024 were $144,094 compared to $- for the comparable period in the prior year. The $144,094 increase
is due to the interest, debt discount and monitoring fee expense of the Streeterville Note that was entered into in June 2024 offset by
the interest income accrual from the Damon Motors Note Issued to Damon.
70
Year Ended June 30, 2024 compared
to the Year Ended June 30, 2023 and Year Ended June 30, 2023 compared to the Year Ended June 30, 2022
The following table sets forth
selected consolidated financial data as a percentage of our revenue and the percentage of period-over-period change:
For the Years Ended June 30,
2024
2023
2022
Variation
2024 - 2023
% Change
2024 - 2023
Variation
2023 - 2022
% Change
2023 - 2022
Revenues
$
336,562
$
391,848
$
456,076
$
(55,286
)
(14
)%
$
(64,228
)
(14
)%
Cost of revenues
$
82,084
$
95,220
$
95,499
$
(13,136
)
(14
)%
$
(279
)
—
%
Gross profit
$
254,478
$
296,628
$
360,577
$
(42,150
)
(14
)%
$
(63,949
)
(18
)%
Operating expenses
$
1,593,521
$
370,456
$
424,444
$
1,223,065
330
%
$
(53,988
)
(13
)%
Loss from operations
$
(1,339,043
)
$
(73,828
)
$
(63,867
)
$
(1,265,215
)
(1,714
)%
$
(9,961
)
(16
)%
Other expense
$
(9,314
)
$
—
—
$
(9,314
)
—
%
$
—
—
%
Income tax benefit (provision)
$
—
$
—
$
—
$
—
—
%
$
—
—
%
Net loss
$
(1,348,357
)
$
(73,828
)
$
(63,867
)
$
(1,274,529
)
(1,726
)%
$
(9,961
)
(16
)%
Revenues
Fiscal 2024 compared to Fiscal 2023
Revenues for the year ended
June 30, 2024 were $336,562 compared to $391,848 for the comparable period in the prior year for a decrease of $55,286, or approximately
14%. This decrease is primarily attributable to budget cuts in the UK universities' customer bases and some delays in orders as
we transitioned from Inpixon to Grafiti.
Fiscal 2023 compared to Fiscal 2022
Revenues for the year ended
June 30, 2023 were $391,848 compared to $456,076 for the comparable period in the prior year for a decrease of $64,228, or approximately
14%. This decrease is primarily attributable to the loss of a sales manager during the year ended June 30, 2023.
Gross Margin
Fiscal 2024 compared to Fiscal 2023
Cost of revenues for the year
ended June 30, 2024 were $82,084 compared to $95,220 for the comparable period in the prior year. This decrease in cost of revenues was
due to the lower sales in the fiscal year 2024 period.
The gross profit margin for
the year ended June 30, 2024 was 76% which was consistent with the gross margin of the fiscal year ended June 30, 2023 of 76%.
Fiscal 2023 compared to Fiscal 2022
Cost of revenues for the year
ended June 30, 2023 were $95,220 compared to $95,499 for the comparable period in the prior year and relatively flat.
The gross profit margin for
the year ended June 30, 2023 was 76% compared to 79% for the year ended June 30, 2022. This lower margin was primarily due to the lower
revenue during the year ended June 30, 2023.
Operating Expenses
Fiscal 2024 compared to Fiscal 2023
Operating expenses for the
year ended June 30, 2024 were $1,593,521 and $370,456 for the comparable period ended June 30, 2023 for an increase of $1,223,065 which
was due to $280,789 of costs of the Damon transaction, $108,568 provision for credit losses and $627,478 of stock based compensation charges.
71
Fiscal 2023 compared to Fiscal 2022
Operating expenses for the
year ended June 30, 2023 were $370,456 and $424,444 for the comparable period ended June 30, 2022. This decrease of $53,988 was primarily
attributable to decreased rent due to the movement to a shared office space, decreased salaries due to the reduction in sales staff and
advertising in the year ended June 30, 2023.
Other Expense
Other expense for the year
ended June 30, 2024 was $9,314 and primarily consisted of interest expense on the Streeterville debt which was entered into in June 2024.
There was no other expense in the years ended June 30, 2023 and 2022.
Non-GAAP Financial information
EBITDA and Adjusted EBITDA
EBITDA is defined as net income
(loss) before interest, provision for (benefit from) income taxes, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA
plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation.
EBITDA for the three months
ended September 30, 2024 was a loss of $1,420,193 compared to a loss of $3,476 for the prior year period. Adjusted EBITDA for the three
months ended September 30, 2024 was a loss of $334,896 compared to a loss of $3,476 for the prior year period.
The following table presents
a reconciliation of net loss attributable to shareholders of the Company, which is our GAAP operating performance measure, to EBITDA and
Adjusted EBITDA for the three months ended September 30, 2024 and 2023:
For the Three Months Ended
September 30,
2024
2023
Net loss attributable to common shareholders
$
(1,564,540
)
$
(3,692
)
Interest expense/(income), net
144,094
-
Income tax benefit (provision)
-
-
Depreciation and amortization
253
216
Non-GAAP EBITDA
$
(1,420,193
)
$
(3,476
)
Adjusted for:
Non-recurring one-time charges:
Acquisition transaction/financing costs
1,085,297
-
Non-GAAP Adjusted EBITDA
$
(334,896
)
$
(3,476
)
EBITDA for the year ended
June 30, 2024 was a loss of $1,338,348 compared to a loss of $72,582 for the year ended June 30, 2023. Adjusted EBITDA for the year ended
June 30, 2023 was a loss of $72,582 compared to a loss of $62,548 for the year ended June 30, 2022.
Adjusted EBITDA for the year
ended June 30, 2024 was a loss of $430,081 compared to a loss of $72,582 for the year ended June 30, 2023. Adjusted EBITDA for the year
ended June 30, 2023 was a loss of $72,582 compared to a loss of $62,548 for the year ended June 30, 2022.
72
The following table presents
a reconciliation of the net loss of Grafiti Holding, which is our GAAP operating performance measure, to EBITDA and Adjusted EBITDA for
the years ended June 30, 2024, 2023 and 2022:
For the Years Ended June 30,
2024
2023
2022
Net loss attributable to common shareholders
$
(1,348,357
)
$
(73,828
)
$
(63,867
)
Interest expense, net
9,314
—
—
Depreciation and amortization
695
1,246
1,319
EBITDA
(1,338,348
)
(72,582
)
(62,548
)
Adjusted for:
Non-recurring one-time charges:
Acquisition transaction/financing costs
280,789
—
—
Stock-based compensation - compensation and related benefits
627,478
—
—
Adjusted EBITDA
$
(430,081
)
$
(72,582
)
$
(62,548
)
We rely on EBITDA and Adjusted
EBITDA, which are non-GAAP financial measures for the following:
●
To review and assess the operating performance of our Company as permitted by ASC Topic 280, Segment Reporting;
●
To compare our current operating results with corresponding periods and with the operating results of
other companies in our industry;
●
As a basis for allocating resources to various projects;
●
As a measure to evaluate potential economic outcomes of acquisitions, operational alternatives and strategic
decisions; and
●
To evaluate internally the performance of our personnel.
We have presented EBITDA and
Adjusted EBITDA above because we believe they convey useful information to investors regarding our operating results. We believe they
provide an additional way for investors to view our operations, when considered with both our GAAP results and the reconciliation to net
income (loss). By including this information, we can provide investors with a more complete understanding of our business. Specifically,
we present EBITDA and Adjusted EBITDA as supplemental disclosure because of the following:
●
We believe EBITDA and Adjusted EBITDA are useful tools for investors to assess the operating performance
of our business without the effect of interest, income taxes, depreciation and amortization.
●
We believe that it is useful to provide to investors with standard operating metrics used by management
to evaluate our operating performance; and
●
We believe that the use of EBITDA and Adjusted EBITDA is helpful to compare our results to other companies.
Even though we believe EBITDA
and Adjusted EBITDA are useful for investors, they have limitations as an analytical tool. Thus, we strongly urge investors not to consider
this metric in isolation or as a substitute for net income (loss) or consolidated statement of operations data prepared in accordance
with GAAP. Some of these limitations include the fact that:
●
Neither EBITDA nor Adjusted EBITDA reflects our cash expenditures or future requirements for capital expenditures
or contractual commitments;
73
●
Neither EBITDA nor Adjusted EBITDA reflects changes in, or cash requirements for, our working capital
needs;
●
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized
will often have to be replaced in the future, and neither EBITDA nor Adjusted EBITDA reflects any cash requirements for such replacements;
and
●
Neither EBITDA nor Adjusted EBITDA reflects income or other taxes or the cash requirements to make any
tax payments
Because of these limitations,
neither EBITDA nor Adjusted EBITDA should be considered a measure of discretionary cash available to us to invest in the growth of our
business or as a measure of performance in compliance with GAAP. We compensate for these limitations by relying primarily on our GAAP
results and providing EBITDA and Adjusted EBITDA only as supplemental information.
Liquidity and Capital Resources as of September 30, 2024
Our current capital resources
and operating results as of and for the three months ended September 30, 2024, consist of:
●
an overall working capital surplus of $12,374;
●
cash of $175,292;
●
net cash used in operating activities for the three months ended September 30, 2024 of $799,535.
The breakdown of our overall
working capital surplus is as follows:
Working Capital
Assets
Liabilities
Net
Cash
$
175,292
$
-
$
175,292
Accounts receivable, net / accounts payable
55,865
972,125
(916,260
)
Notes receivable net of allowance for credit losses
907,897
-
907,897
Accrued liabilities
-
104,513
(104,513
)
Deferred revenue
-
151,377
(151,377
)
Prepaid expenses and other current assets
101,335
-
101,335
Total
$
1,240,389
$
1,228,015
$
12,374
For further discussion on
the Company's liquidity and ability to continue as a going concern, please see the discussion under Financial Obligations and Requirements
below.
Contractual
Obligations and Commitments
Contractual obligations are
cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. Our contractual obligations
consist of an operating lease. As of September 30, 2024, the total obligation for operating leases was $2,520, which is expected to be
paid in the next twelve months.
Financial Obligations and Requirements
Net cash used in operating
activities during the three months ended September 30, 2024 of $799,535 consists of a net loss of $1,564,540 offset by non-cash adjustments
of approximately $273,882 plus net cash changes in operating assets and liabilities of approximately $491,123. As the Company was part
of Inpixon group of companies prior to December 27, 2023, the Company was dependent upon Inpixon for all of its working capital and financing
requirements as Inpixon uses a centralized approach to cash management and financing of its operations. This arrangement is not reflective
of the way the Company would have financed its operations had the Company been a standalone public company during the periods presented.
Prior to December 27, 2023, financial transactions relating to the Company are accounted for through Shareholders' Equity. As a
result of the spin-off of the Company from Inpixon, the Company no longer participates in Parent's corporate-wide cash management
and financing approach, and therefore the Company's ability to fund operating needs will depend on the Company's ability to
generate positive cash flows from operations, and on the Company's ability to obtain debt financing on acceptable terms or to issue
additional equity or equity-linked securities as needed.
74
Management's plans to
address the uncertainty that the Company will continue as a going concern include the business combination that occurred on November 13,
2024 as described above as well as obtaining associated debt and equity financing. On November 13, 2024, the Company secured a commitment
for additional financing in the aggregate amount of $13,000,000 under the November 2024 Debt Financing, and on November 20, 2024 the remaining
$3,150,000 of the funds placed in escrow under the Streeterville Note were released to the Company, which has increased the Company's
available source of funding and, accordingly, it is expected that the Company will have sufficient working capital and available funds
to continue operations for at least twelve months following the date of this filing.
Liquidity and Capital Resources as
of September 30, 2024 Compared with September 30, 2023
The Company's net cash
flows used in and provided by operating, investing and financing activities for the three months ended September 30, 2024 and 2023 and
certain balances as of the end of those periods are as follows:
For the three months ended
September 30, 2024
2024
2023
Net cash (used in) provided by operating activities
$
(799,535
)
$
57,285
Net cash used in investing activities
(596,000
)
-
Net cash provided by financing activities
414,335
32,193
Effect of foreign exchange rate changes on cash
7,588
(5,308
)
Net (decrease) increase in cash
$
(973,612
)
$
84,170
As of
September 30,
2024
As of
June 30,
2023
Cash
$
175,292
$
1,148,904
Working capital surplus
$
12,374
$
1,046,944
Cash flows from Operating Activities
for the three months ended September 30, 2024
Net cash used in operating
activities during the three months ended September 30, 2024 was approximately $799,535. The cash flows related to the three months ended
September 30, 2024 consisted of the following:
Net loss
$
(1,564,540
)
Non-cash income and expenses
273,882
Net change in operating assets and liabilities
491,123
Net cash used in operating activities
$
(799,535
)
The non-cash income and expense
of $273,882 consisted primarily of the following:
$
253
Depreciation and amortization expenses
82,178
Amortization of original issue discount
129,535
Provision for credit losses
(24,066
)
Accrued interest income
50,405
Accrued interest expense
35,577
Accrued monitoring fee expense
$
273,882
Total non-cash expenses
75
The net change in operating
assets and liabilities aggregated $491,123 and consisted primarily of the following:
$
(23,541
)
Increase in accounts receivable
(3,068
)
Increase in prepaid expenses and other current assets
528,078
Increase in accounts payable
(9,058
)
Decrease in accrued liabilities
(1,288
)
Decrease in deferred revenue
$
491,123
Net cash provided by changes in operating assets and liabilities
Cash flows from Operating Activities
for the three months ended September 30, 2023
Net cash provided by operating
activities during three months ended September 30, 2023 was $57,285. The cash flows related to the three months ended September 30, 2023
consisted of the following:
Net loss
$
(3,692
)
Non-cash income and expenses
216
Net change in operating assets and liabilities
60,761
Net cash provided by operating activities
$
57,285
The non-cash income and expense
of $216 consisted primarily of depreciation and amortization expenses.
The net change in operating
assets and liabilities aggregated approximately $60,761 and consisted primarily of the following:
$
47,626
Decrease in accounts receivable
(149
)
Increase in prepaid expenses and other current assets
958
Increase in accounts payable
(4,830
)
Decrease in accrued liabilities
17,156
Increase in deferred revenue
$
60,761
Net cash provided by changes in operating assets and liabilities
Cash Flows from Investing Activities
for the three months ended September 30, 2024 and 2023
Net cash flows used in investing
activities during the three months ended September 30, 2024 was $596,000 for a loan to Damon Motors. There were no net cash flows provided
by or used in investing activities during the three months ended September 30, 2023.
Cash Flows from Financing Activities
for the three months ended September 30, 2024 and 2023
Net cash flows provided by
financing activities during the three months ended September 30, 2024 was $414,335 which includes $350,000 of proceeds from a note payable
and $64,335 of cash received from the exercise of stock options. Net cash flows provided by financing activities during the three months
ended September 30, 2023 was $32,193 from an investment by Inpixon.
76
Liquidity and Capital Resources as
of June 30, 2024 Compared With June 30, 2023 and June 30, 2022
The Company's net cash flows used in operating,
investing and financing activities for the years ended June 30, 2024, 2023 and 2022 and certain balances as of the end of those periods
are as follows:
For the Years Ended June 30,
2024
2023
2022
Net cash used in operating activities
$
(129,551
)
$
(75,616
)
$
(154,813
)
Net cash used in investing activities
(552,871
)
—
—
Net cash provided by financing activities
1,567,330
166,471
177,053
Effect of foreign exchange rate changes on cash
(248
)
3,223
(16,541
)
Net increase in cash
$
884,660
$
94,078
$
5,699
As of
June 30,
2024
As of
June 30,
2023
As of
June 30,
2022
Cash
$
1,148,904
$
264,244
$
170,166
Working capital surplus
$
1,050,245
$
201,921
$
102,886
Operating Activities for the year
ended June 30, 2024
Net cash used in operating activities during the
year ended June 30, 2024 was $129,551. The cash flows related to the year ended June 30, 2024 consisted of the following:
Net loss
$
(1,348,357
)
Non-cash income and expenses
740,563
Net change in operating assets and liabilities
478,243
Net cash used in operating activities
$
(129,551
)
The non-cash income and expense of $740,563 consisted
primarily of the following:
$
695
Depreciation and amortization expenses
627,478
Stock-based compensation expense
4,941
Amortization of original issue discount
3,301
Accrued interest expense
1,620
Accrued monitoring fee expense
(548
)
Accrued interest income
(5,492
)
Unrealized gain on foreign currency transactions
108,568
Provision for credit losses
$
740,563
Total non-cash expenses
The net cash for the change in operating assets
and liabilities aggregated $478,243 and consisted primarily of the following:
$
64,381
Decrease in accounts receivable and other receivables
(68,496
)
Increase in prepaid expenses, current assets and other assets
440,241
Increase in accounts payable
(15,535
)
Decrease in accrued liabilities and other liabilities
57,652
Increase in deferred revenue
$
478,243
Net cash used in the changes in operating assets and liabilities
77
Operating Activities for the year
ended June 30, 2023
Net cash used in operating activities during the
years ended June 30, 2023 was approximately $75,616. The cash flows related to the year ended June 30, 2023 consisted of the following:
Net loss
$
(73,828
)
Non-cash income and expenses
1,246
Net change in operating assets and liabilities
(3,034
)
Net cash used in operating activities
$
(75,616
)
The non-cash income and expense of $1,246 consisted
of depreciation and amortization expenses.
The net cash for the change in operating assets
and liabilities aggregated $3,034 and consisted primarily of the following:
$
(22,768
)
Increase in accounts receivable and other receivables
3,901
Decrease in prepaid expenses, other current assets and other assets
(2,625
)
Decrease in accounts payable
31,607
Increase in accrued liabilities and other liabilities
(13,149
)
Decrease in deferred revenue
$
(3,034
)
Net use of cash in the changes in operating assets and liabilities
Operating Activities for the year
ended June 30, 2022
Net cash used in operating activities during the
years ended June 30, 2022 was $154,813. The cash flows related to the year ended June 30, 2022 consisted of the following:
Net loss
$
(63,867
)
Non-cash income and expenses
9,495
Net change in operating assets and liabilities
(100,441
)
Net cash used in operating activities
$
(154,813
)
78
The non-cash income and expense of $9,495 consisted
primarily of the following:
$
1,319
Depreciation and amortization expenses
8,176
Amortization of right-of-use asset
$
9,495
Total non-cash expenses
The net cash for the change in operating assets
and liabilities aggregated $100,441 and consisted primarily of the following:
(21,372
)
Increase in accounts receivable and other receivables
4,146
Decrease in prepaid expenses, other current assets and other assets
(2,379
)
Decrease in accounts payable
(18,368
)
Decrease in accrued liabilities and other liabilities
(8,259
)
Decrease in operating lease liabilities
(54,209
)
Decrease in deferred revenue
$
(100,441
)
Net use of cash in the changes in operating assets and liabilities
Investing Activities as of June
30, 2024, 2023, and 2022
Net cash flows used in investing activities during
the year ended June 30, 2024 was $552,871 which consisted of a loan to Damon for $550,000 and an investment in property and equipment
of $2,871. There were no cash flows from investing activities during the years ended June 30, 2023 and 2022.
Cash Flows from Financing Activities
as of June 30, 2024, 2023 and 2022
Net cash flows provided by financing activities
during the year ended June 30, 2024 was $1,567,330 which consisted of proceeds from a note payable of $1,500,000 and $67,330 from an investment
by Inpixon. Net cash flows provided by financing activities during the years ended June 30, 2023 and 2022 were $166,471 and 177,053, respectively,
which were investments by Inpixon.
Off-Balance Sheet Arrangements
We do not have any off-balance
sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange
traded contracts.
Recently Issued Accounting Standards
For a discussion of recently
issued accounting pronouncements, please see Note 3 to the Company's condensed consolidated financial statements as of September
30, 2024, which are included in this prospectus beginning on page F-92.
79
Management's
Discussion and Analysis of Financial Condition
and Results of Operations OF DaMON MOTORS
The following discussion
and analysis of the financial condition and results of operations of Damon Motors should be read in conjunction with the accompanying
interim unaudited condensed consolidated financial statements of Damon Motors as of September 30, 2024, consolidated financial statements
of Damon Motors for the fiscal years ended June 30, 2024, 2023 and 2022, and related notes included elsewhere in this prospectus. Some
of the information contained in this discussion and analysis or set forth elsewhere, including information with respect to its plans and
strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions.
You should read the "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors" for a discussion
of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
Unless otherwise indicated
herein, the following management's discussion and analysis (the "MD&A") provides information concerning the consolidated
financial condition and results of operations of Damon Motors and its subsidiaries prior to the Closing of Business Combination.
All references to "Fiscal
2025" are to Damon Motors's fiscal year ending June 30, 2025. "Fiscal 2024," "Fiscal 2023" and "Fiscal
2022" are to Damon Motors's fiscal years ended June 30, 2024, 2023 and 2022, respectively. "Q1 2025" refers to
three months period ended September 30, 2024 and "Q1 2024" refers to three months period ended September 30, 2023.
Overview of business and recent events
Overview of Damon Motors's Business
and the Business Combination
Damon Motors is a motorcycle
manufacturing company aiming to building a smart and technologically advanced motorcycle with zero emissions while still maintain performance
and safety while also incorporating connectivity and artificial intelligence.
Founded in 2017, Damon Motors
started reimagining the future of motorcycling by means of advanced safety design, electric vehicle powertrain technology and user experience.
In 2019, Damon Motors took its first alpha prototype motorcycles and safety systems into the field to test the concept. In 2021, Damon
Motors expanded its operations and expertise with an R&D facility in San Rafael, California to accelerate the engineering and development
of its HyperDrive platform drive unit and the HyperSport motorcycle. Through core technology advancements, Damon Motors electric motorcycles
are in prototype phase of product validation. Damon Motors does not expect any material changes to its business will occur during the
current financial period.
See the "Recent Events"
section in "
Management's Discussion and Analysis of the Financial Condition and Results of Operations of Damon (formerly
Grafiti Holding)
" for information regarding the completion of the Business Combination and related financing and other transactions.
Amendment agreement with Joseph Gunnar
On August 28, 2024, Damon Motors entered into an amendment to the letter
of agreement amending certain terms in the original engagement agreement dated September 25, 2023. In the amended agreement, in lieu of
the compensation described in Section 3 of the original agreement, Peikin, as assignee of Joseph Gunnar, shall receive from the company
a one-time fee of $1,000,000 in cash due and payable on the thirteen (13) month anniversary of the closing (the "Closing")
of the reverse merger; and the company shall also issue to Peikin, as assignee of Joseph Gunnar, the following amounts, any of which may
be paid in securities (i.e., common stock of the post-merger Damon public company), with each issuance further made pursuant to a resale
registration statement to be filed within (10) days of each payment date based on the payment schedule below:
(a)
$600,000 on the 90-day anniversary of the Closing;
(b)
$400,000 on the 180-day anniversary of the Closing; and
(c)
$300,000 on the 270-day anniversary of the Closing.
80
The total of $2,300,000, of
which up to $1,300,000 may potentially be paid in securities as set forth above to Peikin shall fully satisfy all obligations of the company
to Joseph Gunnar, which obligations Joseph Gunnar has assigned to Peikin. The number of shares to calculate the USD value on each of the
three (3) issuances shall be calculated based on the Nasdaq Market Price, which is the lower of the consolidated closing bid price for
the business day immediately preceding each date that any one (1) of the three (3) issuances are due and payable OR the average of the
consolidated closing bid price of the post-merger Damon public company's common stock for the five (5) trading days immediately
preceding each date that any one (1) of the three (3) issuances are due and payable. Joseph Gunnar and Peikin, each respectively, and
collectively, reserve all rights with respect to compensation described in Section 3 of the original agreement if any one or more of such issuances/remittances
are not timely made.
Financing
From July 1, 2024 to September
30, 2024, Damon Motors raised the following funds to finance Damon Motors's operation :
●
issuance of $555,000 convertible promissory notes and 202,820
common share purchase warrants to arms-length parties.
●
issuance of additional $596,000 senior secured promissory
note bringing the total aggregate principal amount owing of $1,146,000.
●
issuance of two tranches of promissory note to arms-length
parties with principal amount of $729,299 (CAD$1,000,000) secured against future Canadian Scientific Research & Development ("SR&ED")
tax credit refund.
From October 1, 2024 to reporting
date, Damon Motors continue to raise funds to finance Damon Motors's operation as follows :
●
on October 8, 2024, Damon Motors issued $500,000 convertible
promissory notes and 182,721 common share purchase warrants to arms-length parties.
●
on October 9, 2024, Damon Motors issued promissory note to
arms-length parties and received proceeds of $200,000, which is net of set-up fee of $12,500. The note accrues interest at a rate of
12% per annum.
●
on October 18, 2024, Damon Motors issued $50,000 convertible
promissory notes and 18,272 common share purchase warrants to arms-length parties.
For details of the financing
above, see the section entitled "Liquidity and Capital Resources" below.
Amendments to convertible promissory notes
On September 11, 2024, Damon
Motors and the convertible promissory notes holders entered into a Letter of Agreement amending the maturity of the convertible promissory
notes, from September 30, 2024 to mature on October 31, 2024, subject to an additional tolling period of 30 days at the election of Damon
Motors upon notice by Damon Motors to the note holders.
SR&ED tax credit refund
On October 4, 2024, Damon
Motors received the Notice of Assessment for 2024 SR&ED tax credit refund amount of $1,004,022 (CAD$1,355,329) from CRA and the tax
credit refund was received in full on October 16, 2024.
81
Conversion of Simple Agreements for Future
Equity (SAFEs)
On July 1, 2024, the SAFEs
issued and outstanding (see Note 11 of Damon Motors's consolidated financial statements of Damon Motors for the fiscal years ended
June 30, 2024, 2023 and 2022) matured and were converted to 1,437,002 Damon Motors common shares the per the terms of the agreement.
Amendment to the Surrender of Lease Agreement
On October 1, 2024, Damon
Motors and the lessor to a facility in Surrey, British Columbia, signed an amendment to the Surrender of Lease Agreement whereby the lessor
hereby agrees to a waiver of breach by Damon Motors of its payment obligations in subsection 3.1(e), (f) and (g) of the Surrender of Lease
Agreement by the Tenant. In addition, the subsections (e), (f) and (g) of Section 3.1 of the Surrender of Lease Agreement are deleted
in their entirety and replaced, whereby Damon Motors agrees to pay the lessor:
(e)
the amount in Canadian dollars $108,333.33 on or before the
date that is thirty (30) days following the completion of the Business Combination;
(f)
the amount in Canadian dollars of $108,333.33 on or before
the date that is sixty (60) days following the completion of the Business Combination;
(g)
the amount in Canadian dollars of $108,333.33 on or before
the date that is ninety (90) days following the completion of the Business Combination.
Amendments to Wilson Sonsini Goodrich &
Rosati Professional Corporation ("WSGR") promissory notes
On November 11, 2024, Damon
Motors signed another amendment to the promissory note agreement with WSGR to modify the due date of October 31, 2024 to December 15,
2024.
Critical Accounting Estimates
The condensed interim unaudited
consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles. In connection with the
preparation of the financial statements, we are required to make assumptions and estimates about future events and apply judgments that
affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates
and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated
financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure
that our consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their
effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could
be material.
We believe that the following
accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require
our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently
uncertain. There have been no changes to estimates during the periods presented in the filing. Historically changes in management estimates
have not been material.
There have been no significant
changes to our critical accounting policies and estimates from the information included in Note 3 of Damon Motors's consolidated
financial statements of Damon Motors for the fiscal years ended June 30, 2024, 2023 and 2022.
Components of Results of Operations
Revenues
To date, Damon Motors is a
pre-revenue company that has only been taking reservations for its motorcycles and has not delivered any to customers.
82
Research and Development, net
Damon Motors's research
and development, net include compensation, employee benefits, and stock-based compensation for technology developers and product management
employees as well as fees paid to outside contractors and consultants, purchase of lab supplies to build prototype motorcycles, subscriptions
and dues, travel, meals and entertainment and rent and insurance allocated. Damon Motors is eligible for government grant and claim tax
credits and accounts for these government grant and tax credits as a reduction to research and development expenses and will recognize
these claims when it is probable that the expense incurred qualify for the government grant claim and that Damon Motors has complied with
all the conditions to realize the claim. Otherwise, the recognition of government grant claim and tax credits would be deferred until
the recognition criteria are satisfied.
General and Administrative
General and administrative
include compensation, employee benefits, and stock-based compensation for executive management, finance administration and human resources,
fees paid to outside contractors and consultants, professional fees, subscriptions and dues, travel, meals and entertainment, rent and
insurance allocated, and other general expenses. Damon Motors expects its cash-based administrative expenses to increase for the foreseeable
future as Damon Motors increases headcount to support the growth of its business.
Sales and Marketing
Sales and marketing consist
of compensation, employee benefits and stock-based compensation of sales and marketing employees, fees paid to outside contractors and
consultants, rent and insurance allocated as well as marketing and promotion expenses, travel, trade show sponsorships and events. Costs
associated with Damon Motors's advertising are expensed as incurred and are included in sales and marketing expenses.
Depreciation
Depreciation represents the
estimated reduction in value of Damon Motors's fixed assets within a fiscal year and are calculated using the straight-line method
over the lease term for right-of-use assets and the estimated useful lives of the assets other than right-of-use assets.
Changes in Fair Value of Financial Liabilities
Changes in Fair Value of Financial
Liabilities represent the movement in the fair value for SAFE, convertible notes and warrants at each balance sheet date.
Finance Expense
Finance expense consists primarily
of interest paid on Damon Motors's outstanding debts, convertible notes, promissory notes and on a Scientific Research and Experimental
Development ("SR&ED") facility draw down, interest on lease liabilities, as well as financing fee paid to private bankers
to help raise fund.
Foreign Exchange (Gain) Loss
Foreign exchange gains and
losses represent the gains and losses on instruments such as cash balances, accounts receivable, accounts payable, debt balances and other
accounts that are denominated in foreign currencies to the functional currencies of the related Damon Motors entities, as a result of
changes in foreign currency rates. Damon Motors does not hedge foreign currency exchange.
83
Results of Operations
Comparison of Quarterly Results
Damon Motors's results
of operations for the periods ended September 30, 2024 and 2023 are presented below:
3 months ended
September 30,
Variation
%
Change
2024
2023
2024-2023
2024-2023
$
$
$
%
Expenses
Research and development, net of tax credits
57,221
1,937,227
(1,880,006
)
(97
)%
General and administrative
790,027
1,092,282
(302,255
)
(28
)%
Sales and marketing
174,166
376,312
(202,146
)
(54
)%
Depreciation
67,248
80,138
(12,890
)
(16
)%
Transaction costs
748,541
458,232
290,309
63
%
Foreign exchange (gain) loss
62,738
(159,457
)
222,195
(139
)%
1,899,941
3,784,734
(1,884,793
)
(50
)%
Other loss (income)
Changes in fair value of financial liabilities
4,657,388
827,304
3,830,084
463
%
Finance expense
854,846
765,153
89,693
12
%
5,512,234
1,592,457
3,919,777
246
%
Net loss
7,412,175
5,377,191
2,034,984
38
%
Loss per share:
Basic and diluted - common shares
(0.54
)
(0.45
)
0.09
19
%
Weighted average number of shares outstanding:
Basic and diluted - common shares
13,745,886
11,851,349
1,894,537
16
%
Research and Development, net of tax credits
3 months ended
September 30,
2024
2023
$
$
Salaries and wages
863,507
1,381,195
Lab supplies and materials
30,535
148,645
Stock-based compensation
11,792
123,977
Rent and insurance
147,355
245,668
General expenses and others
8,054
37,742
Canadian Scientific Research & Development tax credits
(1)
(1,004,022
)
-
57,221
1,937,227
(1)
The Canadian Scientific Research & Development ("SR&ED") tax credits for FY2024 was received in full on October 16, 2024 and accounted as a reduction to the research and development costs above
For the three months ended
September 30, 2024, the research and development, net amounted to $0.1 mil compared to $1.9 mil for the three months ended September 30,
2023 primarily due to recognition of FY2024 Canadian Scientific Research & Development tax credit ("SR&ED ") receivable
of $1.0 mil in three months ended September 30, 2024 compared to $nil in the three months ended September 30, 2023 and reduced research
and development activities as Damon Motors managed its cashflow and spend on key operational items as analyzed below.
For the three months ended
September 30, 2024, salaries and wages decreased from $1.4 mil for the three months ended September 30, 2023, to $0.9 mil mainly due to
decrease in headcount, from 39 as of June 30, 2023, to 18 by June 30, 2024 and further reduced to 17 by September 30, 2024. Similarly,
the lab supplies and materials decreased from $0.1 mil for the three months ended September 30, 2023 to just $0.03 mil for the three months
ended September 30, 2024 as development activities in 2025 were reduced significantly as the development of motorcycle models were mostly
completed largely in 2023 and tight cashflow. Stock-based compensation decreased from $0.1 mil for the three months ended September 30,
2023, to $0.01 mil in line with decrease in headcount, expiry of unexercised stock options and cancelation of unvested stock options for
terminated employees. The decrease in rent and insurance from $0.2 mil for the three months ended September 30, 2023 to $0.1 mil for the
three months ended September 30, 2024 is mainly due to surrender of 708 Powell lease effective April 26, 2024. Overall decrease in general
expenses and others were in line with Damon Motors managing costs.
84
General and Administrative
3 months ended
September 30,
2024
2023
$
$
Salaries and wages
289,419
401,477
Contractors and consultants
190,947
260,948
Professional fees
103,806
154,521
Stock-based compensation
1,285
69,121
Rent and insurance
73,832
120,504
Subscriptions and dues
53,734
77,607
General expenses and others
77,004
65,857
Rental income
-
(57,753
)
790,027
1,092,282
General and administrative
decreased to $0.8mil for the three months ended September 30, 2024 compared to $1.1 mil for the three months ended September 30, 2023,
mainly due to management controlling its operating cost due to challenges with fund raising.
Salaries and wages for the
three months ended September 30, 2024, of $0.3 mil is lower compared to $0.4 mil for the three months ended September 30, 2023, principally
due to decrease in headcount from 10 as of June 30, 2023, to 5 as of June 30, 2024 and further reduced to 4 as of September 30, 2024.
Contractors and consultants fees paid to external parties decreased from $0.3 mil for the three months ended September 30, 2023 to $0.2
mil for the three months ended September 30, 2024 as Damon Motors further reduce engagement of contractors and consultants due to tight
cashflow. Professional fees decreased from $0.2 mil for the three months ended September 30, 2023, to $0.1 mil for the three months ended
September 30, 2024, due to decrease in professional fees related to financing and decrease in intellectual property filing and patent
registration. The decrease in professional fees related to financing is due to Damon Motors raising funds in Q1 2025 mainly through non-brokered
financing compared to largely brokered financing in Q1 2024. Stock-based compensation decreased from $0.1 mil for the three months ended
September 30, 2023, compared to almost nil for the three months ended September 30, 2024 in line with decrease in headcount and expiry
of unexercised stock options and cancelation of unvested stock options for terminated employees.
Sales and Marketing
3 months ended
September 30,
2024
2023
$
$
Marketing and promotion
41,330
224,924
Salaries and wages
108,567
102,469
Stock-based compensation
3,218
11,061
General expenses and others
21,051
37,858
174,166
376,312
85
For the three months ended
September 30, 2024, sales and marketing decreased from $0.4 mil for the three months ended September 30, 2023, to $0.2 mil. The decrease
was primarily due to Damon Motors reducing the marketing team activity due to a delay in production and Damon Motors continues to manage
its cash flows.
Marketing and promotion expenses
reduced from $0.2 mil for the three months ended September 30, 2023 compared to $0.04 mil for the three months ended September 30, 2024
as Damon Motors limited the spend on promotion activities, sponsorship, advertisement, public relation consultancy costs due to the limited
cashflow.
Depreciation
For the three months ended
September 30, 2024, depreciation remained flat compared to the three months ended September 30, 2023 as there was no asset addition for
the three months ended September 30, 2024 and some assets were fully depreciated.
Transaction costs
For the three months ended
September 30, 2024, transaction costs increased from $0.5 mil for the three months ended September 30, 2023, to $0.7 mil due to higher
legal, professional and consulting fees related to business combination closing with XTI Aerospace and public listing.
Changes in Fair Value of Financial Liabilities
Changes in the fair value
of financial liabilities includes the following amounts for the three months ended September 30, 2024 and 2023:
3 months ended
September 30,
2024
2023
$
$
Changes in Fair Value of:
SAFEs
-
(144,083
)
Convertible notes
4,657,388
1,250,971
Warrants
-
(279,584
)
4,657,388
827,304
Changes in the fair value
of $4.7 mil for the three months ended September 30, 2024, compared to $0.9 mil for the three months ended September 30, 2023, related
to changes in fair value of SAFEs, convertible promissory notes and common share purchase warrants issued. No changes in fair value for
SAFEs and warrants for three months ended September 30, 2024 due to conversion of SAFEs to common shares on maturity during the period
and absent of liability-classified warrants as of September 30, 2024 as all warrants are equity-classified.
The increase in fair value
for the three months ended September 30, 2024 attributed mainly to more financial instruments issued to finance Damon Motors's
operation and the increase in the market price of Damon Motors equity as compared to the previous valuations.
Finance Expense
Finance expense includes the
following amount for the three months ended September 30, 2024 and 2023:
3 months ended
September 30,
2024
2023
$
$
Financing fees and other
43,085
315,962
Interest on debt
70,526
69,546
Interest on convertible notes
738,995
377,153
Interest on finance lease
2,240
2,492
854,846
765,153
Finance expense increased
marginally from $0.8 mil for the three months ended September 30, 2023, to $0.9 mil for the three months ended September 30, 2024 primarily
due to Damon Motors relying more on debt to finance its operations. For the three months ended September 30, 2024, interest expense on
convertible notes increased from $0.4 mil for the three months ended September 30, 2023 compared to $0.7 mil for the three months ended
September 30, 2024 as more convertible promissory notes continued to be issued in Fiscal 2024 and Q1 2025 to finance Damon Motors's
operation. The increase in partially off-set by decrease financing fees which decreased from $0.4 mil for the three months ended September
30, 2023 to $0.04 mil for the three months ended September 30, 2024 as the convertible notes issued in Q1 2025 are mainly non-brokered.
86
Net Loss
For the period ended September
30, 2024, the net loss increased from $5.4 mil for the period ended June 30, 2023 to $7.4 mil. The increase in net loss was largely due
to increase in the fair value of financial liabilities of $3.8 mil, higher finance expenses of $0.1 mil as Damon Motors continued to issue
financial instruments to finance its operation, partially off-set by recognition of FY2024 Canadian Scientific Research & Development
tax credit ("SR&ED") of $1.0 mil and decrease in operating expenses by $0.9 mil as Damon Motors manages its cashflow and
re-direct spending on key operational items.
Comparison of Annual Results
Damon Motors's
results of operations for the year ended June 30, 2024, 2023 and 2022 are presented below:
Years ended June 30,
2024
2023
2022
Variation 2024-2023
% Change 2024-2023
Variation 2023-2022
% Change 2023-2022
$
$
$
$
%
$
%
Expenses
Research and development, net
4,550,229
17,451,749
18,166,436
(12,901,520
)
(74
)%
(714,687
)
(4
)%
General and administrative
4,296,231
6,792,996
4,778,250
(2,496,766
)
(37
)%
2,014,746
42
%
Sales and marketing
986,137
2,747,792
4,417,165
(1,761,655
)
(64
)%
(1,669,373
)
(38
)%
Depreciation
303,424
370,575
247,947
(67,151
)
(18
)%
122,629
49
%
Transaction costs
1,626,519
942,187
-
684,332
73
%
942,187
n.a
Asset impairment
-
9,471,276
-
(9,471,276
)
(100
)%
9,471,276
n.a.
Gain from release of lease obligation
(42,297
)
(6,167,001
)
-
(6,124,704
)
(99
)%
(6,167,001
)
n.a.
Foreign exchange (gain)/loss
(235,871
)
429,358
113,921
(665,229
)
(155
)%
315,437
277
%
Loss from Operations
11,484,372
32,038,932
27,723,719
(20,554,560
)
(64
)%
4,315,213
16
%
Other expenses
Changes in fair value of financial liabilities
18,424,992
3,881,980
8,935,049
14,543,012
375
%
(5,053,069
)
(57
)%
Loss on debt settlement
785,377
-
-
785,377
n.a
Finance expense
3,273,507
1,091,697
77,342
2,181,810
200
%
1,014,355
1,312
%
22,483,876
4,973,677
9,012,391
17,510,199
352
%
(4,038,714
)
(45
)%
Net loss before income tax
33,968,248
37,012,609
36,736,110
(3,044,361
)
(8
)%
276,499
1
%
Income tax expense
-
-
-
-
-
-
-
Net loss
33,968,248
37,012,609
36,736,110
(3,044,361
)
(8
)%
276,499
1
%
Loss per share:
Basic and diluted – common shares
(2.79
)
(3.14
)
(3.22
)
0.35
11
%
0.08
3
%
Weighted average number of shares outstanding:
Basic and diluted – common shares
12,180,571
11,793,772
11,405,891
386,799
3
%
387,881
3
%
Research and Development, Net
Year ended June 30,
2024
2023
2022
$
$
$
Salaries and wages
5,098,938
8,418,133
7,406,673
Lab supplies and materials
549,305
5,135,769
4,700,997
Contractors and consultants
53,673
1,129,714
3,655,903
Stock-based compensation
72,605
789,486
1,303,706
Rent and insurance
726,438
1,430,985
532,065
Travel, meals and entertainment
54,919
234,877
413,848
Subscriptions and dues
52,891
252,328
335,762
General expenses and others
44,168
163,282
444,652
Canadian Scientific Research & Development tax credits
(1)
(2,102,708
)
-
(570,291
)
Industrial Research Assistance Program grant funding
-
(102,825
)
(56,879
)
4,550,229
17,451,749
18,166,436
(1)
The Canadian Scientific Research & Development ("SR&ED") tax credits are accounted
as a reduction to the research and development costs above and is made up of 2022 SR&ED tax credit refund of $1,036,952 (Note 7 –
CAD$1,403,514) and 2023 SR&ED tax credit refund of $1,065,756 (CAD$1,461,087), both of which were received in the three months period
ended December 31, 2023
87
Fiscal 2024 compared to Fiscal 2023
For the year
ended June 30, 2024, the research and development, net amounted to $4.6 mil compared to $17.5 mil for the year ended June 30, 2023.
The decrease was primarily due to reduced R&D activities as Damon Motors managed its cashflow and spend on key operational items
as analyzed below and recognition of Canadian Scientific Research & Development tax credit ("SR&ED ") of $2.1
mil received in year ended June 30, 2024 compared to $nil received in year ended June 30, 2023.
For the year ended June 30, 2024, salaries and wages decreased from
$8.4 mil for the year ended June 30, 2023, to $5.1 mil mainly due to decrease in headcount, from 39 as of June 30, 2023, to 18 by June
30, 2024. Similarly, the lab supplies and materials decreased from $5.1 mil for the year ended June 30, 2023 to just $0.5 mil for the
year ended June 30, 2024 as development activities in 2024 were reduced significantly as the development of motorcycle models were mostly
completed largely in 2022 and 2023. The fees paid to outside contractors and consultants decreased from $1.1 mil for the year ended June
30, 2023 compared $0.05 mil for the year ended June 30, 2024 with development and testing work being carried out by Damon Motors employees
instead of out-sourcing to third party. Stock-based compensation decreased from $0.8 mil for the year ended June 30, 2023, to $0.1 mil
in line with decrease in headcount, expiry of unexercised stock options for terminated employees and no new stock options granted for
the year ended June 30, 2024 compared to the year ended June 30, 2023. The decrease in rent and insurance from $1.4 mil for the year ended
June 30, 2023 to $0.7 mil for the year ended June 30, 2024 is mainly due to the surrender of Surrey manufacturing facility lease effective
June 30, 2023. Overall decrease in travel, meals and entertainment, subscriptions and dues, and general and other expenses were in line
with Damon Motors's managing costs.
Fiscal 2023 compared to Fiscal 2022
For the year ended June 30,
2023, the research and development, net amounted to $17.5 mil, compared to $18.2 mil for the year ended June 30, 2022. The decrease was
due to scaling down of R&D activities in the second half of 2023 due to tight cash position as explained below.
For the year ended June 30, 2023, salaries and wages increased from
$7.4 mil for the year ended June 30, 2022 to $8.4 mil for the year ended June 30, 2023 mainly due to higher headcount in the first half
of the Fiscal 2023 and severance payment made to terminated employees. With development of HyperDrive and HyperSport, the research and
development team headcount continued to increase from 78 as of June 30, 2022, peaking at 85 team members in August 2022 but dwindling
down to 39 by June 30, 2023 as Damon Motors under-go two rounds of headcount reduction in February and April 2023. Stock-based compensation
decreased from $1.3 mil for the year ended June 30, 2023 to $0.8 mil for the year ended June 30, 2022 as stock options granted to the
R&D team during the year were more than off-set by forfeiture or cancellation of unexercised stock options for terminated employees.
The fees paid to outside contractors and consultants of $3.7mil for the year ended June 30, 2022 has decreased to $1.1 mil for the year
ended June 30, 2023 as some of the contractors converted to full-time employees of Damon Motors, and due to slowing down of non-critical
research and development activities as funds were tight. The decrease was also reflected in overall decrease in travel, meals and entertainment,
subscriptions and dues and in general and other expenses in line with overall headcount decrease. The decrease was, however, partially
off-set by increase in rent and insurance due to commencement of lease of Surrey manufacturing facility and 101 Glacier on September 29,
2022 and October 1, 2022 respectively.
88
Also included in research
and development, net are SR&ED tax credits and government grant funding totaling $nil and $0.1 mil respectively the year ended June
30, 2023 and $0.6 mil and $0.1 mil respectively for the year ended June 30, 2022. The decrease in SR&ED tax credits for the year ended
June 30, 2023 was because the tax credit claimed during the year was not finalize at of June 30, 2023.
General and Administrative
Year ended June 30,
2024
2023
2022
$
$
$
Salaries and wages
1,595,844
2,188,438
1,422,378
Contractors and consultants
1,283,259
1,141,072
1,343,542
Professional fees
310,725
1,067,552
914,818
Stock-based compensation
58,765
914,408
829,288
Rent and insurance
558,204
472,601
144,239
Travel, meals and entertainment
159,760
286,444
52,270
Subscriptions and dues
339,713
441,141
31,788
General expenses and others
142,690
325,776
39,927
Rental income
(1)
(152,729
)
(44,436
)
-
4,296,231
6,792,996
4,778,250
(1)
Rental income for the year ended June 30, 2024 is net of bad debt of $43,091 (2023 and 2022 – nil)
Fiscal 2024 compared to Fiscal 2023
General and administrative
decreased to $4.3 mil for the year ended June 30, 2024 compared to $6.8 mil for the year ended June 30, 2023, mainly due to management
controlling its operating costs due to challenges with fund raising.
Salaries and wages for the year ended June 30, 2024, of $1.6 mil is
lower compared to $2.2 mil for the year ended June 30, 2023, principally due to decrease in headcount from 10 as of June 30, 2023, to
5 members as of June 30, 2024 due to terminations on March 18, 2024. Contractors and consultants fees paid to external parties increased
from $1.1 mil for the year ended June 30, 2023 to $1.3 mil for the year ended June 30, 2024 as Damon Motors incurred more consultancy
and advisory fees due to interim financial statements reviews and year-end financial statements audit for the public filing requirements
in fiscal year 2024. However, professional fees decreased from $1.1 mil for the year ended June 30, 2023, to $0.3 mil for the year ended
June 30, 2024, due to decrease in professional fees related to financing and decrease in intellectual property filing and patent registration
due to tight cashflow. The decrease in professional fees related to financing is due to Damon Motors raising funds in fiscal year 2024
through a broker compared to largely non-brokered financing in fiscal year 2023. Stock-based compensation decreased from $0.9 mil for
the year ended June 30, 2023, compared to $0.06 mil for the year ended June 30, 2024 in line with decrease in headcount, expiry of unexercised
stock options for terminated employees, and no new stock options granted for the year ended June 30, 2024 compared to the year ended June
30, 2023.
89
Fiscal 2023 compared to Fiscal 2022
For the year ended June 30,
2023, general and administrative expenses increased from $4.8 mil for the year ended June 30, 2022, to $6.8 mil. The increase resulted
from the expansion of Damon Motors's head office in anticipation of an expected increase in business and professional fees incurred
for intellectual property filing and patent registration in fiscal year 2023.
Salaries and wages increased
from $1.4 mil for the year ended June 30, 2022, to $2.2 mil for year ended June 30, 2023 mainly due to increase in salary and wages in
line with increase headcount and severance payment for terminated employees the in second half of Fiscal 2023. The headcount increased
from 15 as of June 30, 2022, peaking at 20 headcounts in September 2022 to support business expansion, before the two rounds of headcount
reduction in February and April 2023, reducing the headcount significantly back to 10 members as of June 30, 2023 due to challenges with
fund raising. On the other hand, fees paid to contractors and consultants reduced marginally from $1.3 mil for year ended June 30, 2022
to $1.1 mil for the year ended June 30, 2023 as Damon Motors cut down its spending on third party contractors and consultants due to tight
cash position but partially off-set by increase in accounting and consulting fees due to more frequent interim financial statements reviews.
Professional fees increased from $0.9 mil for the year ended June 30, 2022, to $1.1 mil for year ended June 30, 2023 due to higher legal
and professional fees related to intellectual property filing and patent registration in fiscal year 2023 and on-going fund raising. Stock-based
compensation increased marginally for the year ended June 30, 2023 totaling $0.9 mil compared to $0.8 mil for the year ended June 30,
2022 as stock options granted were partially offset by forfeiture or cancellation of unexercised stock options for terminated employees.
The increase in rent and insurance was due commencement of leases as
mentioned above. The overall increase in travel, meals and entertainment, and in general and other expenses for the year ended June 30,
2023 was mainly due to more travelling due to increase fund raising, corporate transaction activities and expansion of business activities.
Increase in subscriptions and dues was mainly due to implementation and subscription of Damon Motors cloud-based financial application
and cloud-based content management application in Fiscal 2023.
Sales and Marketing
Year ended June 30,
2024
2023
2022
$
$
$
Marketing and promotion
390,305
1,273,680
2,587,198
Salaries and wages
456,216
793,209
1,270,935
Stock-based compensation
15,471
128,996
190,301
Contractors and consultants
8,500
98,889
11,861
Rent and insurance
111,739
435,517
136,977
General expenses and others
3,906
17,501
219,893
986,137
2,747,792
4,417,165
Fiscal 2024 compared to Fiscal 2023
For the year ended
June 30, 2024, sales and marketing decreased from $2.7 mil for the year ended June 30, 2023, to $1.0 mil. The decrease was primarily due
to Damon Motors reducing the marketing team activity due to a delay in production and Damon Motors continuing to manage its cash flows
as explained above.
Marketing and promotion expenses were reduced from $1.3 mil for the
year ended June 30, 2023 to $0.4 mil for the year ended June 30, 2024 as Damon Motors limited the spend on promotion activities, sponsorship,
advertisement, and public relation consultancy costs due to the limited cashflow. Salaries and wages also reduced from $0.8 mil for the
year ended June 30, 2023 to $0.5 mil for the year ended June 30, 2024 as headcount was reduced from 5 members as of June 30, 2023 to 3
members as of June 30, 2024.
90
Fiscal 2023 compared to Fiscal 2022
For the year ended June
30, 2023, selling and marketing expenses decreased from $4.4 mil for the year ended June 30, 2022, to $2.7 mil. The decrease was
primarily due to Damon Motors reducing headcount in its marketing team due to a delay in production and scaling down marketing
activities due to a tight cash position.
In view of the above, marketing
and promotion expenses reduced from $2.6 mil for the year ended June 30, 2022 compared to $1.3 mil for the year ended June 30, 2023. Salaries
and wages also reduced from $1.3 mil for the year ended June 30, 2022 to $0.8 mil due to headcount reduction from 8 members as of June
30, 2022 to just 5 members as of June 30, 2023 as production was delayed and due to challenging funding situation. The decrease in travel,
meals and entertainment, and general and other expense were due to drastic scaling down of activities in view of tight cash position.
On the other hand, increase in rent and insurance allocated was mainly due to commencement of new leases as mentioned previously.
Depreciation
Fiscal 2024 compared to Fiscal 2023
For the year ended
June 30, 2024, depreciation decreased from $0.4 mil for the year ended June 30, 2023, to $0.3 mil as there was no asset addition for the
year ended June 30, 2024 and some assets were impaired in Fiscal 2023.
Fiscal 2023 compared to Fiscal 2022
The depreciation for the year
ended June 30, 2023 increase to of $0.4 mil from $0.2 mil for the year ended June 30, 2022, due office expansion to accommodate new headcounts.
Transaction costs
For the year ended
June 30, 2024, transaction costs increased from $0.9 mil for the year ended June 30, 2023, to $1.6 mil due to higher legal, professional
and consulting fees related business combination with XTI Aerospace and public listing in Fiscal 2024 compared to costs associated with
the deSPAC transaction in Fiscal 2023.
There were no transaction costs for the
year ended June 30, 2022.
Changes in Fair Value of Financial Liabilities
Changes in the fair
value of financial liabilities includes the following amounts for the year ended June 30, 2024, 2023 and 2022:
Year ended June 30,
2024
2023
2022
$
$
$
Changes in Fair Value of:
SAFEs
592,543
740,030
8,935,049
Convertible notes
13,011,887
2,874,000
-
Warrants
4,820,562
267,950
-
18,424,992
3,881,980
8,935,049
Fiscal 2024 compared to Fiscal 2023
Changes in the fair value of financial liabilities of $18.4 mil for
the year ended June 30, 2024, compared to $3.9 mil for the year ended June 30, 2023, related to changes in fair value of SAFEs issued
in August and September 2022, convertible promissory notes issued from October 2022 onwards and common share purchase warrants issued
as part of the convertible notes from June 2023 onwards to finance Damon Motors's operation. The increase in fair value for the
year ended June 30, 2024 is attributed mainly to more financial instruments issued to finance Damon Motors's operation (see MD&A
section entitled "Liquidity and Capital Resources") and the increase in the market price of Damon Motors equity as compared
to the previous valuations.
91
Fiscal 2023 compared to Fiscal 2022
The decrease in the changes in fair value of SAFEs from $8.9 mil for
the year ended June 30, 2022 to of $0.7 mil for the year ended June 30, 2023 as the two tranches of SAFEs, Tranche 5 and Tranche 6, were
converted to preferred shares on December 31, 2021. The changes in fair value of SAFEs of $0.7 mil for the year ended June 30, 2023 relates
to Tranche 7 which will be convertible to common shares on maturity. The change in fair value of convertible promissory notes and common
share purchase warrant obligations of $2.9 mil and $0.3 mil respectively for the year ended June 30, 2023 relates to convertible notes
and share purchase warrants issued to noteholders in Fiscal 2023 compared to nil in Fiscal 2022 as Damon Motors was funded mainly from
issuance of SAFEs in Fiscal 2022.
Finance Expense
Finance expense
includes the following amount for the year ended June 30, 2024, 2023 and 2022:
Year ended June 30,
2024
2023
2022
$
$
$
Financing fees and other
833,904
432,312
44,817
Interest on debt
162,758
173,632
13,794
Interest on convertible notes
2,320,751
512,183
-
Interest on finance lease
9,499
10,606
12,435
Accretion
-
11,058
6,296
Interest Income
(53,405
)
(48,094
)
-
3,273,507
1,091,697
77,342
Fiscal 2024 compared to Fiscal 2023
Finance expense increased from $1.1 mil for the year ended June 30,
2023, to $3.3 mil primarily by Damon Motors relying more on debt to finance its operations. For the year ended June 30, 2024, Damon Motors
incurred financing fees of $0.8 mil which increased from financing fees of $0.4 mil for the year ended June 30, 2023. Interest expense
on convertible notes increased from $0.5 mil for the year ended June 30, 2023 compared to $2.3 mil for the year ended June 30, 2024 as
all notes were largely issued in the second quarter of Fiscal 2023 and Fiscal 2024 to finance Damon Motors's operation.
Fiscal 2023 compared to Fiscal 2022
For the year ended June 30,
2023, finance expenses increased from $0.1 mil for the year ended June 30, 2022, to $1.1 mil. The increase was driven primarily by financing
fees, interest expense for SR&ED facility loan, promissory notes and convertible notes all drawn or issued in the second quarter of
Fiscal 2023 to finance Damon Motors's operation.
In general, Damon Motors realized
lower finance expense for the year ended June 30, 2022, as Damon Motors was largely funded by the issuance of SAFEs which are convertible
to common shares on maturity, with no interest charge.
Net Loss
Fiscal 2024 compared to Fiscal 2023
For the year ended
June 30, 2024, the net loss decreased from $37.0 mil for the year ended June 30, 2023 to $34.0 mil. The decrease in net loss was largely
due to substantial drop in operating cost of $15.1 mil, recognition of Canadian Scientific Research & Development tax credit ("SR&ED
") of $2.1 mil received in year ended June 30, 2024 as explained above, and absence of asset and right-of-use asset impairment of
$9.5 mil recognized in the year ended June 30, 2023, partially offset by increase in transaction cost of $0.7 mil, gain from release of
lease obligation of $6.1 mil, changes in fair value of financial liabilities of $14.5 mil, loss from debt settlement of $0.8 mil and higher
finance expenses $2.2 mil as Damon Motors relies more on convertible notes issued to finance its operation.
92
Fiscal 2023 compared to Fiscal 2022
For the year ended June 30,
2023, the net loss increased marginally from $36.7 mil for the year ended June 30, 2022, to $37.0 mil. The increase in net loss was due
to higher transaction costs $0.9 mil, asset impairment of $9.5 mil, higher finance expenses of $1.0 mil, partially off-set by gain from
the release of lease obligation of $6.2 mil and changes in fair value of financial liabilities of $5.1 mil.
Non-GAAP Financial Measures
Adjusted EBITDA
(a)
of negative $1.8 mil for the period ended September 30, 2024, as compared to negative $3.7 mil for the period ended September 30, 2023,
is mainly due to management controlling its operating cost due to challenges with fund raising explained above.
Adjusted EBITDA
(a)
of negative $11.3 mil for the year ended June 30, 2024, as compared to negative $26.1 mil for the year ended June 30, 2023, is mainly
due to management controlling its operating costs due to challenges with fund raising explained above.
(a)
"Adjusted EBITDA" is defined as net earnings (loss) before finance expenses income tax expense or benefit, and depreciation and amortization, adjusted for stock-based compensation, changes in fair value of financial liabilities and foreign exchange (gain). Damon Motors's computation of Adjusted EBITDA may not be comparable to other similarly entitled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion. Damon Motors believes that the use of Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results, which may present similar non-GAAP financial measures to investors. In addition, Damon Motors's presentation of these measures should not be construed as an inference that Damon Motors's future results will be unaffected by unusual or non-recurring items. The reconciliation of net earnings (loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA is below.
93
Reconciliation of EBITDA and Adjusted EBITDA
The following table reconciles
the net loss to Adjusted EBITDA for the periods ended September 30, 2024 and 2023:
3 months ended
September 30,
2024
2023
$
$
Net loss
7,412,175
5,377,191
Depreciation and amortization
(67,248
)
(80,138
)
Finance expense
(854,846
)
(765,153
)
Stock-based compensation
(16,295
)
(204,159
)
Foreign exchange (gain) loss
(62,738
)
159,457
Changes in fair value of financial liabilities
(1)
(4,657,388
)
(827,304
)
Adjusted EBITDA
1,753,660
3,659,894
(1)
Represents non-cash change in the fair value of financial liabilities as described in note 9, note 10 and note 11 to the condensed interim unaudited consolidated financial statements for periods ended September 30, 2024 and 2023.
The following table
reconciles the net loss to Adjusted EBITDA for the year ended June 30, 2024, 2023 and 2022:
Year ended June 30,
2024
2023
2022
$
$
$
Net loss
33,968,248
37,012,609
36,736,110
Depreciation and amortization
(303,424
)
(370,575
)
(247,947
)
Finance expense
(3,273,507
)
(1,091,697
)
(77,342
)
Stock-based compensation
(1)
(146,842
)
(1,832,890
)
(2,323,294
)
Foreign exchange gain/(loss)
235,871
(429,358
)
(113,921
)
Changes in fair value of financial liabilities
(2)
(18,424,992
)
(3,881,980
)
(8,935,049
)
Loss on debt settlement
(785,377
)
-
-
Other transactions
(4)
42,297
(3,304,275
)
-
Adjusted EBITDA
11,312,274
26,101,834
25,038,557
(1)
Represents non-cash expenses recognized in connection with the stock options issued to participants
                                                    under Damon Motors's stock option plan as described in Note 12 to the annual audited consolidated financial statements for the year
                                                    ended June 30, 2024, 2023 and 2022.
(2)
Represents non-cash change in the fair value of financial
liabilities as described in note 8, note 9 and note 10 to the consolidated financial statements for the year ended June 30, 2024, 2023
and 2022.
(3)
Represents asset impairment arising from termination and
surrender of 708 Powell lease and Surrey manufacturing facility lease respectively in fiscal year 2024 and 2023.
94
Financial Position
The following table sets out
selected information related to the financial position of Damon Motors as of September 30, 2024 and June 30, 2024 as well as explanations
for variations:
September 30,
2024
June 30,
2024
Variation
Explanation of Variation
$
$
$
Cash
113,549
395,580
(282,031
)
Decrease in cash is mainly due to funds raised from financing activities during the period is insufficient to cover the cash used in operation, reducing the opening cash balances - See MD&A section entitled "Cash Flows" and "Liquidity and Capital Resources"
Funding receivable
1,004,022
-
1,004,022
Mainly due to recognition of FY2024 SR&ED tax credit as Damon Motors received Notice of Assessment in October 2024
Other current assets
115,806
90,921
24,885
Variance not material
Current assets
1,233,377
486,501
746,876
Increase in current asset is mainly due to recognition of FY2024 SR&ED as explained above, marginally off-set by decrease in cash as additional fund raised from financing activities during the period were all fully used in operation
Premises lease deposits
127,309
126,431
878
Movement not material
Property and equipment, net
941,807
1,138,420
(196,613
)
Mainly due to depreciation and amortization fixed asset and right-of-use assets and impairment of operating right-of-use asset
Non-current assets
1,069,116
1,264,851
(195,735
)
Mainly due to factors explained above
TOTAL ASSETS
2,302,493
1,751,352
551,141
Mainly due to factors explained above
Accounts payable and accrued liabilities
6,657,291
5,924,121
733,170
Mainly due to Damon Motors delaying payment to tight cashflow
Customer deposits
476,404
482,575
(6,171
)
Movement not material
Current portion of operating lease liabilities
363,640
443,519
(79,879
)
Mainly due to on-going lease payments
Current portion of finance lease liabilities
7,329
7,141
188
Mainly due to on-going lease payments
Short-term debt
2,507,214
1,099,489
1,407,725
Mainly due to issuance of new promissory notes and senior secured promissory notes issued to Grafiti Holding – see MD&A section entitled "Liquidity and Capital Resources"
Convertible notes
46,294,751
40,630,756
5,663,995
Mainly due to convertible promissory notes $0.6 mil issued during the period, (see MD&A section entitled "Liquidity and Capital Resources"), interest accrued $0.7 mil, changes in fair value $4.7 mil partially offset by amount allocated to warrant bifurcated of $0.3 mil
Financial liability convertible to equity
-
3,200,000
(3,200,000
)
Mainly due to conversion of Simple Agreements for Future Equity (SAFE) during the period to common shares
Current liabilities
56,306,629
51,787,601
4,519,028
Mainly due to factors explained above
Non-current portion of operating lease liabilities
175,493
235,492
(59,999
)
Mainly due to on-going lease payments
Non-current portion of finance lease liabilities
178,008
177,403
605
Mainly due to on-going lease payments
Non-current Liabilities
353,501
412,895
(59,394
)
Mainly due to factors explained above
TOTAL LIABILITIES
56,660,130
52,200,496
4,459,634
Mainly due to factors explained above
Common shares
5,138,751
1,938,751
3,200,000
Mainly due to common shares issue for conversion of SAFEs
Preferred shares
71,590,087
71,590,087
-
Additional paid in capital
16,933,294
16,629,612
303,682
Mainly due to equity-classified warrant issued during the year $0.3 mil
Accumulated deficit
(148,019,769
)
(140,607,594
)
(7,412,175
)
Mainly due to operational loss during the year – see MD&A section entitled "Results of Operations"
Total Shareholders' deficit
(54,357,637
)
(50,449,144
)
(3,908,493
)
Mainly due to factors explained above
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT
2,302,493
1,751,352
551,141
Mainly due to factors explained above
95
The following table sets out
selected information related to the financial position of Damon Motors as of June 30, 2024 and June 30, 2023 as well as explanations
for variations:
June
    30,
2024
June
    30,
2023
Variation
Explanation of Variation
$
$
$
Cash
395,580
2,069,056
(1,673,476
)
Decrease in cash
    is mainly due to funds raised from financing activities during the period being insufficient to cover the cash used in operation,
    reducing the opening cash balances - see MD&A section entitled "Cash Flows" and "Liquidity and Capital Resources"
Other
    current assets
90,921
255,582
(164,661
)
Mainly due to amortization
    of prepayment during the period and reduction in other receivables
Current
    assets
486,501
2,324,638
(1,838,137
)
Decrease in current assets
    is mainly due to decrease in cash as additional funds raised from financing activities during the period were all fully used in operation
Premises
    lease deposits
126,431
187,435
(61,004
)
Movement not material
Property
    and equipment, net
1,138,420
2,004,066
(865,646
)
Mainly due to depreciation
    and amortization fixed asset and right-of-use assets and impairment of operating right-of-use asset
Non-current
    assets
1,264,851
2,191,501
(926,650
)
Mainly due to factors explained
    above
TOTAL
    ASSETS
1,751,352
4,516,139
(2,764,787
)
Mainly due to factors explained
    above
Accounts
    payable and accrued liabilities
5,924,121
7,106,281
(1,182,160
)
Mainly due to the company making
    payments to reduce accounts payable as additional funds are raised
Customer
    deposits
482,575
488,569
(5,994
)
Movement not material
Current
    portion of operating lease liabilities
443,519
740,486
(296,967
)
Mainly due to on-going lease
    payments
Current
    portion of finance lease liabilities
7,141
12,363
(5,222
)
Mainly due to on-going lease
    payments
Debt
1,099,489
1,857,550
(758,061
)
Mainly due to repayment of
    SR&ED loan and promissory note converted to convertible promissory note on maturity partially offset by issuance of new promissory
    notes for debt settlement and senior secured promissory notes issued to Grafiti – see MD&A section entitled "Liquidity
    and Capital Resources"
Convertible
    notes
40,630,756
14,727,183
25,903,573
Mainly due to convertible notes
    $11.6 mil issued during the period, (see MD&A section entitled "Liquidity and Capital Resources"), $1.3m convertible
    notes issued for debt settlement, interest accrued $2.3 mil, changes in fair value $13.0 mil partially offset by amount allocated
    to warrant bifurcated of $1.8 mil and interest paid of $0.5 mil
Derivative
    warrant liabilities
-
521,950
(521,950
)
Mainly due to $1.1 mil bifurcated
    value of additional share purchase warrants issued during the period (see MD&A section entitled "Liquidity and Capital
    Resources") and fair value changes of $4.8 mil fully off-set as these warrants are reclass to equity-classified and charge
    to AIPC $6.4 mil
Financial
    liability convertible to equity
3,200,000
2,700,000
500,000
Mainly due to fair value changes
    of Simple Agreements for Future Equity (SAFE) during the period
Current
    liabilities
51,787,601
28,154,382
23,633,219
Mainly due to factors explained
    above
Non-current
    portion of operating lease liabilities
235,492
621,325
(385,833
)
Mainly due to on-going lease
    payments and de-recognition of lease liability following termination of one of the operating leases
Non-current
    portion of finance lease liabilities
177,403
190,774
(13,371
)
Mainly due to on-going lease
    payments
Other
    non-current liabilities
-
19,099
(19,099
)
Mainly comprised of long-term
    deposit for office space subleased, variance not material
Non-current
    Liabilities
412,895
831,198
(418,303
)
Mainly due to factors explained
    above
TOTAL
    LIABILITIES
52,200,496
28,985,580
23,214,916
Mainly due to factors explained
    above
Common shares
1,938,751
1,285,788
652,963
Mainly due to stock options
    exercised and shares issued to reduce severance settlements during the period
Preferred
    shares
71,590,087
71,590,087
-
Additional
    paid in capital
16,629,612
9,294,030
7,335,582
Mainly due to liability-classified
    warrant reclassed to equity-classified warrant charged to APIC $6.4 mil; equity-classified warrant issued during the year $1.1 mil
    and stock-based compensation vested $0.1 mil; partially offset by the increase in value of stock option exercised $0.3 mil
Accumulated
    deficit
(140,607,594
)
(106,639,346
)
(33,968,248
)
Mainly due to operational loss
    during the year – see MD&A section entitled "Results of Operations"
Total
    Shareholders' deficit
(50,449,144
)
(24,469,441
)
(25,979,703
)
Mainly due to factors explained
    above
TOTAL
    LIABILITIES AND SHAREHOLDERS' DEFICIT
1,751,352
4,516,139
(2,764,787
)
Mainly due to factors explained
    above
96
Cash Flows
The following table provides
a summary of Damon Motors's operating, investing, and financing cash flows for the three months ended September 30, 2024 and 2023:
Three months ended
September 30,
2024
2023
$
$
Cash used in operating activities
(2,160,571
)
(4,302,549
)
Cash provided by financing activities
1,878,540
4,928,604
Net change in cash during the period
(282,031
)
626,055
Cash, beginning of period
395,580
2,069,056
Cash, end of period
113,549
2,695,111
The following
table provides a summary of Damon Motors's operating, investing, and financing cash flows for the year ended June 30, 2024, 2023 and
2022:
Year ended June 30,
2024
2023
2022
$
$
$
Cash used in operating activities
(12,869,374
)
(21,082,292
)
(24,440,545
)
Cash used in investing activities
-
(778,681
)
(2,708,872
)
Cash provided by financing activities
11,195,898
13,831,298
25,283,836
Net change in cash during the year
(1,673,476
)
(8,029,675
)
(1,865,581
)
Cash, beginning of year
2,069,056
10,098,731
11,964,312
Cash and restricted cash, end of year
395,580
2,069,056
10,098,731
Cash Flows Used in Operating Activities
For the three months ended
September 30, 2024, cash flows used in operating activities was $2.2 mil and was composed of Damon Motors's net loss of $7.4 mil
driven by the factors discussed partially offset by net non-cash items of $5.7 mil and by net changes in non-cash working capital of $0.4
mil. Non-cash items of $5.7 mil composed mainly of $4.7 mil loss related to the change in fair value of financial liabilities, $0.8 mil
accrued unpaid interest on debt, $0.2 mil for depreciation and amortization.
For the period ended September
30, 2023, cash flows used in operating activities was $4.3 mil and was composed of Damon Motors's loss and comprehensive loss of
$5.4 mil driven by the factors discussed above and by net changes in non-cash working capital of $0.5 mil partially offset by net non-cash
items of $1.6 mil. Non-cash items of $1.6 mil were mainly composed of $0.8 mil loss related to the change in fair value of financial liabilities,
$0.4 mil accrued unpaid interest on debt, $0.2 mil for stock-based compensation expense, $0.2 mil for depreciation and amortization, partially
off-set by $0.1 mil in unrealized foreign exchange gain. The decrease in non-cash working capital was primarily driven by decreases in
trade payables and accrued liabilities of $0.5 mil, operating lease payment of $0.1 mil, partially off-set by increase in customer deposits
and a decrease in prepaid and deposits.
For the year
ended June 30, 2024, cash flows used in operating activities was $12.9 mil and was composed of Damon Motors's net loss of $34.0 mil
driven by the factors discussed partially offset by net non-cash items of $21.7mil and by net changes in non-cash working capital of
$0.6 mil. Non-cash items of $21.7 mil were mainly composed of $18.4 mil loss related to the change in fair value of financial
liabilities, $1.7 mil accrued unpaid interest on debt, $0.8 mil for loss on debt settlement, $0.1 mil for stock-based compensation
expense, $0.8 mil for depreciation and amortization.
For the year
ended June 30, 2023, cash flows used in operating activities was $21.1 mil and was composed of Damon Motors's net loss of $37.0 mil
driven by the factors discussed above, partially offset by net non-cash items of $11.6 mil and by net changes in non-cash working
capital of $4.3mil. Non-cash items of $11.6mil were mainly composed of $1.5 mil for stock-based compensation expense, $1.1 mil for
depreciation and amortization, $0.8 mil for accrued unpaid interest on operating lease, $3.9 mil loss related to the change in fair
value of financial liabilities, $9.4 mil related to asset impairment partially off-set by $6.2 mil in gain from lease obligation
released. The increase in non-cash working capital was primarily driven by increases in trade payables.
97
For the year ended June
30, 2022, cash flows used in operating activities was $24.4 mil and was composed of Damon Motors's net loss of $36.7 mil driven by
the factors discussed above, partially offset by net non-cash items of $11.8 mil and net changes in non-cash working capital of $0.5
mil. Non-cash items of $11.8 mil were mainly composed of $2.3 mil for stock-based compensation expense, $0.6 mil for depreciation
and amortization and $8.9 mil related to the change in fair value of SAFEs. The net changes in non-cash working capital were
primarily driven by increases in trade payables and accrued liabilities, an increase in customer deposits partially offset by an
increase in prepaid and deposits.
Cash Flows Used in Investing Activities
Cash flows used in investing
activities primarily relates to capital expenditures for leasehold improvements, equipment and office furniture as Damon Motors continues
to expand and invest in its business infrastructure and scales its manufacturing operations.
There is no cash flow used
in investing activities for the three months ended September 30, 2024 and 2023.
There is no cash
flow used in investing activities for the year ended June 30, 2024.
For the year ended
June 30, 2023, cash flows used in investing activities primarily relates to tenant improvements made to the Surrey manufacturing facility
and on lease commencement, capitalized as part of the right-of-use asset.
For the year ended
June 30, 2022, cash flows used in investing activities relates to tenant improvement on the Surrey manufacturing facility and leasehold
improvement and equipment for new office space in both Vancouver, British Columbia, Canada and San Rafael, California, the United States
to accommodate business expansion.
Cash Flows from Financing Activities
Cash flows from financing
activities were $1.9 mil for the three months ended September 30, 2024 and was primarily due to proceeds from issuance of convertible
promissory notes of $0.6 mil, proceeds from issuance of senior secured promissory note to Grafiti Holding of $0.6 mil and proceeds from
issuance of secured promissory note and of $0.7 mil to uLoan and Rise Capital.
Cash flows from financing
activities were $4.9 mil for the period ended September 30, 2023 and was primarily due to proceeds from issuance of convertible notes
of $4.95 mil marginally offset by partial repayment of SR&ED loan $0.03mil.
Cash flows from
financing activities were $11.2 mil for the year ended June 30, 2024 and was primarily due to proceeds from issuance of convertible notes
of $11.5 mil, proceeds from issuance of senior secured promissory note of $0.55 mil marginally offset by partial repayment of SR&ED
loan $0.9 mil.
98
Cash flows from
financing activities were $13.8 mil for the year ended June 30, 2023 and was primarily due to proceeds from issuance of convertible notes
of $11.2 mil, SAFEs of $2.0 mil, drawdown on SR&ED facility of $1.1 mil and proceeds from promissory note of $0.7 mil, partially off-set
by cash settlement for release of lease obligation of $1.1 mil and SR&ED facility repayment of $0.2 mil.
Cash flows from
financing activities were $25.3 mil for the year ended June 30, 2022 and was primarily due to proceeds from issuance of preferred shares
$25.3 mil, draw down on SR&ED facility $0.6 mil, partially offset by SR&ED repayments of $0.6 mil during the year.
Liquidity and Capital Resources
Liquidity
As of September 30, 2024,
Damon Motors had a cash balance of $0.1 mil ($0.4 mil as of June 30, 2024). Damon Motors incurred loss for the year of $7.4 mil for the
three months ended September 30, 2024, of which $4.7 mil loss related to the change in fair value of financial liabilities, $0.8 mil accrued
unpaid interest on debt, $0.2 mil for depreciation and amortization, partially off-set by net changes in non-cash working capital of $0.4
mil. Damon Motors's accumulated deficit and expected future losses cast substantial doubt upon Damon Motors's ability to continue
as a going concern. Furthermore, Damon Motors had negative cash flows from operating activities of $2.2 mil for the three months ended
September 30, 2024. These operating losses and negative cash flows were mainly the result of on-going operating costs, transaction costs
incurred due to the business combination and the public listing exercise and financing cost to sustain its operation. Based on the foregoing
and its growth strategy, Damon Motors expects to continue to make significant expenditures to expand Damon Motors's business and
develop manufacturing operations in the future. As a result, Damon Motors may continue to incur operating losses and have negative cash
flows in the short term, as it continues to execute on its growth strategy and develop manufacturing capability to produce the motorcycles
to meet delivery of the motorcycles in our order book.
Damon Motors's primary
sources of liquidity used in the funding of its operations and the execution of its growth comes from on-going fund raised in the form
of issuance of convertible notes (as discussed in the section "Capital Resources" of this MD&A below). Damon Motors cannot
provide assurance that Damon Motors will secure financing in a timely manner.
Capital Resources
Convertible Notes and Share Purchase Warrants
issued between July 1, 2024 to September 30, 2024
During the period from July
1, 2024 to September 30, 2024, Damon Motors issued convertible promissory notes to arms-length parties with an aggregate principal amount
of $555,000 at valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on the maturity date. These convertible
promissory notes holders were also issued 202,820 common share purchase warrants to subscribe for, and purchase of Damon Motors common
shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization at closing date.
Convertible Notes and Share Purchase Warrants
issued after September 30, 2024
From October 1, 2024 to the
date of the report, Damon Motors secured additional convertible promissory notes with aggregate value of $550,000 with a valuation cap
of $125,000,000, maturing one year from issuance and interest rate of 12% per annum, payable in arrears on maturity. These convertible
promissory notes holders were also issued 200,993 common share purchase warrants to subscribe for, and purchase of Damon Motors common
shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization at closing date.
99
Senior secured promissory note
On July 3, 2024, Damon Motors
issued additional $396,000 senior secured promissory note ("Secured Note") with interest rate at 10.0% per annum in favour
of Grafiti Holding.
On September 25, 2024, Damon
Motors amended the senior secured promissory note dated June 26, 2024 increasing the maximum aggregate principal amount of the note from
$1,000,000 to $1,150,000. On the same date, Damon Motors drew down an additional $200,000 on the note bringing the total principal amount
drew down to $1,146,000.
Secured promissory notes
On August 5 2024, Damon Motors
issued promissory note to arms-length parties with principal amount of $364,649 (CAD$500,000) secured against future SR&ED tax credit
refund expected to be received from year-end tax returns for 2024 submitted to CRA and substantially all of the assets of Damon Motors.
The loan accrues interest at a rate of 3% per month and matures on or before November 15, 2024.
On August 11, 2024, Damon
Motors issued another promissory note to arms-length parties with principal amount of $364,650 (CAD$500,000) secured against substantially
all of the assets of Damon Motors on a pari passu basis with the promissory note issued on August 6, 2024. The loan accrues interest at
a rate of 3% per month and matures on or before November 15, 2024.
On October 9, 2024, Damon
Motors issued promissory note to arms-length parties and received proceeds of $200,000, which is net of set-up fee of $12,500. The note
accrues interest at a rate of 12% per annum and shall become due and payable in full on the earlier of (i) 60 days from the funds are
advanced; or (ii) five (5) business days following the completion of the liquidity event. The liquidity event refers to the business combination
with Grafiti, following which Damon Motors will become a wholly owned subsidiary of Grafiti Holding and Grafiti Holding's securities
will become listed and trading on the Nasdaq.
SR&ED tax credit refund
On October 4, 2024, Damon
Motors received the Notice of Assessment for 2024 SR&ED tax credit refund amount of $1,004,022 (CAD$1,355,329) from CRA and the tax
credit refund was received in full on October 16, 2024.
Off-Balance Sheet Arrangements
Damon Motors does not have
any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities,
which are established for the purpose of facilitating off-balance sheet arrangements.
Commitments and Contingencies
In the normal course of business,
Damon Motors enters into contractual obligations that will require it to disburse cash over future periods.
Commitments and contingencies
disclosures can be found in Note 12 of Damon Motors's unaudited condensed interim consolidated financial statements as of September
30, 2024 included elsewhere in this prospectus.
New Accounting Standards Not Yet Adopted
Damon Motors continually assesses
any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects
Damon Motors's financial reporting, Damon Motors undertakes a study to determine the consequences of the change to its financial
statements and assures that there are proper controls in place to ascertain that Damon Motors's financial statements properly reflect
the change.
Details of the recent accounting
pronouncements not yet adopted can be found in Note 3(d) of Damon Motors's unaudited condensed interim consolidated financial statements
as of September 30, 2024 included elsewhere in this prospectus.
100
BUSINESS
Our Group Structure
The following organization
chart indicates the intercorporate relationships of the Company and its material subsidiaries, together with the jurisdiction of formation,
incorporation or continuance of each entity, following the consummation of the Business Combination.
Our Business
Our Motorcycle Development and Manufacturing
Business through Damon Motors
The material business of the
Company operates through Damon Motors. Damon Motors is a British Columbia based motorcycle manufacturing company aiming to building a
smart and technologically advanced motorcycle with zero emissions while still maintain performance and safety while also incorporating
connectivity and artificial intelligence.
We, through our wholly-owned
subsidiary Damon Motors and its subsidiaries, design and produce motorcycles aimed at transforming the motorcycle industry by building
a smart and technologically advanced motorcycle. Damon Motors is developing the technology and investing in the capabilities to lead the
industry transformation in the high-performance electric motorcycle market. With decades of combined management and engineering experience
across the team's careers, and a commitment to low carbon personal mobility solutions, Damon Motors is introducing existing enthusiasts
to high-performance electric products while bringing new riders to the motorcycle community with first of its kind advances in zero emissions
motorcycle performance, safety, connectivity and AI.
Founded in 2017, Damon Motors
started reimagining the future of motorcycling by means of advanced safety design, electric vehicle powertrain technology and user experience.
In 2019, Damon Motors took its first alpha prototype motorcycles and safety systems into the field to test the concept. In 2021, Damon
Motors expanded its operations and expertise with an R&D facility in San Rafael, California to accelerate the engineering and development
of its HyperDrive platform drive unit and the HyperSport motorcycle. Through core technology advancements, Damon Motors electric motorcycles
are in prototype phase of product validation.
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Our SAVES Distribution Business Through
Grafiti Limited
We, through our wholly-owned
subsidiary Grafiti Limited, distribute in the UK and certain other European countries data analytics and visualization software products
referred to as "SAVES" primarily for scientists and engineers. Grafiti Limited's products can be downloaded to a user's
desktop. These products help scientific research in the health and life sciences domain in the discovery of new drugs, in the study of
the efficacy of established drugs and therapies, and in epidemic propagation research, among other applications. Engineers use our products
for a multitude of applications which include, but are not limited to, conducting surface modelling analysis and curve fitting in order
to design new engineering processes, studying signal attenuation and propagation in radio engineering. Potential automobile and motorcycle
applications could include surface panel design for aerodynamics, aesthetic symmetry, and calculated asymmetry among others. We believe
the Grafiti Limited regression analysis product could also be used for predicting vehicle sharing demand and pricing trends in various
markets based on a wide range of variables.
Grafiti Limited was formed
by the Parent on May 13, 2020 as a distribution arm for its SAVES products in the UK market and part of the European market.
Our Market
EV Growth Worldwide
According to the International
Energy Agency's April 2023 Global EV Outlook, global electric car markets are seeing rapid growth as sales exceed 10 million units
in 2022. A total of 16% of all new cars sold were electric in 2022, up from around 9% in 2021 and less than 5% in 2020. Three geographic
markets dominated global sales. China was the frontrunner, accounting for around 60% of global electric car sales. More than half of the
electric cars on roads worldwide are now in China and the country has already exceeded its 2025 target for new energy vehicle sales. In
Europe, the second largest market, electric car sales increased by over 15% in 2022, meaning that more than one in every five cars sold
was electric. Electric car sales in the United States – the third largest market – increased 55% in 2022, reaching a sales
share of 8%. The rest of the world accounts for about 2%.
EV Growth in the North American and
European Markets
As reported by Silas Smith
of way.com, in North America, the percentage of electric cars hit a new high in early 2022. During the first quarter of 2022, the number
of EV registrations increased by 60% despite the generally slow performance of the overall market. During the initial nine months of 2022,
a total of 530,577 electric cars were sold in the US. These numbers are only for BEVs. The figures do not include plug-in HEV and Hybrid
Electric Vehicles. Almost 65% of these percentage of electric cars were Tesla. As early as 2026, S&P Global Mobility expects the total
of new EV models available to break 200 in the US market, as the ICE new model count continues a steady decline. In late 2027/early 2028,
the total model count should be at its apex — with the number of options across all propulsion system designs approaching 650. The
situation is expected to be similar in Europe. S&P Global Mobility forecasts that the three propulsion system designs — EV,
hybrid, and ICE — will each account for between 29% and 36% of the market by the end of this decade. After that, EV share is expected
to continue to grow while hybrid plateaus and then joins ICE in a continuous, but slow, decline.
Motorcycle Market Today
The global motorcycle industry
is a $144B industry, according to data from Motorcycles Data 2022 Global Industry Sales Report, and there are more than 180M motorcycles
and scooters produced per year, which exceeds the number of passenger cars and light trucks produced per year on a combined basis.
Damon's strategy is
to provide premium and high-technology electric motorcycle offerings for each highway-capable motorcycle segment, priced competitively
with the other available options with the goal of becoming a leading motorcycle manufacturer with electric motorcycles that outperform
comparable gas bikes.
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The relevant electric vehicle
markets for Damon includes:
●
small and large scooters
●
light, medium and heavy motorcycles
●
small and large three-wheelers
Damon's current core
capabilities are in the light, medium and heavy motorcycle segments. Motorcycles Data 2022 Global Industry Sales Report reported $32.1
billion in light motorcycle sales in 2022, which skewed towards the markets in Asia and Europe, while the sales of medium and heavy motorcycles
totaled $11.2 billion, growing at a CAGR of 7.2% and concentrated in North America and Europe, where customers more often choose heavier
models.
The North American market
accounts for the majority of the market's profits, whereas the majority of volume is accounted for in Southeast Asia, albeit with
significantly lower margins than the North American market. That said, according to Motorcycles Data 2022 Global Industry Sales Report,
the average priced motorcycle purchased in Southeast Asia has risen above $2,400, with the fastest growing segment now priced at $3,000.
This increase in price is driven mainly by the increasing middle-class incomes across a younger population, where 1 out of every 2 people
is now under the age of 40.
Competitive Landscape
The motorcycle market is highly
competitive, and Damon expects it will become even more so in the future. Currently, Damon's competition for its vehicles comes
principally from manufacturers of motorcycles with internal combustion engines powered by gasoline, including in the premium and other
segments of its business. Although Damon intends to strategically enter the premium electric vehicle segment, it similarly expects this
segment will become more competitive in the future as a result of new entrants, both from established brands and start-up companies from
various regions of the globe.
Many of Damon's current
and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than Damon and
may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their
products. Based on publicly available information, a number of Damon's competitors already have displayed prototype electric motorcycles
and have announced target availability and production timelines, while others have launched pilot programs or full commercial offerings
in certain markets.
Notably, Damon expects competition
in its industry to intensify in the future, considering increased demand and regulatory push for alternative fuel vehicles, continuing
globalization and consolidation in the worldwide motorcycle industry. Factors affecting competition include, among others, product quality
and features, innovation and development time, pricing, reliability, safety, fuel and energy economy, customer service (including breadth
of service network) and financing terms. Damon's ability to successfully compete in the motorcycle industry will be fundamental
to its future success in existing and new markets and its market share. There can be no assurance that Damon will be able to compete successfully
in the markets in which it operates. If Damon's competitors introduce new models or services that successfully compete with or surpass
the quality, price, performance or availability of Damon's vehicles or services, it may be unable to satisfy existing customers
or attract new customers at the prices and levels that would allow it to generate attractive rates of return on its investment. Increased
competition could result in lower vehicle unit sales, price reductions and revenue shortfalls, loss of customers and loss of market share,
which may materially adversely affect Damon's business, financial condition, operating results and prospects.
Damon's expects competition
from two primary segments:
●
First, from leading traditional ICE-focused companies including BMW, Honda, Ducati and Triumph. These
companies have the ability to scale manufacturing and leverage global distribution capabilities, but do not currently offer a premium
electric motorcycle in market. However, some of these companies are beginning to explore entering the electric motorcycle market, albeit
typically they do so first with the lowest cost motorcycles and scooters, lower technological know-how required and reduced cannibalization
of their high-margin products necessary to enter the bottom segments of the market.
●
Second, electric vehicle-focused companies, including LiveWire, Zero and Energica that have product in
market today. Damon's focus is to provide higher performing motorcycles with enhanced safety features relative to these current
products. Unlike LiveWire, which is majority owned by Harley Davidson, Zero and Energica have motorcycles in the market today but lack
the global manufacturing and distribution capabilities of the major ICE players.
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While Damon expects competition
to grow as the market shifts to electric and more players begin to make serious investments, Damon believes it is well-positioned with
its combination of commitment, capabilities and advanced technology to lead the growing electric motorcycle market.
Damon's Competitive Strengths
We expect to drive continued
growth and strong financial performance by leveraging our distinct competitive strengths, each of which we believe provide unique competitive
advantages. These include:
Highly qualified and
knowledgeable management team
Damon has assembled a top
team of innovative electric vehicle and ADAS safety system engineers and management team members with backgrounds spanning design, development
and manufacturing who have developed a wide array of electric vehicles, from buses, to cars, motorcycles, VTOL's and transport trucks
across world class companies such as Apple, BMW, Daimler, Uber Elevate, and many others.
Best-in-class strategic
partners and suppliers
Damon's world class
strategic partners and suppliers, such as Continental, Fukuta, Brembo, Ohlins, Pirelli, Auteco, Indika Energy and many others, are among
the leaders in their respective fields, and Damon believes that such relationships will allow Damon to successfully pursue a competitive
position in the global electric motorcycle market.
Head start in the market
Damon believes it has a significant
competitive advantage stemming from the coordinated application of multiple new technologies. With more than $75M invested to date, Damon's
products have advanced vehicle range and power at a reduced overall mass and are developed to solve fundamental problems that motorcyclists
frequently experience that have long been poorly addressed. These include noise, emissions, range, safety, comfort and digital connectivity.
Patents and trade secrets
Damon's patent portfolio
of 34 national and international parents awarded or filed and collection of trade secrets will further protect this new class of motorcycles.
With more than 10 billion media impressions and 1200 original earned articles in 2022, as measured by unique visitors and reach based
on BPA audited publications using databases such as Muckrack, Cision and Google Analytics, Damon believes its technological competitive
advantage is well infused into its brand, which will continue to provide a market advantage, even as heritage brands look on.
Direct to customer
distribution
Unlike its competitors, Damon
is one of a few motorcycle manufacturers selling direct to consumers. Selling over the internet, shipping direct and owning and eventually
operating its own Damon experience centers is perhaps the most important sales and distribution advantage the Company has over established
players, allowing for high margin retention and a vital information feedback loop from its customers that goes straight into manufacturing
and vehicle design, while also providing considerably higher profit margins and lower customer acquisition costs over time. The ability
to sell motorcycles directly to consumers has shown to be viable in the electric car space; however, it is uncommon in motorcycles. Damon
has enjoyed significant success with the direct sales model to date. Damon's expects to continue to generate an evangelistic brand
and following, with a growing backlog currently extending into 2025/2026.
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Our SAVES Market
We distribute SAVES products
in the UK market and part of the European market. Grafiti Limited's strategy is to build a broader, long term customer base by increasing
its sales of Grafiti Limited's product offerings which will include cloud and Macintosh compatible data analytics and statistical
visualization software products. We believe this will enable the Grafiti Limited business to focus on generating more recurring revenues
in the future.
Our SAVES Customers
Our customers include academic
institutions, engineers and scientists in a variety of industries including environmental sciences, behavioral sciences, medical research,
and engineering.
By understanding our customers
unique needs and considering the markets we target, we provide expert guidance, demonstrations, and ongoing support to maximize the value
our software brings. Over 60% of our customers are academic institutions or scientist associated with them. Our channel partners account
for approximately 25% of our revenue.
During the year ended June
30, 2024, Grafiti Limited had one customer that accounted for 11% of revenue and during the year ended June 30, 2023, Grafiti Limited
had one customer that accounted for 16% of revenue. During the quarter ended September 30, 2024, Grafiti Limited has two customers that
accounted for a total of 30% of revenue. See "
Risk Factors - Our SAVES business relies on a limited number of key customers,
the importance of which may vary dramatically from year to year, and a loss of one or more of these key customers may adversely affect
our operating results
."
Competition Faced by Our SAVES Business
We operate in a market characterized
by intense competition from competitive products and their distributors and/or resellers, based on such factors as price, quality and
depth of product lines and training, as well as service and support provided by the distributor to the customer. We believe we are well
equipped to compete effectively with other distributors in all of these areas.
Our business is characterized
by innovation and rapid change in the products we distribute. Originlab and Graphpad Prism are the main competitors of the products that
we sell. These competitive products are characterized by the complexity of their user interfaces and the pre-supposition and in-depth
understanding of statistics. 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. We offer multiple pricing models and believe our products are competitively
priced.
Our Products and Services
Electric Motorcycles
Damon's electric vehicles
are developed with a set of proprietary design principles that elevate the brand, deliver differentiated riding experiences and bring
emotion to electric propulsion. The initial product portfolio of motorcycle models will be built upon and utilize a single powertrain
platform called HyperDrive™. As a patented, monocoque-constructed battery-chassis, HyperDrive houses a proprietary 150 kW 6-phase
liquid cooled IPM motor-gearbox and proprietary electronics. This platform approach establishes a capital-efficient path to grow the product
line to meet a wide range of future segments and price points, while also supporting a wide range of future motorcycle models and power
sizes that share as much as 85 percent common parts. By using the frame of the battery as the motorcycle's chassis, HyperDrive also
achieves valuable weight and cost reduction advantages. With 150 kW of power at its disposal, HyperDrive has been specifically designed
to compete with the performance of market leaders in the high-performance motorcycle market, whether internal combustion or electric.
Thanks to the energy modularity designed into it, HyperDrive-based motorcycles can be detuned in power, energy and thus cost to support
500 – 1500cc power equivalent classes of motorcycles in both the North American and European markets, with price points ranging
from $20,000 - $80,000.
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The HyperDrive platform is
contrasted by the smaller, less powerful and lower cost HyperLite platform, currently in its early design phase. HyperLite will be developed
using a very similar design architecture as HyperDrive, enabling the production of a range of light weight, low to medium cost motorcycles
and scooters with milder levels of horsepower that are more common in overseas and developing markets. With these two platforms paired
with Damon's three patented cornerstone technologies, CoPilot™, Shift™ and its AI-enabled cloud platform. Damon's
long-term objective is to build a premium, high-tech, electric motorcycle company that rivals the largest incumbents in both profit and
annual volume, by providing a technologically enhanced riding experience that is not currently available from any other manufacturer.
CoPilot provides a novel rider
assistance and warning system integrated into the motorcycle. Shift allows the handlebars and foot pegs to mechatronically adjust on the
fly, addressing issues of ergonomic comfort and allowing users to select different riding positions for changing conditions such as a
lower, more aerodynamic position for highway use or a more upright position for urban use. Its AI-enabled cloud collects environmental
and situational data that, paired with over-the-air software updates, drives a continual loop of collision warning improvements, with
an aim to further reduce accident probability over time.
The commercial production
of Damon's motorcycles is expected to commence after passing various internal and external tests and undergoing a self-certification
process required for US-bound vehicle homologation. These tests include: the completion of Damon's ride quality and long-term durability
testing, completion of FCC Title 47 certification for the onboard charger, completion of UN 38.3 battery testing, completion of Damon's
internal battery testing, extreme temperature operation verification, brake testing per FMVSS, and an internal and external review of
FMVSS compliance with Damon engineering subcontractor TUV of Germany. The following is a further description on the timing and stage of
research and development:
●
HyperDrive: The HyperDrive serves as a common powertrain platform for both the HyperSport and HyperFighter
models. Damon leverages a combination of in-house research and development alongside subcontracting to external experts to advance this
project. Currently, in the engineering & development stage, the power electronics are 90% complete, with ongoing validation and the
integration of new features. Similarly, the mechanical and cooling systems are 90% complete, with continued testing, while the battery
system is 70% complete, with efforts focused on the development of the cell interconnect system. This stage is expected to be completed
by Q2 FY 2026. Subsequently, the project will progress to the pre-production stage, which will emphasize design validation and testing,
with an anticipated completion by Q3 - Q4 FY 2025. The budget allocated for the next 12 months is $0.6 million and $1.0 million for the
next 13 to 18 months, which proposed use of funds is disclosed in the table under the heading "Research and Development" in
this Prospectus.
●
HyperSport: The Engineering & Development of the HyperSport is mostly complete, with vehicle mechanics
90% finalized, pending the completion of the HyperDrive platform. The pre-production stage is set to commence, with tooling release as
a critical milestone, followed by validation and design confirmation, with an estimated completion by Q1 FY 2026. The Production &
Commercialization Stage is ongoing in parallel, focusing on the establishment of the final assembly and test facility, along with the
development of distribution and delivery infrastructure. This stage is expected to conclude between Q3 FY 2026 and Q2 FY 2027. The estimated
budget for this program for the next 24 months is $24 million.
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●
HyperFighter: The HyperFighter shares its powertrain platform with the HyperSport, along with other key
components such as the chassis, braking system, and dash display. Currently in the concept stage, the design and performance characteristics
of the HyperFighter are being defined, leveraging these shared components, with an estimated completion date in Q2 - Q3 FY 2026. The engineering
& development stage will follow with an anticipated completion in Q4 FY 2026 - Q1 FY 2027, and subsequently, the pre-production stage
is expected to be completed by Q3 - Q4 FY 2027. The Production & Commercialization Stage is projected to conclude by Q1 - Q2 FY 2028.
The budget allocated for the next 24 months is $0.5 million for design and concept.
●
HyperLite: The HyperLite is currently in the concept stage, where the design and performance characteristics
are being meticulously defined. This model is envisioned as a smaller and less powerful variant of the HyperSport, featuring a new powertrain
platform, and is targeted at the mass market. The concept stage, including simulation and 3D design programs, is expected to be completed
by Q2 - Q3 FY 2026. The subsequent engineering & development stage is projected to conclude by Q4 FY 2027 - Q1 FY 2028. Following
this, the pre-production stage is anticipated to be completed by Q3 - Q4 FY 2028. The estimated budget for the next 24 months is $0.2
million, allocated for design and concept development.
●
Additional Steps and Estimated Costs: As per the following table:
Damon is starting the product
portfolio with the HyperSport, the launch product sets a premium and high technology nature of the brand, which currently is responsible
for more than half of Damon's 3400+ reservations. Damon plans to launch additional models made possible by reusing the same HyperDrive
powertrain platformcore vehicle chassis and powertrain system to address various market segmentation opportunities while reducing new
product and platform development investments. Over time, Damon intends to launch additional, lower cost commuter motorcycles, offered
with Damon's advanced features such as CoPilot, Shift, and connectivity to further expand global appeal.
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Damon's strategy is
to commercialize and refine costly new technology with a premium family of products in the 'Hyper' family of motorcycles for
the western market first. This market allows Damon to establish the brand and command the highest margins while ramping up volume. For
the large markets in India, Southeast Asia, Asia, Africa and South America, some of the key challenges include price sensitivity, brand
appeal, customer credit and financing options, import tax levies, trade tariffs and challenges relating manufacturing as a foreign entity.
Building a successful western
brand is the first step to addressing the brand awareness and reputation gap in emerging markets.
To address price sensitivities,
a scaled down, smaller powertrain platform called HyperLite will be introduced following the initial HyperDrive motorcycles. Using similar
battery technology and a smaller multi-variant battery design as the HyperDrive platform, it will support several models that meet the
needs of the 125cc to 400cc market segments in emerging markets such as India, SE Asia, Latin America and Africa. These vehicles are planned
to be final assembled, distributed and sold by partners in market, such as Damon's partnership with Auteco and Indika.
Damon's HyperLite-based
vehicles intend to compete by offering enhanced safety features, technology, or performance. Coupled with cost competitive subscription
plans proven in western markets, Damon intends to capture considerable market share by offering a low friction price model with exceptional
safety, noise and emissions benefits.
One way to determine the size
of an emerging market is by conducting early market validation and testing through online pre-sales campaigns, similar to how Damon has
built its order book to date. This will be achieved by conducting early web-based marketing to establish appetite for the HyperLite platform.
This web-based marketing will be achieved with local language websites that link to sections of the main Damon website. In addition, Damon
will look for strategic business-to-business opportunities, such as sales to other motorcycle manufacturers, last mile and other delivery
applications that would allow Damon to establish a beachhead in new regions.
Software and Connectivity Associated
with Our Motorcycles
As software-defined vehicles,
all of Damon's cloud backend and control for Damon's vehicle electronic control unit is an internal development. This approach
helps Damon to ensure high compatibility and functionality, integrating critical electric vehicle systems and vehicle functions into one
vehicle-cloud-to-vehicle proprietary system. This allows Damon to be responsive to changing consumer needs, to remotely update software
and prioritize feature development identified through analysis of Damon's data sets. This approach will apply to both its HyperLite
and HyperDrive line of vehicles.
Damon's cloud vision
is to revolutionize the transportation landscape through its connected vehicle strategy, empowering end users with unrivaled vehicle optimization
and supervision capabilities, supporting increasingly better efficiency, safety, and performance.
Damon's CoPilot system
interfaces with the rider via vibrating handlebars for forward collision warning, and via a proprietary 7" touchscreen display.
The display includes integrated GPS, 4G-LTE, Bluetooth, high-speed video processing and 500 GB of onboard data storage. With its 1080P
resolution, the display enables the following novel features to enhance rider awareness:
●
LED forward collision warning to complement the handlebar vibration-based warning;
●
LED blind spot warning;
●
a digital rearview of traffic behind the motorcyclist;
●
charging status via the 'Dragon' logo on the back side of the display; and
●
full system control of the motorcycle's features and functions.
The Damon app allows riders
to interact with the electric motorcycle, providing location-based services, charging stations and vehicle control functions via an integrated
user profile. Damon's app remotely bridges the rider to the bike using built-in cellular connectivity and GPS, providing status,
notifications, and alerts. In combination with the cloud system, the mobile app will enable an ecosystem of services provided to Damon
riders.
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Our SAVES Products and Services
We offer a comprehensive set
of data analytics and statistical visualization software solutions for engineers and scientists. The suite of data analytics and statistical
visualization tools includes SigmaPlot, SigmaStat, SYSTAT, PeakFit, TableCurve 2D, TableCurve 3D, SigmaScan and MYSTAT. In addition, over
the last three years the next generation of the Sigmaplot Product called Sigmaplot NG was successfully developed. Sigmaplot NG is platform
independent/Macintosh compatible and is a technological refresh of the past versions of Sigmaplot allowing it to leverage modern hardware
architectures and computational capacity. In addition a cloud version of the Sigmaplot NG product which allows our customers to leverage
the full power of the cloud and distribute our software among its users with low touch and/or no touch installation processes is anticipated
to be released later this year.
SigmaPlot
is the flagship
product that goes beyond financially oriented spreadsheets and the "bells and whistles" of business graphing software by making
the technical features that scientists and engineers need the highest priority. SigmaPlot provides more than 100 different 2D and 3D graph
types. Researchers can choose from a full range of graphing options: technical axis scales, multiple axes, multiple intersecting 3-D graphs
and more. With SigmaPlot, users create clear, compelling graphs that cannot be generated with basic spreadsheet packages.
Systat
is a powerful
statistical and graphical software package that is easy to use and highly integrated. The software includes basic and advanced statistics.
The basic functions are usually the most commonly used statistics (e.g., user can do descriptive statistics, frequencies, correlations
and etc.). Systat can also be used for advanced statistics (e.g., regression, ANOVA, MANOVA, factor analysis, cluster analysis, time series).
SigmaStat
was sold
as a separate product for decades and was recently integrated into SigmaPlot. SigmaStat is a user-friendly statistical software package
scientists turn to when they want to be expertly guided through the analysis of their data. It is an ideal solution for anyone who needs
to conduct statistical analysis but does not have the in-depth knowledge of the math behind the statistical procedures performed.
SigmaScan Pro Scientists
,
engineers or technicians face problems that are difficult to measure but easy to photograph. SigmaScan provides a complete image analysis
package for studying the structure and size of the visual information — everything from image collection to data analysis. With
powerful image analysis and data manipulation techniques, SigmaScan Pro transforms images into reliable statistics, understandable graphs
and valuable scientific conclusions.
TableCurve 2D
is a
linear and non-linear curve fitting package for scientists. TableCurve 2D is the first and only program that completely eliminates endless
trial and error by automating curve fitting.
TableCurve 3D
performs
linear and non-linear surface fitting. TableCurve 3D is the first and only program that combines a powerful surface fitter with the ability
to find the ideal equation to describe three-dimensional empirical data.
PeakFit
performs automated
nonlinear peak separation and analysis. It was designed for scientists performing spectroscopy, chromatography and electrophoresis. PeakFit's
state-of-the-art nonlinear curve fitting is essential for accurate peak analysis and conclusive findings.
Our Operations
Sources and Availability of Raw Materials
for Our Motorcycle Business
As a vehicle designer and
manufacturer, Damon designs, develops and tests functional vehicle components such as the motor-gearbox, inverter, electronic control
unit, rider display interface, battery pack, cooling system and more. It has also designed and developed the bodywork and chassis system.
These components are manufactured by world class suppliers such as Fukuta, Sinbon, Inventec and Wistron. Other specialized components
such as brakes, suspension, ABS systems and tires are supplied by major brand names such as Brembo, Ohlins, Continental and Dunlop. All
final components and subassemblies and shipped for hand assembly by Damon staff. Damon does not procure any raw materials.
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Distribution Methods for Our Motorcycle
Business
Damon is positioned to modernize
the way electric motorcycles are brought to market, combining online and in-person touchpoints to yield a superior customer experience
with greater cost efficiency. With a meaningful gap between the pace at which vehicle retailing has evolved over the past two decades
relative to other sectors, Damon believes there is tremendous upside potential for a model that incorporates direct-to-consumer online
practices with pull-based vehicle assembly. This significantly lowers on-hand inventory costs, creates a continuous customer order backlog
that generates ongoing demand and eliminates the ability for end customers to negotiate on price.
Most Damon customers begin
their journey online, with many utilizing a mobile device interfacing via its mobile website or through the Damon app. Damon is investing
in digital development to bring those customers to a single front end to address the early stages of their journey and to continue through
to purchase.
In North America and Europe,
Damon intends to offer interested customers the opportunity for a test ride before making a purchase. In addition, Damon plans to open
pop-up locations and brand installations to provide customers to interact with Damon products in key locations.
Beyond North America and Europe,
Damon has agreed to a partnership with Auteco Mobility ("Auteco"), for the final assembly, distribution, and sales of Damon's
HyperLite, its lower-cost global electric motorcycle platform.
Damon's agreement with
Auteco is for the development of the Latin American Market, which also includes a provision for technology licensing. Damon intends to
make a depopulated variant of its CoPilot technology to provide safety on lower cost vehicles. In its discussion with Auteco, they proposed
installing CoPilot on all their bikes and providing the customers with the ability to unlock the safety features for an additional $10/month.
The details of these and other licensing opportunities are still to be finalized, but there appears to be strong demand for Damon's
safety technology. For manufacturing, Damon intends to work with Auteco on the assembly, distribution, and sales of Damon branded motorcycles
into the LATAM countries where Auteco has an established network.
In addition to Auteco, Damon
has received a $5 million investment from, and established a strategic partnership with, PT Ilectra Motor Group and PT Solusi Mobilitas
Indonesia for final assembly and distribution in Indonesia with the ability to expand that partnership to all of Southeast Asia. Damon
has entered into a relationship agreement with PT Ilectra Motor Group and PT Solusi Mobilitas Indonesia that establishes the strategic
partnership and a provided for the purchase of an unsecured promissory note by PT Solusi Mobilitas Indonesia from Damon for $5,000,000.
In addition, Damon agreed to invest an aggregate amount of $1,000,000 in PT Ilectra Motor Group.
Sales and Marketing for Our SAVES
Business
Grafiti sales channels include
direct sales as well as indirect sales through channel partners including resellers and distributors. Our five indirect sales partners
distribute the Grafiti products in the western Europe region and also provide a wide range of pre- and post-sales services to Grafiti
customers including installation and support services. There has not been any revenue concentration with any single channel distributor.
The agreements with the channel distributions contain customary terms including a negotiated discount for the Manufacturer's Suggested
Retail Price.
Direct sales representatives
are compensated with a base salary and, in certain circumstances, may participate in incentive plans such as commissions or bonuses.
Our products are marketed
through industry-focused as well as account-based marketing strategies which utilize SEO, advertising, social media, trade shows, conferences,
webinars, and other media.
Grafiti products are sold
as annual or perpetual licenses along with maintenance subscriptions.
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Our Intellectual Property
Damon's intellectual
property is a core asset and an important tool to drive value and differentiation in its products and services. Damon protects, uses and
defends its intellectual property in support of its business objectives to increase return on investment, enhance competitive position,
and create shareholder value. Through strategic and business assessments of its intellectual property, Damon relies on a combination of
patents, trade secrets, copyrights, service marks, trademarks, domains, contractual terms and enforcement mechanisms across various international
jurisdictions to establish and protect intellectual property related to its current and future business and operations.
As of the date of this filing,
Damon held 14 utility patents and 0 design patents, and had filed an additional 11 utility patent applications and 1 design patent applications
in the U.S. Damon also held 2 patents and 10 patent applications that are foreign counterparts of some of its U.S. patents and patent
applications with foreign patent offices. Damon does not view any individual patent as being material to its business. Subject to required
payments of annuities or maintenance fees, U.S. design patents have a term of 15 years from the date of issuance, and U.S. utility patents
have a term of 20 years from the priority application date. Accordingly, Damon's U.S. patents that have already been issued will
expire between 2037 and 2043. Damon's foreign patents generally have similar expiration dates, but may vary from country to country,
the duration being set according to the laws of the jurisdiction that issued the patent. Damon's trademarks, logos, domain names,
and service marks are used to establish and maintain its reputation with its customers, and the goodwill associated with its business.
Additionally, Damon has registered trademarks including "DAMON (word)," "HYPERSPORT (word)," "HYPERCROSS
(word)," "HYPERFIGHTER (word)," and "DAMON (design)" and other pending trademark applications with U.S.
and foreign trademark offices. The duration of trademark registrations varies from country to country, but it is typically for ten years
with unlimited ten-year renewal terms, subject to the payment of maintenance and renewal fees and the laws of the jurisdiction in which
the trademark is registered.
License, Distribution and Administrative
Service Arrangements with Grafiti LLC for Our SAVES Business
On June 19, 2020, the Parent
acquired an exclusive license to use, market, distribute, and develop the SYSTAT and SigmaPlot software suite of products (referred to
as "SAVES") pursuant to an Exclusive Software License and Distribution Agreement, among the Parent, Cranes Software International
Ltd. ("Cranes") and Systat Software, Inc. ("Systat" and, together with Cranes, the "Systat Parties"),
as amended on June 30, 2020 and February 22, 2021 (as amended, the "License Agreement"). In connection with the License Agreement,
the Parent received an exclusive, worldwide license to use, modify, develop, market, sublicense and distribute the SAVES software, software
source, user documentation and related Systat Intellectual Property (as defined in License Agreement) (the "License"); and
an option to acquire the assets underlying the License (the "Purchase Option"). In connection with the Solutions Divestiture,
the Parent contributed the License, along with other assets and businesses, to Grafiti LLC, then a wholly-owned subsidiary of the Parent.
As reported in the current report on Form 8-K filed by the Parent on February 23, 2024, the Parent sold 100% of the equity interest in
Grafiti LLC to an entity controlled by Nadir Ali, our Chief Executive Officer and sole director.
Grafiti UK was incorporated
by the Parent in May of 2020 to operate as a distributor of the SAVES products in the UK and western European region. Grafiti UK is responsible
for maintaining all aspects of the relationship with the end customer. All customer interaction from solicitation, pre-sale activities,
sale and invoicing, delivery and customer support is the responsibility of Grafiti UK.
On July 19, 2024, Grafiti
UK entered into a Distributor Agreement with Grafiti LLC. Under the Distributor Agreement, Grafiti LLC granted Grafiti UK a non-exclusive,
non-transferable right and license to market and distribute SAVES products in the United Kingdom and other agreed-upon territories. Grafiti
UK will pay Grafiti LLC the then-current prices for the products, subject to a discount of up to 50% if certain revenue targets are met
or other arrangements agreed upon by the parties. The deemed effective date of the Distributor Agreement is January 1, 2024, and will
remain in effect for one year from the effective date, automatically renewing for successive one-year periods unless either party provides
advance notice prior to the end of the current term to not extend. Either party may terminate the Agreement without cause by providing
at least 90 days' prior written notice, or immediately for specified reasons, including an uncured breach or bankruptcy.
Additionally, on July 19,
2024, Grafiti UK entered into an Administrative Support Service Agreement with Grafiti LLC. Under the Administrative Support Service Agreement,
Grafiti LLC agreed to provide accounting, tax, and other administrative sales support services to Grafiti UK for $5,080 per month, with
the amount subject to a 5% annual increase by Grafiti LLC. The Administrative Support Service Agreement is deemed to have commenced on
January 1, 2024, and remains in effect for one year from the effective date, automatically renewing for successive one-year periods unless
either party provides advance notice prior to the end of the current term to not extend.
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Facilities
Damon Motors entered into
a two year and four-month lease on September 12, 2022, for a facility in San Rafael, California, USA. The 18,110 square foot office, manufacturing
and warehouse space houses part of the Company's research and development group, including battery and powertrain development. The
majority of this space is for research and development labs, prototype manufacturing, vehicle test and validation, and material storage.
The Company's intention is to begin commercial assembly from the San Rafael location.
Employees
As of the date of this filing,
the Company has a total of 19 employees and contractors. Of these, 17 are dedicated to our motorcycle business, including 14 full-time
employees and 3 contractors. By location, 11 team members are based in Canada, 3 in the USA, and 3 are based in France and Germany. Additionally,
2 employees support the SAVES business: one focuses on sales and marketing efforts, while the other handles pre- and post-sale support.
None of its employees are
members of any unions.
Regulatory Overview
United States
NHTSA Safety and Self-Certification Obligations
As a manufacturer of electric
vehicles, Damon's electric vehicles are subject to, and must comply with, numerous regulatory requirements established by National
Highway Traffic Safety Administration ("NHTSA"), including all applicable United States Federal Motor Vehicle Safety Standards
("Safety Standards"). As set forth by the National Traffic and Motor Vehicle Safety Act, Damon must certify that its electric
vehicles meet all applicable Safety Standards. At the time of production, Damon intends for its motorcycles to be fully compliant with
all such Safety Standards without the need for any exemptions.
Damon is also required to
comply with, or demonstrate exemptions from, other requirements of federal laws administered by NHTSA, including the consumer information
labeling and owner's manual requirements and various reporting requirements, such as "early warning" reports regarding
warranty claims and field incidents, death and injury reports, foreign recall reports and safety defects reports. In addition, Damon's
products are also subject to certain laws and regulations that have been enacted or proposed, e.g., "Right to Repair," laws,
that could require Damon to provide third-party access to its network and/or vehicle systems.
EPA Certificate of Conformity
The Clean Air Act requires
that Damon obtain an Environmental Protection Agency-issued Certificate of Conformity with respect to emissions from its electric vehicles
and include labeling providing consumer information such as miles per gallon of gas-equivalent ratings and maximum range on a single charge.
The Certificate of Conformity is required each model year for electric vehicles sold in states covered by the Clean Air Act's standards
and is also required each model year for vehicles sold in states that have sought and received a waiver from the Environmental Protection
Agency to utilize California standards.
Battery Safety and Testing
Damon's battery packs
are tested in accordance with industry safety standards, including selected tests specified in the SAE J2464 and J2929 standards as well
as tests defined by other standards and regulatory bodies and Damon's own internal safety and quality tests. These tests evaluate
battery function and performance as well as resilience to conditions including immersion, humidity, fire and other potential hazards.
Damon is still in the process of testing the vehicle battery pack. Testing has taken place at a battery cell and submodule level with
the next phase planned for battery module and full pack abuse testing.
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European Union
Europe Type Approval
Damon intends to export electric
vehicles to Europe. Unlike the United States, once Damon starts operating in this market, it must obtain pre-approval from regulators
to import and sell its electric vehicles into the EU and countries that recognize EU certification or have regulatory regimes aligned
with the EU (collectively referred to as "Europe"). The process for certification in Europe is known as "Type Approval"
and requires Damon to demonstrate to a regulatory agency in the EU, referred to as a "Competent Authority", that its electric
vehicles meet all EU safety and emission standards.
Type Approval is accomplished
through witness testing of vehicles as well as inspection of a representative vehicle intended for production and sale. Once the vehicle
type is approved, all vehicles manufactured based on the approved type of vehicle may be produced or imported and sold in Europe.
Any changes to an approved
vehicle type, including substantial software changes, must go through updated Type Approval by the Competent Authority.
EU Emissions Regulations
Damon believes Europe's
regulatory environment is generally conducive to the development, production and sale of electric vehicles. Through emission legislation,
tax incentives and direct subsidies, EU and non-EU countries in Europe are taking a progressive stance in reducing carbon emissions in
the transport sector which may lead to increasing demand for electric vehicles.
This is reflected in the EU-wide
target of a 90% reduction in greenhouse gas emissions from the transport sector by 2050 (compared to 1990 levels), as part of an economy-wide
carbon-neutral target. Moving forward, the European Commission has proposed legislation that would (i) introduce a "cap and trade"
carbon pricing system that would apply to the transport sector from 2026; and (ii) require increased levels of national greenhouse gas
reduction commitments (which include the transport sector) pursuant to a revision of the Effort Sharing Regulation, as part of efforts
to reduce EU emissions by 55% by 2030 (compared to 1990 levels).
Environmental, Health and Safety Regulations
Certain of Damon's operations,
properties and products are subject to stringent and comprehensive international, federal, state and local laws and regulations governing
matters including environmental protection, occupational health and safety, and the release or discharge of materials into the environment
(including air emissions and wastewater discharges). Failure to comply with these laws and regulations may result in the assessment of
administrative, civil and criminal penalties, the imposition of investigatory and remedial obligations, and the issuance of orders enjoining
some or all of Damon's operations in affected areas.
Damon is also subject to permitting,
registration, and other government approval requirements under environmental, health and safety laws and regulations applicable in the
jurisdictions in which Damon operates. Those requirements obligate Damon to obtain permits, registrations, and other government approvals
from one or more governmental agencies to conduct its operations and sell its products. The requirements vary depending on the location
where Damon's regulated activities are conducted.
The following summarizes certain
existing environmental, health and safety laws and regulations applicable to Damon's operations.
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United States
Hazardous Substances
Damon is subject to regulations
governing the proper handling, storage, transportation and disposal of products containing hazardous substances. Transportation of its
battery packs (and of equipment containing them) is governed by regulations that address risks posed during different modes of transport
(e.g.¸ air, rail, ground, ocean). Governing transportation regulations in the U.S., issued by the Pipeline and Hazardous Materials
Safety Administration ("PHMSA"), are based on the United Nations ("UN") Recommendations and Model Regulations
on the Transport of Dangerous Goods as well as related UN Manual Tests and Criteria. Damon plans to test our battery pack against the
applicable UN Manual tests for its production battery packs, and the test results demonstrate Damon's compliance with the PHMSA
regulations in the following phases of industrialization.
Damon currently uses transition
metal oxide cells in its high-voltage battery packs. Damon battery packs include certain packaging materials that contain trace amounts
of hazardous chemicals whose use, storage and disposal is regulated under U.S. federal law. As a result, Damon's battery packs are
subject to federal and state environmental laws and regulations that govern the handling and disposal of waste, including, in some instances,
the remanufacture, recycling and disposal of hazardous waste.
The laws governing hazardous
substances and hazardous waste also may impose strict, joint and several liability for the investigation and remediation of areas where
hazardous substances may have been released or disposed. In the course of ordinary operations, Damon, directly and through third parties
and contractors, may handle hazardous substances within the meaning of the Comprehensive Environmental Response, Compensation, and Liability
Act and similar U.S. federal and state statutes and, as a result, may be jointly and severally liable for all or part of the costs required
to clean up sites at which any such hazardous substances have been released into the environment.
European Union
Hazardous Substances
Should Damon expand manufacturing
into the EU, it would also be subject to regulations governing the proper handling, and disposal of products containing hazardous substances
in the EU, including the EU Waste Framework Directive. In relation to Damon's batteries, disposal would be governed by the Batteries
Directive, which imposes, among other obligations, certain requirements in relation to the disposal of batteries, such as that producers
of batteries and producers of other products that incorporate a battery are responsible for the waste management of batteries that they
place on the market, in particular the financing of collection and recycling schemes.
In December 2020, the EU proposed
a new Batteries Regulation, which, if passed, would include obligations with respect to the amount of recycled content required in batteries
placed on the EU market and would introduce mandatory supply chain due diligence obligations with respect to the materials used in its
batteries.
Manufacturer and Dealer Regulation in the United States
State laws regulate the manufacture,
distribution, sale, and service (including delivery) of motorcycles, and generally require vehicle manufacturers and dealers to be licensed
in order to sell vehicles directly to customers in the state. Some states, however, do not permit motorcycle manufacturers to be licensed
as dealers or to act in the capacity of a dealer. To sell vehicles directly to residents of these states, Damon must conduct the sale
out of state over the internet or telephonically.
In addition, certain states
and territories require service facilities to be available for vehicles sold in the state or territory, which may be interpreted to require
service facilities to be available for vehicles sold over the internet or telephonically to residents of the state or territory. Puerto
Rico, for example, is one such jurisdiction. Such laws could limit Damon's ability to sell vehicles in states where Damon either
does not maintain service facilities or where Damon does not have retail partners licensed to act as dealers who maintain service facilities
within these states.
Damon believes that, as a
matter of interstate commerce, it may sell an electric vehicle to any consumer in any state in the United States from a Damon retail partner
that is duly licensed as a dealer by a state in the United States. That customer may contact a licensed Damon retail partner through the
internet, by telephone or visiting the location directly. However, states that prohibit direct sales also restrict traditional sales activities.
Accordingly, in order to test drive an electric vehicle or have an in-person discussion with a Damon salesperson regarding issues such
as price, financing, trade-ins, options or similar purchase-related topics, a consumer residing in a direct sales-prohibited state would
be required to either contact Damon through electronic means (e.g., Internet or telephone) or by traveling out of their home state to
visit a licensed Damon retail partner in another state. With respect to service, vehicle manufacturers are prohibited from providing warranty
service from an established location within several states. Service for customers residing in those states may in the future be provided
by a mobile unit dispatched from a licensed service location in a nearby state where warranty service is allowed or by that customer driving
their Damon vehicle (or having it towed) to a state which allows Damon or a licensed Damon retail partner to have a physical service location
and perform warranty service activities.
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Data Privacy and Cybersecurity Laws and Regulations
Damon's business collects,
uses, handles, stores, receives, transmits and otherwise processes different types of information about a range of individuals, including
its customers, riders of its electric vehicles, website visitors, users of its mobile application, its employees and job applicants, and
employees of companies it does business with (such as vendors and suppliers). As a result, Damon is and may become subject to existing
and emerging federal, state, local and international laws and regulations related to the privacy, security and protection of such information.
The following is an overview
of the legal and regulatory framework by jurisdiction that the Company may be subject to.
United States
Within the United States there
are numerous data privacy and cybersecurity laws and regulations that the Company may be subject to. Example of these laws and regulations
include the Federal Trade Commission ("FTC") Act, the Gramm-Leach-Bliley Act, the Telephone Consumer Protection Act, the CAN-SPAM
Act, California Consumer Privacy Act ("CCPA"), the California Privacy Rights Act ("CPRA"), the Virginia Consumer
Data Protection Act ("VCDPA"), the Colorado Privacy Act ("CPA"), the Connecticut Data Privacy Rights Act ("CTDPA")
and the Utah Consumer Privacy Act ("UCPA").
In the United States, while
there is not a single generally applicable federal law governing the processing of personal information, there are federal laws that apply
to the processing of certain types of information, or the processing of personal information by certain types of entities, and the Federal
Trade Commission and state attorneys general may bring enforcement actions against companies that engage in processing of personal information
in a manner that constitutes an "unfair" or "deceptive" trade practice.
In addition, certain states
have enacted laws relating to data privacy and the processing of information about residents in those states. The CCPA, which went into
effect on January 1, 2020, and applies to Damon's business, imposes obligations and restrictions on businesses that handle personal
information of California residents and provides new and enhanced data privacy rights to California residents, including the right to
know, the right to delete and the right to opt out of the sale of personal information as well as additional protections for minors. Certain
requirements in the CCPA remain uncertain due to ambiguities in the drafting of or incomplete guidance. Adding to the uncertainty, in
November 2020, California voters also passed the CPRA, which amends and expands upon the CCPA, imposes additional obligations and sets
forth additional privacy rights for California residents. Additional states, Virginia, Colorado, Connecticut and Utah, also recently enacted
comprehensive data privacy laws. Virginia passed the VCDPA, Colorado passed the CCPA, Connecticut passed the CTDPA and Utah passed the
UCPA. The CPRA and VCDPA become effective on January 1, 2023, the CPA and CTDPA become effective on July 1, 2023, and the UCPA becomes
effective on December 31, 2023. There are currently draft CPRA regulations and draft CPA rules that, when passed, will supplement the
CPRA and CCPA. Additionally, laws, regulations, and standards covering marketing and advertising activities conducted by telephone, email,
mobile devices, and the Internet, may be applicable to Damon's business, such as the TCPA, the CAN-SPAM Act and similar state and
federal consumer protection laws. Damon is also subject to certain laws and regulations that have been enacted or proposed, such as "Right
to Repair" laws, that could require it to provide third-party access to its network and/or vehicle systems.
European Union and the United Kingdom
By expanding into Europe and
the United Kingdom, Damon will also become subject to laws, regulations and standards covering data protection and marketing and advertising,
including the EU General Data Protection Regulation ("GDPR") and the United Kingdom data protection regime, consisting primarily
of the UK General Data Protection Regulation and the UK Data Protection Act (together referred to as the UK GDPR). The GDPR and UK GDPR
regulate the processing of data relating to an identifiable individual (personal data) and impose stringent data protection requirements
on organizations with significant penalties for noncompliance. The European Data Protection Board has also released data guidelines for
connected vehicles, and the upcoming ePrivacy Regulation is in its final stages.
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Rest of World
Regulators and legislators
in jurisdictions around the world continue to propose and enact more stringent data protection and privacy laws. New laws as well as any
significant changes to applicable laws, regulations, interpretations of laws or regulations, or market practices regarding privacy and
data protection or regarding the manner in which Damon seeks to comply with applicable laws and regulations could require Damon to make
modifications to its products, services, policies, procedures, notices and business practices. Many large geographies which may become
important to Damon's future success, including Australia, Brazil, Canada, China and India, have passed or are considering comparable
data privacy legislation or regulations. Until prevailing compliance practices standardize, the impact of worldwide privacy regulations
on Damon's business and, consequently, its revenue, could be negatively impacted.
Damon prioritizes the trust
of its customers and employees and places great emphasis on systems and product security, cybersecurity, and privacy. To earn this trust
and comply with the above legal and regulatory framework, Damon is adopting and implementing a variety of technical and organizational
security measures, procedures, and protocols designed to protect its systems, products and data, in accordance with the National Institute
of Standards and Technology ("NIST") Cybersecurity Framework.
Utilizing the NIST Cybersecurity
Framework, Damon has instituted a cybersecurity program designed to address the evolving cyber-threat landscape. This includes a company-wide
risk management structure with capabilities to assess direct and indirect vendors and an enterprise Secure Software Development Lifecycle
to ensure that Damon reduces its attack surface by remediating vulnerabilities in the development process itself. Additionally, Damon's
identity and access management procedures and controls are consistent with the NIST Cybersecurity Framework, including measures to validate
and authenticate the identity of its corporate users.
Damon maintains a vulnerability
management program that includes periodic scans designed to identify security vulnerabilities and implement remediations for potential
customer-impacting issues that are found. In addition, Damon conducts penetration tests, receives threat intelligence, follows incident
response procedures, and remediates vulnerabilities according to severity and risk. Further, seeking to implement effective management,
control, and protection, Damon has established a centralized, organization-wide view of information assets.
Damon's cloud security
program seeks to enable secure cloud architecture deployments and extend security capabilities to the edge of Damon's network where
it interacts with customers. Damon works to increase cybersecurity awareness throughout its organization through education. Damon's
cloud-hosted website and mobile application software services are developed using industry-standard SecDevOps practices and are rigorously
tested before deployment. Damon's product software plan to utilize a zero-trust approach that employs signed certificates, encryption
keys, authentication schemes, and cryptography algorithms, and Damon has deployed these measures as appropriate as part of its efforts
to secure products' communications and data transfers, vehicles and their components, including firmware over-the-air ("FOTA")
updates. Additionally, Damon utilizes pre-condition checks, sequence and dependency execution, failure detection, and rollback and recovery
when performing updates during the FOTA process.
Damon has also commenced a
corporate-wide data privacy program with dedicated cross-functional resources. The objective of Damon's data privacy program is
to facilitate beneficial uses of data to improve its products and services while preserving its customers' privacy expectations
and complying with applicable law. Global data privacy laws and practices are continually evolving, and will continue to guide the operational
design, controls, procedures, and policies for Damon's program. Damon's strategy accounts for increased risk as its business
scales by addressing appropriate security and access controls for customer and employee information. A core tenet of Damon's privacy
program is to implement privacy-by-design principles in both software and hardware development throughout the organization. Damon's
privacy program will continue to evolve and adapt, utilizing industry practices and tailored risk management frameworks, to allow for
close collaboration across the organization, particularly between Damon's information technology and legal functions.
Legal Proceedings
As of the date of this filing,
we are not party to, nor is any of our property the subject of, any material pending legal proceedings reportable under Item 103 of Regulation
S-K.
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Management
The following sets forth certain
information, as of the date of this filing, concerning the persons who serve as our directors and executive officers.
Name
Age
Position
Dominique Kwong
49
Interim CEO and Director
Baljinder Kaur Bhullar
55
CFO and Director
Karan Sodhi
32
Director
Shashi Tripathi
47
Chairman of the Board
Melanie Figueroa
42
Director
Karan Sodhi, Shashi Tripathi
and Melanie Figueroa serve on the Company's Audit Committee, its Compensation Committee and its Nominating and Corporate Governance
Committee.
Biographies
The following are brief profiles
of the executive officers and directors of the Company, including a description of each individual's principal occupation within
the past five years:
Dominique Kwong, Interim Chief Executive Officer and Director
Mr. Kwong was appointed to
serve as the Interim CEO and Director of the Company effective as of December 4, 2024. He served as the Chief Technology Officer and Chief
Operating Officer of Damon Motors Inc. from June 2017 to January 2023. Between January 2023 and December 2024, Mr. Kwong served as a consultant
in the role of as Head of Electronics for Alpinestars, a globally recognized motorcycle apparel manufacturer. In this capacity, he contributed
to strategic initiatives, R&D, and operational improvements for their Tech-Air airbag systems and other electronic products. Mr. Kwong's
in-depth knowledge and experience with the Company's business in electric motorcycle development and manufacturing and extensive
executive leadership background led us to conclude that he should serve as a director.
Baljinder (Bal) Bhullar, Chief Financial Officer and Director
Bal Bhullar was appointed
to serve as CFO and Director of the Company with effect upon the closing of the Business Combination. She was appointed to serve as CFO
of the Company's wholly owned subsidiaries Damon Motors, Inc. and Damon Motors Corp. effective January 1, 2024. Ms. Bhullar brings
over 20 years of experience in diversified business, investor relations, investment banking, financial & risk management serving as
an executive and board member in both public and private companies across various sectors, including automotive, technology, manufacturing,
e-commerce, transport, energy, resource and health/wellness. She previously served as CFO and Corporate Secretary of Foremost Lithium
Resource and Technology (NASDAQ: FMST) from September 2023 to February 2024;; CFO of ReCar (ReBuild Manufacturing) from January 2023 to
March 2023; and Chief Compliance Officer, CFO and board member of ElectraMeccanica Vehicles Corp. (NASDAQ: SOLO) from October 2018 to
December 2022. She has also served as President of the BC Risk Management Association and has held positions as a board member and executive
of several private and public companies. Currently Ms. Bhullar is CFO of the Company and a member of the Board and CEO/Founder/board member
of BKB Management Ltd. Ms. Bhullar is a Chartered Professional Accountant, Certified General Accountant, a CRM designation from Simon
Fraser University and a diploma in Financial Management from British Columbia Institute of Technology. Ms. Bhullar has proven expertise
with increasing market capitalization, raising capital, overseeing corporate governance, SOX, ESG, diversity and regulatory compliance,
financial & strategic planning, as well as successfully completing initial public offerings, reverse mergers, business expansions,
start-up operations, program development and product development which led us to the conclusion that she should serve as a director.
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Melanie Figueroa, Director
Melanie Figueroa was appointed
to serve as a member of the Board effective upon the closing of the Business Combination. Since May 2023, she has served as Co-Managing
Partner of Next Move Partners LLC, an advisory firm that supports emerging growth companies navigating the complexities of the U.S. public
markets in their capital raising and M&A growth initiatives. Since March 2024, Ms. Figueroa has also served as General Counsel to
Grafiti LLC, a data analytics and statistical visualization software solution for engineers and scientists. From January 2020 until the
closing of its business combination with XTI Aircraft Company in March 2024, Ms. Figueroa served as General Counsel to Inpixon, a Nasdaq
listed global software technology company where she assisted the executive management team & board in defining and successfully executing
its financing and M&A strategy, including domestic, cross-border and M&A transactions. Prior to her role as General Counsel, she
was the Managing Partner of the NY office of a national law firm where she advised and assisted high growth companies in structuring&
executing debt & equity financing transactions & a multitude of domestic & cross border M&A transactions, on both the
buy side & sell side. Ms. Figueroa has over 15 years of experience advising executive management teams and board of directors of emerging
growth companies seeking access to the U.S. public markets to raise capital and executing go public transactions through traditional IPO's
and other alternative structures, including reverse mergers, spin-offs, and SPACs which led us to the conclusion that she should serve
as a member of the Board.
Karan Sodhi, Director
Karan Sodhi was appointed
to serve as a member of the Board effective upon the closing of the Business Combination. He was appointed as a director of Damon in August
2024. He is a practicing lawyer, and the managing partner at Rockford Legal & Advisory LP, a regional law firm in Delta, British Columbia.
Prior to his service with Damon, Karan was an Associate Lawyer at DuMoulin Black LLP from September 2022 to September 2023; General Counsel
at SOL Global Investments from September 2021 to September 2022; and Associate Legal Counsel at Pan American Silver Corp from November
2019 to September 2021. Karan brings a breadth of knowledge and experience in corporate commercial transactions, securities, capital markets
and estate planning. With nearly a decade of experience, Karan has become a trusted advisor to public companies and high-net-worth individuals,
managing complex transactions and regulatory challenges which led us to the conclusion that he should serve as a member of the Board.
Shashi Tripathi, Chairman of the Board
Shashi Tripathi was appointed
to serve as a member of the Board effective upon the closing of the Business Combination. He was appointed as a director of Damon in August
2024. Mr. Tripathi is a seasoned entrepreneur, investor, and advisor with extensive experience in technology, operations, supply chain,
and manufacturing. He has served on the boards of several companies and has a proven track record in regulated industries, having received
accolades such as the Best Patient Engagement Strategy and Medical Design Excellence awards. Mr. Tripathi has successfully led three companies
to exits and since October 2019 has served as the founder and Managing Partner of Nurture Growth Fund, which invests in a diverse range
of sectors including artificial intelligence, SaaS, digital health, and FinTech. Prior to his service with Damon, he has served as Chief
Operating Officer and Chief Technology Officer of ImpediMed from July 2018 to June 2024. Additionally, he is currently the CEO of Sleepiz
USA. Mr. Tripathi holds a master's degree in industrial engineering and a bachelor's degree in mechanical engineering. His
valuable experience as an investor and advisor to early stage, pre-IPO companies across a variety of sectors led us to conclude that he
should serve as a member of the Board.
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Family Relationships
There are no family relationships
between any of our directors and executive officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge,
none of our directors or executive officers were involved in any legal proceedings described in Item 401(f) of Regulation S-K in
the past ten years.
The Board Composition
and Election of Directors
The
Board is comprised of five members made up of a single class of directors. Each director is subject to re-election on an annual basis
at each annual meeting of shareholders. The Board of Directors may establish the authorized number of directors from time to time by ordinary
resolution. If, at any meeting of shareholders at which there should be an election of directors, the places of any of retiring directors
are not filled by that election, those retiring directors who are not re-elected and who are asked by the newly elected directors to continue
in office will, if willing to do so, continue in office to complete the number of directors until further new directors are elected at
a meeting of shareholders convened for that purpose. If any such election or continuance of directors does not result in the election
or continuance of the then-current number of directors, the number of directors of the Company shall be deemed to be set at the number
of directors actually elected or continued in office. Our directors hold office until the earlier of their death, resignation, retirement,
disqualification or removal or until their successors have been duly elected and qualified. In the event of a casual vacancy in our Board,
the remaining directors may fill such vacancy until the next annual meeting of shareholders.
Director Independence
We
have determined that Mr. Karan Sodhi and Mr. Shashi Tripathi are independent directors in accordance with the listing requirements of
Nasdaq. The Nasdaq independence definition includes a series of objective tests, including that the director is not, and has not been
for at least three years, one of the Company's employees and that neither the director nor any of his, her or their family members
has engaged in various types of business dealings with the Company. The Company is relying on the phase-in exemption permitted under Nasdaq
listing rules for the requirement of having a majority of independent directors.
Director Compensation
For
a discussion of our director compensation arrangements, see the section entitled "
Executive and Director Compensation
."
Committees of the
Board of Directors
Our
Board has established an audit committee, a compensation committee and a nominating and corporate governance committee, each of which
operate pursuant to a charter to be adopted by our Board of Directors. The Board of Directors may also establish other committees from
time to time to assist our company and the Board. Our committees' charters are available on our website at
https://damon.com/
.
The reference to our website address does not constitute incorporation by reference of the information contained at or available through
our website, and you should not consider it to be part of this prospectus.
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Audit Committee
Our
audit committee consists of Melanie Figueroa, Shashi Tripathi and Karan Sodhi. Mr. Tripathi and Mr. Sodhi have been determined by the
Board to satisfy the independence requirements under Nasdaq listing standards and Rule 10A-3(b)(1) of the Exchange Act. The Company is
relying on the phase-in exemption permitted under Nasdaq listing rules for the requirement of a fully independent audit committee. The
chair of our audit committee is Karan Sodhi, who the Board has determined is an "audit committee financial expert" within
the meaning of SEC regulations. Each member of our audit committee can read and understand fundamental financial statements in accordance
with applicable requirements. In arriving at these determinations, the Board has examined each audit committee member's scope of
experience and the nature of their employment in the corporate finance sector.
The principal duties
and responsibilities of our audit committee include, among other things:
●
reviewing and recommending for approval to the Board the annual
financial statements (individually and collectively, the "annual Financial Statements"), accounting policies that affect
the Financial Statements, annual Management Discussion and Analysis ("MD&A") and associated press release;
●
reviewing and approving, or recommending for approval to the
Board, the quarterly financial statements (individually and collectively, the "quarterly Financial Statements", collectively
with the annual Financial Statements, the "Financial Statements"), quarterly MD&A and associated press release;
●
reviewing the annual report for consistency with the financial
disclosure referenced in the annual Financial Statements;
●
assessing the adequacy of procedures in place for the review
of our public disclosure of financial information extracted or derived from annual or quarterly Financial Statements and periodically
assess the adequacy of such procedures;
●
reviewing any significant issues affecting financial reports;
●
reviewing any developments in the International Financial
Reporting Standards as issued by the IFRS Foundation and the International Accounting Standards Board (IASB) or U.S. Generally Accepted
Accounting Principles as issued by the Financial Accounting Standards Board (FASB) that could affect the Company;
●
reviewing and approving any earnings guidance to be provided
by the Corporation;
●
coordinating the oversight and reviewing the adequacy of our
internal control over financial reporting;
●
establishing policies and procedures for the receipt and retention
of accounting-related complaints and concerns;
●
reviewing with management, external auditors and legal counsel
any material litigation claims or other contingencies, including tax assessments, and adequacy of financial provisions, that could materially
affect financial reporting;
●
reviewing with the our Chief Executive Officer and the Chief
Financial Officer our disclosure controls and procedures, including any significant deficiencies in, or material non-compliance with,
such controls and procedures;
●
discussing with our Chief Executive Officer and the Chief
Financial Officer all elements of certification required pursuant to National Instrument 52-109 and the Sarbanes-Oxley Act of 2002, as
applicable;
●
reviewing all related person transactions for potential conflict
of interest situations and approving all such transactions;
●
appointing, approving the compensation of, and assessing the
independence of our independent registered public accounting firm;
120
●
pre-approving auditing and permissible non-audit services,
and the terms of such services, to be provided by our independent registered public accounting firm;
●
reviewing the overall audit plan with our independent registered
public accounting firm and members of management responsible for preparing our financial statements;
●
reviewing and discussing with management and our independent
registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting
policies and practices used by us;
●
reviewing and monitoring the processes in place to identify
and manage the principal risks that could impact our financial reporting;
●
reviewing and approving corporate investment policies; and
●
assessing the effectiveness of the overall process for identifying
principal business risks and report thereon to the Board.
Compensation Committee
Our
compensation committee consists of Melanie Figueroa, Shashi Tripathi and Karan Sodhi. Each of Mr. Tripathi and Mr. Sodhi has been determined
has been determined by the Board to satisfy the independence requirements under Nasdaq listing standards and is a "non-employee
director" as defined in Rule 16b-3 promulgated under the Exchange Act. The Company is relying on the phase-in exemption permitted
under Nasdaq listing rules for the requirement of a fully independent compensation committee. The chair of our compensation committee
is Shashi Tripathi.
The
principal duties and responsibilities of our compensation committee include, among other things:
●
overseeing and administering our incentive compensation and
other equity-based plans and recommending any changes to the Board as needed, as well as exercising the authority of the Board with respect
to the administration of such plans;
●
reviewing and approving the corporate goals and objectives
with respect to compensation for our Chief Executive Officer;
●
reviewing and recommending to the board of directors the evaluation
process and compensation structure of our other executive officers;
●
periodically reviewing and making recommendations to the Board
regarding the compensation of non-management directors, including Board and Committee retainers, meeting fees, equity-based compensation
and such other forms of compensation and benefits as the Committee may consider appropriate;
●
overseeing the appointment and removal of executive officers,
and reviewing and approving for executive officers, including the Chief Executive Officer, any employment, severance or change in control
agreements; and
●
approving any loans to employees as allowed by law.
Nominating and Corporate
Governance Committee
Our
nominating and corporate governance committee consists of Melanie Figueroa, Shashi Tripathi and Karan Sodhi. Mr. Tripathi and Mr. Sodhi
have been determined by the Board to satisfy the independence requirements under Nasdaq listing standards. The Company is relying on the
phase-in exemption permitted under Nasdaq listing rules for the requirement of a fully independent nominating and corporate governance
committee. The chair of our nominating and corporate governance committee is Shashi Tripathi.
The
nominating and corporate governance committee's responsibilities include, among other things:
●
identifying and recommending to the Board individuals qualified
to be nominated for election to the Board of Directors;
●
recommending to the Board the members and Chair for each Board
committee;
●
reviewing and assessing our corporate governance principles
and make recommendations for changes thereto to the Board; and
●
establishing and overseeing appropriate director orientation
and continuing education programs.
121
Board Leadership Structure
The
Board and management believe that the choice of whether the Chair of the Board should be an executive of our company, or a non-executive
or independent director, depends upon a number of factors, taking into account the candidates for the position and the best interests
of our company and our shareholders. Shashi Tripathi serves as the Board Chair and is an independent director. However, the Board may
decide in the future to unite the roles of Chairman and Chief Executive Officers if it determines that such structure provides better
and more effective oversight and management of the Company. In such case, the Board may also consider appointing a lead independent director,
if the circumstances warrant it. When the Board convenes for a meeting, it is expected that the non-management directors will meet in
one or more executive sessions, if the circumstances warrant it.
Role of Board in Risk
Oversight Process
The
Board is responsible for the oversight of the Company's risk management processes and, either as a whole or through its committees,
regularly discusses with management the Company's major risk exposures, their potential impact on the Company's business and
the steps the Company takes to manage them. The risk oversight process includes receiving regular reports from board committees and members
of senior management to enable the Board to understand the Company's risk identification, risk management and risk mitigation strategies
with respect to areas of potential material risk, including operations, finance, legal, regulatory, strategic and reputational risk.
The
audit committee reviews and monitors the processes in place to identify and manage the principal risks that could impact our financial
reporting. It also reviews and approves corporate investment policies and assesses the effectiveness of our overall process for identifying
principal business risks. Oversight by the audit committee includes direct communication with the Company's external auditors, and
discussions with management regarding significant risk exposures and the actions management has taken to limit, monitor or control such
exposures. The compensation committee is responsible for assessing whether any of the Company's compensation policies or programs
has the potential to encourage excessive risk-taking. The nominating and corporate governance committee manages risks associated with
the independence of the Board and corporate practices. While each committee is responsible for evaluating certain risks and overseeing
the management of such risks, the entire Board is regularly informed through committee reports about such risks. Matters of significant
strategic risk is considered by the Board as a whole.
Compensation Committee
Interlocks and Insider Participation
No
member of the compensation committee serves or served during the fiscal year ended June 30, 2024, as a member of the Board or compensation
committee of a company that has one or more executive officers serving as a member of the board of directors or compensation committee.
Director Qualifications
The
nominating and corporate governance committee is responsible for reviewing with the Board, on an annual basis, the appropriate characteristics,
skills and experience required for the Board as a whole and its individual members. There is no difference in the manner in which the
nominating and corporate governance committee and evaluates nominees for director based on whether the nominee is recommended by a shareholder.
Arrangements between
Officers and Directors
To
our knowledge, there is no arrangement or understanding between any of our officers or directors and any other person, including directors,
pursuant to which the officer was selected to serve as an officer or director.
Code of Business Conduct
and Ethics
The Company adopted a written
code of business conduct and ethics that applies to its directors, officers and employees, including its principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the code is
posted on the corporate website at
https://damon.com/
. In addition, the Company intends to post on its website all disclosures
that are required by law or the listing standards of Nasdaq concerning any amendments to, or waivers from, any provision of the code.
The reference to the Company's website address does not constitute incorporation by reference of the information contained at or
available through its website, and you should not consider it to be a part of this prospectus.
122
EXECUTIVE AND DIRECTOR
COMPENSATION
Summary Compensation Table
The information included in
the Summary Compensation Table below reflects compensation awarded or paid by the Company during fiscal years ended June 30, 2024 and
2023 to our sole officer and director prior to the consummation of the Business Combination. The individual included in the table is referred
to herein as the Company's named executive officer ("NEO").
Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
All Other
Compensation
($)(1)
Total
($)
Nadir Ali,
2024
$
None
$
None
$
None
$
219,627
(2)
$
45,000
$
264,627
Chief Executive Officer (3)
2023
$
None
$
None
$
None
$
None
$
None
$
None
(1)
Includes service fees paid by Grafiti Holding to Mr. Ali for the period from April 1, 2024 through June 30, 2024.
(2)
The fair value of employee option grants were estimated on the date of grant using the Black-Scholes option valuation model with probability weighted scenarios of the company "As-Is" on a standalone basis and on a "Merger" basis assuming the completion of the Business Combination.
(3)
Mr. Ali resigned from all director and officer positions with the Company upon the closing of the Business Combination.
Outstanding Equity Awards at Fiscal Year-End
Other than as set forth below,
there were no outstanding unexercised options, unvested stock, and/or equity incentive plan awards issued to our NEO as of June 30, 2024.
Option Awards
Stock Awards
Name
Grant Date
Number of
securities
underlying
unexercised
options (#)
exercisable
Number of
securities
underlying
unexercised
options (#)
unexercisable
Equity
incentive
plan
awards:
number of
securities
underlying
unexercised
unearned
options
(#)
Option
exercise
price
($)
Option
expiration
date
Number
of
shares
of restricted
stock
#
Market
value
of
shares
of restricted
stock
($)
Nadir Ali
06/11/2024
355,384
(1)
—
—
$
0.06336
12/31/2024
—
—
(1)
This option is 100% vested.
Advisory Services and Consulting Agreement with Nadir Ali
The Company paid Mr. Ali a
fee of $15,000 per month for services rendered to the Company since April 1, 2024 and until the closing of the Business Combination. Grafiti
Holding has entered into a Consulting Agreement with Mr. Ali on September 25, 2024 (the "Ali Consulting Agreement"), pursuant
to which Mr. Ali will advise on public company reporting and compliance matters, business development, growth strategies and other operational
matters as requested.
Pursuant to the terms of the
Ali Consulting Agreement, the Company agreed to pay Mr. Ali, through a wholly owned affiliated entity, 3AM Investments LLC, a fee of $15,000
per month for services rendered to the Company since April 1, 2024 until the end of the month of the closing of the Business Combination.
In connection with the terms of the Ali Consulting Agreement, Mr. Ali will advise on public company reporting and compliance matters,
strategic business development and growth strategies and other operational matters as requested.
123
As compensation under the
Ali Consulting Agreement, Mr. Ali is entitled to a fee of $325,000 upon closing the Business Combination and his monthly fee will increase
to $54,167 per month beginning on the first of each month following the closing of the Business Combination through the remainder of the
term of the agreement.
Unless otherwise terminated
earlier pursuant to the Ali Consulting Agreement, the agreement will continue for a period of six months following the closing of the
Business Combination which may be extended for additional terms, upon mutual consent. The Company has the right to terminate the Ali Consulting
Agreement with 30 days' notice; however, if it is terminated by the Company prior to the six month anniversary of the closing of
the Business Combination (the "Ali Guaranteed Period") for any reason other than the gross negligence, recklessness or willful
misconduct of Mr. Ali, the monthly fee will continue to be paid for the remainder of the Ali Guaranteed Period. Mr. Ali has the right
to terminate the Ali Consulting Agreement with 30 days' notice for specified reasons, including the Company's failure to make
timely payments, gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by the Company. In such cases, the monthly
fee for the remainder of the Ali Guaranteed Period will continue to be paid.
Stock Incentive Plan
On June 11, 2024, the Company's
Board adopted a Stock Incentive Plan (the "Plan Effective Date"), which was approved by the trust as the sole shareholder
on June 11, 2024. Below is a summary of the Stock Incentive Plan.
Overview and Purpose
The Stock Incentive Plan provides
flexibility to the Company to grant equity-based incentive awards (each, an "Award") in the form of Options, RSUs, Restricted
Shares, PSUs and DSUs, as described in further detail below.
The purpose of the Stock Incentive
Plan is to, among other things, provide the Company with a share-related mechanism to attract, retain and motivate qualified directors,
employees and consultants of the Company and its subsidiaries, to reward such of those directors, employees and consultants as may be
granted awards under the Stock Incentive Plan by the Board from time to time for their contributions toward the long-term goals and success
of the Company, and to enable and encourage such directors, employees and consultants to acquire Shares as long-term investments and proprietary
interests in the Company.
Material Terms of the Stock Incentive Plan
Shares Subject to the Stock Incentive Plan
The maximum aggregate number
of common shares that may be issued pursuant to Awards granted under the Plan (the "Share Reserve") shall initially be 10,000,000,
and the Share Reserve shall automatically increase on the first day of each calendar year beginning January 1, 2025, by a number of shares
equal to the greatest of (i) 3,000,000 Shares, (ii) twenty percent (20%) of the outstanding common shares on the last day of the immediately
preceding calendar quarter, or (iii) such number of common shares determined by the Committee. The Company shall at all times while the
Stock Incentive Plan is in effect reserve such number of common shares as will be sufficient to satisfy the requirements of outstanding
Awards granted under the Stock Incentive Plan. The common shares subject to the Stock Incentive Plan shall be either authorized and unissued
or treasury common shares. Notwithstanding the foregoing, the aggregate number of common shares that may be issued during the term of
the Stock Incentive Plan may not exceed 40,000,000. For clarity, the Share Reserve is a limitation on the number of common shares that
may be issued pursuant to the Stock Incentive Plan. As a single common share may be subject to grant more than once (e.g., if a common
share subject to an Award is forfeited, it may be made subject to grant again under the Stock Incentive Plan), the Share Reserve is not
a limit on the number of Awards that can be granted. Up to 10,000,000 common shares may (but need not be) issued pursuant to the exercise
of "incentive stock options" (within the meaning of Section 422 of the United States
Internal Revenue Code of 1986
,
as amended (the "Code")) granted under the Stock Incentive Plan.
Any common shares issued by
the Company through the assumption or substitution of outstanding stock options or other equity-based awards from an acquired company
will not reduce the number of common shares available for issuance pursuant to the exercise of Awards granted under the Stock Incentive
Plan.
Administration of the Stock Incentive Plan
The Stock Incentive Plan designates
the Board as the initial Plan Administrator (as defined in the Stock Incentive Plan), subject to the ability of the Board to delegate
from time to time all or any of the powers conferred on the Plan Administrator to a committee of the Board. The Board has resolved to
delegate all powers of administration of the Stock Incentive Plan to the Compensation Committee.
The Plan Administrator determines
which directors, officers, consultants and employees are eligible to receive Awards under the Stock Incentive Plan, the time or times
at which Awards may be granted, the conditions under which awards may be granted or forfeited to the Company, the number of common shares
to be covered by any Award, the exercise price of any Award, whether restrictions or limitations are to be imposed on the common shares
issuable pursuant to grants of any Award, and the nature of any such restrictions or limitations, any acceleration of exercisability or
vesting, or waiver of termination regarding any Award, based on such factors as the Plan Administrator may determine.
In addition, the Plan Administrator
interprets the Stock Incentive Plan and may adopt guidelines and other rules and regulations relating to the Stock Incentive Plan and
make all other determinations and take all other actions necessary or advisable for the implementation and administration of the Stock
Incentive Plan.
124
Eligibility
All directors, employees and
consultants are eligible to participate in the Stock Incentive Plan. The extent to which any such individual is entitled to receive a
grant of an Award pursuant to the Stock Incentive Plan will be determined in the sole and absolute discretion of the Plan Administrator.
Types of Awards
Awards of Options, RSUs, Restricted
Shares, PSUs and DSUs may be made under the Stock Incentive Plan. All of the Awards described below are subject to the conditions, limitations,
restrictions, exercise price, vesting, settlement and forfeiture provisions determined by the Plan Administrator, in its sole discretion,
subject to such limitations provided in the Stock Incentive Plan and will generally be evidenced by an Award agreement. In addition, subject
to the limitations provided in the Stock Incentive Plan and in accordance with applicable law, the Plan Administrator may accelerate or
defer the vesting or payment of Awards, cancel or modify outstanding Awards and waive any condition imposed with respect to Awards or
common shares issued pursuant to Awards.
Options
An Option entitles a holder
thereof to purchase a prescribed number of common shares at an exercise price set at the time of the grant. The Plan Administrator will
establish the exercise price at the time each Option is granted. Except as otherwise determined by the Plan Administrator and specified
in an Award agreement, exercise price of an Option granted under the Stock Incentive Plan will not be less than the greater of the closing
market price of the common shares on (i) the trading day prior to the date of grant of the Option or (ii) the date of grant of the Option.
Subject to any accelerated termination as set forth in the Stock Incentive Plan, each Option expires on its respective expiry date. The
Plan Administrator will have the authority to determine the vesting terms applicable to grants of Options. Once an Option becomes vested,
it shall remain vested and shall be exercisable until expiration or termination of the Option, unless otherwise specified by the Plan
Administrator, or as otherwise set forth in any written employment agreement, Award agreement or other written agreement between the Company
or a subsidiary of the Company and the participant. The Plan Administrator has the right to accelerate the date upon which any Option
becomes exercisable. The Plan Administrator may provide at the time of granting an Option that the exercise of that Option is subject
to restrictions, in addition to those specified in the Stock Incentive Plan, such as vesting conditions relating to the attainment of
specified performance goals.
Unless otherwise specified
by the Plan Administrator at the time of granting an Option and set forth in the particular Award agreement, an exercise notice must be
accompanied by payment of the exercise price. A participant may, in lieu of exercising an Option pursuant to an exercise notice, elect
to surrender such Option to the Company (a "Cashless Exercise") in consideration for an amount from the Company equal to (i)
the closing market price of the common shares issuable on the exercise of such Option (or portion thereof) as of the date such Option
(or portion thereof) is exercised, less (ii) the aggregate exercise price of the Option (or portion thereof) surrendered relating to such
Shares (the "In-the-Money Amount"), by written notice to the Company indicating the number of Options such participant wishes
to exercise using the Cashless Exercise, and such other information that the Company may require. Subject to the provisions of the Stock
Incentive Plan, the Company will satisfy payment of the In-the-Money Amount by delivering to the participant such number of common shares
having a fair market value equal to the In-the-Money Amount.
Restricted Share Units
A RSU is a unit equivalent
in value to a common share credited by means of a bookkeeping entry in the books of the Company which entitles the holder to receive one
common share (or the value thereof) for each RSU after a specified vesting period. The Plan Administrator may, from time to time, subject
to the provisions of the Stock Incentive Plan and such other terms and conditions as the Plan Administrator may prescribe, grant RSUs
to any participant in respect of a bonus or similar payment in respect of services rendered by the applicable participant in a taxation
year.
The number of RSUs (including
fractional RSUs) granted at any particular time under the Stock Incentive Plan will be calculated by dividing: (a) the amount that is
to be paid in RSUs, as determined by the Plan Administrator; by (b) the greater of (i) the market price of a common share on the date
of grant and (ii) such amount as determined by the Plan Administrator in its sole discretion.
The Plan Administrator shall
have the authority to determine the settlement and any vesting terms applicable to the grant of RSUs, provided that the terms applicable
to RSUs granted to U.S. taxpayers comply with Section 409A of the Code, to the extent applicable.
Upon settlement, holders will
redeem each vested RSU for one fully paid and non-assessable common share in respect of each vested RSU.
125
Restricted Shares
The Plan Administrator may,
from time to time, subject to the provisions of the Stock Incentive Plan and such other terms and conditions as the Plan Administrator
may prescribe, grant Restricted Shares to any participant. Restricted Shares shall be subject to such restrictions on transferability,
risk of forfeiture and other restrictions, if any, as the Plan Administrator may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements),
in such installments or otherwise, as the Plan Administrator may determine at the date of grant or thereafter. During the restricted period
applicable to a Restricted Share, the Restricted Share may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered
by the participant.
As a condition to the grant
of an Award of Restricted Shares, the Plan Administrator may allow a participant to elect, or may require, that any cash dividends paid
on a Restricted Share be automatically reinvested in additional Restricted Shares, applied to the purchase of additional Awards under
this Plan or deferred without interest to the date of vesting of the associated Award of Restricted Shares; provided, that, to the extent
applicable, any such election is intended to comply with Section 409A. Unless otherwise determined by the Plan Administrator and specified
in the applicable Award Agreement, common shares distributed in connection with a share split or share dividend, and other property (other
than cash) distributed as a dividend, will be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Share
with respect to which such share or other property has been distributed.
Performance Share Units
A PSU is a unit equivalent
in value to a common share credited by means of a bookkeeping entry in the books of the Company which entitles the holder to receive one
common share for each PSU after specific performance-based vesting criteria determined by the Plan Administrator, in its sole discretion,
have been satisfied. The Plan Administrator may, from time to time, subject to the provisions of the Stock Incentive Plan and such other
terms and conditions as the Plan Administrator may prescribe, grant PSUs to any participant in respect of services rendered by the applicable
participant in a tax year. The performance goals to be achieved during any performance period, the length of any performance period, the
amount of any PSUs granted, the effect of termination of a participant's service and the settlement terms pursuant to any PSU will
be determined by the Plan Administrator and by the other terms and conditions of any PSU, all as set forth in the applicable Award agreement.
The Plan Administrator shall
have the authority to determine the settlement and any vesting terms applicable to the grant of PSUs, provided that the terms applicable
to PSUs granted to U.S. taxpayers comply with Section 409A of the Code, to the extent applicable. Upon settlement, holders will redeem
each vested PSU for one fully paid and non-assessable common share in respect of each vested PSU.
Deferred Share Units
A DSU is a unit equivalent
in value to a common share credited by means of a bookkeeping entry in the books of the Company which entitles the holder to receive one
common share (or, at the election of the holder and subject to the approval of the Plan Administrator, the cash value thereof) for each
DSU on a future date. The Board may fix from time to time a portion of the total compensation (including annual retainer) paid by the
Company to a director in a calendar year for service on the Board (the "Director Fees") that are to be payable in the form
of DSUs. In addition, each director is given, subject to the provisions of the Stock Incentive Plan, the right to elect to receive a portion
of the cash Director Fees owing to them in the form of DSUs.
Except as otherwise determined
by the Plan Administrator or as set forth in the particular Award agreement, DSUs shall vest immediately upon grant. The number of DSUs
(including fractional DSUs) granted at any particular time will be calculated by dividing: (a) the amount of Director Fees that are to
be paid in DSUs, as determined by the Plan Administrator; by (b) the market price of a common share on the date of grant. Upon settlement,
holders will redeem each vested DSU for: (a) one fully paid and non-assessable common share in respect of each vested DSU, or (b) at the
election of the holder and subject to the approval of the Plan Administrator, a cash payment on the date of settlement. Any cash payments
made under the Stock Incentive Plan by the Company to a participant in respect of DSUs to be redeemed for cash shall be calculated by
multiplying the number of DSUs to be redeemed for cash by the market price per common share as at the settlement date.
126
Dividend Equivalents
Except as otherwise determined
by the Plan Administrator or as set forth in the particular Award agreement, RSUs, PSUs and DSUs shall be credited with dividend equivalents
in the form of additional RSUs, PSUs and DSUs, as applicable, as of each dividend payment date in respect of which normal cash dividends
are paid on common shares. Dividend equivalents shall vest in proportion to, and settle in the same manner as, the Awards to which they
relate. Such dividend equivalents shall be computed by dividing: (a) the amount obtained by multiplying the amount of the dividend declared
and paid per common share by the number of RSUs, PSUs and DSUs, as applicable, held by the participant on the record date for the payment
of such dividend; by (b) the market price at the close of the first business day immediately following the dividend record date, with
fractions computed to three decimal places.
Black-out Periods
In the event an Award expires,
at a time when a scheduled blackout is in place or an undisclosed material change or material fact in the affairs of the Company exists,
the expiry of such Award will be the date that is ten business days after which such scheduled blackout terminates or there is no longer
such undisclosed material change or material fact.
Term
No Awards may be granted under
the Stock Incentive Plan on or after the tenth anniversary of the Plan Effective Date.
While the Stock Incentive
Plan does not stipulate a specific term for Awards granted thereunder, as discussed below, Awards may not expire beyond 10 years from
its date of grant, except where shareholder approval is received or where an expiry date would have fallen within a blackout period of
the Company. All Awards must vest and settle in accordance with the provisions of the Stock Incentive Plan and any applicable Award agreement,
and which Award agreement may include an expiry date for a specific Award.
Termination of Employment or Services
The following describes the impact of certain
events upon the participants under the Stock Incentive Plan, including termination for cause, resignation, termination without cause,
disability, death or retirement, subject, in each case, to the terms of a participant's applicable employment agreement, Award agreement
or other written agreement:
(a)
Termination
for Cause or upon Termination
: Any Option or other Award held by the participant that has not been exercised, surrendered or settled
as of the termination date (as defined in the Stock Incentive Plan) shall be immediately forfeited and cancelled as of the termination
date.
(b)
Termination
without Cause
: A portion of any unvested Options or other Awards shall immediately vest, such portion to be equal to the number of
unvested Options or other Awards held by the participant as of the termination date multiplied by a fraction the numerator of which is
the number of days between the date of grant and the termination date and the denominator of which is the number of days between the
date of grant and the date any unvested Options or other Awards were originally scheduled to vest. Any vested Options may be exercised
by the participant at any time during the period that terminates on the earlier of: (a) the expiry date of such Option; and (b) the date
that is 90 days after the termination date. If an Option remains unexercised upon the earlier of (a) or (b), the Option shall be immediately
forfeited and cancelled for no consideration upon the termination of such period. In the case of a vested Award other than an Option,
such Award will be settled within 90 days after the termination date.
(c)
Disability
:
A portion of any unvested Options or other Awards shall immediately vest, such portion to be equal to the number of unvested Options
or other Awards held by the participant as of the termination date multiplied by a fraction the numerator of which is the number of days
between the date of grant and the termination date and the denominator of which is the number of days between the date of grant and the
date any unvested Options or other Awards were originally scheduled to vest. Any vested Option may be exercised by the participant at
any time until the expiry date of such Option. Any vested Option may be exercised by the participant at any time until the expiry date
of such Option. Any vested Award other than an Option will be settled within 90 days after the termination date.
127
(d)
Death
:
A portion of any unvested Options or other Awards shall immediately vest, such portion to be equal to the number of unvested Options
or other Awards held by the participant as of the termination date multiplied by a fraction the numerator of which is the number of days
between the date of grant and the termination date and the denominator of which is the number of days between the date of grant and the
date any unvested Options or other Awards were originally scheduled to vest. Any vested Option may be exercised by the participant's
beneficiary or legal representative (as applicable) at any time during the period that terminates on the earlier of: (a) the expiry date
of such Option; and (b) the first anniversary of the date of the death of such participant. If an Option remains unexercised upon the
earlier of (a) or (b), the Option shall be immediately forfeited and cancelled for no consideration upon the termination of such period.
In the case of a vested Award other than an Option, such Award will be settled with the participant's beneficiary or legal representative
(as applicable) within 90 days after the date of the Participant's death.
(e)
Retirement
:
A portion of any unvested Options or other Awards shall immediately vest, such portion to be equal to the number of unvested Options
or other Awards held by the participant as of the termination date multiplied by a fraction the numerator of which is the number of days
between the date of grant and the termination date and the denominator of which is the number of days between the date of grant and the
date any unvested Options or other Awards were originally scheduled to vest. Any vested Option may be exercised by the participant at
any time during the period that terminates on the earlier of: (a) the expiry date of such Option; and (b) the third anniversary of the
participant's date of retirement. If an Option remains unexercised upon the earlier of (a) or (b), the Option shall be immediately
forfeited and cancelled for no consideration upon the termination of such period. In the case of a vested Award other than an Option,
such Award will be settled within 90 days after the participant's retirement. Notwithstanding the foregoing, if, following his
or her retirement, the participant commences on the Commencement Date (as defined in the Stock Incentive Plan) employment, consulting
or acting as a director of the Company or any of its subsidiaries (or in an analogous capacity) or otherwise as a service provider to
any person that carries on or proposes to carry on a business competitive with the Company or any of its subsidiaries, any Option or
other Award held by the participant that has not been exercised or settled as of the commencement date shall be immediately forfeited
and cancelled as of the Commencement Date.
Change in Control
Under the Stock Incentive
Plan, except as may be set forth in an employment agreement, Award agreement or other written agreement between the Company or a subsidiary
of the Company and a participant:
(a) the Plan Administrator may,
without the consent of any participant, take such steps as it deems necessary or desirable, including to cause: (i) the conversion or
exchange of any outstanding Awards into or for rights or other securities of substantially equivalent value, as determined by the Plan
Administrator in its discretion, in any entity participating in or resulting from a Change in Control (as defined below); (ii) outstanding
Awards to vest and become exercisable, realizable or payable, or restrictions applicable to an Award to lapse, in whole or in part prior
to or upon consummation of a Change in Control, and, to the extent the Plan Administrator determines, terminate upon or immediately prior
to the effectiveness of such Change in Control; (iii) the termination of an Award in exchange for an amount of cash and/or property, if
any, equal to the amount that would have been attained upon the exercise or settlement of such Award or realization of the participant's
rights as of the date of the occurrence of the transaction; (iv) the replacement of such Award with other rights or property selected
by the Board in its sole discretion where such replacement would not adversely affect the holder; or (v) any combination of the foregoing;
provided that: (A) in taking any of the foregoing actions, the Plan Administrator will not be required to treat all Awards similarly in
the transaction; and (B) in the case of Options, RSUs and PSUs held by a Canadian taxpayer, the Plan Administrator may not cause the Canadian
taxpayer to receive any property in connection with a Change in Control other than rights to acquire shares of a corporation or units
of a "mutual fund trust" (as defined in the
Income Tax Act
(Canada) (the "Tax Act")) of the Company or
a "qualifying person" (as defined in the Tax Act) that does not deal at arm's length (for purposes of the Tax Act) with
the Company, as applicable, at the time such rights are issued or granted;
(b) if within 12 months following
the completion of a transaction resulting in a Change in Control (as defined below), a participant's employment, consultancy or
directorship is terminated by the Company or a subsidiary of the Company without Cause (as defined in the Stock Incentive Plan), without
any action by the Plan Administrator:
(i) any unvested Awards
held by the participant at the termination date shall immediately vest; and
(ii) any vested Awards
may be exercised, surrendered to the Company, or settled by the participant at any time during the period that terminates on the earlier
of: (i) the expiry date of such Award; and (ii) the date that is 90 days after the termination date. Any Award that has not been exercised,
surrendered or settled at the end of such period being immediately forfeited and cancelled; and
(c) unless otherwise
determined by the Plan Administrator, if, as a result of a Change in Control, the common shares will cease trading on NASDAQ, the Company
may terminate all of the Awards (other than an Option, RSU or PSU held by a participant that is a resident of Canada for the purposes
of the Tax Act) at the time of and subject to the completion of the Change in Control transaction by paying to each holder at or within
a reasonable period of time following completion of such Change in Control transaction an amount for each Award equal to the fair market
value of the Award held by such participant as determined by the Plan Administrator, acting reasonably, provided that any vested Awards
granted to U.S. taxpayers will be settled within 90 days of the Change in Control.
128
Subject to certain exceptions, a "Change
in Control" includes: (i) any transaction pursuant to which a person or group acquires more than 50% of the outstanding common shares
(assuming conversion of the other Shares); (ii) the sale of all or substantially all of the Company's assets; (iii) the dissolution
or liquidation of the Company; (iv) the acquisition of the Company via consolidation, merger, exchange of securities, purchase of assets,
amalgamation, statutory arrangement or otherwise; (v) individuals who comprise the Board at the last annual meeting of shareholders (the
"Incumbent Board") cease to constitute at least a majority of the Board, unless the election, or nomination for election by
the shareholders, of any new director was approved by a vote of at least a majority of the Incumbent Board, in which case such new director
shall be considered as a member of the Incumbent Board; or (vi) any other event which the Board determines to constitute a change in control
of the Company.
Non-Transferability of Awards
Except as permitted by the
Plan Administrator and to the extent that certain rights may pass to a beneficiary or legal representative upon death of a participant,
by will or as required by law, no assignment or transfer of Awards, whether voluntary, involuntary, by operation of law or otherwise,
vests any interest or right in such Awards whatsoever in any assignee or transferee and immediately upon any assignment or transfer, or
any attempt to make the same, such Awards will terminate and be of no further force or effect. To the extent that certain rights to exercise
any portion of an outstanding Award pass to a beneficiary or legal representative upon the death of a participant, the period in which
such Award can be exercised by such beneficiary or legal representative shall not exceed one year from the participant's death.
Amendments to the Stock Incentive Plan
The Plan Administrator may
also from time to time, without notice and without approval of the holders of Shares, amend, modify, change, suspend or terminate the
Stock Incentive Plan or any Awards granted pursuant thereto as it, in its discretion, determines appropriate, provided that: (a) no such
amendment, modification, change, suspension or termination of the Stock Incentive Plan or any Award granted pursuant thereto may materially
impair any rights of a participant or materially increase any obligations of a participant under the Stock Incentive Plan without the
consent of such participant, unless the Plan Administrator determines such adjustment is required or desirable in order to comply with
any applicable securities laws or stock exchange requirements; and (b) any amendment that would cause an Award held by a U.S. Taxpayer
to be subject to the income inclusion under Section 409A of the Code shall be null and void
ab initio
.
129
Notwithstanding the above,
and subject to the NASDAQ Listing Rules, the approval of shareholders is required to effect any of the following amendments to the Stock
Incentive Plan:
(a)
increasing
the number of common shares reserved for issuance under the Stock Incentive Plan, except pursuant to the provisions in the Stock Incentive
Plan which permit the Plan Administrator to make equitable adjustments in the event of transactions affecting the Company or its capital;
(b)
extending
the term of an Option award beyond the original expiry date (except where an expiry date would have fallen within a blackout period applicable
to the participant or within ten business days following the expiry of such a blackout period);
(c)
extending
the term of an Option award beyond the original expiry date (except where an expiry date would have fallen within a blackout period applicable
to the participant or within ten business days following the expiry of such a blackout period);
(d)
permitting
an Option award to be exercisable beyond ten years from its date of grant (except where an expiry date would have fallen within a blackout
period);
(e)
increasing
or removing the limits on the participation of directors;
(f)
permitting
Awards to be transferred to a person;
(g)
changing
the eligible participants; and
(h)
deleting
or reducing the range of amendments which require approval of the shareholders.
Except for the items listed
above, amendments to the Stock Incentive Plan will not require shareholder approval. Such amendments include (but are not limited to):
(a) amending the general vesting provisions of an Award; (b) amending the provisions for early termination of Awards in connection with
a termination of employment or service; (c) adding covenants of the Company for the protection of the participants; (d) amendments that
are desirable as a result of changes in law in any jurisdiction where a participant resides; and (e) curing or correcting any ambiguity
or defect or inconsistent provision or clerical omission or mistake or manifest error. Further, the Plan Administrator retains discretion
under the Stock Incentive Plan to reprice out-of-the-money Options without obtaining shareholder approve.
Anti-Hedging Policy
Participants are restricted
from purchasing financial instruments such as prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that
are designed to hedge or offset a decrease in market value of Awards granted to them.
Policies and Practices for Granting Option Awards
The Company has not granted
any new option awards since becoming a reporting company, other than the replacement options issued to option holders of Damon Motors
pursuant to the plan of arrangement between the Company and Damon Motors. The Compensation Committee does not plan to take material non-public
information into account when determining the timing and terms of option awards, and the Company does not plan to time the disclosure
of such material non-public information for purposes of affecting the exercise price of the options or the value of executive compensation.
In addition, the Company does not plan to grant options during the four business days prior to or the one business day following the filing
of a periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of a Form 8-K that discloses material non-public information.
Post-Closing Executive and Director Compensation
Executive Employment Agreements
The following summarizes the
employment agreements with our executive officers appointed upon the closing of the Business Combination, which agreements have been entered
into with Damon Motors. Jay Giraud, Derek Dorresteyn and Amber Spencer served until December 4, 2024, January 15, 2025 and December 4,
2024, respectively; and as of the date of this filing, no longer hold any officer or director positions in the Company.
Employment Agreement with Interim Chief Executive Officer
On December 4, 2024, Damon
Motors entered into an Interim Executive Employment Agreement with Dominique Kwong. The agreement provides for a six-month term, which
may be extended by mutual agreement. During his employment, Mr. Kwong will receive an annualized salary of CAD $265,000 and the company's
standard senior executive benefits. The company may terminate the agreement without notice for cause or, without cause, by providing four
weeks' written notice. Mr. Kwong may resign with four weeks' written notice, during which the company may waive the notice
period and pay any outstanding wages, including no more than four weeks' additional base salary. The agreement also includes customary
confidentiality provisions and post-employment non-solicitation and non-competition covenants.
130
Employment Agreement with Chief Financial Officer
On January 1, 2024, Damon
Motors entered into an employment agreement with Bal Bhullar (the "Bhullar Employment Agreement"). Ms. Bhullar serves as the
Chief Financial Officer and reports directly to the Chief Executive Officer of Damon Motors. Ms. Bhullar is entitled to a salary of US$325,000
(CAD$435,000) less applicable statutory deductions. Ms. Bhullar is also entitled to reasonable industry standard annual bonuses based
upon the performance of Damon Motors and upon the achievement of reasonable management objectives to be reasonably established by the
board of directors of Damon Motors. Pursuant to an employment side letter agreement dated August 26, 2024, Ms. Bhullar will receive a
$1 million listing bonus ninety days after the successful public listing of the Company.
If Ms. Bhullar employment
contract is terminated for just cause or upon her resignation, Ms. Bhullar is entitled to an amount equal to her monthly salary and vacation
pay earned by and payable to the executive up to the date of termination and shall have no entitlement to any further notice of termination,
payment in lieu of notice of termination, severance, continuation of benefits or any damages whatsoever. If Ms. Bhullar's contract
is terminated by Damon Motors without just cause, or upon a change of control, in which case the company terminates Ms. Bhullar's
employment other than for just cause or Ms. Bhullar resigns for good reason, then: (a) Damon Motors shall pay an amount equal to the monthly
salary and vacation pay earned and payable up to the date of termination, together with any other vacation pay required to comply with
applicable employment standards legislation; (b) Damon Motors shall pay Ms. Bhullar's annual performance bonus entitlements (if
any) calculated pro rata for the period up to the date of termination based on achievement of the objectives to such date, such payment(s)
being made not later than 30 calendar days following the board's approval of the audited financial statements for the fiscal year
in which the date of termination occurs; and (c) Damon Motors shall pay, as severance, an amount equal to six months' monthly salary,
based on the executive's monthly salary as at the date of termination.
Employment Agreement with Former Chief Executive Officer and Chairman
of Board
On March 23, 2022, Damon Motors
entered into an employment agreement with Jay Giraud (the "Giraud Employment Agreement") for the employment of Mr. Giraud
as the CEO of Damon Motors. Under the Giraud Employment Agreement, Damon Motors agreed to pay Mr. Giraud an annual base salary of $350,000
(CAD$450,000) and a bonus in the range of $195,000 to $450,000, subject to the approval of the board of directors of Damon Motors. Pursuant
to an employment side letter agreement dated October 17, 2024, Mr. Giraud is entitled to receive a $1 million listing bonus subject to
the continued service with the Company for a period of 375 days following the date of public listing ("Service Period"). The
listing bonus shall be paid out as soon as practicable at the time when the board determines that it is in the best interests of the Company
to do so, having due regard to the Company's financial situation. Notwithstanding the preceding sentence the listing bonus shall
be paid promptly following the completion of the Service Period.
Mr. Giraud may terminate the
Giraud Employment Agreement and Mr. Giraud's employment with Damon Motors at any time by providing Damon Motors with eight weeks'
prior written working notice. Damon Motors may waive all or any part of the notice given by Mr. Giraud and direct Mr. Giraud not to report
for work for any part of the notice period. In these circumstances, Mr. Giraud would then be paid all outstanding wages (including accrued
but unpaid vacation pay) owing up to and including the effective resignation date. In no event will Damon Motors be required to pay Mr.
Giraud more than twelve weeks' pay (plus accrued but unused vacation pay) based on Mr. Giraud's base salary at the time of
resignation.
Damon Motors may terminate
the Giraud Employment Agreement and the Mr. Giraud's employment at any time, without cause, upon Damon Motors providing Mr. Giraud
with notice of termination or pay in lieu of notice (which shall be calculated based exclusively on Mr. Giraud's base salary at
the time of termination), or some combination of the two, equal to (i) three months' notice during his/her first year of service;
plus (ii) an additional four weeks' notice for every completed year of service thereafter, subject to an overall maximum entitlement
of 42 weeks (the "Notice Period").
Damon Motors will continue
to pay the premiums required to maintain Mr. Giraud's participation in whatever extended health and/or dental group benefit plans
Mr. Giraud is covered by at the time Mr. Giraud receives the notice of termination, until the earlier of the end of the applicable Notice
Period or the date on which Mr. Giraud becomes eligible to participate in similar benefits through alternate or self-employment, whichever
occurs first and provided that in no event will Mr. Giraud's benefit coverage be terminated prior to the expiration of the applicable
statutory notice period. All other benefits or benefit coverage in place at the time shall be discontinued at the end the applicable statutory
notice period.
Damon Motors may terminate
the Giraud Employment Agreement and Mr. Giraud's employment without notice of termination or pay in lieu of notice at any time for
Cause. For the purposes of the Giraud Employment Agreement, the term "Cause" includes: (a) the existence of cause for termination
of employment at common law, including situations involving fraud, dishonesty, illegality, breach of statute or regulation, conflict of
interest, gross negligence in the performance of Mr. Giraud's duties, or gross incompetence; (b) any material breach of the provisions
of this Agreement; (c) wilful disobedience of a reasonable direction from Damon Motors; (d) neglect of duty; (e) misconduct that undermines
Damon Motors's confidence in Mr. Giraud's ability to effectively carry out the duties and responsibilities of his/her position;
or (f) any material violation of Damon Motors's policies and procedures, as determined by Damon Motors in its sole and absolute
discretion. In the event of a termination for Cause, Mr. Giraud will receive payment of any salary and vacation pay earned up to and including
the date of termination. All other entitlements that Mr. Giraud may have as of the date of termination will be automatically extinguished,
except for such minimum mandated entitlements, if any, as may be required by the
Employment Standards Act
(British Columbia).
Upon termination of employment
for any reason, Mr. Giraud will cease to be and shall immediately resign as an officer or director of Damon Motors.
This provision regarding termination
of employment will apply regardless of any changes to the terms and conditions of Mr. Giraud's employment subsequent to Mr. Giraud's
signing of the Giraud Employment Agreement including, but not limited to, promotions and transfers, unless the parties expressly agree
otherwise in writing.
131
There is a non-solicit and
other post-employment restrictions present in the Giraud Employment Agreement.
There are no provisions with
respect to change of control in the Giraud Employment Agreement.
Employment Agreement with Former Chief Technology Officer
On July 12, 2021, Damon Motors
entered into an employment agreement with Derek Dorresteyn (the "Dorresteyn Employment Agreement") for the provision of CTO
services. Under the Dorresteyn Employment Agreement, Damon Motors agreed to pay Mr. Dorresteyn an annual base salary of $300,000 (CAD$390,000)
and a bonus subject to and conditioned upon the terms and conditions of the applicable plan, as well as the Mr. Dorresteyn's continued
employment by Damon Motors in good standing through the bonus payment date and neither party having delivered notice of an intent to terminate.
Mr. Dorresteyn's employment through the bonus payment date as permitted by applicable law. Pursuant to an employment side letter
agreement dated October 17, 2024, Mr. Dorresteyn is entitled to receive a $1 million bonus subject to the continued service with the Company
for a period of 375 days following the date of public listing ("Service Period"). The listing bonus shall be paid out as soon
as practicable at the time when the board of directors of Damon Motors determines that it is in the best interests of the Company to do
so, having due regard to the Company's financial situation. Notwithstanding the preceding sentence the listing bonus shall be paid
promptly following the completion of the Service Period.
Upon Mr. Dorresteyn's
termination for any reason, Mr. Dorresteyn will be entitled to: (i) all earned but unpaid base salary through Mr. Dorresteyn's separation
date; (ii) any unpaid or unreimbursed business expenses incurred; (iii) any accrued but unused vacation through the separation date; and
(iv) any benefits provided under Damon Motors's employee benefit plans, if any, following a termination of employment, in accordance
with the terms contained in said plans (the "Accrued Obligations"). The Accrued Obligations will be payable to Mr. Dorresteyn
as required by applicable law.
Mr. Dorresteyn may terminate
the Dorresteyn Employment Agreement and Mr. Dorresteyn's employment with Damon Motors at any time by providing Damon Motors with
12 weeks' prior written notice. Damon Motors may waive all or any part of the notice period given by Mr. Dorresteyn and direct Mr.
Dorresteyn not to report for work for any part of the notice period. In these circumstances, where Damon Motors elects to shorten the
notice period, Mr. Dorresteyn would then be paid all Accrued Obligations owing up to and including the separation date.
Damon Motors may terminate
the Dorresteyn Employment Agreement and Mr. Dorresteyn's employment at any time, without Cause. If Mr. Dorresteyn's employment
is terminated by Damon Motors without Cause, in addition to the Accrued Obligations, Mr. Dorresteyn will be entitled to receive the Severance
Benefits (defined below), subject to and contingent upon Mr. Dorresteyn executing a general release of claims satisfactory to Damon Motors,
which must be executed and effective (taking into account any applicable revocation period) on or before the sixtieth (60th) day following
the separation date (the "Release Requirements").
Damon Motors will pay Mr.
Dorresteyn any Severance Benefits, if payable, in a lump sum
on
the 60th day following the Separation Date, provided the Release
Requirements have been satisfied. If the release has not been executed or is not effective (taking into account any applicable revocation
period)
by
the 60th day following the Separation Date, Mr. Dorresteyn will not be entitled to any (and shall forfeit all) payments
(other than the Accrued Obligations). For the avoidance of doubt, if Mr. Dorresteyn's termination occurs other than by Damon Motors
without Cause, Mr. Dorresteyn will not be entitled to Severance Benefits. Other than as expressly provided herein, Mr. Dorresteyn shall
not be entitled to receive any payments or benefits under the Dorresteyn Employment Agreement for periods after Mr. Dorresteyn's
Separation Date, and Damon Motors will have no obligation to make any additional payments or provide any other benefits for periods after
the Separation Date (except as may otherwise be required under the applicable law).
"Severance Benefits"
means an amount equal to (i) three months of Mr. Dorresteyn's base salary on the Separation Date; plus, if the Separation Date occurs
after the first anniversary of the start date (ii) an additional four weeks of base salary for every full completed year of service thereafter,
subject to an overall maximum entitlement of forty-two weeks.
132
Damon Motors may terminate
the Dorresteyn Employment Agreement and his employment immediately at any time for Cause. For the purposes of the Dorresteyn Employment
Agreement, the term "Cause" includes: a) the existence of cause for termination of employment at common law, including situations
involving fraud, dishonesty, illegality, breach of statute or regulation, conflict of interest, gross negligence in the performance of
Mr. Dorresteyn's duties, or gross incompetence; b) any material breach of the provisions of the Dorresteyn Employment Agreement;
c) wilful disobedience of a reasonable direction from Damon Motors; d) neglect of duty; e) misconduct that undermines Damon Motors's
confidence in Mr. Dorresteyn's ability to effectively carry out the duties and responsibilities of his/her position; f) material
unauthorized use or disclosure of any Confidential Information of Damon Motors or any other party to whom they owe an obligation of nondisclosure
as a result of their relationship with Damon Motors; g) Mr. Dorresteyn indictment, conviction, admission or plea of
nolo contendere
to any felony, or to any other crime that involves theft, fraud or moral turpitude; or h) any material violation of Damon Motors's
policies and procedures, as determined by Damon Motors in its sole and absolute discretion. In the event of a termination for Cause, Mr.
Dorresteyn will receive payment of the Accrued Obligations.
Mr. Dorresteyn's employment
with Damon Motors may be terminated immediately due to Mr. Dorresteyn's death or Disability. In the event of a termination due to
Executive's death or Disability, Mr. Dorresteyn will receive payment of the Accrued Obligations. "Disability" will have
the same meaning as such phrase is given under the long term disability plan sponsored by Damon Motors as may be offered from time to
time or, in the absence of such policy, if Mr. Dorresteyn becomes physically or mentally incapacitated or impaired and is therefore unable
for a period of twelve (12) consecutive weeks in any six (6)-consecutive month period, or such longer period as may be required by applicable
law, to perform Mr. Dorresteyn's duties. Any question as to the existence of the disability of Mr. Dorresteyn shall be determined
in writing by a qualified independent physician selected by Damon Motors.
Upon termination of employment
for any reason, Mr. Dorresteyn will cease to be and shall immediately resign as an officer or director of Damon Motors, if applicable.
There is a non-solicit and
other post-employment restrictions present in the Dorresteyn Employment Agreement. There are no provisions with respect to change of control
in the Dorresteyn Employment Agreement.
Employment Agreement with Former Chief Marketing
Officer
On July 11, 2022, Damon Motors entered into an
employment agreement with Amber Spencer. Ms. Spencer serves as the Chief Marketing Officer of Damon Motors (the "Spencer Employment
Agreement"). Ms. Spencer is entitled to an annual salary of CAD$250,000. Ms. Spencer is entitled to participate in the company bonus
plan for senior executives according to its terms and conditions and any other incentive plans or programs established for executives
in accordance with the applicable plan or program, and, subject to board approval, may be eligible to participate in the equity incentive
plan of Damon Motors. Ms. Spencer may terminate her employment agreement by providing 8 weeks' prior written working notice. In
these circumstances, Ms. Spencer would then be paid all outstanding wages (including accrued but unpaid vacation pay) owing up to and
including the effective resignation date. Damon Motors may terminate the employment agreement at any time, without cause, upon notice
of termination or pay in lieu of notice (which shall be calculated based exclusively on the executive's base salary at the time
of termination), or some combination of the two, equal to (i) three months' notice during his/her first year of service; plus (ii)
an additional four weeks' notice for every completed year of service thereafter, subject to an overall maximum entitlement of 42
weeks. Damon Motors may terminate Ms. Spencer's employment agreement without notice of termination or pay in lieu of notice at any
time for cause. Ms. Spencer's employment does not have any payment in connection with a change of control of Damon Motors.
133
Director Compensation
Post-Closing, the Board and
the compensation committee of the Company approved the payment of the following compensation to its non-executive directors:
●
US$60,000 annual base retainer per director;
●
US$25,000 additional annual retainer payable to the director serving as lead director;
●
US$20,000 additional annual retainer payable to each director serving as chair of a committee of the Board
Consulting Agreement
The following summarizes the
terms of the consulting agreements the Company has entered into with its director Melanie Figueroa.
Melanie Figueroa Consulting Agreement
Pursuant to the terms of a
consulting agreement, dated September 25, 2024 (the "Figueroa Consulting Agreement"), the Company agreed to pay Ms. Figueroa,
a fee of $15,000 per month for services rendered to the Company since April 1, 2024 until the end of the month of the closing of the Business
Combination. In connection with the terms of the Figueroa Consulting Agreement, Ms. Figueroa will advise on public company reporting and
compliance matters, business development, growth strategies and other operational matters as requested. As compensation under the Figueroa
Consulting Agreement, Ms. Figueroa is entitled to a fee of $175,000 upon closing the Business Combination and her monthly fee will increase
to $29,167 per month beginning on the first of each month following the closing of the Business Combination through the remainder of the
term of the agreement.
Unless otherwise terminated
earlier pursuant to the Figueroa Consulting Agreement, the agreement will continue for a period of six months following the closing of
the Business Combination which may be extended for additional terms, upon mutual consent. The Company has the right to terminate the Figueroa
Consulting Agreement with 30 days' notice; however, if it is terminated by the Company prior to the Figueroa Guaranteed Period for
any reason other than the gross negligence, recklessness or willful misconduct of Ms. Figueroa, the monthly fee will continue to be paid
for the remainder of the Figueroa Guaranteed Period. Ms. Figueroa has the right to terminate the Figueroa Consulting Agreement with 30
days' notice for specified reasons, including the Company's failure to make timely payments, gross negligence, recklessness,
willful misconduct, or the filing of bankruptcy by the Company. In such cases, the monthly fee for the remainder of the Figueroa Guaranteed
Period will continue to be paid.
134
CERTAIN RELATIONSHIPS
AND RELATED PARTY TRANSACTIONS
In addition to the compensation
arrangements with directors and executive officers described under "
Executive and Director Compensation
" and "
Management
" in this prospectus, the following is a description of each transaction since our incorporation,
and each currently proposed transaction in which:
●
we have been or are to be a participant;
●
the amount involved exceeds or will exceed the lesser of $120,000 and
1% of the average of the Company's total assets at year-end for the last two completed fiscal years; and
●
any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or
any immediate family member of, or person sharing the household with, any of these individuals (other than tenants or employees), had
or will have a direct or indirect material interest.
The Company has policies and
procedures designed to minimize potential conflicts of interest arising from any dealings it may have with its affiliates and to provide
appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically,
pursuant to its audit committee charter, the audit committee has the responsibility to review related party transactions.
Certain Relationships and Related Party Transactions
Agreements Entered into by Grafiti
Limited or Grafiti Holding in connection with the SAVES Business
Grafiti Limited is a primary
distributor in the UK and Western European region of the SAVES products. Historically, Grafiti UK relied on advances from the Parent,
as its parent to satisfy expenses. The expenses incurred that were settled by the Parent consisted of salaries and benefits to certain
employees of the Parent that provided services for the company. In addition, Grafiti Limited recorded cost of sales for the purchase of
the SAVES software from the Parent at market value based on the price that the Parent would charge third parties for the purchase of its
software with industry consistent margins.
In connection with the Solutions
Divestiture, the Parent contributed the License, along with other assets and businesses, Grafiti LLC, then a wholly-owned subsidiary of
the Parent. As reported in the current report on Form 8-K filed by the Parent on February 23, 2024, the Parent sold 100% of the equity
interest in Grafiti LLC to an entity controlled by Nadir Ali, our former Chief Executive Officer and sole director prior to the closing
of the Business Combination, who also owned more than 5% of Grafiti Holding common shares immediately prior to the closing of the Business
Combination. The Company has entered into a Distributor Agreement and an Administrative Support Service Agreement with Grafiti LLC. See
the description of the terms of these agreements in "
Business - License, Distribution and Administrative Service Arrangements
with Grafiti LLC
."
Agreements Entered into by Grafiti
Holding in connection with the Spinoff
Separation and Distribution Agreement
On October 23, 2023, the Parent
and the Company entered into a Separation and Distribution Agreement, pursuant to which all of the outstanding shares of Grafiti Limited,
were transferred to the Company, such that on December 26, 2023, Grafiti Limited became a wholly-owned subsidiary of Grafiti (the "reorganization").
Following the reorganization, and in connection with the spin-off of the Company from Parent, on December 27, 2023 (the "record
date"), all of the outstanding common shares of the Company held by the Parent (the "Trust Shares") were transferred
to the Grafiti Holding Inc. Liquidating Trust (the "Trust"), to be held for the benefit of holders of the Parent's common
stock, preferred stock and those outstanding warrants that are contractually entitled to participate in the distribution of the Trust
Shares, on a pro rata basis as of the record date (collectively, the "participating Parent securityholders"). On November
12, 2024 (the "distribution date"), the Trust Shares were delivered to the participating Parent securityholders, on a pro
rata basis at a ratio of 1 Trust Share for every 50 shares of common stock of the Parent held by the participating Parent securityholders,
with all fractional shares being rounded up, resulting in the distribution of an aggregate of 3,536,746 Trust Shares to participating
Parent securityholders.
Liquidating Trust Agreement
On December 27, 2023, Grafiti
Holding, the Parent and the initial trustee of the trust have entered into a Liquidating Trust Agreement (the "Liquidating Trust
Agreement"), pursuant to which the Parent distributed the Grafiti Holding common shares owned by the Parent to the trust as of the
record date and the trust will deliver the Grafiti Holding common shares to the beneficiaries promptly following the effective date. If
the distribution is not consummated prior to the second anniversary of the date of the Liquidating Trust Agreement, the trustee(s) of
the trust will be empowered to liquidate the Grafiti Holding common shares held by the trust and distribute the proceeds thereof to the
participating securityholders as beneficiaries.
135
Agreements Entered into by Grafiti
Holding in connection with Consulting Services
Prior to the closing of the
Business Combination, the Company paid Melanie Figueroa $15,000 a month for advisory services with respect to her knowledge and expertise
related to Company's public company reporting and compliance matters and corporate business development and growth strategies. Ms.
Figueroa is the trustee of the Grafiti Holding Inc. Liquidating Trust and also individually owned more than 5% of the outstanding common
shares immediately prior to the closing of the Business Combination. Grafiti Holding has entered into a consulting agreement on September
25, 2024 with Ms. Figueroa. See the description of the terms of the agreement in
"Management – Consulting Agreement –
Melanie Figueroa Consulting Agreement.
"
Additionally, Grafiti Holding
has entered into a consulting agreement on September 25, 2024 with Ms. Wendy Loundermon, who owned more than 5% of the outstanding common
shares immediately prior to the closing of the Business Combination. Pursuant to this agreement, Grafiti Holding has agreed to pay a fee
of $10,000 per month for services rendered to the Company since April 1, 2024 until the closing of the Business Combination pursuant to
which Ms. Loundermon is providing advisory services in connection with the transition of the Company's financial reporting
function to ensure continuity of business operations following the Closing.
As compensation under the
Consulting Agreement, Grafiti Holding will pay Ms. Loundermon a fee of $150,000 upon closing the Business Combination and her monthly
fee will increase to $25,000 per month beginning on the first of each month following the closing of the Business Combination through
the remainder of the term of the agreement.
Unless otherwise terminated
earlier pursuant to the Consulting Agreement, the agreement will continue for a period of six months following the closing of the Business
Combination which may be extended for additional terms, upon mutual consent. Grafiti Holding will have the right to terminate the Consulting
Agreement with 30 days' notice; however, if it is terminated by Grafiti Holding prior to the six month anniversary of the closing
of the Business Combination (the "Loundermon Guaranteed Period") for any reason other than the gross negligence, recklessness
or willful misconduct of Ms. Loundermon, the monthly fee will continue to be paid for the remainder of the Loundermon Guaranteed Period.
Mrs. Loundermon will have the right to terminate the Consulting Agreement with 30 days' notice for specified reasons, including
Grafiti Holding's failure to make timely payments, gross negligence, recklessness, willful misconduct, or the filing of bankruptcy
by Grafiti Holding. In such cases, the monthly fee for the remainder of the Loundermon Guaranteed Period will continue to be paid.
Agreements Entered by Damon with Former
CEO and Chairman of Board
Upon the closing of the Business
Combination, Damon Jay Giraud was appointed as CEO, President, and Executive Chairman of the Board. Pursuant to the Plan of Arrangement
and the BCBCA, as contemplated in the Business Combination Agreement, Mr. Giraud received 1,391,181 multiple voting shares of the Company
(the "Multiple Voting Shares"), which were the only multiple voting shares issued by the Company. On December 4, 2024, Mr.
Giraud resigned from all positions as a director and officer of the Company and its subsidiaries. In accordance with the terms of the
Founder Agreement between Mr. Giraud and the Company, all 1,391,181 Multiple Voting Shares held by Mr. Giraud and his controlled entity
were converted into common shares on a one-for-one basis. Following this conversion and as of the date of this filing, Mr. Giraud owns
more than 5% of the Company's issued and outstanding common shares. Summarized below are the Coattail Agreement and the Founder
Agreement Damon entered into with Mr. Giraud upon the Closing.
Coattail Agreement and Founder Agreement
In connection with the issuance
of 1,391,181 multiple voting shares to Mr. Giraud on the Closing Date, the Company and Mr. Giraud entered into a coattail agreement among
Mr. Giraud, the Company and a trustee (the "Coattail Agreement"), and a founder agreement between Mr. Giraud and the Company
(the "Founder Agreement").
Under the Coattail Agreement,
any sale of Multiple Voting Shares (other than a transfer to a pledgee as security) by a holder of Multiple Voting Shares party to the
Coattail Agreement will be conditional upon the transferee becoming a party to the Coattail Agreement, to the extent such transferred
Multiple Voting Shares are not automatically converted into common shares in accordance with the Articles.
136
The Coattail Agreement contains
provisions for authorizing action by the trustee to enforce the rights under the Coattail Agreement on behalf of the holders of the common
shares. The obligation of the trustee to take such action will be conditional on the combined company or holders of the common shares
providing such funds and indemnity as the trustee may reasonably require. No holder of common shares will have the right, other than through
the trustee, to institute any action or proceeding or to exercise any other remedy to enforce any rights arising under the Coattail Agreement
unless the trustee fails to act on a request authorized by holders of not less than 10% of the outstanding common shares and reasonable
funds and indemnity have been provided to the trustee.
Other than in respect of non-material
amendments and waivers that do not adversely affect the interests of holders of common shares, the Coattail Agreement provides that, among
other things, it may not be amended, and no provision thereof may be waived, unless, prior to giving effect to such amendment or waiver,
the following have been obtained: (a) the consent of any applicable securities regulatory authority in Canada or the United States; and
(b) the approval of at least two-thirds of the votes cast by holders of common shares represented at a meeting duly called for the purpose
of considering such amendment or waiver, excluding votes attached to common shares held by the holder of Multiple Voting Shares or their
affiliates and related parties and any persons who have an agreement to purchase Multiple Voting Shares on terms which would constitute
a sale or disposition for purposes of the Coattail Agreement, other than as permitted thereby. Non-material amendments and waivers that
do not adversely affect the interests of holders of common shares shall be subject to the approval of any applicable exchange on which
the common shares trade but shall not require approval of holders of common shares.
The Coattail Agreement provides
that, in the event that a lender transfers or takes beneficial ownership of Multiple Voting Shares pursuant to an enforcement by a lender
of a pledge of, or other security interest in, such Multiple Voting Shares, the applicable Multiple Voting Shares will automatically be
converted into common shares pursuant to the Articles such that, as a result of such enforcement, the applicable lender does not hold
Multiple Voting Shares. Any Multiple Voting Share held by a lender pursuant to a pledge or other grant of a security interest shall be
deemed to continue to be held by Jay Giraud so long as the lender has not transferred or taken beneficial ownership of such Multiple Voting
Share pursuant to an enforcement by the lender of a pledge of, or other security interest in, such Multiple Voting Shares. A lender will
have no rights as a shareholder until the occurrence of an event of default under the loan agreement.
No provision of the Coattail
Agreement will limit the rights of any holders of common shares under applicable law.
Under the Founder Agreement,
Mr. Giraud shall not be entitled to transfer any of the Multiple Voting Shares to any other person, except for certain permitted transferees.
Jay Giraud also agreed to convert his Multiple Voting Shares into common shares upon:
●
The shipment of 1,000 motorcycles to customers by the combined company; and
●
Jay Giraud ceasing to be an executive officer of the Company due to his voluntary resignation as both
a director and an officer of the combined company, or his termination as an executive officer for cause (which termination has been confirmed
by a court of competent jurisdiction, or in respect of which a claim is not brought within 90 days following such termination).
In addition, under the Founder
Agreement, Mr. Giraud agreed that he will not vote or cause to be voted more than one-seventh of the number of Multiple Voting Shares
that he owns, or over which he has voting control, in favor, against or withheld on a vote for the election or removal directors, except
in the case of a vote for the election of directors proposed in any management information circular of the Company, in which case Mr.
Giraud will be entitled to vote all Multiple Voting Shares held by him in favor of the slate of directors proposed in such management
information circular.
Mr. Giraud resigned as an
executive officer and director of the Company on December 4, 2024; accordingly the Multiple Voting shares that were beneficially owned
by him are deemed converted into an equivalent number of common shares as of such date.
Lock-Up Agreement
In connection with the execution
of the Business Combination Agreement, Mr. Giraud executed a lock-up agreement to be subject to lock-up restrictions for the period from
the closing of the Business Combination to 180 days after the closing, unless released earlier by the Company.
Indemnification Agreements
Entered by Damon with Directors and Officers
The Company's Articles
contain provisions limiting the liability of directors and provide that the Company will indemnify each of its directors and officers
to the fullest extent permitted under law. In addition, we have entered into an indemnification agreement with each of our directors,
which requires us to indemnify them.
137
PRINCIPAL SHAREHOLDERS
The following table sets forth
the beneficial ownership of our common shares as of the date of this filing by:
●
each person who is known to be the beneficial owner of more than 5% of the outstanding common shares;
●
each of our current named executive officers and directors; and
●
all our current executive officers and directors as a group.
Beneficial ownership is determined
according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses
sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable
within 60 days after that date through the exercise of any option or warrant. In computing the number of common shares beneficially owned
by a person and the percentage ownership of that person, our common shares subject to options or warrants (as set forth above) held by
that person that are currently exercisable, or will become exercisable within 60 days thereafter, are deemed outstanding for such person,
while such shares are not deemed outstanding for purposes of computing percentage ownership of any other person. Each person named in
the table has sole voting and investment power with respect to all of the shares shown as beneficially owned by such person, except as
otherwise indicated in the table or footnotes below.
Unless otherwise indicated,
we believe that all persons named in the table below have sole voting and investment power with respect to the voting securities beneficially
owned by them. To our knowledge, none of the common shares beneficially owned by any executive officer or director have been pledged as
security. Unless otherwise noted, the address of each beneficial owner is c/o Damon Inc., 704 Alexander Street, Vancouver, British Columbia,
V6A 1E3.
As of the date of this filing,
there are 22,030,884 common shares issued and outstanding.
Name of Beneficial Owner
Amount and
nature of
beneficial
owner
%
(1)
5% or More Shareholders:
Damon Jay Giraud (2)
1,917,035
8.5
%
Directors and Executive Officers
Dominique Kwong
748,945
3.4
%
Baljinder Kaur Bhullar
-
-
Karan Sodhi
-
-
Shashi Tripathi (3)
66,176
*
Melanie Figueroa (4)
317,341
1.4
%
All directors and executive officers as a group (5 individuals)
1,132,462
5.0
%
* Indicates beneficial ownership of less than 1% of the outstanding common shares.
(1)
Based on 22,030,884 shares outstanding as of the date of this
filing.
(2)
According to the Schedule 13D/A filed with the SEC on December
6, 2024, this represents (i) 10,142 common shares, (ii) 525,854 common shares issuable upon exercise of options to purchase common shares
which are immediately exercisable, both directly owned by Mr. Giraud, and (iii) 1,381,039 common shares owned by Lime Dragon Holdings
Corp. ("Lime Dragon"), of which Mr. Giraud serves as the sole director and sole shareholder. The business address of Mr.
Giraud and Lime Dragon is 342 15
th
Street W, North Vancouver, British Columbia, Canada V7M 1S5.
(3)
According to the Form 4 filed with the SEC on November 15, 2024,
this represents (i) 29,272 common shares held by Nurture Growth Fund, LP, (ii) 32,011 common shares of Damon underlying private warrants,
which were distributed to Nurture Growth Fund, LP in connection with the Closing of the Business Combination Agreement, (iii) 2,333 common
shares held by Nurture Group Ventures LLC, and (iv) 2,560 common shares of Damon underlying private warrants, which were distributed
to Nurture Group ventures LLC in connection with the Closing of the Business Combination Agreement. Mr. Tripathi is the managing partner/member
of Nurture Growth Fund, LP and Nurture Group Ventures LLC and may be deemed to control and have voting and investment power over these
securities.
(4)
Includes 63,255 common shares that are held by the Trust, resulting
from the rounding down of fractional shares pursuant to the Distribution. Ms. Figueroa is the sole trustee of the Trust and maintains
limited voting and dispositive power over the shares held by the Trust pursuant to the Liquidating Trust Agreement dated December 27,
2023, and may be deemed to control and have voting and investment power over these shares.
138
Selling SECURITYHOLDERS
This prospectus relates to
(i) the resale of up to 343,053 common shares issued to Streeterville pursuant to the Securities Purchase Agreement, (ii) the resale from
time to time of up to 17,656,947 common shares potentially issuable to Streeterville in satisfaction of pre-paid purchase balances outstanding
from time to time under the Securities Purchase Agreement, subject to such limitation as may be required pursuant to Nasdaq Listing Rule
5635(d) and a beneficial ownership limitation equal to 9.99% of the common shares outstanding from time to time , and (iii) the resale
of up to 514,579 common shares issued to Maxim Partners LLC pursuant to the Financial Advisory Agreement.
The Selling Securityholders
may from time to time offer and sell any or all of the common shares set forth below pursuant to this prospectus and any accompanying
prospectus supplement. When we refer to the "Selling Securityholders" in this prospectus, we mean the persons listed in the
table below, and the pledgees, donees, transferees, assignees, successors, designees and others who later come to hold any of the Selling
Securityholders' interest in the common shares other than through a public sale.
The following table sets forth,
as of the date of this filing, the names of the Selling Securityholders, and the aggregate number of common shares that the Selling Securityholders
may offer pursuant to this prospectus. The following table does not reflect the beneficial ownership of any common shares issuable upon
exercise of exercisable securities or conversion of convertible securities unless such securities are exercisable or convertible within
60 days following this filing.
We cannot advise you as to
whether the Selling Securityholders will in fact sell any or all of such common shares. In addition, the Selling Securityholders may sell,
transfer or otherwise dispose of, at any time and from time to time, the common shares in transactions exempt from the registration requirements
of the Securities Act after the date of this prospectus. For purposes of this table, we have assumed that the Selling Securityholders
will have sold all of the securities covered by this prospectus upon the completion of the offering.
Number of Common Shares
Beneficially Owned Prior to this Offering
(1)
Number of
Common Shares
Being
Beneficial Ownership of Common
Shares After
Registration Assuming All Shares Are Sold
(3)
Name of Selling Securityholders
Number
Percentage
(2)
Offered
Number
Percentage
Streeterville Capital, LLC
(4)
343,053
1.6
%
18,000,000
—
—
Maxim Partners LLC
(5)
577,078
(6)
2.6
%
514,579
62,499
0.3
%
(1)
"Beneficial ownership" means that a person, directly or indirectly, has or shares voting or investment power with respect to a security or has the right to acquire such power within 60 days. The number of common shares beneficially owned is determined as of the date of this filing, and the percentage is based upon 22,030,884 common shares outstanding as of the date of this filing. Each Selling Securityholder's information comes from questionnaires provided by the selling securityholders to the Company dated around the date of this prospectus, and such information may have changed from the date such information was provided until the date of this prospectus or after the date of this prospectus.
(2)
Percentages are based on common stock issued and outstanding as of the date of this filing.
(3)
Assumes the sale of all shares offered herein. Based on 22,030,884 common shares outstanding.
(4)
Streeterville Capital, LLC is the beneficial holder of 343,053 common shares and can purchase and resell up to 17,656,947 common shares pursuant to the Securities Purchase Agreement. The number of common shares that may actually be acquired by Streeterville pursuant to the Securities Purchase Agreement is not currently known and is subject to satisfaction of certain conditions and other limitations, including the limitation that the Company shall not effect the issuance of shares that would cause Streeterville to beneficially own a number of common stock exceeding 9.99% of the number of common stock outstanding on such date, as set forth in the Securities Purchase Agreement. John M. Fife has voting and dispositive power over securities held by Streeterville. The business address of Streeterville is 297 Auto Mall Drive #4, St. George, Utah 84770.
(5)
Maxim Partners LLC ("Maxim Partners") is the record and beneficial owner of the securities set forth in the table. MJR Holdings LLC is the managing member of Maxim Partners. Cliff Teller is the Chief Executive Officer of MJR Holdings LLC and, has dispositive power over the securities held by Maxim Partners. Mr. Teller disclaims beneficial ownership over any securities owned by Maxim Partners and MJR Holdings LLC except to the extent of his pecuniary interest therein.  The business address for Maxim Partners LLC is 300 Park Avenue, 16th Floor, New York, New York, 10022.
(6)
Includes 62,499 warrants to purchase common shares exercisable within 60 days.
139
Material Relationships with Selling Securityholders
Streeterville
See the disclosures regarding the equity and debt
financial transactions the Company has with Streeterville and its affiliate, as described elsewhere in the prospectus, including:
●
"
Unaudited Pro Forma Condensed Combined
and Consolidated Combined Financial Information -- Grafiti Promissory Note - Streeterville Capital, LLC
,"
●
"
Management's Discussion and Analysis
of Financial Condition and Results of Operations of Damon (Formerly, Grafiti Holding) – Recent Events – Financing Agreements
- Streeterville June 2024 Note – Amended Security Agreements,
"
●
"
Management's Discussion and Analysis
of Financial Condition and Results of Operations of Damon (Formerly, Grafiti Holding) – Recent Events – Financing Agreements
– November 2024 Debt Financing – East-West,
" and
●
"
Prospectus Summary -- December 2024
Securities Purchase Agreement.
"
Maxim
Pursuant to the terms of an
advisory agreement between the Company and Maxim Group Partners LLC, which served the listing advisor for the Company's listing
on Nasdaq, and following the receipt of listing approval by Nasdaq, Damon Motors issued a convertible promissory note and warrants to
purchase common shares of the Company, which were exchanged for 62,499 common shares of the Company and warrants to purchase 62,499 common
shares of the Company, as compensation for the Listing Advisor's financial advisory services in connection with the listing, and
in accordance with the Business Combination Agreement.
Additionally, see the disclosure
regarding the Financial Advisor Agreement with Maxim Group LLC under "
Prospectus Summary -- Financial Advisory Agreement with
Maxim"
in this prospectus.
140
Description of
Capital Stock
The following description
is a general summary of the terms of the common shares that we may issue. The description below, and in any prospectus supplement, does
not include all of the terms of the common shares and should be read together with our articles, as amended and notice of articles, as
amended (collectively, our "Articles"), copies of which have been filed previously with the SEC. For more information on how
you can obtain copies of our Articles, see the section titled "
Where You Can Find More Information
."
Our Articles authorizes (i)
an unlimited amount of common shares, with no par value, which are also referred to herein as "Subordinate Voting Shares,"
and (ii) an unlimited amount of Multiple Voting Shares. On December 4, 2024, all 1,391,181 outstanding Multiple Voting Shares held by
the Company's former Chief Executive Officer and director, Jay Giraud and his wholly-owned company, were automatically converted
into 1,391,181 common shares pursuant to the terms of his Founder Agreement with the Company. After giving effect to the conversion and
as of the date of this filing, a total of 22,030,884 common shares are outstanding, and no Multiple Voting Shares remain outstanding.
Subordinate Voting Shares and Multiple Voting Shares
Except as described below,
the Subordinate Voting Shares and Multiple Voting Shares will have the same rights, will be equal in all respects and will be treated
by the combined company as if they were one class of shares. The Articles provide that following the listing of the Company's common
shares on the Nasdaq Stock Market ("Nasdaq") or other similar recognized national securities exchange in Canada or the United
States, the Company may not issue any new Multiple Voting Shares from its treasury.
Ranking
The Subordinate Voting Shares
and Multiple Voting Shares will rank
pari passu
with respect to the payment of dividends, return of capital and distribution of
assets in the event of the Company's liquidation, dissolution or winding up.
Dividend Rights
Holders of Subordinate Voting
Shares and Multiple Voting Shares will be entitled to receive dividends on a pari passu basis out of the combined company's assets
legally available for the payment of dividends at such times and in such amount and form as the board of directors may from time to time
determine. In the event of the payment of a dividend in the form of shares, holders of Subordinate Voting Shares will receive Subordinate
Voting Shares, and holders of Multiple Voting Shares will receive Multiple Voting Shares, unless otherwise determined by the board of
directors.
Voting Rights
Holders of Subordinate Voting
Shares will be entitled to one vote per Subordinate Voting Share, and holders of Multiple Voting Shares will be entitled to seven votes
per Multiple Voting Share, on all matters upon which shareholders are entitled to vote.
141
Conversion
The Subordinate Voting Shares
will not convertible into any other class of shares. In addition, the Multiple Voting Shares shall convert to Subordinate Voting Shares
as follows:
●
Each outstanding Multiple Voting Share may at any time, at the option of the holder, be converted into
one Subordinate Voting Share;
●
On the first business day following the fifth annual meeting of shareholders of the combined company following
the Subordinate Voting Shares being listed and posted for trading on a U.S. national securities exchange such as Nasdaq, the Multiple
Voting Shares shall automatically convert to Subordinate Voting Shares; and
●
If Jay Giraud or his permitted transferees no longer beneficially owns, directly or indirectly and in
the aggregate, at least 2% of the issued and outstanding Subordinate Voting Shares and Multiple Voting Shares on a non-diluted basis (on
an as converted basis), the Multiple Voting Shares shall automatically convert to Subordinate Voting Shares.
In addition, pursuant to the
Founder Agreement with Jay Giraud, Jay Giraud agreed to convert his Multiple Voting Shares into Subordinate Voting Shares upon:
●
The shipment of 1,000 motorcycles to customers by the combined company; and
●
Jay Giraud ceasing to be an executive officer of the Company due to his voluntary resignation as both
a director and an officer of the combined company, or his termination as an executive officer for cause (which termination has been confirmed
by a court of competent jurisdiction, or in respect of which a claim is not brought within 90 days following such termination). Mr. Giraud
resigned as an executive officer and director of the Company on December 4, 2024; accordingly the Multiple Voting shares that were beneficially
owned by him are deemed converted into an equivalent number of common shares as of such date.
Meetings of Shareholders
Holders of Subordinate Voting
Shares and Multiple Voting Shares will be entitled to receive notice of any meeting of shareholders and may attend and vote at such meetings,
except those meetings where only the holders of shares of another class or of a particular series are entitled to vote. A quorum for the
transaction of business at a meeting of shareholders is present if at least two shareholders who, together, hold not less than 33 and
1/3% of the votes attaching to the issued and outstanding shares entitled to vote at the meeting are present in person or represented
by proxy.
Redemption Rights
The combined company will
have no redemption or purchase for cancellation rights.
Liquidation Rights
Upon a liquidation, dissolution
or winding-up, whether voluntary or involuntary, of the combined company, the holders of Subordinate Voting Shares and Multiple Voting
Shares, without preference or distinction, will be entitled to receive ratably all of the Company's assets remaining after payment
of all debts and other liabilities.
Subdivision, Consolidation and Issuance of Rights
No subdivision or consolidation
of the Subordinate Voting Shares or Multiple Voting Shares may occur unless both classes of shares are concurrently subdivided or consolidated
and in the same manner and proportion. No new rights to acquire additional shares or other securities or property of ours will be issued
to holders of Subordinate Voting Shares or Multiple Voting Shares unless the same rights are concurrently issued to the holders of both
classes of shares.
Certain Amendments
In addition to any other voting
right or power to which the holders of Subordinate Voting Shares shall be entitled by law or regulation or other provisions of the Articles
from time to time in effect, but subject to the provisions of the Articles, holders of Subordinate Voting Shares shall be entitled to
vote separately as a class, in addition to any other vote of shareholders that may be required, in respect of any alteration, repeal or
amendment of the Articles which would adversely affect the rights or special rights of the holders of Subordinate Voting Shares or affect
the holders of Subordinate Voting Shares and Multiple Voting Shares differently, on a per share basis.
142
Pursuant to the Articles,
holders of Subordinate Voting Shares and Multiple Voting Shares will be treated equally and identically, except with respect to voting
and conversion, on a per share basis, in certain change in control transactions that require approval of the shareholders under the Business
Corporations Act (British Columbia) ("BCBCA"), unless different treatment of the shares of each such class is approved by
a majority of the votes cast by the holders of the Subordinate Voting Shares and Multiple Voting Shares, each voting separately as a class.
Forum Selection
The Articles include a forum
selection provision that provides that, unless the combined company consents in writing to the selection of an alternative forum, the
British Columbia Supreme Court and appellate Courts therefrom will be the sole and exclusive forum for (i) any derivative action or proceeding
brought on the combined company's behalf; (ii) any action or proceeding asserting a breach of fiduciary duty owed by any of the
combined company's directors, officers or other employees to the combined company; (iii) any action or proceeding asserting a claim
arising pursuant to any provision of BCBCA or the Articles; or (iv) any action or proceeding asserting a claim otherwise related to the
"affairs" (as defined in the BCBCA) of the combined company. The forum selection provision also provides that the combined
company's securityholders are deemed to have consented to personal jurisdiction in the Province of British Columbia and to service
of process on their counsel in any foreign action initiated in violation of the Articles. To the fullest extent permitted by law, the
forum selection provision applies to claims arising under U.S. federal securities laws. In addition, investors cannot waive compliance
with U.S. federal securities laws and the rules and regulations thereunder.
Advance Notice Provisions
The Articles include certain
advance notice provisions with respect to the election of directors (the "Advance Notice Provisions"). The Advance Notice
Provisions are intended to: (i) facilitate orderly and efficient annual general meetings or, where the need arises, special meetings;
(ii) ensure that all shareholders receive adequate notice of the board of directors nominations and sufficient information with respect
to all nominees; and (iii) allow shareholders to register an informed vote. Only persons who are nominated by shareholders in accordance
with the Advance Notice Provisions will be eligible for election as directors at any annual meeting of shareholders, or at any special
meeting of shareholders if one of the purposes for which the special meeting was called was the election of directors.
Under the Advance Notice Provisions,
a shareholder wishing to nominate a director would be required to provide the combined company notice, in the prescribed form, within
the prescribed time periods. These time periods include, (i) in the case of an annual meeting of shareholders (including annual and special
meetings), not more than 40 days prior to the date of the annual meeting of shareholders; provided, that if the first public announcement
of the date of the annual meeting of shareholders (the "Notice Date") is less than 50 days before the meeting date, notice
must be given not later than the close of business on the 10th day following the Notice Date; and (ii) in the case of a special meeting
(which is not also an annual meeting) of shareholders called for the purpose of electing directors (whether or not called for other purposes),
not later than the close of business on the 15th day following the Notice Date.
Transfer Agent and Registrar
The transfer agent and registrar
for our common shares is Odyssey Transfer & Trust Company.
Trading Symbols and Market
Our common shares are listed
on the Nasdaq Global Market under the symbol "DMN."
143
SECURITIES ACT
RESTRICTIONS ON RESALE OF COMMON STOCK
Rule 144
Pursuant to Rule 144, a person
who has beneficially owned restricted common shares of Damon for at least six months would be entitled to sell their securities provided
that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding,
a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have
filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required
to file reports) preceding the sale.
Persons who have beneficially
owned restricted common shares of Damon for at least six months but who are our affiliates at the time of, or at any time during the three
months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month
period only a number of securities that does not exceed the greater of:
●
1% of the total number of shares of Damon common shares then outstanding; or
●
the average weekly reported trading volume of Damon common shares during the four calendar weeks preceding
the filing of a notice on Form 144 with respect to the sale.
Sales by affiliates of Damon
under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information
about Damon.
144
PLAN OF DISTRIBUTION
We will not receive any of
the proceeds from the sale of the securities by the Selling Securityholders. The Selling Securityholders, which as used herein includes
donees, pledgees, transferees, distributees or other successors-in-interest selling common shares or interests in our common shares received
after the date of this prospectus from the Selling Securityholders as a gift, pledge, partnership distribution or other transfer, may,
from time to time, sell, transfer, distribute or otherwise dispose of certain of their common shares or interests in our common shares
on any stock exchange, market or trading facility on which common shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices
determined at the time of sale, or at negotiated prices.
The Selling Securityholders
may use any one or more of the following methods when disposing of their common shares or interests therein:
●
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
●
one or more underwritten offerings;
●
block trades in which the broker-dealer will attempt to sell the common shares as agent, but may position
and resell a portion of the block as principal to facilitate the transaction;
●
purchases by a broker-dealer as principal and resale by the broker-dealer for its accounts;
●
an exchange distribution in accordance with the rules of the applicable exchange;
●
privately negotiated transactions;
●
distributions to their members, partners or shareholders;
●
short sales effected after the date of the registration statement of which this prospectus is a part is
declared effective by the SEC;
●
through the writing or settlement of options or other hedging transactions, whether through an options
exchange or otherwise;
●
in market transactions, including transactions on a national securities exchange or quotations service
or over-the-counter market;
●
directly to one or more purchasers;
●
through agents;
●
broker-dealers may agree with the Selling Securityholders to sell a specified number of such common shares
at a stipulated price per share; and
●
a combination of any such methods of sale.
The Selling Securityholders
may, from time to time, pledge or grant a security interest in some common shares owned by them and, if a Selling Securityholder defaults
in the performance of its secured obligations, the pledgees or secured parties may offer and sell such common shares, as applicable, from
time to time, under this prospectus, or under an amendment or supplement to this prospectus amending the list of the Selling Securityholders
to include the pledgee, transferee or other successors in interest as the Selling Securityholders under this prospectus. The Selling Securityholders
also may transfer common shares in other circumstances, in which case the transferees, pledgees or other successors in interest will be
the selling beneficial owners for purposes of this prospectus.
145
In connection with the sale
of common shares or interests therein, the Selling Securityholders may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of our common shares in the course of hedging the positions they assume. The Selling
Securityholders may also sell common shares short and deliver these securities to close out their short positions, or loan or pledge common
shares to broker-dealers that in turn may sell these securities. The Selling Securityholders may also enter into option or other transactions
with broker-dealers or other financial institutions or the creation of one or more derivative securities that require the delivery to
such broker-dealer or other financial institution of common shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to
the Selling Securityholders from the sale of common shares offered by them will be the purchase price of such common shares less discounts
or commissions, if any. The Selling Securityholders reserve the right to accept and, together with their agents from time to time, to
reject, in whole or in part, any proposed purchase of share of our common shares to be made directly or through agents. We will not receive
any of the proceeds from any offering by the Selling Securityholders.
The Selling Securityholders
also may in the future resell a portion of our common shares in open market transactions in reliance upon Rule 144 under the Securities
Act; provided that they meet the criteria and conform to the requirements of that rule, or pursuant to other available exemptions from
the registration requirements of the Securities Act.
The Selling Securityholders
and any underwriters, broker-dealers or agents that participate in the sale of common shares or interests therein may be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of
common shares may be underwriting discounts and commissions under the Securities Act. If any Selling Securityholder is an "underwriter"
within the meaning of Section 2(11) of the Securities Act, then the Selling Securityholder will be subject to the prospectus delivery
requirements of the Securities Act. Underwriters and their controlling persons, dealers and agents may be entitled, under agreements entered
into with us and the Selling Securityholders, to indemnification against and contribution toward specific civil liabilities, including
liabilities under the Securities Act.
To the extent required, our
common shares to be sold, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter, and
any applicable discounts, commissions, concessions or other compensation with respect to a particular offer will be set forth in an accompanying
prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
To facilitate the offering
of our common shares offered by the Selling Securityholders, certain persons participating in the offering may engage in transactions
that stabilize, maintain or otherwise affect the price of our common shares. This may include over-allotments or short sales, which involve
the sale by persons participating in the offering of more common shares than were sold to them. In these circumstances, these persons
would cover such over-allotments or short positions by making purchases in the open market or by exercising their over-allotment option,
if any. In addition, these persons may stabilize or maintain the price of our common shares by bidding for or purchasing common shares
in the open market or by imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may be reclaimed
if common shares sold by them are repurchased in connection with stabilization transactions. The effect of these transactions may be to
stabilize or maintain the market price of our common shares at a level above that which might otherwise prevail in the open market. These
transactions may be discontinued at any time.
146
Under the Registration Rights
Agreement, we have agreed to indemnify the Selling Securityholders party thereto against certain liabilities that they may incur in connection
with the sale of the securities registered hereunder, including liabilities under the Securities Act, and to contribute to payments that
the Selling Securityholders may be required to make with respect thereto. In addition, we and the Selling Securityholders may agree to
indemnify any underwriter, broker-dealer or agent against certain liabilities related to the selling of the securities, including liabilities
arising under the Securities Act.
We have agreed to maintain
the effectiveness of this registration statement until all such securities have been sold under this registration statement or Rule 144
under the Securities Act or are no longer outstanding. We have agreed to pay all expenses in connection with this offering, other than
underwriting fees, discounts, selling commissions, stock transfer taxes and certain legal expenses. The Selling Securityholders will pay,
on a pro rata basis, any underwriting fees, discounts, selling commissions, stock transfer taxes and certain legal expenses relating to
the offering.
Selling Securityholders may
use this prospectus in connection with resales of common shares. This prospectus and any accompanying prospectus supplement will identify
the Selling Securityholders, the terms of our common shares and any material relationships between us and the Selling Securityholders.
Selling Securityholders may be deemed to be underwriters under the Securities Act in connection with common shares they resell and any
profits on the sales may be deemed to be underwriting discounts and commissions under the Securities Act. Unless otherwise set forth in
a prospectus supplement, the Selling Securityholders will receive all the net proceeds from the resale of common shares.
A Selling Securityholder that
is an entity may elect to make an in-kind distribution of common shares to its members, partners or shareholders pursuant to the registration
statement of which this prospectus is a part by delivering a prospectus. To the extent that such members, partners or shareholders are
not affiliates of ours, such members, partners or shareholders would thereby receive freely tradable common shares pursuant to the distribution
through a registration statement.
We are required to pay all
fees and expenses incident to the registration of common shares to be offered and sold pursuant to this prospectus.
147
LEGAL MATTERS
The validity of the securities
offered hereby will be passed upon for us by Norton Rose Fulbright Canada LLP, Vancouver, British Columbia. Additional legal matters may
be passed on for us, or any underwriters, dealers or agents by counsel we will name in the applicable prospectus supplement.
EXPERTS
The audited consolidated financial
statements of Grafiti Holding Inc. as of June 30, 2024, 2023 and 2022 and for each of the years in the period ended June 30, 2024, 2023
and 2022, included in this prospectus have been so included in reliance on the report (which report expresses an unqualified opinion and
includes an explanatory paragraph as to Grafiti Holding Inc.'s ability to continue as a going concern) of Marcum LLP, an independent
registered public accounting firm, given upon their authority as experts in accounting and auditing.
The audited consolidated financial
statements of Damon Motors Inc. as of June 30, 2024 and for the year ended June 30, 2024, included in this prospectus have been so included
in reliance on the report (which report expresses an unqualified opinion and includes an explanatory paragraph as to Damon Motors Inc.'s
ability to continue as a going concern) of Marcum LLP, an independent registered public accounting firm, given upon their authority as
experts in accounting and auditing.
The consolidated financial
statements of Damon Motors Inc. as of June 30, 2023 and for each of the two years in the period ended June 30, 2023 included in this prospectus
have been so included in reliance on the report of BDO Canada LLP, an independent registered public accounting firm, appearing elsewhere
herein, given on the authority of said firm as experts in auditing and accounting. The report on the consolidated financial statements
contains an explanatory paragraph regarding the ability of Damon Motors Inc. to continue as a going concern.
Where You Can Find
More Information
We have filed with the SEC
this registration statement on Form S-1 under the Securities Act, with respect to our common shares covered by this prospectus. This prospectus
is part of, and does not contain all of the information set forth in, the registration statement and the exhibits thereto. Some items
are omitted in accordance with the rules and regulations of the SEC. For further information with respect to us and our common shares,
we refer you to the registration statement and the exhibits filed therewith. Statements contained in this prospectus as to the contents
of any contract, agreement or any other document referred to are summaries of the material terms of the respective contract, agreement
or other document. With respect to each of these contracts, agreements or other documents filed as an exhibit to the registration statement,
reference is made to the exhibits for a more complete description of the matter involved.
The SEC maintains a website
that contains reports, proxy and information statements and other information regarding registrants, like us, that file electronically
with the SEC. The address of the SEC's website is http://www.sec.gov.
We are subject to the information
and periodic reporting requirements of the Exchange Act and, accordingly, we file annual reports containing financial statements audited
by an independent public accounting company, quarterly reports containing unaudited financial statements, current reports, proxy statements
and other information with the SEC. You will be able to inspect them without charge at the SEC's website. You will also be able
to access, free of charge, our reports filed with the SEC (for example, our Annual Report on Form 10-K, our Quarterly Reports on Form
10-Q and our Current Reports on Form 8-K and any amendments to those forms) through our website at
https://damon.com/
. Reports
filed with or furnished to the SEC will be available as soon as reasonably practicable after they are filed with or furnished to the SEC.
Our website is included in this prospectus as an inactive textual reference only. The information found on our website is not part of
this prospectus or any report filed with or furnished to the SEC.
You should rely only on the
information contained in this registration statement or to which this registration statement has referred you. We have not authorized
any person to provide you with different information or to make any representation not contained in this registration statement.
148
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Financial Statements of Grafiti Holding Inc.
Report of Independent Registered Public Accounting Firm (PCAOB NO. 688)
F-2
Consolidated Balance Sheets as of June 30, 2024, 2023 and 2022
F-3
Consolidated Statements of Operations for the years ended June 30, 2024, 2023 and 2022
F-4
Consolidated Statements of Comprehensive Loss for the years ended June 30, 2024, 2023 and 2022
F-5
Consolidated Statements of Changes in Stockholder's Equity for the years ended June 30, 2024, 2023 and 2022
F-6
Consolidated Statements of Cash Flows for the years ended June 30, 2024, 2023 and 2022
F-7
Notes to Consolidated Financial Statements
F-8
Consolidated Financial Statements of Damon Motors, Inc.
Report of Independent Registered Public Accounting Firm (PCAOB NO. 688)
F-27
Report of Independent Registered Public Accounting Firm (PCAOB NO. 1227)
F-28
Consolidated Balance Sheets as of June 30, 2024 and 2023
F-29
Consolidated Statements of Loss and Comprehensive Loss for the years ended June 30, 2024, 2023 and 2022
F-30
Consolidated Statements of Changes in (Deficit) Equity for the years ended June 30, 2024, 2023 and 2022
F-31
Consolidated Statements of Cash Flows for the years ended June 30, 2024, 2023 and 2022
F-32
Notes to Consolidated Financial Statements
F-33
Interim Unaudited Condensed Consolidated Financial Statements of Damon Inc. (formerly Grafiti Holding Inc.)
Interim Unaudited Consolidated Balance Sheets as of September 30, 2024 and June 30, 2024
F-82
Interim Unaudited Consolidated Statements of Operations for the three months ended September 30, 2024 and 2023
F-83
Interim Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended September 30, 2024 and 2023
F-84
Interim Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the three months ended September 30, 2024 and 2023
F-85
Interim Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2024 and 2023
F-86
Notes to Unaudited Condensed Consolidated Financial Statements
F-87
Interim Unaudited Condensed Consolidated Financial Statements of Damon Motors Inc.
Condensed Interim Unaudited Consolidated Balance Sheets for the three months ended September 30, 2024 and 2023
F-104
Condensed Interim Unaudited Consolidated Statements of Operations for the three months ended September 30, 2024 and 2023
F-105
Condensed Interim Unaudited Consolidated Statements of Changes in Shareholders' Deficit for the three months ended September 30, 2024 and 2023
F-106
Condensed Interim Unaudited Consolidated Statements of Cash Flows for the three months ended September 30, 2024 and 2023
F-107
Notes to the Condensed Interim Unaudited Consolidated Financial Statements
F-108
F-
1
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Grafiti Holding Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of Grafiti Holding Inc. (the "Company") as of June 30, 2024, 2023 and 2022, the related consolidated statements
of operations, comprehensive loss, changes in stockholders' equity (deficit) and cash flows for each of the three years in the period
ended June 30, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024, 2023 and 2022, and the
results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in conformity with accounting
principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has suffered recurring
losses from operations, recurring negative cash flows from operations and needs to raise additional funds to meet its obligations and
sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but
not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly,
we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum
llp
Marcum
llp
We have served as the Company's auditor since 2023.
New York, NY
September 26, 2024
F-
2
GRAFITI
HOLDING INC.
CONSOLIDATED BALANCE
SHEETS
As of
June 30,
2024
As of
June 30,
2023
As of
June 30,
2022
Assets
Current Assets
Cash
$
1,148,904
$
264,244
$
170,166
Accounts receivable, net
30,572
94,838
68,437
Note receivable, net of $
108,568
allowance for credit losses
441,980
—
—
Prepaid expenses
70,487
682
483
Other current assets
—
1,307
902
Total Current Assets
1,691,943
361,071
239,988
Property and equipment, net
2,392
216
1,447
Other assets
251
251
4,650
Total Assets
$
1,694,586
$
361,538
$
246,085
Liabilities and Stockholders'
    (Deficit) Equity
Current Liabilities
Accounts payable
$
440,688
$
447
$
3,041
Accrued liabilities
56,620
72,068
37,758
Deferred revenue
144,390
86,635
96,303
Total Current Liabilities
641,698
159,150
137,102
Long Term Liabilities
Long-term debt, net
1,509,862
—
—
Total Liabilities
2,151,560
159,150
137,102
Commitments
                                            and Contingencies
Stockholders' (Deficit) Equity
Common Stock - $
0
par value,
3,600,001
shares authorized, issued and outstanding as of June 30, 2024, June 30, 2023  and June 30, 2022
679,302
611,972
445,501
Additional paid-in capital
627,478
—
—
Accumulated other comprehensive loss
(
8,828
)
(
3,015
)
(
3,777
)
Accumulated deficit
(
1,754,926
)
(
406,569
)
(
332,741
)
Total Stockholders'
    (Deficit) Equity
(
456,974
)
202,388
108,983
Total Liabilities
    and Stockholders' (Deficit) Equity
$
1,694,586
$
361,538
$
246,085
The accompanying notes are an integral part of
these consolidated financial statements
F-
3
GRAFITI HOLDING INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended June 30,
2024
2023
2022
Revenues
$
336,562
$
391,848
$
456,076
Cost of Revenues
82,084
95,220
95,499
Gross Profit
254,478
296,628
360,577
Operating Expenses
Sales and marketing
174,061
196,907
229,450
General and administrative
402,625
173,549
194,994
Share based compensation ($
219,627
to related parties)
627,478
—
—
Acquisition-related costs
280,789
—
—
Provision for credit losses
108,568
—
—
Total Operating
    Expenses
1,593,521
370,456
424,444
Loss From Operations
(
1,339,043
)
(
73,828
)
(
63,867
)
Other Expense
Interest expense, net
(
9,314
)
—
—
Total Other Expense
(
9,314
)
—
—
Loss, before benefit (provision) for
    income taxes
(
1,348,357
)
(
73,828
)
(
63,867
)
Income tax benefit (provision)
—
—
—
Net Loss
$
(
1,348,357
)
$
(
73,828
)
$
(
63,867
)
Net Loss Per Share
    - Basic and Diluted
$
(
0.37
)
$
(
0.02
)
$
(
0.02
)
Weighted Average Shares Outstanding
Basic and Diluted
3,600,001
3,600,001
3,600,001
The accompanying notes are an integral part of
these consolidated financial statements
F-
4
GRAFITI HOLDING INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
For the Years Ended June 30,
2024
2023
2022
Net Loss
$
(
1,348,357
)
$
(
73,828
)
$
(
63,867
)
Other comprehensive loss, net of tax
Unrealized foreign exchange gain
    (loss) from cumulative translation adjustments
(
5,813
)
762
(
3,957
)
Total other comprehensive loss
(
5,813
)
762
(
3,957
)
Total Comprehensive
    Loss
$
(
1,354,170
)
$
(
73,066
)
$
(
67,824
)
The accompanying notes are an integral part of
these consolidated financial statements
F-
5
GRAFITI HOLDING INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY (DEFICIT)
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Common Stock
Additional
Paid-In
Accumulated Other Comprehensive
Accumulated
Total
Stockholders'
Shares
Amount
Capital
Income (Loss)
Deficit
Equity (Deficit)
Balance - July 1, 2021 (retroactively adjusted)
3,600,001
$
268,448
$
—
$
180
$
(
268,874
)
$
(
246
)
Net investments from Inpixon
—
177,053
—
—
—
177,053
Cumulative translation adjustment
—
—
—
(
3,957
)
—
(
3,957
)
Net loss
—
—
—
—
(
63,867
)
(
63,867
)
Balance - June 30, 2022 (retroactively adjusted)
3,600,001
$
445,501
$
—
$
(
3,777
)
$
(
332,741
)
$
108,983
Net investments from Inpixon
—
166,471
—
—
—
166,471
Cumulative translation adjustment
—
—
—
762
—
762
Net loss
—
—
—
—
(
73,828
)
(
73,828
)
Balance - June 30, 2023 (retroactively adjusted)
3,600,001
611,972
—
(
3,015
)
(
406,569
)
202,388
Net investments from Inpixon
—
67,330
—
—
—
67,330
Stock options granted to consultants
—
—
627,478
—
—
627,478
Cumulative translation adjustment
—
—
—
(
5,813
)
—
(
5,813
)
Net loss
—
—
—
—
(
1,348,357
)
(
1,348,357
)
Balance  - June 30, 2024
3,600,001
$
679,302
$
627,478
$
(
8,828
)
$
(
1,754,926
)
$
(
456,974
)
The accompanying notes are an integral part of
these consolidated financial statements
F-
6
GRAFITI HOLDING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Years Ended June 30,
2024
2023
2022
Operating Activities:
Net loss
$
(
1,348,357
)
$
(
73,828
)
$
(
63,867
)
Adjustment to reconcile net loss to net cash used in operating
    activities:
Depreciation and amortization
695
1,246
1,319
Stock options granted to consultants ($
219,627
to related parties)
627,478
—
—
Amortization of right-of-use asset
—
—
8,176
Amortization of original issue discount
4,941
—
—
Provision for credit losses
108,568
—
—
Accrued interest income
(
548
)
—
—
Accrued interest expense
3,301
—
—
Accrued monitoring fee expense
1,620
—
—
Unrealized gain on foreign currency transactions
(
5,492
)
—
—
Changes in operating assets and liabilities:
Accounts receivable
64,381
(
22,768
)
(
21,372
)
Prepaid expenses and other current assets
(
68,496
)
(
529
)
4,962
Other assets
—
4,430
(
816
)
Accounts payable
440,241
(
2,625
)
(
2,379
)
Accrued liabilities
(
15,535
)
31,607
(
18,368
)
Deferred revenue
57,652
(
13,149
)
(
54,209
)
Operating lease obligation
—
—
(
8,259
)
Net Cash Used in Operating Activities
(
129,551
)
(
75,616
)
(
154,813
)
Investing Activities:
Purchase of property and equipment
(
2,871
)
—
—
Loan to Damon Motors
(
550,000
)
—
—
Net Cash Used in Investing Activities
(
552,871
)
—
—
Financing Activities:
Proceeds from note payable
1,500,000
—
—
Net investments from Inpixon
67,330
166,471
177,053
Net Cash Provided
    By Financing Activities
1,567,330
166,471
177,053
Effect of Foreign
    Exchange Rate on Changes on Cash
(
248
)
3,223
(
16,541
)
Net Increase in Cash
884,660
94,078
5,699
Cash - Beginning of year
264,244
170,166
164,467
Cash - End of year
$
1,148,904
$
264,244
$
170,166
Supplemental Disclosure of cash flow
    information:
Cash paid for:
Interest
$
—
$
—
$
—
Income taxes
$
—
$
—
$
—
Non-cash financing activities
Original issue discount related to long term debt
$
450,059
$
—
$
—
Transaction costs
$
20,000
$
—
$
—
The
accompanying notes are an integral part of these consolidated financial statements
F-
7
GRAFITI HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Note 1 - Organization and Nature of Business
Grafiti Holding Inc. (collectively the "Company,"
"we," "us" or "our") ("Grafiti Holding") was incorporated in British Columbia, Canada
on October 17, 2023. The Company is the parent non-operating holding company of Grafiti Limited (formerly known as Inpixon Limited).
Grafiti Limited was incorporated in England and
Wales on May 13, 2020. Grafiti Limited provides specialized scientific software products and services for the environmental sciences,
life sciences, behavioral sciences, medical research and engineering domains. Grafiti Limited provides effective solutions to the scientific
and engineering community to compress the time intensive process of data analysis and presentation, thus enhancing productivity. Users
of Grafiti Limited's products include government organizations, academic institutions and leading corporations. Grafiti Limited's
headquarters are located in Slough, United Kingdom, and operations for Grafiti Limited are primarily performed in the United Kingdom.
On October 23, 2023, a Business Combination Agreement
(the "Damon Business Combination Agreement") was entered into by and among XTI Aerospace Inc. (f/k/a "Inpixon"
or "XTI"), Grafiti Holding, 1444842 B.C. LTD ("Amalco Sub"), and Damon Motors, Inc. ("Damon"), pursuant
to which Damon will combine and merge with Amalco Sub, a British Columbia corporation and a wholly-owned subsidiary of Grafiti Holding,
with Damon continuing as the surviving entity and a wholly-owned subsidiary of Grafiti Holding (the "Grafiti Holding Transaction").
Pursuant to the Damon Business Combination Agreement,
Inpixon formed a newly wholly owned subsidiary, Grafiti Holding for the sole purpose of consummation of the Grafiti Holding Transaction.
Inpixon contributed the assets and liabilities of Grafiti Limited, a wholly owned subsidiary of Inpixon, to the then Inpixon wholly owned
subsidiary Grafiti Holding in accordance with the separation and distribution agreement. As the Registration Statement for the Damon
Business Combination Agreement is not expected to become effective until 2024, on December 27, 2023 Inpixon transferred the Grafiti Holding
common shares to a newly-created liquidating trust, titled the Grafiti Holding Inc. Liquidating Trust (the "Trust")(the "Spin-Off:),
which holds the Grafiti Holding common shares for the benefit of the participating Inpixon security holders. As of December 27, 2023,
the date the transfer of shares occurred, Grafiti Limited was assigned by Inpixon to the Company. Grafiti Holding consolidates Grafiti
Limited via the voting interest model, as Grafiti Limited is wholly owned by Grafiti Holding. This transaction between entities under
common control resulted in a change in reporting entity and required retrospective combination of the entities for all periods presented,
as if the combination had been in effect since the inception of common control. Accordingly, the financial statements of the Company
reflect the accounting of the combined acquired subsidiary at historical carrying values except that equity reflects the equity of Grafiti
Holdings. This change in reporting entity did not impact net income for the periods presented. The Grafiti Holding common shares will
be held by the Trust until the Registration Statement has been declared effective by the Securities and Exchange Commission (the "SEC").
Promptly following the effective time of the Registration Statement, Inpixon will deliver the Grafiti Holding common shares to the participating
Inpixon security holders, as beneficiaries of the Trust, pro rata in accordance with their ownership of shares or underlying shares of
Inpixon common stock as of the record date. Amalco Sub, a wholly-owned, direct subsidiary of Grafiti Holding, will merge with Damon resulting
in Damon as the surviving entity post-merger ("Damon Surviving Corporation"). Upon the consummation of the Merger, both Grafiti
Limited and Damon will be wholly-owned subsidiaries of Grafiti Holding. Following the Merger, Grafiti Holding shall be known as the "Grafiti
Combined Company." The combined company will be renamed Damon Motors, Inc., and the ticker symbol will be changed to a symbol to
be determined concurrent with the closing. The Company incurred $
280,789
of acquisition related costs related to the Damon Business Combination
Agreement during the fiscal year ended June 30, 2024. These costs are included in the acquisition-related costs line in the consolidated
statements of operations.
The accompanying consolidated financial statements
of Grafiti Holding, show the historical financial position, results of operations, changes in stockholders' equity (deficit) and
cash flows of the Company. Prior to December 27, 2023, the Company operated as a segment of Inpixon and not as a separate entity.
F-
8
GRAFITI HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
The operating results of the Company prior to
December 27, 2023 have been specifically identified by Inpixon's management based on the Company's existing divisional organization
and are presented on a carve-out basis. The assets and liabilities of the Company as of June 30, 2023 have been identified based on the
existing divisional structure. The historical costs and expenses reflected in our consolidated financial statements prior to December
27, 2023 include an allocation by time spent for certain corporate and shared service functions. See Note 11 for further additional information
regarding the Investments by Inpixon prior to December 27, 2023.
Management believes the assumptions underlying
our consolidated financial statements are reasonable but may not necessarily be indicative of the costs that would have incurred if the
Company had been operated on a standalone basis for the entire periods presented. Actual costs that would have been incurred if we had
operated as a standalone company for the entirety of the periods presented would depend on multiple factors, including organizational
structure and strategic decisions made in various areas, including information technology and infrastructure. The Company also may incur
additional costs associated with being a standalone, publicly listed company that were not included in the expense allocations, prior
to December 27, 2023, and therefore, would result in additional costs that are not reflected in our historical results of operations,
financial position and cash flows.
Note 2 - Summary of Significant Accounting
Policies
Liquidity and Going Concern
The accompanying consolidated financial statements
of the Company have been prepared assuming the Company will continue as a going concern in accordance with U.S. GAAP. The going concern
basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued
and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.
As of June 30, 2024, the Company has a working
capital surplus of $
1,050,245
, inclusive of cash of $
1,148,904
. For the year ended June 30, 2024, the Company incurred a net loss
attributable to common stockholders of $
1,348,357
and net cash used in operating activities during the year ended June 30, 2024
was $
129,551
. As the Company was part of Inpixon group of companies prior to December 27, 2023, the Company was dependent upon Inpixon
for all of its working capital and financing requirements as Inpixon uses a centralized approach to cash management and financing of
its operations. This arrangement is not reflective of the way the Company would have financed its operations had the Company been a standalone
public company during the periods presented. Prior to December 27, 2023, financial transactions relating to the Company are accounted
for through Stockholders' Equity. Accordingly, none of Inpixon's cash, cash equivalents, or debt at the corporate level have
been assigned to the Company in the consolidated financial statements. As a result of the Grafiti Holding Transaction, the Company will
no longer participate in Inpixon's corporate-wide cash management and financing approach, and therefore the Company's ability
to fund operating needs will depend on the Company's ability to generate positive cash flows from operations, and on the Company's
ability to obtain debt financing on acceptable terms or to issue additional equity or equity-linked securities as needed.
The Company cannot assure you that we will ever
earn revenues sufficient to support our operations, or that we will ever be profitable. In order to continue our operations, the Company
supplemented the revenues earned with funding from Inpixon and other third parties. The adverse conditions detailed above indicate material
uncertainties that cast substantial doubt upon the Company's ability to continue as a going concern within one year after financial
statement issuance date.
When substantial doubt exists, management evaluates
whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company's ability to continue as
a going concern. The mitigating effect of management's plans, however, is only considered if both (1) it is probable that the plans
will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that
the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity's ability
to continue as a going concern within one year after the date that the financial statements are issued.
F-
9
GRAFITI HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Management's
                                            plans to address the uncertainty that the Company will continue as a going concern include
                                            the business combination described in Note 1 above as well as obtaining associated debt and
                                            equity financing. There is no assurance that the Company's plans to consummate the
                                            business combination will be successful and the Company cannot provide assurance that the
                                            Company will secure financing in a timely manner, nor can they provide assurance that the
                                            business combination will be completed. As such, the substantial doubt of the Company's
                                            ability to continue as a going concern has not been alleviated by management's plans.
                                            The accompanying consolidated financial statements have been prepared assuming the Company
                                            will continue as a going concern and do not include any adjustments that might result from
                                            the outcome of this uncertainty.
Risks and Uncertainties
The Company cannot assure you that we will ever
earn revenues sufficient to support our operations, or that we will ever be profitable. In order to continue our operations, the Company
supplemented the revenues earned with funding from Inpixon and other third parties.
Use of Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles in the United States of America ("GAAP") requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results
could differ from those estimates. The Company's significant estimates consist of:
●
the allowance for credit losses;
●
the valuation allowance for deferred
                                            tax assets;
Cash and Concentration of Credit Risk
Cash consist of savings and checking accounts.
Financial instruments that subject the Company to credit risk consist principally of trade accounts receivable and cash. The Company
performs certain credit evaluation procedures and does not require collateral for financial instruments subject to credit risk. The Company
believes that credit risk is limited because the Company routinely assesses the financial strength of its customers and, based upon factors
surrounding the credit risk of its customers, establishes an allowance for uncollectible accounts and, consequently, believes that its
accounts receivable credit risk exposure beyond such allowances is limited.
The Company maintains cash deposits with financial
institutions, which, from time to time, may exceed federally insured limits. Cash is also maintained at foreign financial institutions
in the UK. Cash in UK financial institutions as of June 30, 2024, 2023 and 2022 was $
1,148,904
, $
264,244
, and $
170,166
,respectively.
The Company has not experienced any losses and believes it is not exposed to any significant credit risk from cash.
Consolidations
The consolidated financial statements have been
prepared using the accounting records of Grafiti Holding and Grafiti Limited. All material inter-company balances and transactions have
been eliminated.
F-
10
GRAFITI
                                            HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Accounts Receivable, net and Allowance
for Credit Losses
Accounts receivable are stated at the amount
the Company expects to collect. The Company recognizes an allowance for credit losses to ensure accounts receivables are not overstated
due to un-collectability. Bad debt reserves are determined based on a variety of factors, including the length of time the receivables
are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the
Company becomes aware of a customer's inability to meet its financial obligation, such as in the case of bankruptcy filings, or
deterioration in such customer's operating results or financial position. If circumstances related to a customer change, estimates
of the recoverability of receivables would be further adjusted. After reviewing the collectability of the receivables the Company's
allowance for credit losses was not material as of June 30, 2024, 2023 or 2022 .
Financial Instruments — Credit Losses
("CECL") - (ASU 2016-13)
The CECL impairment model is applicable to financial
assets measured at amortized cost, including loans, held-to-maturity debt securities and off-balance sheet credit exposures. The CECL
impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, that considers
forecasts of future economic conditions in addition to information about past events and current conditions. Based on this model, we
analyze the following criteria, as applicable in developing allowances for credit losses: historical loss information, the borrower's
ability to make scheduled payments, the remaining time to maturity, the value of underlying collateral, projected future performance
of the borrower and macroeconomic trends.
The Company carries its note receivable from
Damon (the "Grafiti Holding Note") at its amortized cost basis in the consolidated balance sheets since management has the
intent and ability to hold the Grafiti Holding Note for the foreseeable future or until maturity or payoff. The Company reviews its loans
carried at amortized cost for expected credit losses under
ASC 326, Financial Instruments - Credit Losses
, on an ongoing basis.
The Company utilized probability-of-default ("PD") and loss-given-default ("LGD") methodologies to calculate
the allowance for expected credit losses.
Under the PD×LGD method, the loss rate
is a function of two components: (1) the lifetime default rate ("PD"); and (2) the loss given default ("LGD").
Due to the Company's limited operating history and lack of loss history, the Company derived its PD and LGD rates by considering
average historical default and recovery rates for corporate debt instruments, the borrower's current financial position, and unsupportable
forecasts utilizing default studies and hybrid quantitative regression models provided by multiple industry leading sources. The Company
uses PD and LGD rates that correspond to the customer's assumed credit rating and the contractual term of the note.
The amortized cost, including accrued interest,
of the Company's Grafiti Holding Note was $
441,980
, net of the allowance for expected credit losses of $
108,568
, as of June 30,
2024.
Property and Equipment, net
Property and equipment are recorded at cost less
accumulated depreciation and amortization. The Company depreciates its property and equipment for financial reporting purposes using
the straight-line method over the estimated useful lives of the assets, which is 3 years. Expenditures for maintenance and repairs, which
do not extend the economic useful life of the related assets, are charged to operations as incurred, and expenditures, which extend the
economic life, are capitalized. When assets are retired, or otherwise disposed of, the costs and related accumulated depreciation or
amortization are removed from the accounts and any gain or loss on disposal is recognized.
Leases and Right-of-Use Assets
The Company determines if an arrangement is a
lease at its inception. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease
payments over the lease term. The Company generally uses their incremental borrowing rate based on the information available at the lease
commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known.
Right-of-use assets related to the Company's operating lease liabilities are measured at lease inception based on the initial measurement
of the lease liability, plus any prepaid lease payments and less any lease incentives. The Company's lease terms that are used
in determining their operating lease liabilities at lease inception may include options to extend or terminate the leases when it is
reasonably certain that the Company will exercise such options. The Company amortizes their right-of-use assets as operating lease expense
generally on a straight-line basis over the lease term and classify both the lease amortization and imputed interest as operating expenses.
The Company does not recognize lease assets and lease liabilities for any lease with an original lease term of less than one year. All
leases as of June 30, 2024, 2023 and 2022 were considered short-term in nature.
F-
11
GRAFITI
                                            HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Income Taxes
The Company accounts for income taxes using the
separate return method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is
recognized in income or expense in the period that the change is enacted. Income tax benefits are recognized when it is probable that
the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred
tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. The Company
recorded no income tax provision or benefit for the year ended June 30, 2024, 2023, or 2022. See Note 9 - Income Taxes for further details.
Foreign Currency Translation
Assets and liabilities related to the Company's
foreign operations in the United Kingdom are calculated using the British Pound, Grafiti Limited's functional currency, and are
translated to the U.S. Dollar, the Company's reporting currency, at end-of-period exchange rates. The Company's related revenues
and expenses are translated from the British Pound to U.S. Dollar at average exchange rates prevailing during the period. Translation
adjustments are recorded as a separate component of stockholder's equity, totaling a gain/(loss) of approximately $(
5,813
), $
762
,
and $(
3,957
) for the years ended June 30, 2024, 2023, and 2022 respectively. Gains or losses resulting from transactions denominated
in foreign currencies are included in general and administrative expenses in the statements of operations. Realized gains/(losses) from
transactions for the years ended June 30, 2024, 2023 and 2022 totaled $
947
, ($
3,808
), and ($
8,744
), respectively. Unrealized gains/(losses)
from transactions for the year ended June 30, 2024 was a gain of $
5,492
. Unrealized gains/(losses) from transactions for the years ended
June 30, 2023 and 2022 were not material.
Comprehensive Loss
The Company reports comprehensive loss and its
components in its financial statements. Comprehensive loss consists of net loss and foreign currency translation adjustments affecting
parent's net investment from Inpixon that, under GAAP, are excluded from net loss.
Revenue Recognition
The Company recognizes revenue when control is
transferred of the promised products or services to its customers, in an amount that reflects the consideration the Company expects to
be entitled to in exchange for those products or services. The Company derives revenue from the sale of software and software as a service.
License Revenue Recognition
The Company enters into contracts with its customers
whereby it grants a non-exclusive license for the use of its proprietary software. The contracts provide for either (i) a one year stated
term with a one year renewal option, (ii) a perpetual term or (iii) a two year term with the option to upgrade to a perpetual license
at the end of the term. The contracts may also provide for yearly on-going maintenance services for a specified price, which includes
maintenance services, designated support, and enhancements, upgrades and improvements to the software (the "Maintenance Services"),
depending on the contract. Licenses for on-premises software provide the customer with a right to use the software as it exists when
made available to the customer. All software provides customers with the same functionality and differ mainly in the duration over which
the customer benefits from the software.
F-
12
GRAFITI HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
The timing of the Company's revenue recognition
related to the licensing revenue stream is dependent on whether the software licensing agreement entered into represents a good or service.
Software that relies on an entity's IP and is delivered only through a hosting arrangement, where the customer cannot take possession
of the software, is a service. A software arrangement that is provided through an access code or key represents the transfer of a good.
Licenses for on-premises software represents a good and provide the customer with a right to use the software as it exists when made
available to the customer. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same
functionality and differ mainly in the duration over which the customer benefits from the software. Revenue from distinct on-premises
licenses is recognized at a point in time when the software is made available to the customer.
Renewals or extensions of licenses are evaluated
as distinct licenses (i.e., a distinct good or service), and revenue attributed to the distinct good or service cannot be recognized
until (1) the entity provides the distinct license (or makes the license available) to the customer and (2) the customer is able to use
and benefit from the distinct license. Renewal contracts are not combined with original contracts, and, as a result, the renewal right
is evaluated in the same manner as all other additional rights granted after the initial contract. The revenue is not recognized until
the customer can begin to use and benefit from the license, which is typically at the beginning of the license renewal period. Therefore,
the Company recognizes revenue resulting from renewal of licensed software starting at the beginning of the license renewal period.
The Company recognizes revenue related to software
as a service evenly over the service period using a time-based measure because the Company is providing continuous service and the customer
simultaneously receives and consumes the benefits provided by the Company's performance as the services are performed.
Contract Balances
The timing of the Company's revenue recognition
may differ from the timing of payment by its customers. The Company records a receivable when revenue is recognized prior to payment
and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the
Company records deferred revenue until the performance obligations are satisfied. The Company had deferred revenue of approximately $
144,390
,
$
86,635
and $
96,303
as of June 30, 2024, 2023, and 2022, respectively, related to cash received in advance for product license and
maintenance services to be performed in future periods. The Company expects to satisfy its remaining performance obligations for these
license and maintenance services, and recognize the deferred revenue and related contract costs over the next twelve months. The Company
recognized revenue of $
67,688
during the year ended June 30, 2024 that was included in the contract liability balance at the beginning
of the period.
Costs to Obtain a Contract
The Company does not have a history of incurring
incremental costs to obtain a contract with a customer, but if the Company incurs these costs in the future, the Company will recognize
these costs as an asset that will be amortized over the expected contract term.
Cost to Fulfill a Contract
The Company incurs costs to fulfill their obligations
under a contract once it has obtained, but before transferring goods or services to the customer. The Company has determined that these
costs are immaterial. Therefore, the Company expenses the costs as they are incurred.
F-
13
GRAFITI
                                            HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Multiple Performance Obligations
The Company enters into contracts with customers
for its technology licenses that may include multiple performance obligations. Each distinct performance obligation was determined by
whether the customer could benefit from the good or service on its own or together with readily available resources. The Company allocates
revenue to each performance obligation based on its standalone selling price. The Company's contracts with its customers outline
the terms of the number of software licenses to be issued and any Maintenance Services, along with the agreed-upon prices. The price
for both the licenses and any related Maintenance Fees are fixed and stated in the contract.
Sales and Use Taxes
The Company presents transactional taxes such
as sales and use tax collected from customers and remitted to government authorities on a net basis.
Segments
The Company and its Chief Executive Officer ("CEO"),
acting as the Chief Operating Decision Maker ("CODM") determines its operating segments in accordance with Segment Reporting
("ASC 280"). If there are components within an operating segment that meet the definition of a business, the Company evaluates
those components to determine if they must be separated into separate segments. The Company has
one
operating segment. The Company is
organized and operated as one business. Management reviews its business as a single operating segment, using financial and other information
rendered meaningful only by the fact that such information is presented and reviewed in the aggregate.
Advertising Costs
Advertising costs are expensed as incurred. The
Company incurred advertising costs, which are included in sales and marketing expense of $
1,696
, $
8,237
and $
18,510
during the years
ended June 30, 2024, 2023, and 2022, respectively.
Net Loss Per Share
The Company computes basic and diluted earnings
per share by dividing net loss by the weighted average number of common shares outstanding during the period. Basic and diluted net loss
per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options in the calculation of
diluted net loss per common shares would have been anti-dilutive. The Company notes that there were common share equivalents of
1,015,383
in the form of stock options that were excluded from the calculation of diluted net loss per common share for the year ended June 30,
2024 as they are considered to be anti-dilutive. The Company notes that there were no such shares outstanding for the years ended June
30, 2023 and 2022.
Fair Value of Financial Instruments
Financial instruments consist of cash, accounts
receivable, note receivable, and accounts payable. The Company determines the estimated fair value of such financial instruments presented
in these financial statements using available market information and appropriate methodologies. These financial instruments are stated
at their respective historical carrying amounts, which approximate fair value due to their short-term nature.
F-
14
GRAFITI
                                            HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Carrying Value, Recoverability and Impairment
of Long-Lived Assets
The Company has adopted Section 360-10-35 of
the FASB ASC for its long-lived assets. Pursuant to ASC Paragraph 360-10-35-17, an impairment loss shall be recognized only if the carrying
amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset
group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition
of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested
for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group)
exceeds its fair value. Pursuant to ASC Paragraph 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a
long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized)
over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.
Pursuant to ASC Paragraph 360-10-35-21, the Company's
long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount
may not be recoverable. The Company considers the following to be some examples of such events or changes in circumstances that may trigger
an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) a significant adverse change
in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) a significant adverse
change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse
action or assessment by a regulator; (d) an accumulation of costs significantly in excess of the amount originally expected for the acquisition
or construction of a long-lived asset (asset group); (e) a current-period operating or cash flow loss combined with a history of operating
or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset
group); and (f) a current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed
of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment
indicators at least annually and more frequently upon the occurrence of such events.
Based on its assessments, the Company has not
recorded any impairment on long-lived assets during the years ended June 30, 2024, 2023, and 2022, respectively.
Reclassifications
Certain prior year amounts have been reclassified
to conform to June 30, 2024 presentation. The Company notes that these reclassifications only impacted the balance sheet and did not
impact cash flows or net income.
Recently Issued Accounting Standards Not
Yet Adopted
The Company reviewed recently issued accounting
pronouncements and concluded that they were not applicable to the consolidated financial statements, except for the following:
In July 2023, the FASB issued ASU 2023-03, "Presentation
of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity
(Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)", which updates codification on how an entity
would apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards should be accounted
for in accordance with Topic 718, Compensation—Stock Compensation. The effective date of this update is for fiscal years beginning
after December 15, 2023, including interim periods within those fiscal years. The Company is currently assessing potential impacts of
ASU 2023-03 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial statements
and disclosures.
F-
15
GRAFITI HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
In November 2023, the FASB issued ASU 2023-07,
"Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which amends the disclosure to improve reportable
segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an annual and interim basis
for to enable investors to develop more decision-useful financial analyses. All public entities will be required to report segment information
in accordance with the new guidance starting in annual periods beginning after December 15, 2023. The Company is currently assessing
potential impacts of ASU 2023-07 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated
financial statements and disclosures as the Company currently only has one reportable segment.
In
                                            December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements
                                            to Income Tax Disclosures", which amends the disclosure to address investor requests
                                            for more transparency about income tax information through improvements to income tax disclosures
                                            primarily related to the rate reconciliation and income taxes paid information and includes
                                            certain other amendments to improve the effectiveness of income tax disclosures. For entities
                                            other than public business entities, the requirements will be effective for annual periods
                                            beginning after December 15, 2025. The guidance will be applied on a prospective basis with
                                            the option to apply the standard retrospectively. Early adoption is permitted. The Company
                                            is currently assessing potential impacts of ASU 2023-09 and does not expect the adoption
                                            of this guidance will have a material impact on its condensed consolidated financial statements
                                            and disclosures.
Note 3 - Disaggregation of Revenue
Disaggregation of Revenue
The Company recognizes revenue when control of
the promised products or services is transferred to its customers, in an amount that reflects the consideration the Company expects to
be entitled to in exchange for those products or services. The Company derives revenue from software sales. The Company's revenue
from contracts with customers are mainly sourced from the United Kingdom, Switzerland, France, and Italy.
Revenues consisted of the following:
For the Years Ended June 30,
2024
2023
2022
Recurring revenue
$
202,031
$
179,775
$
268,121
Non-recurring revenue
134,531
212,073
187,955
Total Revenue
$
336,562
$
391,848
$
456,076
For the Years Ended June 30,
2024
2023
2022
Revenue recognized at a point in time (1)
$
134,531
$
212,073
$
187,955
Revenue recognized over time (2)
202,031
179,775
268,121
Total
$
336,562
$
391,848
$
456,076
(1)
Software's performance obligation is satisfied at a point in time when access to the software is provided to the customer.
(2)
Performance obligation from right to access software sales is satisfied evenly over the service period using a time-based measure because the Company is providing continuous access to its service and service is recognized over time.
F-
16
GRAFITI
                                            HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Note 4 - The Grafiti Holding Note
On June 26, 2024, Grafiti Holding purchased
from Damon the Grafiti Holding Note with an original principal amount of $
350,000
(the "Grafiti Holding Note"). In
accordance with the terms of the Grafiti Holding Note, Grafiti Holding must loan to Damon, at Damon's request, additional
funds up to an aggregate principal amount, including the original principal amount, of $
1,000,000
. On September 25, 2024, the
Grafiti Holding Note was amended to increase the maximum principal amount available for borrowing to $
1,150,000
. The Grafiti Holding
Note accrues interest at a rate of
10
% per year. The debt and accrued and unpaid interest is due and payable the earlier of (a)
December 31, 2024, (b) when declared due and payable by Grafiti Holding upon the occurrence of an event of default, or (c) within
three business days following termination of the Damon Business Combination Agreement. Concurrent with the original principal amount
provided to Damon, Grafiti Holding also loaned an additional $
200,000
to Damon on June 26, 2024. The principal balance of the
Grafiti Holding Note was $
550,000
with interest accrued of $
548
as of June 30, 2024. Subsequent to June 30, 2024 and through the
date of this filing, the Company has loaned Damon $
596,000
of additional funds.
Our note receivables balance was as follows:
June 30,
2024
June 30,
2023
June 30,
2022
Note receivable, amortized cost (inclusive of accrued interest)
$
550,548
$
—
$
—
Less: allowance for credit losses
(
108,568
)
—
—
Note receivable, net
$
441,980
$
—
$
—
Current note receivable, net
$
441,980
$
—
$
—
Note receivable, net
$
441,980
$
—
$
—
A roll forward of the Company's allowance for credit losses
was as follows:
Balance at June 30, 2023
$
—
Provision
108,568
Balance at June 30, 2024
$
108,568
There were neither charges against the allowance
nor recoveries of previously written off amounts for the years ended June 30, 2024, 2023 and 2022.
The Company's Grafiti Holding Note represents
a variable interest in Damon Motors. As such, the Company applied ASC 810 to assess whether the Company is the primary beneficiary and
Damon Motors should be consolidated. The Company determined they are not the primary beneficiary, as the Company does not have the power
to direct the activities that most significantly affect Damon Motors's economic performance. The Company's support to Damon
Motors, and the Company's maximum exposure, consists only of the Grafiti Holding Note outlined above. The primary reason for the
financial support is to assist Damon Motors' operations until the close of the merger. As such, the Company concluded the Damon
Motors legal entity should not be consolidated.
F-
17
GRAFITI
                                            HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Note 5 - Property and Equipment, net
Property and equipment as of June 30, 2024,
2023 and 2022 consisted of the following:
As of June 30,
2024
2023
2022
Computer and office equipment
$
2,871
$
3,873
3720
Less: accumulated depreciation
(
479
)
(
3,657
)
(
2,273
)
Total Property and Equipment, Net
$
2,392
$
216
$
1,447
Depreciation expense was approximately $
695
, $
1,246
and $
1,319
for the years ended June 30, 2024, 2023 and 2022, respectively. The Company disposed of $
3,873
of computer and office equipment during the year ended June 30, 2024.
Note 6 - Accrued Liabilities
Accrued liabilities as of June 30, 2024,
2023 and 2022 consisted of the following:
As of June 30,
2024
2023
2022
Accrued compensation and benefits
$
19,780
$
20,112
$
19,155
Accrued bonus and commissions
3,708
3,345
3,633
Accrued professional fees
17,393
31,585
—
Accrued sales and other indirect taxes payable
15,739
17,026
14,970
$
56,620
$
72,068
$
37,758
Note 7 - Long-Term Debt
On June 26, 2024, Grafiti Holding and Streeterville
Capital, LLC ("Streeterville," or "Investor") entered into a note purchase agreement, pursuant to which Grafiti Holding agreed to sell,
and Streeterville agreed to purchase, a secured promissory note in an aggregate original principal amount of $
6,470,000
(the "Streeterville
Note"). The Streeterville Note accrues interest on the outstanding balance of the note at the rate of
10
% per annum, and all principal
plus accrued interest is due and payable in December 2025. The Streeterville Note carries an original issue discount of $
1,450,000
and
$
20,000
of issuance costs to cover legal, accounting, due diligence, monitoring and other transaction costs. On the same day, the Investor
paid the purchase price of $
5,000,000
as follows: (a) $
1,150,000
to Grafiti Holding; (b) $
350,000
to Damon as a senior secured loan from
Grafiti Holding to Damon (the "Grafiti Holding Note"), and (c) $
3,500,000
into escrow, which will be distributed to Grafiti
Holding upon satisfaction of certain conditions including: (a) consummation of the Grafiti Holding Transaction; (b) the combined company's
common shares being listed on Nasdaq; and (c) immediately following the closing of the Grafiti Holding Transaction, the combined company
having no outstanding debt other than the Streeterville Note, certain other specified debts and trade payables incurred in the ordinary
course of business (the "Escrow Conditions"). Pursuant to the escrow agreement,
if the Escrow Conditions have not been satisfied by August 31, 2024 (the "Deadline Date"), the escrow agent may return the
escrow amount to the Investor and the Guaranties in favor of Streeterville (as defined below) to Damon and Damon Subsidiary (as defined
below). In accordance with the first and second amendments to the escrow agreement, the Deadline Date has been extended to October 31,
2024. Additionally, the second amendment to the escrow agreement allows for the release of funds at the discretion of the Investor even
if the funding conditions have not been satisfied. On September 23, 2024, $
350,000
of the funds placed in escrow were released to Grafiti
Holding.
Long-Term Debt as of June 30, 2024 consisted of the following:
Long-Term Debt
Maturity
2024
June 2024
10
% Note (net of $
450,059
unamortized debt discount and issuance costs)
12/26/2025
$
1,509,862
Total Long-Term Debt
$
1,509,862
Debt discount and issuance costs in the amount of $
455,000
related to the Streeterville Note was recorded as a contra liability within long-term debt, which will be amortized over the term of the note. Additional debt discount and issuance costs will be recorded as the Company receives the remaining portions of the Streeterville Note. Interest expense on the long-term debt for the year ended June 30, 2024 totaled $
9,862
which includes $
3,301
of interest expense, $
4,941
of amortized debt discount and $
1,620
of monitoring fees. There was
no
interest expense in the years ended June 30, 2023 or 2022.
The Company had
no
short-term or long-term debt
as of June 30, 2023 or 2022.
F-
18
GRAFITI
                                            HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Note 8 - Stock Award Plan and Stock-Based
Compensation
On June 11, 2024, the Grafiti Holding board of
directors adopted a Stock Incentive Plan. The maximum aggregate number of Subordinate Voting Shares that may be issued pursuant to the
awards granted under the Plan (the "Share Reserve") shall initially be
10,000,000
, and the Share Reserve shall automatically
increase on the first day of each calendar year beginning January 1, 2025, by a number of shares equal to the greatest of (i)
3,000,000
Shares, (ii) twenty percent (
20
%) of the outstanding Subordinate Voting Shares on the last day of the immediately preceding calendar
quarter, or (iii) such number of Subordinate Voting Shares determined by the Committee. As of June 30, 2024,
1,015,383
of options were
granted to consultants of the Company and
8,984,617
options were available for future grant under the Stock Incentive Plan.
Incentive stock options granted under the Option
Plans are granted at exercise prices not less than
100
% of the estimated fair market value of the underlying common stock at date of
grant. The exercise price per share for incentive stock options may not be less than
110
% of the estimated fair value of the underlying
common stock on the grant date for any individual possessing more that
10
% of the total outstanding common stock of the Company. Options
granted under the Option Plans vest over periods ranging from immediately to
four years
and are exercisable over periods not exceeding
ten years
.
During the year ended June 30, 2024, the
Company granted options under the stock option plan for the purchase of
1,015,383
shares of common stock to Nadir Ali, CEO of the Company,
and other consultants. Nadir Ali was considered a related party to the Company and $
219,627
of the stock-based compensation expense is
related to his options. Nadir Ali and the other consultants were granted these stock options for services performed in connection with
the Spin Off. These options are
100
% vested upon grant, expire on December 31, 2024, and have an exercise price of $
0.06336
per share.
The Company valued the stock options using the Black-Scholes option valuation model under probability weighted scenarios. The "As-Is"
scenario represents the value of the Company on a standalone basis. The "Merger" scenario represents the agreed upon price
for the reverse merger with Damon. The fair value of the awards was determined to be approximately $
0.6
million. The fair values of the
common stock as of the grant date under the "As-Is" and "Merger" scenarios were determined to be $
0.0634
and
$
6.00
per share, respectively.
During the year ended June 30, 2024, the
Company recorded a charge of approximately $
0.6
million for stock option expense for the stock options granted during the fiscal year
as they are
100
% vested and exercisable upon grant, which is included in the general and administrative section of the consolidated statement
of operations.
As of June 30, 2024, there were
no
non-vested
stock options and no unrecognized stock option compensation so the fair value of non-vested options was $
0.0
million.
Key weighted-average assumptions used to apply
this pricing model under the two probability weighted scenarios during the year ended June 30, 2024 were as follows:
For the Year Ended
June 30, 2024
As-Is
Merger
Risk-free interest rate
4.39
%
4.40
%
Expected life of option grants
3
months
3
months
Expected volatility of underlying stock
41.00
%
67.00
%
Dividends assumption
$
—
$
—
The expected stock price volatility for the Company's
stock options was determined by the historical volatilities for industry peers and used an average of those volatilities. Risk free interest
rates were obtained from U.S. Treasury rates for the applicable periods. The dividends assumptions was $
0
as the Company historically
has not declared any dividends and does not expect to. The Company accounts for forfeitures as they occur, rather than estimating expected
forfeitures.
F-
19
GRAFITI
                                            HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
See below for a summary of the stock options
granted under the stock option plan:
Total
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
(in thousands)
Outstanding at Outstanding at July 1, 2023
—
$
—
$
—
Granted
1,015,383
0.06336
—
Exercised
—
—
—
Expired
—
—
—
Forfeitures
—
—
—
Outstanding at June 30, 2024
1,015,383
$
0.06336
$
—
Exercisable at June 30, 2024
1,015,383
$
0.06336
$
—
All of the
1,015,383
of stock options granted during the fiscal year
ended June 30, 2024 were exercised on various dates between August 21, 2024 and September 4, 2024.
Note 9 - Income Taxes
The domestic and foreign components of loss before
income taxes for the years ended June 30, 2024, 2023 and 2022 are as follows:
For the Years Ended June 30,
2024
2023
2022
Domestic
$
—
$
—
$
—
Foreign
(
1,348,357
)
(
73,828
)
(
63,867
)
Loss before tax
$
(
1,348,357
)
$
(
73,828
)
$
(
63,867
)
The income tax provision (benefit) for the years
ended June 30, 2024, 2023 and 2022 consists of the following:
For the Years Ended June 30,
2024
2023
2022
Foreign
$
—
$
—
$
—
Deferred
132,407
13,195
10,359
132,407
13,195
10,359
Change in valuation allowance
(
132,407
)
(
13,195
)
(
10,359
)
Income Tax Benefit
$
—
$
—
$
—
F-
20
GRAFITI
                                            HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
The reconciliation between the U.S. statutory
federal income tax rate and the Company's effective rate for the years ended June 30, 2024, 2023 and 2022 is as follows:
For the Years Ended June 30,
2024
2023
2022
U.S. federal statutory rate
21.0
%
21.0
%
21.0
%
US-Foreign income tax rate difference
(
8.0
)%
(
2.0
)%
(
2.0
)%
Other permanent items
(
3.2
)%
(
1.1
)%
(
2.8
)%
Change in valuation allowance
(
9.8
)%
(
17.9
)%
(
16.2
)%
Effective Rate
—
%
—
%
—
%
As of June 30, 2024, 2023 and 2022, the
Company's deferred tax assets consisted of the effects of temporary differences attributable to the following:
As of June 30,
2024
2023
2022
Deferred Tax Asset
Net operating loss carryovers
$
123,875
$
72,339
$
56,353
Credit loss reserves
11,942
—
—
Share based compensation
69,023
—
—
Total Deferred Tax Asset
204,840
72,339
56,353
Less: valuation allowance
(
204,840
)
(
72,339
)
(
56,353
)
Deferred Tax Asset, Net of Valuation Allowance
$
—
$
—
$
—
As of June 30, 2024, 2023 and 2022, Grafiti
Limited, had approximately $
461,913
, $
380,733
, and $
296,593
of UK NOL carryovers available to offset future taxable income, respectively.
These NOLs do not expire. In the UK, there are limitations to the usage of prior losses after a change in ownership if either:
(1)
the scale of activities was small before the change
                                            of ownership and a considerable revival of the trade follows the change or
(2)
within any five-year period beginning no more than
                                            three years before the change in ownership there is a major change in the nature or conduct
                                            of the trade."
As of June 30, 2024, Grafiti Holding has approximately
$
328,285
of Canadian NOLs.
Canada allows for net operating losses to be carried back 3 years and forward up to 20 years. There are limitations
in the event of a change in ownership. This is broadly defined as when a person or group of persons acquires shares of a corporation
to hold more than 75% of the FMV of all of the shares of the corporation without otherwise acquiring control of the corporation and if
it is reasonable to conclude that one of the main reasons that control was not acquired was to avoid the loss restriction rules.
Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes. In assessing the realization of deferred tax assets, management considers, whether it is "more likely
than not", that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets
is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible
amounts become deductible.
F-
21
GRAFITI HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
ASC 740, "Income Taxes" requires
that a valuation allowance be established when it is "more likely than not" that all, or a portion of, deferred tax assets
will not be realized. A review of all available positive and negative evidence needs to be considered, including the scheduled reversal
of deferred tax liabilities, projected future taxable income, and tax planning strategies. After consideration of all the information
available, management believes that uncertainty exists with respect to future realization of its deferred tax assets with respect to
both Grafiti Holding and Grafiti Limited. Therefore, a full valuation allowance was established as of June 30, 2024, 2023 and 2022. As
of June 30, 2024, 2023 and 2022, the change in valuation allowance was $
132,501
, $
15,986
, and $
4,087
, respectively.
ASC 740 also clarifies the accounting for uncertainty
in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement process
for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits
to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. ASC 740 also provides
guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company
is required to file income tax returns in the United Kingdom and in Canada. Based on the Company's evaluation, it has been concluded
that there are no material uncertain tax positions requiring recognition in the Company's consolidated financial statements for
the years ended June 30, 2024, 2023 and 2022.
The Company's policy for recording interest
and penalties associated with unrecognized tax benefits is to record such interest and penalties as interest expense and as a component
of income tax expense. There were no amounts accrued for interest or penalties for the years ended June 30, 2024, 2023 and 2022. Management
does not expect any material changes in its unrecognized tax benefits in the next year.
The Company operates in the UK and in Canada
and in the normal course of business, its tax returns are subject to examination by taxing authorities. Such examinations may result
in future assessments by these taxing authorities. Grafiti Limited is subject to examination by UK tax authorities beginning May 13,
2020. In general, the UK Revenue & Customs Authority may reassess taxes four years from the date of filing. The tax years that remain
open and subject to UK reassessment are 2020 – 2022. Grafiti Holding is subject to examination by Canadian tax authorities for
their filings for up to four years.
Note 10 - Credit Risk and Concentrations
During the year ended June 30, 2024, the Company
had one customer that accounted for
11
% of revenue and during the year ended June 30, 2023, the Company had one customer that accounted
for
16
% of revenues. During the year ended June 30, 2022, the Company did not have any customers that accounted for over
10
% of revenues.
As of June 30, 2024, three customers represented
16
%,
17
%, and
19
% of accounts receivable. As of June 30, 2023, one customer represented approximately
63
% of total accounts receivable.
As of June 30, 2022, one customer represented
28
% of total accounts receivable and another customer represented approximately
26
%
of total accounts receivable.
As of June 30, 2024, 2023 and 2022, the
majority of cost of goods sold was related to related party expenses as discussed in Note 11. Therefore, there are no significant concentrations
of purchases or accounts payable.
Note 11 - Net Investments from Inpixon
Prior to the transaction on December 27, 2023,
the Company incurred expenses that were paid by Inpixon. The expenses incurred consist of salaries and benefits to certain employees
of Inpixon that provided services for the Company. Inpixon allocated expenses to the Company based on the estimated time spent by each
Inpixon employee. In addition, the Company recorded cost of sales for the use of Inpixon's software. The Company also recorded
adjustments to these consolidated financial statements to record cost of sales at market value based on the price Inpixon would charge
third parties for the use of the Inpixon's software with industry consistent margins. The Company settled the amounts through equity.
The Company has recorded these amounts as a change in stockholders' equity (deficit) of $
67,330
, $
166,471
and $
177,053
for the
years ended June 30, 2024, 2023 and 2022, respectively.
F-
22
GRAFITI HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Note 12 - Grafiti LLC Transactions
The Company notes that after the transaction
on December 27, 2023, the software is owned by Grafiti LLC and the Company has negotiated a monthly license fee of
50
% of the amount
invoiced to customers during the month for the use/sale of its software (See Note 15 for distributor agreement details). The Company
notes that Grafiti LLC is wholly owned by Grafiti Group LLC, which is owned by Nadir Ali, the former CEO of Inpixon. The Company has
recorded the amounts related to the recognized revenue during the January 1, 2024 through June 30, 2024 period as cost of revenues on
the Company's consolidated statement of operations of approximately $
34,474
, $
0
and $
0
for the years ended June 30, 2024, 2023
and 2022, respectively. Additionally, starting from January 1, 2024, the Company pays an administrative service fee of $
5,080
per month
to Grafiti LLC for the administrative services provided by Grafiti LLC. The Company has recorded these amounts as general and administrative
costs on the Company's consolidated statement of operations of approximately $
30,480
, $
0
and $
0
for the years ended June 30, 2024,
2023 and 2022, respectively.
Note 13- Commitments and Contingencies
Litigation
Certain conditions may exist as of the date the
consolidated financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more
future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise
of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims
that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well
as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates
that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability
would be accrued in the Company's financial statements. If the assessment indicates that a potentially material loss contingency
is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and
an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally
not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters
will not materially and adversely affect the Company's business, financial position, and results of operations or cash flows. However,
the performance of our Company's business, financial position, and results of operations or cash flows may be affected by unfavorable
resolution of any particular matter.
Leases
The Company had a six months operating lease
for administrative offices in the United Kingdom for approximately $
340
per month which expired on April 30, 2024. The Company signed
a new lease for the May 1, 2024 to April 30, 2025 period for approximately $
360
per month. The Company also has a storage space lease
that it retains for approximately $
300
per month that renews on an annual basis in October of each year.
F-
23
GRAFITI
                                            HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Consulting Arrangements
Grafiti Holding agreed to pay Mr. Ali, a related
party, $
15,000
a month for advisory services on public company reporting and compliance matters related to the development of strategies
in connection with public company financing, business opportunities and other strategic transactions, as well as operational matters
as requested. As of the date of this filing, Grafiti Holding has paid Mr. Ali $
45,000
for services provided during the months of April
through June 2024 which is included in the general and administrative line in the consolidated statements of operations. See Note 15.
Grafiti Holding agreed to pay Ms. Figueroa $
15,000
a month for advisory services with respect to her knowledge and expertise related to Company's public company reporting and compliance
matters and corporate business development and growth strategies. As of the date of this filing, Grafiti Holding has paid Ms. Figueroa
$
45,000
for services provided during the months of April through June 2024 which is included in the general and administrative line in
the consolidated statements of operations. See Note 15.
Grafiti Holding agreed to pay Ms. Loundermon,
the former CFO of Inpixon, $10,000 a month for advisory services with respect to her knowledge and expertise regarding the transition
of the Company's financial reporting function to ensure continuity of business operations. As of the date of this filing, Grafiti
Holding has paid Ms. Loundermon $
30,000
for services provided during the months of April through June 2024 which is included in the general
and administrative line in the consolidated statements of operations. See Note 15.
The Company notes that the Company will continue
to pay for the advisory services noted above until the Damon Business Combination is completed.
Note 14 - Foreign Operations
The Company's operations are located in
the United Kingdom and Canada. Revenues by geographic area are attributed by country of domicile of our subsidiaries.
The financial data
by geographic area are as follows:
Canada
United
Kingdom
Total
For the Years Ended June 30, 2024:
Revenue by geographic area
$
—
$
336,562
$
336,562
Operating loss by geographic area
$
(
1,263,106
)
$
(
75,937
)
$
(
1,339,043
)
Net loss by geographic area
$
(
1,272,420
)
$
(
75,937
)
$
(
1,348,357
)
As of June 30, 2024:
Total identifiable assets by geographic area
$
1,473,723
$
220,863
$
1,694,586
Long lived assets by geographic area
$
—
$
2,643
$
2,643
The Company notes that the Company's Canadian
operations consist of Grafiti Holdings while the Company's United Kingdom operations consist of Grafiti Limited. As such, the years
ended June 30, 2023 and 2022 only include the operations from United Kingdom.
F-
24
GRAFITI HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Note 15 - Subsequent Events
Distributor Agreement
On July 19, 2024, Grafiti Limited entered into
a Distributor Agreement with Grafiti LLC. Under the Distributor Agreement, Grafiti LLC granted Grafiti Limited a non-exclusive, non-transferable
right and license to market and distribute SAVES (statistical analytics and visualization) products in the United Kingdom and other agreed-upon
territories. Grafiti Limited will pay Grafiti LLC the then-current prices for the products, subject to a discount of up to
50
% if certain
revenue targets are met or other arrangements agreed upon by the parties. The deemed effective date of the Distributor Agreement is retroactive
to January 1, 2024, and will remain in effect for one year from the effective date, automatically renewing for successive one-year periods
unless either party provides advance notice prior to the end of the current term to not extend. Either party may terminate the Agreement
without cause by providing at least 90 days' prior written notice, or immediately for specified reasons, including an uncured breach
or bankruptcy. As of June 30, 2024 Grafiti Limited owed Grafiti LLC $
42,896
under the agreement which is included in the Accounts Payable
line on the Consolidated Balance Sheets.
Administrative Support Service Agreement
Additionally, on July 19, 2024, Grafiti Limited
entered into an Administrative Support Service Agreement with Grafiti LLC. Under the Administrative Support Service Agreement, Grafiti
LLC agreed to provide accounting, tax, and other administrative sales support services to Grafiti Limited for $
5,080
per month, with
the amount subject to a
5
% annual increase by Grafiti LLC. The Administrative Support Service Agreement is deemed to have commenced on
January 1, 2024, and remains in effect for one year from the effective date, automatically renewing for successive one-year periods unless
either party provides advance notice prior to the end of the current term to not extend. As of June 30, 2024, Grafiti Limited owed Grafiti
LLC $
15,240
under the agreement which is included in the Accounts Payable line on the Consolidated Balance Sheets.
Advisory Services and Consulting Agreements
Nadir Ali
Grafiti Holding has entered into a consulting
agreement with Mr. Ali on September 25, 2024 pursuant to which it has agreed to pay a fee of $
15,000
per month for services rendered
to the Company since April 1, 2024 until the closing of the Business Combination pursuant to which Mr. Ali will advise on public company
reporting and compliance matters, business development, growth strategies and other operational matters as requested.
As compensation under the Consulting Agreement,
Grafiti Holding will pay Mr. Ali a fee of $
325,000
upon closing the Business Combination and his monthly fee will increase to $
54,167
per month beginning on the first of each month following the closing of the Business Combination through the remainder of the term of
the agreement.
Unless otherwise terminated earlier pursuant
to the Consulting Agreement, the agreement will continue for a period of six months following the closing of the Business Combination
which may be extended for additional terms, upon mutual consent. Grafiti Holding will have the right to terminate the Consulting Agreement
with 30 days' notice; however, if it is terminated by Grafiti Holding prior to the six month anniversary of the closing of the
Business Combination (the "Guaranteed Period") for any reason other than the gross negligence, recklessness or willful misconduct
of Mr. Ali, the monthly fee will continue to be paid for the remainder of the Guaranteed Period. Mr. Ali will have the right to terminate
the Consulting Agreement with 30 days' notice for specified reasons, including Grafiti Holding's failure to make timely payments,
gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by Grafiti Holding. In such cases, the monthly fee for
the remainder of the Guaranteed Period will continue to be paid.
F-
25
GRAFITI HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024, 2023, AND
2022
Melanie Figueroa
Grafiti Holding has entered into a consulting
agreement on September 25, 2024 with Ms. Figueroa pursuant to which it has agreed to pay a fee of $
15,000
per month for services rendered
to the Company since April 1, 2024 until the closing of the Business Combination pursuant to which Ms. Figueroa will provide advisory
services with respect to her knowledge and expertise related to Company's public company reporting and compliance matters and corporate
business development and growth strategies.
As compensation under the Consulting Agreement,
Grafiti Holding will pay Ms. Figueroa a fee of $
175,000
upon closing the Business Combination and her monthly fee will increase to $
29,167
per month beginning on the first of each month following the closing of the Business Combination through the remainder of the term of
the agreement.
Unless otherwise terminated earlier pursuant
to the Consulting Agreement, the agreement will continue for a period of six months following the closing of the Business Combination
which may be extended for additional terms, upon mutual consent. Grafiti Holding will have the right to terminate the Consulting Agreement
with 30 days' notice; however, if it is terminated by Grafiti Holding prior to the six month anniversary of the closing of the
Business Combination (the "Guaranteed Period") for any reason other than the gross negligence, recklessness or willful misconduct
of Ms. Figueroa, the monthly fee will continue to be paid for the remainder of the Guaranteed Period. Ms. Figueroa will have the right
to terminate the Consulting Agreement with 30 days' notice for specified reasons, including Grafiti Holding's failure to
make timely payments, gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by Grafiti Holding. In such cases,
the monthly fee for the remainder of the Guaranteed Period will continue to be paid.
Wendy Loundermon
Grafiti Holding has entered into a consulting
agreement with Mrs. Loundermon on September 25, 2024 pursuant to which it has agreed to pay a fee of $
10,000
per month for services rendered
to the Company since April 1, 2024 until the closing of the Business Combination pursuant to which Mrs. Loundermon will provide advisory
services with respect to her knowledge and expertise regarding the transition of the Company's financial reporting function to
ensure continuity of business operations.
As compensation under the Consulting Agreement,
Grafiti Holding will pay Mrs. Loundermon a fee of $
150,000
upon closing the Business Combination and her monthly fee will increase to
$
25,000
per month beginning on the first of each month following the closing of the Business Combination through the remainder of the
term of the agreement.
Unless otherwise terminated earlier pursuant
to the Consulting Agreement, the agreement will continue for a period of six months following the closing of the Business Combination
which may be extended for additional terms, upon mutual consent. Grafiti Holding will have the right to terminate the Consulting Agreement
with 30 days' notice; however, if it is terminated by Grafiti Holding prior to the six month anniversary of the closing of the
Business Combination (the "Guaranteed Period") for any reason other than the gross negligence, recklessness or willful misconduct
of Mrs. Loundermon, the monthly fee will continue to be paid for the remainder of the Guaranteed Period. Mrs. Loundermon will have the
right to terminate the Consulting Agreement with 30 days' notice for specified reasons, including Grafiti Holding's failure
to make timely payments, gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by Grafiti Holding. In such
cases, the monthly fee for the remainder of the Guaranteed Period will continue to be paid.
F-
26
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Damon Motors Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheet of Damon Motors Inc. (the "Company") as of June 30, 2024, the related consolidated statements of operations,
changes in shareholders' deficit and cash flows for the year then ended, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of June 30, 2024, and the results of its operations and its cash flows for the year then ended, in conformity
with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a significant
working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding
these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company's auditor
since 2024.
New York, NY
September 26, 2024
F-
27
Tel: (604) 688-5421
BDO Canada LLP
Fax: (604) 688-5132
1100 Royal Centre
www.bdo.ca
1055 West Georgia Street, P.O. Box 11101
Vancouver, British Columbia
V6E 3P3
Report of Independent Registered Public Accounting Firm
Shareholders
and Board of Directors
Damon
Motors Inc.
Vancouver,
British Columbia, Canada
Opinion
on the Consolidated Financial Statements
We
have audited the accompanying consolidated balance sheet of Damon Motors Inc. (the "Company") as of June 30, 2023, the related
consolidated statements of loss and comprehensive loss, changes in (deficit) equity, and cash flows for each of the two years in the
period ended June 30, 2023, and the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at June 30, 2023, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2023, in
conformity with accounting principles generally accepted in the United States of America.
Substantial
Doubt About the Company's Ability to Continue as a Going Concern
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations, has a net capital deficit
and negative cash flows from operations that raise substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.
/s/
BDO Canada LLP
Chartered
Professional Accountants
We
have served as the Company's auditor since 2021.
Vancouver,
British Columbia, Canada
December
28, 2023
BDO Canada
LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms
part of the international BDO network of independent member firms
F-
28
DAMON MOTORS INC.
CONSOLIDATED BALANCE SHEETS
As of June 30, 2024 and June 30, 2023
(Expressed in United States dollars)
Notes
June 30,
2024
June 30,
2023
$
$
ASSETS
Current assets
Cash
395,580
2,069,056
Other current assets
90,921
255,582
Current assets
486,501
2,324,638
Non-current assets
Premises lease deposits
126,431
187,435
Property and equipment, net
4
1,138,420
2,004,066
Non-current assets
1,264,851
2,191,501
Total assets
1,751,352
4,516,139
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
5, 13
5,924,121
7,106,281
Customer deposits
482,575
488,569
Current portion of operating lease liabilities
6
443,519
740,486
Current portion of finance lease liabilities
6
7,141
12,363
Debt
7
1,099,489
1,857,550
Convertible notes
8
40,630,756
14,727,183
Derivative warrant liabilities
9
-
521,950
Financial liability convertible to equity
10
3,200,000
2,700,000
Current liabilities
51,787,601
28,154,382
Non-current liabilities
Non-current portion of operating lease liabilities
6
235,492
621,325
Non-current portion of finance lease liabilities
6
177,403
190,774
Other non-current liabilities
-
19,099
Non-current liabilities
412,895
831,198
Total liabilities
52,200,496
28,985,580
SHAREHOLDERS' DEFICIT
Common shares without par value, unlimited shares authorized, 12,324,504
    shares issued and outstanding as of June 30, 2024 (2023 – 11,829,386)
12
1,938,751
1,285,788
Preferred shares without par value, unlimited shares authorized, 16,758,528
    shares issued and outstanding as of June 30, 2024 and 2023 (Liquidation preference : $48,215,054)
12
71,590,087
71,590,087
Additional paid in capital
12
16,629,612
9,294,030
Accumulated deficit
(140,607,594
)
(106,639,346
)
Total shareholders' deficit
(50,449,144
)
(24,469,441
)
Total liabilities and shareholders' deficit
1,751,352
4,516,139
Going Concern (Note 1)
Commitments and Contingencies (Note 11)
Subsequent Events (Note 24)
The accompanying notes are an integral part of these consolidated
financial statements.
F-
29
DAMON MOTORS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended June 30, 2024, 2023 and 2022
(Expressed in United States dollars)
Year ended June 30,
Notes
2024
2023
2022
$
$
$
Expenses
Research and development, net
14
4,550,229
17,451,749
18,166,436
General and administrative
15
4,296,231
6,792,996
4,778,250
Sales and marketing
16
986,137
2,747,792
4,417,165
Depreciation
4
303,424
370,575
247,947
Transaction costs
1,626,519
942,187
-
Asset and right-of-use asset impairment
17
-
9,471,276
-
Gain from release of lease obligation
17, 18
(42,297
)
(6,167,001
)
-
Foreign currency transaction (gain)/loss
(235,871
)
429,358
113,921
Loss from Operations
11,484,372
32,038,932
27,723,719
Other expenses
Changes in fair value of financial liabilities
22
18,424,992
3,881,980
8,935,049
Loss on debt settlement
8
785,377
-
-
Finance expense
19
3,273,507
1,091,697
77,342
22,483,876
4,973,677
9,012,391
Net loss before income tax
33,968,248
37,012,609
36,736,110
Income tax expense
-
-
-
Net loss
33,968,248
37,012,609
36,736,110
Loss per share:
Basic and diluted – common shares
(2.79
)
(3.14
)
(3.22
)
Weighted average number of shares outstanding:
Basic and diluted – common shares
12,180,571
11,793,772
11,405,891
The accompanying notes are an integral part of these consolidated
financial statements.
F-
30
DAMON MOTORS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
For the years ended June 30, 2024, 2023 and 2022
(Expressed in United States dollars)
Common shares
Preferred shares
Additional paid in
capital
Accumulated
Deficit
Shareholders'
deficit
#
$
#
$
$
$
$
As of June 30, 2021
11,323,585
551,119
5,039,824
2,938,632
5,741,630
(32,890,627
)
(23,659,246
)
Issuance of shares, net of issuance costs
36,000
75,566
3,627,211
25,262,364
-
-
25,337,930
Conversion of Simple Agreements for Future Equity (SAFEs)
-
-
8,091,493
43,389,091
-
-
43,389,091
Stock-based compensation
-
-
-
-
2,323,294
-
2,323,294
Stock options exercised
244,655
233,079
-
-
(192,133
)
-
40,946
Loss for the year
-
-
-
-
-
(36,736,110
)
(36,736,110
)
As of June 30, 2022
11,604,240
859,764
16,758,528
71,590,087
7,872,791
(69,626,737
)
10,695,905
Issuance of shares, net of issuance costs
180,000
368,878
-
-
-
-
368,878
Stock-based compensation
-
-
-
-
1,472,634
-
1,472,634
Stock options exercised
45,146
57,146
-
-
(51,395
)
-
5,751
Loss for the year
-
-
-
-
-
(37,012,609
)
(37,012,609
)
As of June 30, 2023
11,829,386
1,285,788
16,758,528
71,590,087
9,294,030
(106,639,346
)
(24,469,441
)
Issuance of common shares to settle liabilities
95,380
260,999
-
-
-
-
260,999
Stock-based compensation
-
-
-
-
146,842
-
146,842
Stock options exercised
399,738
391,964
-
-
(330,809
)
-
61,155
Common share purchase warrants
-
-
-
-
1,090,797
-
1,090,797
Reclassification of liability-classified warrants to equity
-
-
-
-
6,428,752
-
6,428,752
Loss for the year
-
-
-
-
-
(33,968,248
)
(33,968,248
)
As of June 30, 2024
12,324,504
1,938,751
16,758,528
71,590,087
16,629,612
(140,607,594
)
(50,449,144
)
The accompanying notes are an integral part of these consolidated
financial statements.
F-
31
DAMON MOTORS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended June 30, 2024, 2023 and 2022
(Expressed in United States dollars)
Year ended June 30,
2024
2023
2022
$
$
$
Operating activities
Net loss:
(33,968,248
)
(37,012,609
)
(36,736,110
)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation
303,424
370,575
247,947
Amortization of operating lease right-of-use asset
542,496
779,091
309,566
Stock-based compensation
146,842
1,472,634
2,323,294
Debt accretion
-
11,058
6,296
Accrued interest added to debt
1,694,149
651,822
13,794
Accrued unpaid interest on operating lease settled
-
808,275
-
Changes in fair value of financial liabilities
18,424,992
3,881,980
8,935,049
Loss on debt settlement
785,377
-
-
Asset and right-of-use asset impairment
-
9,471,276
-
Gain from release of lease obligation
(42,297
)
(6,167,001
)
-
Foreign exchange (gain)/loss
(184,514
)
320,235
(54,495
)
Changes in operating assets and liabilities:
Other current assets
159,010
187,498
(273,578
)
Accounts payable and accrued liabilities
(136,934
)
4,533,684
914,390
Operating lease
(587,677
)
(506,592
)
(309,566
)
Customer deposits
(5,994
)
115,782
182,868
Cash used in operating activities
(12,869,374
)
(21,082,292
)
(24,440,545
)
Investing activities
Long term prepayment
-
(773,870
)
(1,265,843
)
Equipment purchase
-
(4,811
)
(1,443,029
)
Cash used in investing activities
-
(778,681
)
(2,708,872
)
Financing activities
Payments on finance leases
(12,081
)
(12,664
)
(20,182
)
Cash settlement for release of lease obligation
(36,582
)
(1,100,248
)
-
Proceeds from SR&ED, net of deferred financing fee
-
1,140,889
637,394
Proceeds from SAFEs issued
-
2,005,213
(636,686
)
Proceeds from convertible notes
11,549,945
11,220,000
-
Proceeds from senior secured promissory notes
550,000
-
-
Proceeds from promissory notes
-
728,332
-
Repayment of SR&ED loan
(916,539
)
(155,975
)
-
Proceeds from exercise of stock options
61,155
5,751
40,946
Proceeds from preferred shares issued, net of issuance cost
-
-
25,262,364
Cash provided by financing activities
11,195,898
13,831,298
25,283,836
Net change in cash and restricted cash during the period
(1,673,476
)
(8,029,675
)
(1,865,581
)
Cash and restricted cash at beginning of period
2,069,056
10,098,731
11,964,312
Cash and restricted cash at end of period (Note 23)
395,580
2,069,056
10,098,731
Supplemental Cash Flow Information (Note 23)
The accompanying notes are an integral part of these consolidated
financial statements.
F-
32
1.
NATURE OF OPERATIONS
                                            AND GOING CONCERN
Nature of operations
Damon Motors Inc. was incorporated
on July 22, 2016, under the laws of British Columbia. The Company's registered address is Suite 2300, Bentall 5, 550 Burrard Street,
Vancouver, British Columbia, V6C 2B5 and head office and principal address is 704 Alexander Street, Vancouver, British Columbia, V6A
1E3, Canada. The Company is a leading light electric vehicle manufacturer currently focused on electric motorcycles including proprietary
electric powertrain, shifting and predictive awareness technologies. The Company has a single reportable segment given that the Company
is engaged in the manufacture of motorcycles in North America, and management views the business as a single reporting segment. See Segment
Reporting (Note 21).
On April 26, 2021, the Company formed
a wholly owned subsidiary, Damon Motors Corporation, a corporation organized and registered in the state of Delaware, USA.
These consolidated financial statements
include the accounts of Damon Motors Inc. and Damon Motors Corporation, collectively the "Company."
Going concern
The accompanying consolidated financial
statements of the Company have been prepared assuming the Company will continue as a going concern in accordance with U.S. GAAP. The
going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements
are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.
The Company is subject to a number
of risks, including, but not limited to, the need for successful development of products, the need for additional capital (or financing)
to fund operating losses (see below), competition from substitute products and services from larger companies, protection of proprietary
technology, patent litigation, dependence on key individuals, and risks associated with changes in electric automotive technology. The
Company's ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to fund its research
and development, complete the construction of its manufacturing facility for the eventual production of electrical motorcycles and meets
its obligations and repay its liabilities arising from normal business operations when they come due.
The Company has incurred net losses
of $33,968,248 and utilized $12,869,374 of cash in operations for the year ended June 30, 2024 and has accumulated a deficit as of June
30, 2024 of $140,607,594 and expects to incur future additional losses. These conditions indicate material uncertainties that cast substantial
doubt upon the Company's ability to continue as a going concern within one year after financial statement issuance date.
When substantial doubt exists, management
evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company's ability to continue
as a going concern. The mitigating effect of management's plans, however, is only considered if both (1) it is probable that the
plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable
that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity's
ability to continue as a going concern within one year after the date that the financial statements are issued.
F-
33
1.
NATURE OF OPERATIONS AND GOING CONCERN
                                            (continued)
Going concern
(continued)
Management's plans to address
the uncertainty that the Company will continue as a going concern include the business combination described in footnote 2 above as well
as obtaining associated debt and equity financing. There is no assurance that the Company's plans to consummate the business combination
will be successful and the Company cannot provide assurance that the Company will secure financing in a timely manner, nor can they provide
assurance that the business combination will be completed. As such, the substantial doubt of the Company's ability to continue
as a going concern has not been alleviated by management's plans. The financial statements have been prepared assuming the Company
will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.
2.
BASIS
                                            OF PRESENTATION
a)
Basis
                                            of presentation
The financial statements have been
prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and applicable rules
and regulations of the Securities and Exchange Commission ("SEC") regarding financial reporting.
b)
Basis
                                            of measurement
These financial statements have been
prepared on a historical cost basis except for certain financial instruments which are measured at their fair value as explained in the
accounting policies set out below. In addition, these financial statements have been prepared using the accrual basis of accounting.
c)
Consolidated
                                            statements
The consolidated financial statements
incorporate the financial statements of the Company and its consolidated subsidiary, Damon Motors Corporation, over which the Company
has control. Control occurs when the Company has power over the investee; is exposed, or has rights, to variable returns from its involvement
with the investee; and has the ability to use its power over the investee to affect its returns. All intercompany transactions and balances
between the Company and the subsidiary are eliminated upon consolidation.
d)
Business
                                            combination with XTI Aerospace, Inc. ("XTI Aerospace" and formerly known as Inpixon)
On October 23, 2023, Damon Motors
Inc. ("Damon") entered into a Business Combination agreement ("BCA") with XTI Aerospace (NASDAQ: XTIA), Grafiti
Holding Inc. ("Grafiti"), a British Columbia corporation and wholly owned subsidiary of XTI Aerospace, 1444842 B.C. Ltd.,
and a wholly owned subsidiary of Grafiti ("Amalco Sub"), pursuant to which it is proposed that Amalco Sub and Damon amalgamate
under the laws of British Columbia, Canada with the amalgamated company (the "Damon Surviving Corporation") continuing as
a wholly owned subsidiary of Grafiti (the "Business Combination").
F-
34
2.
BASIS OF PRESENTATION (continued)
d)
Business combination with XTI
                                            Aerospace, Inc. ("XTI Aerospace" and formerly known as Inpixon) (continued)
The Business Combination is subject
to material conditions, including approval of the Business Combination by securities holders of Damon, approval of the issuance of Grafiti
Common Shares to Damon securities holders pursuant to the Business Combination Agreement by a British Columbia court after a hearing
upon the fairness of the terms and conditions of the Business Combination Agreement as required by the exemption from registration provided
by Section 3(a)(10) under the Securities Act of 1933, and approval of the listing of the Grafiti Common Shares on the Nasdaq Stock Market
("Nasdaq") under the ticker symbol DMN, after giving effect to the Business Combination.
Upon the consummation of the Business
Combination (the "Closing"), both Grafiti Limited (formerly known as Inpixon UK Ltd.), a subsidiary of Grafiti and the Damon
Surviving Corporation will be wholly owned subsidiaries of Grafiti, which will adopt a new name as determined by Damon.
Holders of Grafiti Common Shares and
warrants, including management of XTI Aerospace that hold Grafiti Common Shares immediately prior to the closing of the Business Combination,
are anticipated to retain approximately 18.75% of the outstanding capital stock of the combined company, determined on a fully diluted
basis. Damon shareholders are anticipated to hold approximately 81.25% of the combined company, determined on a fully diluted basis.
It is anticipated that public trading for the Grafiti Common Shares on the Nasdaq would begin following the consummation of the Business
Combination.
Following the signing of the Business
Combination agreement, on October 26, 2023, Damon issued a convertible promissory note to XTI Aerospace in an aggregate principal amount
of $3.0 million (Note 8) together with the Share purchase Warrants (Note 9) pursuant to a private placement. The convertible promissory
note has a 12% annual interest rate, payable in arrears on the maturity date, June 15, 2024. The full principal balance and interest
on the convertible promissory note will automatically convert into common shares of Damon upon the public listing of Damon or a successor
issuer thereof on a national securities exchange (a "Public Company Event").
On June 15, 2024, the Company and
XTI Aerospace signed a Letter of Agreement amending the maturity date of the notes to September 30, 2024.
3.
SIGNIFICANT
                                            ACCOUNTING POLICIES
a)
Use
                                            of estimates
The preparation of financial statements
in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expense
during the reporting period.
F-
35
3.
SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)
a)
Use of estimates (continued)
The most significant estimates relate
to the determination of the fair value of the Company's common shares, determination of the fair value of stock option grants,
and the classification and measurement of Simple Agreements for Future Equity ("SAFEs"), convertible notes and warrants as
a financial liability or an equity instrument, and determination of Scientific Research and Experimental Development ("SR&ED")
tax credit recoverable. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other
factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. These estimates are
based on information available as at the date of the financial statements; therefore, actual results could differ from those estimates.
The Company's management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are
adjusted for prospectively in the period in which the estimates are revised.
b)
Foreign
                                            currencies
These financial statements are presented
in United States dollars, unless otherwise noted, which is the reporting and functional currency of the Company. Foreign currency transaction
gains and losses resulting from or expected to result from transactions denominated in a currency other than the functional currency
are recognized in the consolidated statements of operations.
c)
Cash
                                            and restricted cash
Cash is comprised of cash and restricted
cash. Cash is recorded at cost, which approximates fair value. Cash includes cash held with Canadian financial institutions. The Company's
cash balances exceed those that are federally insured. To date, the Company has not recognized any losses caused by uninsured balances.
Restricted cash consists of certificates of deposits on a leased premises.
d)
Property
                                            and equipment
Property and equipment are stated
at cost, net of accumulated depreciation and accumulated impairment losses, if any. Construction in Progress comprises leasehold improvements
and fixturing which are stated at cost less accumulated impairment losses. Equipment comprises computer equipment, tools and office equipment.
Depreciation and amortization are calculated using the straight-line method over the lease term for right-of-use assets and the estimated
useful lives of the assets other than right-of-use assets.
Depreciation is calculated using the
following methods and terms:
Equipment: Computer equipment
Straight-line
3.33 years
Equipment: Tools
Straight-line
5 years
Equipment: Office equipment
Straight-line
5 years
Leasehold Improvements
Straight-line
life of lease
Right-of-use assets
Straight-line
life of lease
F-
36
3.
SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)
d)
Property and equipment (continued)
An item of equipment is derecognized
upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the statement of
operations in the period the asset is derecognized. The assets' residual values, useful lives and methods of depreciation are reviewed
at each reporting date, and adjusted prospectively, if appropriate.
e)
Long
                                            term prepayment
Long term prepayment relates to prepayment
for tenant improvements of Surrey manufacturing facility lease property that were paid prior to the commencement of the lease on September
29, 2022.
f)
Leases
The Company enters into contractual
arrangements for the utilization of certain non-owned assets. These principally relate to property for the Company's offices, planned
manufacturing plant, equipment and vehicles which have varying terms including extension and termination options. The determination of
whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception and whether the arrangement
is to be fulfilled through the use of a specific asset or assets, or whether the arrangement conveys a right to use the asset. Leases
are classified as either operating or finance leases at lease inception, depending on the transfer of risks and rewards of ownership,
along with other criteria such as the transfer of ownership to the lessee, purchase options, or percentage of economic life of leased
asset. This lease classification is not revised unless there is a modification to the lease agreement. Leases will be classified as finance
or operating, with classification affecting the pattern and classification of expense recognition in the consolidated statements of operations.
The Company recognizes a right-of-
use asset and lease liability at lease commencement based on the present value of lease payments over the lease term. The Company generally
uses its incremental borrowing rate as the discount rate as most of the Company's lease arrangements do not provide an implicit
borrowing rate. The incremental borrowing rate reflects the rate of interest that the Company would have to pay to borrow the funds necessary
to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
For operating leases, fixed lease
payments are recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components
and has elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease
component. Certain lease agreements include variable lease payments that depend on an index, as well as payments for non-lease components,
such as common area maintenance, and certain pass-through operating expenses such as real estate taxes and insurance. In instances where
these payments are fixed, they are included in the measurement of our lease liabilities, and when variable, are excluded and recognized
in the period in which the obligations for those payments are incurred. The Company's leases do not contain any material residual
value guarantees or payments under purchase and termination options.
F-
37
3.
SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)
f)
Leases (continued)
Lease terms are initially determined
as the non-cancellable period of a lease adjusted for options to extend or terminate a lease that are reasonably certain to be exercised.
Lease liabilities are subsequently measured at amortized cost using the effective interest method.
Right of use assets are carried at
cost less accumulated amortization, impairment losses, and any subsequent remeasurement of the lease liability. Initial cost comprises
the lease liability adjusted for lease payments at or before the commencement date, lease incentives received, initial direct costs and
an estimate of restoration costs.
The Company has elected not to present
short-term leases on the consolidated balance for leases that have lease terms of 12 months or less and do not contain purchase options
or renewal terms that the Company is reasonably certain to exercise. The lease expense related to those short-term leases is recognized
on a straight-line basis over the lease term.
The Company subleases one of its office
spaces to third parties, which does not relieve the Company of its primary lease obligations with the lessor (the "headlease").
This sublease is classified as an operating lease, and therefore the Company continues to account for the headlease as it did before
the commencement of the sublease. Sublease income is presented within the same category of operating expenses as the underlying headlease
expenses on the consolidated statements of operations. If the lease cost of the term of the sublease exceeds the Company's anticipated
sublease income for the same period, the Company assesses the right-of-use asset associated with the head lease for impairment under
the long-lived asset impairment provisions of ASC 360.
g)
Current
                                            and deferred income taxes
The Company accounts for income taxes
under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets
and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted
tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax
assets and liabilities is recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax
assets net of a valuation allowance to the extent it believes that these assets are more likely than not to be realized. In making such
a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary
differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that
it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment
to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
F-
38
3.
SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)
g)
Current and deferred income
                                            taxes (continued)
The Company records uncertain tax
positions in accordance with ASC 740 – Income Taxes on the basis of a two-step process in which (1) it determines whether it is
more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those
tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that
is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company has determined that
its tax returns do not include uncertain tax positions.
The Company recognizes accrued interest
and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued
for interest and penalties as of June 30, 2024 and 2023.
h)
Share
                                            capital
Common shares are classified as equity.
Incremental costs directly attributable to the issuance of common shares and stock options are recognized as a deduction from equity.
Share issue costs incurred in advance of share subscriptions are recorded as non-current deferred assets. Share issue costs related to
uncompleted share subscriptions are expensed in the period they are incurred.
Preferred shares are classified as
equity. Incremental costs directly attributable to the issuance of preferred shares are recognized as a deduction from equity. Share
issue costs incurred in advance of share subscriptions are recorded as non-current deferred assets. Share issue costs related to uncompleted
share subscriptions are expensed in the period they are incurred.
i)
Stock-based
                                            compensation
The Company measures and records the
expense related to stock-based payment awards based on the fair value of those awards as determined on the date of grant. The Company
recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting
period and uses the straight-line method to recognize stock-based compensation. For stock options with performance conditions, the Company
records compensation expense when it is deemed probable that the performance condition will be met.
The Company uses a contemporaneous
valuation model, the Black-Scholes-Merton ("Black-Scholes") option-pricing model to determine the estimated fair value of
stock option awards. The Black-Scholes option-pricing model requires the use of the Company's share price estimates on the date
of grant as well as highly subjective and complex assumptions, which determine the fair value of stock-based awards, including the option's
expected term and the price volatility of the underlying stock.
F-
39
3.
SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)
j)
Financial instruments
Financial assets
Financial assets comprise of cash,
restricted cash and accounts receivable. The Company classifies its financial assets in the following categories: at fair value through
statement of operations ("FVTPL") or at amortized cost. The classification is largely driven by the specific type of instrument
but also depends on the Company's business model for managing the financial assets and terms of the related cashflow. Management
determines the classification of its financial assets at initial recognition.
Financial assets carried at FVTPL
are initially recorded at fair value and transaction costs are expensed in the consolidated statements of operations. Realized and unrealized
gains and losses arising from changes in the fair value of the financial assets held at FVTPL are included in the consolidated statements
of operations in the period in which they arise. There are no financial assets held at FVTPL as of June 30, 2024 and 2023.
Financial assets at amortized cost
are initially recognized at fair value and subsequently carried at amortized cost less any impairment. Transaction costs are netted against
financial assets and are accounted for using the effective interest method. They are classified as current assets or non-current assets
based on their maturity date. The Company's financial assets carried at amortized cost include cash, and receivables.
Financial assets are derecognized
when they mature or are sold and substantially all the risks and rewards of ownership have been transferred.
Financial liabilities
Financial liabilities include convertible
debt and other interest-bearing debt, accounts payable and accrued liabilities, customer deposits, lease liabilities. The Company classifies
its financial liabilities into categories, depending on the purpose for which the liability was incurred. The Company's accounting
policy for each category is as follows:
●
FVTPL
                                            - This category comprises derivatives or liabilities acquired or incurred principally for
                                            the purpose of selling or repurchasing it in the near term. They are carried in the consolidated
                                            balance sheets at fair value with changes in fair value recognized in the consolidated statements
                                            of operations. Items measured at FVPTL include financial liabilities convertible to equity.
                                            Transaction costs are expensed in the consolidated statements of operations.
●
Amortized cost - This
                                            category includes the accounts payable and accrued liabilities, customer deposits, lease
                                            liabilities, and debt, all of which are recognized at amortized cost.
●
Fair value option –
                                            Under the Fair Value Option Subsections of ASC Subtopic 825-10, Financial Instruments –
                                            there is an irrevocable option to report certain financial assets and financial liabilities
                                            at fair value on an instrument-by-instrument basis, with changes in fair value reported in
                                            the statement of operations. Any changes in the fair value of liabilities resulting from
                                            changes in instrument-specific credit risk are reported in other comprehensive income. The
                                            change to fair value of financial liabilities and interest accrued are presented as separate
                                            line items.
F-
40
3.
SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)
j)
Financial instruments (continued)
Derivative financial instruments
The Company evaluates its financial
instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The terms of warrants
issued by the Company are reviewed to determine whether they contain terms that result in the warrants being classified as derivative
liabilities for accounting purposes. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value and then is revalued at each reporting date, with changes in fair value reported in the consolidated
statements of operations. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency
risks.
Other equity-linked instruments
Other equity linked securities include
warrants, convertible debt and SAFEs. The Company relies on the guidance provided by ASC 480 - Distinguishing Liabilities from Equity,
to classify certain redeemable and/or convertible equity-linked instruments. The Company first determines whether a financial instrument
should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily
redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or
may settle by issuing a variable number of its equity shares. Once the Company determines that a financial instrument should not be classified
as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity
section of the consolidated balance sheets. The Company will determine temporary equity classification if the redemption of the financial
instrument is outside the control of the Company (i.e., at the option of the holder). Otherwise, the Company accounts for the financial
instrument as permanent equity. The Company records its financial instruments classified as liability, temporary equity or permanent
equity at issuance at the fair value, or cash received. The Company records its financial instruments classified as liabilities at their
fair value at each subsequent measurement date. The changes in fair value of these financial instruments are recorded as other expense/income.
Warrants
For issued or modified warrants that
meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital
at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are
required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes
in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
F-
41
3.
SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)
j)
Financial instruments (continued)
Warrants
(continued)
The Company accounts for warrants
as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable
authoritative guidance in Financial Accounting Standards Board Accounting Standards Codification ASC 480 - Distinguishing Liabilities
from Equity ("ASC 480") and ASC 815 - Derivatives and Hedging ("ASC 815"). The assessment considers whether the
warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether
the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the
Company's own common shares and whether the warrant holders could potentially require "net cash settlement" in a circumstance
outside of the Company's control, among other conditions for equity classification. This assessment, which requires the use of
professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants
are outstanding.
For financial liabilities issued with
detachable share purchase warrant, at inception, the proceeds from the issuance of the financial instruments were allocated between the
host instrument and the share purchase warrants based on the residual method.
Convertible Debt
Upon the issuance of convertible
debt, including convertible promissory notes, the Company evaluates embedded conversion features within convertible debt to determine
whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value
with changes in fair value recorded in the combined consolidated statements of operations.
The equity component, if any,
is treated as a discount on the liability component of the convertible debt, which is amortized over the term of the convertible debt
using the effective interest rate method. When it has been determined an instrument does not have an equity component, the Company may
elect to account for the instrument at fair value with changes in fair value recorded in the combined consolidated statements of operations,
except with respect to changes in value caused by changes in the Company's own credit risk.
SAFEs
The Company accounts for a SAFE
as a liability at fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement
at each balance sheet date until a triggering event, equity financing or a liquidity/dissolution occurs, and any change in fair value
is recognized in the Company's statements of operations.
F-
42
3.
SIGNIFICANT ACCOUNTING POLICIES
                                            (continued)
k)
Revenue recognition
Revenues are recognized when control
of the promised goods or services are transferred to a customer in an amount that reflects the consideration that the Company expects
to receive in exchange for those services. The Company applies the following five steps in order to determine the appropriate amount
of revenue to be recognized as it fulfills its obligations under each of its arrangements:
●
identify
                                            the contract with a customer,
●
identify the performance
                                            obligations in the contract,
●
determine the transaction
                                            price,
●
allocate the transaction
                                            price to performance obligations in the contract, and
●
recognize revenue as
                                            the performance obligation is satisfied.
For the years ended June 30, 2024,
2023 and 2022, the Company did not recognize any revenue. The Company did however receive cash deposits.
l)
Customer
                                            deposits
The Company accepts reservation of
the motorcycles that include cash deposit placed by a potential customer. The deposits serve to prioritize orders when the motorcycles
become available for delivery. Customers making deposits are not obligated to purchase motorcycle and may request return of their deposit
any time up. The Company records such advance deposits as a liability and defers the related revenue recognition until delivery of the
motorcycle occurs.
m)
Government
                                            grants
Government grants are recognized when
the Company has reasonable assurance that it has complied with the relevant conditions of the grant and that it will be received. The
Company recognizes the grants that compensate the Company for expenses incurred against the financial statement line item that it is
intended to compensate.
n)
Impairment
                                            of long-lived assets
The Company assesses long-lived assets
for impairment in accordance with the provisions of Financial Accounting Standards Board ASC 360 - Property, Plant and Equipment. Long-lived
assets (asset group), such as property and equipment as well as intangible assets subject to amortization, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount
of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use
and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the carrying value
of the asset and its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow
models, quoted market value, as considered necessary.
The Company ceased the use of the
Surrey manufacturing facility lease on December 14, 2022 and recognized an impairment loss on the right-of-use asset and construction
work in progress equal to its carrying value of $8,997,858 and $249,971 respectively (Note 17) in the statements of operations for the
second quarter ended December 31, 2022.
F-
43
3.
SIGNIFICANT
                                            ACCOUNTING POLICIES (continued)
n)
Impairment of long-lived assets
                                            (continued)
On January 3, 2023, the Company subleased
its office and operating premises at 708 Powell Street ("708 Powell") to a third party for the remaining term of the lease.
The sublease arrangement triggered an impairment assessment of the right-of-use asset of $175,397 and leasehold improvements of $48,050,
and, as a result, the Company recorded an asset impairment totalling $223,447 (Note 17) in the statements of operations for the third
quarter ended March 31, 2023.
On April 26, 2024, the Company entered
into a release agreement with landlord of 708 Powell Street to terminate the lease, settle the amount owing and release Damon of all
further obligation and right to the leased property. As a result, the Company recorded a net gain on release of lease obligation of $42,297
(Note 18) in the statements of operations for the year ended June 30, 2024.
o)
Loss
                                            per share
Basic loss per share is computed by
dividing the net loss, less accrued dividends on any outstanding preferred stock, by the weighted average number of common shares outstanding
for the period. Diluted loss per share calculations reflects the assumed exercise of all dilutive employee stock options and warrants
and the conversion of any outstanding convertible preferred shares or notes payable that are-in-the-money, applying the as-if-converted
method.
The preferred shares meet the definition
of a participating security, and the two-class method is required. For any periods in which earnings are recognized, the earnings will
be allocated between the common shares and the preferred shares on a six-to-one basis. For any periods in which losses are recognized,
no effect is given to the preferred shares as they do not contractually participate in the losses of the Company.
For the years ended June 30, 2024,
2023 and 2022, the Company's basic loss per share is computed using the two-class method, and the Company's diluted loss
per share is computed using the more dilutive of the treasury stock method or two-class method.
When the Company is in a loss position,
all potential share issuances on the exercise of stock options or warrants and the conversion of any preferred shares or convertible
notes payable are anti-dilutive and the diluted loss per share is the same as the basic loss per share. Potentially dilutive items outstanding
as of June 30, 2024 and 2023 include preferred shares, stock options, SAFE, convertible notes and share purchase warrants.
The following table summarizes the
number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the years
ended June 30, 2024 and 2023:
June 30,
2024
June 30,
2023
Preferred shares
35,111,034
27,809,460
Stock options
9,253,467
10,138,537
SAFE
1,276,857
1,054,294
Convertible promissory notes
15,300,585
6,231,812
Share purchase warrants
5,658,105
950,153
66,600,048
46,184,256
F-
44
3.
SIGNIFICANT ACCOUNTING POLICIES
                                            (continued)
p)
Research and development
Research and development costs that
do not meet the criteria for capitalization are expensed as incurred. Research and development expenses include compensation, employee
benefits, and stock-based compensation for technology developers and product management employees as well as fees paid to outside consultants
and software costs for the Company's proprietary technology. The Company is eligible for government grant and tax credits. The
Company accounts for these credits as a reduction to research and development costs and will recognize these claims when it is probable that
the expense incurred qualify for the government grant claim and that the Company has complied with all the conditions
to realize the claim. Otherwise, the recognition of government grant claim would be deferred until the recognition criteria are satisfied.
q)
General
                                            and administrative
General and administrative expenses
include compensation, employee benefits, and stock-based compensation for executive management, finance administration and human resources,
facility costs (including rent), bad debt costs, professional service fees, and other general overhead costs including depreciation on
corporate assets.
r)
Sales
                                            and marketing
Costs associated with the Company's
advertising are expensed as incurred and are included in sales and marketing expenses. The advertising expenses incurred for the year
ended June 30, 2024 and 2023 are not material.
s)
Transaction
                                            costs
The Company recognized transaction
costs related to Business Combination with XTI Aerospace, and the professional fees related to the public listing for the year ended
June 30, 2024. For the year ended June 30, 2023, the Company incurred and recognized transaction costs and professional fees related
to deSPAC.
t)
Reclassifications
Certain prior period amounts in the
consolidated financial statements and notes thereto have been reclassified to conform to current period presentation. These reclassifications
did not impact the previously reported net income (loss), stockholders' equity or cash flows. The nature and impact of the reclassifications
are explained below:
●
The Company has reclassified transaction costs from general and administrative expenses to a separate line in the consolidated statements of operations in the amount of $942,187 and nil for the year ended June 30, 2023 and 2022 respectively.
●
The Company has amended the disclosure of preferred shares in Note 12 to present the number of preferred shares issued and outstanding for each issued series which was previously disclosed as a total number of preferred shares issued and outstanding.
●
The Company has made certain other reclassifications to the comparative amounts and disclosures in the notes to the consolidated financial statements to conform to current year presentation.
F-
45
3.
SIGNIFICANT ACCOUNTING POLICIES
                                            (continued)
u)
Recent accounting pronouncements
                                            not yet adopted
In July 2023, the FASB issued ASU
2023-03, "Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing
Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)", which updates codification
on how an entity would apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards should
be accounted for in accordance with Topic 718, Compensation—Stock Compensation. The effective date of this update is for fiscal
years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is currently assessing potential
impacts of ASU 2023-03 and does not expect the adoption of this guidance will have a material impact on its consolidated financial statements
and disclosures.
In November 2023, the FASB issued
ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which amends the disclosure
to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an
annual and interim basis for to enable investors to develop more decision-useful financial analyses. All public entities will be required
to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023. The Company
is currently assessing potential impacts of ASU 2023-06 and does not expect the adoption of this guidance will have a material impact
on its consolidated financial statements and disclosures as disclosed in Note 21.
In December 2023, the FASB issued
ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which amends the disclosure to address investor
requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate
reconciliation and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures.
For entities other than public business entities, the requirements will be effective for annual periods beginning after December 15,
2025. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted.
The Company is currently assessing potential impacts of ASU 2023-09 and does not expect the adoption of this guidance will have a material
impact on its consolidated financial statements and disclosures and the Company is in a loss position and not incurring any tax expenses.
v)
Adoption
                                            of recent accounting pronouncements
Effective July 1, 2021, the Company
adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which modifies
ASC 740 to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements.
Adoption of this standard did not materially affect the Company's financial statements.
F-
46
3.
SIGNIFICANT ACCOUNTING POLICIES
                                            (continued)
v)
Adoption of recent accounting
                                            pronouncements (continued)
In August 2020, the FASB issued ASU
No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"), which
simplifies an issuer's accounting for convertible instruments by reducing the number of accounting models that require separate
accounting for embedded conversion features. ASU 2020-06 also simplifies the settlement assessment that entities are required to perform
to determine whether a contract qualifies for equity classification and makes targeted improvements to the disclosures for convertible
instruments and earnings-per-share (EPS) guidance. ASU 2020-06 is effective for annual reporting periods beginning after December 15,
2023 for smaller reporting companies as defined by the SEC. Early adoption is allowed under the standard with either a modified retrospective
or full retrospective method. The Company early adopted ASU 2020-06 on July 1, 2022 using the modified retrospective method. At the date
of adoption, the ASU did not impact the Company's financial position, results of operations or cash flows. The Company elected
the fair value option to account for its convertible promissory notes that were issued as at June 30, 2023 and June 30, 2024, see note
3(j) above for the accounting policy and Note 8 for the underlying terms and required fair value disclosures.
4.
PROPERTY AND EQUIPMENT, NET
Construction
in Progress
Equipment
and leasehold
improvements
Operating
lease right-
of-use
    asset
Financing
lease right-
of-use
    asset
Total
$
$
$
$
$
Cost
Balance, June 30, 2022
249,971
1,196,720
1,871,198
259,211
3,577,100
Additions
-
4,811
9,865,904
-
9,870,715
Impairment
(249,971
)
(70,236
)
(9,378,203
)
-
(9,698,410
)
Balance, June 30, 2023
-
1,131,295
2,358,899
259,211
3,749,405
Impairment
-
-
(572,171
)
-
(572,171
)
Balance, June 30, 2024
-
1,131,295
1,786,728
259,211
3,177,234
Accumulated depreciation
Balance, June 30, 2022
-
217,000
533,371
72,436
822,807
Depreciation
-
322,710
779,091
47,865
1,149,666
Impairment
-
(22,186
)
(204,948
)
-
(227,134
)
Balance, June 30, 2023
-
517,524
1,107,514
120,301
1,745,339
Depreciation
-
256,977
542,496
46,447
845,920
Impairment
-
-
(552,445
)
-
(552,445
)
Balance, June 30, 2024
-
774,501
1,097,565
166,748
2,038,814
Carrying amount
Balance, June 30, 2023
-
613,771
1,251,385
138,910
2,004,066
Balance, June 30, 2024
-
356,794
689,163
92,463
1,138,420
F-
47
4
.
PROPERTY
                                            AND EQUIPMENT, NET (continued)
During the year ended June 30, 2024,
the Company incurred rent expense, included in general and administrative expense in the consolidated statements of operations of $542,496
(2023 – $779,091, 2022 – $309,566) which is included in the above note under depreciation.
On December 14, 2022, the Company
entered into a conditional surrender agreement for the Surrey manufacturing facility and recognized an impairment loss on the right-of-use
asset and construction work in progress equal to its carrying value of $8,997,858 and $249,971, respectively (Note 17). This amount is
included in expenses in the statements of operations for the second quarter ended December 31, 2022.
On January 3, 2023, the Company subleased
708 Powell to a third party for the remaining term of the lease. The sublease arrangement triggered impairments of the right-of-use asset
of $175,397 and leasehold improvements of $48,050, respectively (Note 17), and, as a result, the Company recorded an asset impairment
totalling $223,447 in the statements of operations for the third quarter ended March 31, 2023.
The Company signed a full surrender
agreement with the landlord and lessor of Surrey manufacturing facility ("Lessor") and the surrender agreement was effective
as of June 30, 2023. As of June 30, 2023 the carrying value of the lease liability was $8,208,714. Under this agreement, the Company
reached a final and full settlement with Lessor to fully surrender the property, settling all outstanding amount owing for a consideration
made up of cash consideration of $566,465 (CAD$749,998) payable in 7 instalments, $375,000 convertible promissory note (Note 8), forfeiture
of standby letter of credit $1,100,248 (CAD$1,469,710) and payment of GST owing for tenant improvements ($185,529). For the year ended
June 30, 2023, the Company recorded a gain of $6,167,001 (Note 18) from the final settlement and abandonment of the lease. As a result
of the asset impairment noted above, the Company recorded a net loss on termination of the Surrey manufacturing facility of $3,080,828
(Note 18) for the year ended June 30, 2023.
On April 26, 2024, the Company signed
a release of the 708 Powell lease to surrender the lease. This resulted in the Company recognising a net loss on termination of $42,297
(Note 18) in the statements of operations for the year ended June 30, 2024.
Refer to Note 11 for contingencies
related to the settlement agreement.
5.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
June 30,
2024
June 30,
2023
$
$
Accounts payable
3,172,403
3,882,928
Accrued wages
1,408,358
827,828
Accrued liabilities and other payables
1,343,360
2,395,525
5,924,121
7,106,281
As at June 30, 2024, $220,526 (June
30, 2023 - $458,209) was related to severance and included in accrued wages.
F-
48
5.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
                                            (continued)
Included in accrued liabilities and
other payables is amount owing for the surrender and settlement of lease of Surrey manufacturing facility (Note 6) of $237,452 as of
June 30, 2024 (June 30, 2023 - $566,465). On April 29, 2024 the Company requested payment deferment of the instalment payment due on
March 1, 2024 and May 1, 2024 respectively (Note 18) to July 1, 2024. On June 6, 2024, the Lessor agreed to further defer the payments
due on July 1, 2024 to be paid on or before September 30, 2024.
On March 26, 2024, the Company entered
into a Settlement of Debt agreement to settle the amount owing for directors' fees and consulting fees of $55,724 and $32,667,
respectively included in accrued liability amount above by issuing convertible promissory notes in the amount of $88,391 (Note 8) and
32,302 common share purchase warrants (Note 9) to the debtholders in full settlement of the amount owing. The Company analyzed the settlement
as an extinguishment and compared the net carrying value of the debt being extinguished to the fair value of the convertible promissory
notes and share purchase warrants issued and accounted for the loss on settlement of the debt (Note 8) in the statements of operations.
On May 1, 2024, the Company entered
into a Settlement of Debt agreement to settle the directors' fees owing to former directors of $76,228 by issuing convertible promissory
notes with aggregate value of $76,228 and 27,857 common share purchase warrants (Note 9) to the debtholders in full settlement of the
amount owing. The Company analyzed the settlement as an extinguishment and compared the net carrying value of the debt being extinguished
to the fair value of the convertible promissory notes and share purchase warrants issued and accounted for the loss on settlement of
the debt (Note 8) in the statements of operations.
6.
LEASES
Operating leases
On September 1, 2019, the Company
entered into a lease for its office and operating premises at 708 Powell Street, Vancouver, British Columbia, Canada for a period of
five years. The incremental borrowing rate was estimated to be 12% and the remaining lease term as at June 30, 2023 is 1.2 years. On
January 3, 2023, the Company subleased 708 Powell to a third party for the remaining term of the lease. Under the sublease arrangement,
the Company is not relieved of its primary obligation under the headlease, therefore, the headlease and sublease is accounted separately.
The sublease triggers an impairment assessment of the headlease and as a result, the Company recorded an asset impairment of $175,397
(Note 4) and leasehold improvements of $48,050, and, as a result, the Company recorded an asset impairment totalling $223,447 (Note 17)
in the statements of operations for the year ended June 30, 2023. Following the impairment assessment, the headlease continued to be
recognized as a single lease cost but will no longer be recognized on a straight-line basis. The sublease is recorded as an operating
lease and the Company recorded rental income on the operating lease for the year ended June 30, 2024 of $195,821 (2023 - $44,436, 2022
- nil). Subsequently, on April 26, 2024, the Company signed a release of the 708 Powell lease to surrender the lease and recorded a net
loss on termination of $42,297 (Note 18) in the statements of operations for the year ended June 30, 2024.
On July 1, 2021, the Company entered
into a two-year lease agreement on a 3,360 square foot office and warehouse facility located in San Rafael, California, USA with a commencement
date of August 1, 2021. The incremental borrowing rate was estimated to be 12% and this lease has lapse as at June 30, 2024.
On July 5, 2021, the Company began
its fixturing period on a 15,707 square foot office facility in Vancouver, British Columbia, Canada with a lease commencement date of
September 1, 2021. The incremental borrowing rate was estimated to be 12% and the remaining term on this sublease as at June 30, 2024
is 1.9 years.
F-
49
6.
LEASES (continued)
Operating leases
(continued)
On July 15, 2021, the Company entered
into a 10-year lease agreement on a 109,820 square foot manufacturing plant in Surrey, British Columbia, Canada ("Surrey manufacturing
facility") and the incremental borrowing rate was estimated to be 14.2%. In the agreement, the Company has two (2) options to renew
the Lease for a period of five (5) years each, but the renewal terms were not incorporated in capitalization of right-of-use asset and
lease liability as the probability of the Company renewing the lease is very low. As part of the lease agreement, the Company and the
Lessor mutually agreed for the Lessor to perform lessor-owned Tenant Improvements on the property which was capitalized as part of the
right-of-use asset upon the lease commencement date. On July 15, 2021 the Company amended the termination right of the lease agreement
giving the tenant the sole discretion to terminate the lease at any time after the 7
th
year of the lease, revising the non-cancellable
term of the lease to 7-years. On September 29, 2022, the Lessor delivered notice of possession to allow the Company to begin fixturing.
On December 14, 2022, the Company
entered into conditional surrender of the Lease agreement to surrender the leased property due to change in corporate direction but does
not release the Company of the lease obligation. As a result, the Company impaired the right-of-use assets to its $nil recoverable amount
and recorded an asset impairment of $8,997,858 (Note 17) for the year ended June 30, 2023.
The Company signed a full surrender
agreement with the Lessor and the surrender agreement was effective as at June 30, 2023. As at June 30, 2023 the carrying value of the
lease liability was $8,208,714 (Note 18). Under this agreement, the Company reached a final and full settlement with Lessor to fully
surrender the property, settling all outstanding amount owing for a consideration made up of cash consideration of $566,465 (CAD$749,998)
payable in 7 instalments, $375,000 convertible promissory notes (Note 8), forfeiture of standby letter of credit $1,100,248 (CAD$1,469,710)
and payment of GST owing for tenant improvements ($185,529). As a result, the Company recorded a gain of $6,167,001 (Note 18) from the
final settlement and abandonment of the lease for the year ended June 30, 2023.
On September 12, 2022, the Company
entered into a two year and four months lease agreement on a 18,110 square foot office and warehouse facility located in San Rafael,
California, USA with a commencement date of October 1, 2022. The incremental borrowing rate was estimated to be 12% and the remaining
lease term as at June 30, 2024 is 0.6 year.
Finance leases
On June 1, 2021, the Company entered
into a lease for camera equipment for a period of 36 months. The incremental borrowing rate was estimated to be 12% and the lease has
lapse as at June 30, 2024.
On June 22, 2021, the Company entered
into a lease for a vehicle for a period of 60 months. The incremental borrowing rate was estimated to be 4.89% and the remaining lease
term as at June 30, 2024 is 1.9 years.
F-
50
6.
LEASES (continued)
Presentation
The lease liability in connection
with operating and finance leases are included in lease liabilities and current portion of lease liabilities on the consolidated balance
sheets as follows:
Operating
lease
Finance
leases
June 30,
2024
$
$
$
Non-current portion of lease liabilities
235,492
177,403
412,895
Current portion of lease liabilities
443,519
7,141
450,660
Total lease liabilities
679,011
184,544
863,555
Operating
lease
Finance
leases
June 30,
2023
$
$
$
Non-current portion of lease liabilities
621,325
190,774
812,099
Current portion of lease liabilities
740,486
12,363
752,849
Total lease liabilities
1,361,811
203,137
1,564,948
The right-of-use assets in connection
with leases are included under property and equipment on the consolidated balance sheets and are separately disclosed in Note 4.
The following lease costs are
included in the consolidated statements of operations:
Year
    ended June 30,
2024
2023
2022
$
$
$
Finance
    lease costs:
Amortization
    of right-of-use assets
46,447
47,868
58,683
Interest
    on lease liability
9,499
10,606
12,435
Operating
    lease costs
587,677
506,592
476,357
Rental
    Income
(152,729)
(44,436)
-
Total
    lease costs
490,894
520,630
547,475
F-
51
6.
LEASES (continued)
The future payments due under operating
and finance leases as at June 30, 2024 is as follows:
Operating
lease
Finance
leases
Total
$
$
$
Undiscounted lease payments:
2025
490,963
15,942
506,905
2026
247,528
185,159
432,687
Total undiscounted lease payments
738,491
201,101
939,592
Discount
(59,480
)
(16,557
)
(76,037
)
Lease liabilities
679,011
184,544
863,555
7.
DEBT
SR&ED financing
Promissory note
Senior secured promissory note
Total
$
$
$
$
Balance, July 1, 2022
-
-
-
-
Funds advanced
1,152,413
728,332
-
1,880,745
Interest accrued, net of capitalized interest paid
133,649
5,990
-
139,639
Deferred financing fee
(11,524
)
-
-
(11,524
)
Accretion
11,058
-
-
11,058
Foreign exchange adjustment
(33,784
)
27,391
-
(6,393
)
Repayment of principal
(155,975
)
-
-
(155,975
)
Balance, June 30, 2023
1,095,837
761,713
-
1,857,550
Promissory notes issued as settlement and payment of professional
    fees owing
-
542,753
-
542,753
Funds advanced
-
-
550,000
550,000
Foreign exchange adjustment
(45,612
)
(14,030
)
-
(59,642
)
Interest paid, net of interest capitalized
(133,686
)
33,658
603
(99,425
)
Repayment of principal
(916,539
)
-
-
(916,539
)
Debt settled via issuance of convertible
    promissory notes and common share purchase warrants (Note 8)
-
(775,208
)
-
(775,208
)
Balance, June 30, 2024
-
548,886
550,603
1,099,489
SR&ED financing
The Company entered into a secured
Scientific Research and Experimental Development ("SR&ED") loan agreement dated December 20, 2019 for SR&ED financing.
The SR&ED loan accrues interest at a rate of 13% per annum, requires a 1% advance fee for each drawdown, and matures twelve months
after the fiscal year in which the advance was made. Due to the delays caused by the Canada Revenue Agency ("CRA") audit
process, the maturity date has been extended from September 30, 2023 to November 30, 2023.
F-
52
7
.
DEBT
                                            (continued)
SR&ED financing
(continued)
The Company's SR&ED loan
agreement was secured against future SR&ED tax credit refunds expected to be received from year-end tax returns for 2022 submitted
to CRA. On October 26, 2023, the Company received its 2022 SR&ED tax credit refund amount of $1,107,464 (CAD$1,466,282 made up of
CAD$1,403,514 in investment tax credit refund and CAD$62,768 refund interest). Following the refund of the tax credit, the Company repaid
in full the SR&ED loan and the accrued interest. In addition, on December 15, 2023, the Company received 2023 SR&ED tax credit
refund of $1,065,756 (CAD$1,461,087).
Promissory note
On March 13, 2023, the Company issued
an unsecured promissory note to arms-length parties with principal amount of $728,332 (CAD$1,000,000). The promissory note accrued simple
interest of 18% per annum, payable in arrears quarterly. Any outstanding principal amount and any accrued and unpaid interest then outstanding
is due and payable on the earlier of (i) the first anniversary of the issuance date; or (ii) the date of closing of a transaction effected
by the Company in which the Company issues and sells equity securities, with the principal purpose of raising capital, for aggregate
gross proceeds of at least $10,000,000.
On March 12, 2024, the Company entered
into a Settlement of Debt agreement to settle the outstanding principal amount of CAD$1,000,000 and the interest owing of CAD$44,754
by issuing convertible promissory notes with an aggregate principal amount of $775,208 (Note 8) and 283,294 common share purchase warrants
(Note 9). The Company analyzed the settlement as an extinguishment and compared the net carrying value of the debt being extinguished
to the fair value of the convertible promissory notes and share purchase warrants issued and accounted for the loss on settlement of
the debt (Note 8) in the statements of operations.
On April 16, 2024, the Company signed
an agreement to issue as payment and settlement of professional fees owing, a promissory note in the aggregate amount of $542,753 with
interest rate at 5.5% per annum in favour of Wilson Sonsini Goodrich & Rosati Professional Corporation. All unpaid principal, together
with any then unpaid and accrued interest and other amounts payable hereunder shall be due and payable on the earliest of (i) September
1, 2024; (ii) the closing of a Debt Financing or Equity Financing; (iii) the closing of a Change of Control transaction; (iv) the Company
becomes cash flow positive and is in a position to make payment on the outstanding invoices; or (v) upon the occurrence of an Event of
Default. If all unpaid principal and accrued interest shall not be paid when otherwise due, the interest rate per annum on the note shall
increase from 5.5% per annum to 7% per annum.
Senior secured promissory note
On June 26, 2024, the Company issued
senior secured promissory note ("Secured Note") in the aggregate amount of $550,000 as of June 30, 2024 (up to an aggregate
principal amount of $1,000,000) with interest rate at 10.0% per annum in favour of Grafiti Holding Inc. All unpaid principal, together
with any then unpaid and accrued interest and other amounts payable hereunder shall be due and payable on the earliest of (i) December
31, 2024; (ii) upon the occurrence of an Event of Default; (iii) within three Business Days (as defined in the BCA) following termination
of the BCA by Borrower or Lender pursuant to Section 9.1(b) of the BCA or by Lender pursuant to Section 9.1(d) of the BCA. The Secured
Note is secured by substantially all of the assets of the Company.
The weighted average interest rate
on the debt is 7.8% as of June 30, 2024 (2023 – 14.9%).
F-
53
8.
CONVERTIBLE NOTES
Amount
$
Balance, July 1, 2022
-
Funds advanced
11,220,000
Convertible note issued in settlement of lease obligation
    (Note 6)
375,000
Warrant bifurcated (Note 9)
(254,000
)
Interest accrued
512,183
Changes in fair value of financial
    liabilities
2,874,000
Balance, June 30, 2023
14,727,183
Funds advanced
11,549,945
Convertible note issued for settlement of debt (see below)
1,308,441
Warrant bifurcated classified as liability (Note 9)
(1,086,240
)
Warrant bifurcated classified as equity
(674,034
)
Interest accrued, net of capitalized interest paid
1,793,574
Changes in fair value of financial
    liabilities
13,011,887
Balance, June 30, 2024
40,630,756
Between October and November 2022,
the Company issued three convertible promissory notes ("Tranche 1") to arms-length parties with an aggregate principal amount
of $5,700,000 at valuation cap of $350,000,000 and interest rate of 8% per annum, payable in arrears on July 1, 2023 and on the maturity
date, June 30, 2024.
On April 25, 2023, the Tranche 1 convertible
notes holder with aggregate principal amount of $700,000 has its terms amended to revise the valuation cap from $350,000,000 to $125,000,000
and revise the interest rate from 8% per annum to 12% per annum, payable in arrears on October 1, 2023. Revised date of October 1, 2023
resulted in deferral of interest payable date by 3 months. The amendment of Tranche 1 on April 25, 2023 was determined to be a modification
of a financial liability and the changes in fair value before and after modification was recorded to the statements of operations.
Between January to February 2023,
the Company issued six convertible promissory notes ("Tranche 2") to arms-length parties with an aggregate principal amount
of $1,020,000 and $100,000 at valuation cap of $150,000,000 and $125,000,000 respectively, with interest rate of 12% per annum, payable
in arrears on July 1, 2023 and the maturity date, June 30, 2024. The Tranche 2 convertible notes interest of $51,784 due on July 1, 2023
was not paid as of the date of this report and the Company is in negotiation to include the interest due into the investment amount for
conversion on closing.
Between April to May 2023, the Company
issued four convertible promissory notes ("Tranche 3") to arms-length parties with an aggregate principal amount of $1,900,000
at valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on October 1, 2023 and on the maturity date,
June 30, 2024.
On June 16, 2023, the Company issued
five convertible promissory notes ("Tranche 4") to arms-length parties with an aggregate principal amount of $2,500,000 at
valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on the maturity date, June 15, 2024. Any Principal
which is not paid when due shall bear interest at the rate of the lesser of (i) 16% per annum and (ii) the maximum amount permitted by
the applicable law from the due date thereof until the same is paid. Tranche 4 convertible promissory notes holders were also issued
950,153 common share purchase warrants (Note 9) to subscribe for, and purchase of the Company common shares at the exercise price equal
to the quotient of the valuation cap of $125,000,000 and the diluted capitalization at closing date.
F-
54
8
.
CONVERTIBLE
                                            NOTES (continued)
On June 30, 2023, as part of the lease
settlement (Note 6), the Company issued $375,000 convertible promissory notes (("Tranche 5") to the Lessor as part of the
consideration to fully surrender the manufacturing facility lease (Note 18). The note is issued at valuation cap of $125,000,000 and
interest rate of 12% per annum, payable in arrears on the maturity date, June 30, 2024.
For the year ended June 30, 2024,
the Company issued convertible promissory notes (Tranches 6 to 11, Tranches 14 to 16, and Tranche 18) to arms-length parties with an
aggregate principal amount of $11,549,945 at valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on
the maturity date. For details of the terms and conditions of these Tranches, see table below.
On March 12, 2024, as part of the
Settlement of Debt, the Company issued $775,208 convertible promissory notes ("Tranche 12") to the promissory notes (Note
7) holder in full settlement of the debt owing. The note is issued at a valuation cap of $125,000,000 and interest rate of 12% per annum,
payable in arrears on the maturity date, March 11, 2025. As part of the settlement, the Company also issued 283,294 common share purchase
warrants to subscribe for, and purchase of the Company common shares. The Company analyzed the settlement as an extinguishment and compared
the net carrying value of the debt being extinguished to the fair value of the convertible promissory notes and share purchase warrants
issued and accounted for the loss on settlement of the debt (see table below) in the statements of operations.
On March 26, 2024, the Company entered
into a Settlement of Debt agreement to settle the amount owing for directors' fees and consulting fees of $55,724 and $32,667,
respectively (Note 5) by issuing convertible promissory notes in the amount of $88,391 ("Tranche 13") and 32,302 common share
purchase warrants (Note 9) to the debtholders in full settlement of the amount owing. The note is issued at a valuation cap of $125,000,000
and interest rate of 12% per annum, payable in arrears on the maturity date, March 25, 2025. The Company analyzed the settlement as an
extinguishment and compared the net carrying value of the debt being extinguished to the fair value of the convertible promissory notes
and share purchase warrants issued and accounted for the loss on settlement of the debt (see table below) in the statements of operations.
On May 1, 2024, the Company entered
into a Settlement of Debt agreement to settle the directors' fees owing to former directors of $76,228 by issuing convertible promissory
notes with aggregate value of $76,228 ("Tranche 17"). The note is issued at valuation cap of $125,000,000 and interest rate
of 12% per annum, payable in arrears on the maturity date, April 30, 2025. The Company also issued 27,857 common share purchase warrants
to the debt holder to subscribe for, and purchase of the Company common shares. The Company analyzed the settlement as an extinguishment
and compared the net carrying value of the debt being extinguished to the fair value of the convertible promissory notes and share purchase
warrants issued and accounted for the loss on settlement of the debt (see table below) in the statements of operations.
For details of the terms and conditions
of the common share purchase warrants issued, please refer to Note 9.
F-
55
8
.
CONVERTIBLE
                                            NOTES (continued)
At inception, the fair value of the
convertible notes issued with detachable share purchase warrants were determined and compared to the carrying value of the debt settled.
The loss on debt settlement for the year ended June 30, 2024 is accounted in the statements of operations as summarized below:
Debt
settled
Fair value of convertible notes issued
Fair value of warrants issued (Note
    9)
Loss on
debt
settlement
$
$
$
$
Convertible note issued for settlement of Promissory Note (Note 7)
775,208
1,078,534
343,763
647,089
Convertible note issued for settlement of
    debt (Note 5)
88,391
122,425
39,197
73,231
Convertible note issued for settlement
    of debt (Note 5)
76,228
107,482
33,803
65,057
Total
939,827
1,308,441
416,763
785,377
On June 15, 2024 and June 26, 2024,
the Company and the convertible promissory note holders entered into a Letter of Agreement amending the maturity of the notes, June 15,
2024 and June 30, 2024, respectively, to mature on September 30, 2024. As such, all the principal and interest payable in arrears is
due on the new maturity date, September 30, 2024.
F-
56
8
.
CONVERTIBLE
                                            NOTES (continued)
Summary of the convertible notes issued
and their key terms are as follows:
Tranche
Date of issuance
Amount issued
Valuation cap
Interest rate
Interest due date
Maturity date
$
$' million
%
Tranche 1
October to November 2022
5,700,000
125
(1)
12
%
(1)
October 1, 2023
(1)(2)
September 30, 2024
(7)
Tranche 2
January to February 2023
1,020,000
150
12
%
July 1, 2023
(2)
September 30, 2024
(7)
February 2023
100,000
125
12
%
July 1, 2023
(2)
September 30, 2024
(7)
Tranche 3
April to May 2023
1,900,000
125
12
%
October 1, 2023
(2)
September 30, 2024
(7)
Tranche 4
June 16, 2023
2,500,000
125
12
%
June 15, 2024
(3)(4)
September 30, 2024
(6)
Tranche 5
June 30, 2023
375,000
125
12
%
June 29, 2024
September 30, 2024
(7)
Balance, June 30, 2023
11,595,000
Tranche 6
August 10, 2023
1,025,000
125
12
%
June 15, 2024
(3)(4)
September 30, 2024
(6)
Tranche 7
September 13, 2023
1,020,000
125
12
%
June 15, 2024
(3)(4)
September 30, 2024
(6)
Tranche 8
September 26, 2023
2,705,000
125
12
%
June 15, 2024
(3)(4)
September 30, 2024
(6)
Tranche 9
September 30, 2023
200,000
125
12
%
September 29, 2024
(3)(4)
September 29, 2024
Tranche 10
October 26, 2023
4,275,000
125
12
%
June 15, 2024
(3)(4)
September 30, 2024
(6)
Tranche 11
December 15, 2023
350,000
125
12
%
June 15, 2024
(3)(4)
September 30, 2024
(6)
Tranche 12
March 12, 2024
775,208
125
12
%
March 11, 2025
(3)(5)
March 11, 2025
Tranche 13
March 26, 2024
88,391
125
12
%
March 25, 2025
(3)(5)
March 25, 2025
Tranche 14
April 5, 2024
304,945
125
12
%
June 15, 2024
(3)(4)
September 30, 2024
(6)
Tranche 15
April 15, 2024
1,500,000
125
12
%
June 16, 2024
(3)(4)
September 30, 2024
(6)
Tranche 16
April 26, 2024
150,000
125
12
%
June 15, 2024
(3)(4)
September 30, 2024
(6)
Tranche 17
May 1, 2024
76,228
125
12
%
April 30, 2025
(3)(5)
April 30, 2025
Tranche 18
May 29, 2024
20,000
125
12
%
May 28, 2025
(3)(5)
May 28, 2025
Balance, June 30, 2024
24,084,772
Note 1 - On April 25, 2023, the Tranche
1 convertible notes with aggregate principal amount of $700,000 has its terms amended to revise the valuation cap from $350,000,000 to
$125,000,000 and revise the interest rate from 8% per annum to 12% per annum, payable in arrears on October 1, 2023. On October 11, 2023,
the convertible notes holder with aggregate principal amount of $5,000,000 had its terms amended to revise the valuation cap from $350,000,000
to $125,000,000 and the interest rate revised from 8% per annum to 12% per annum, payable in arrears on October 1, 2023.
Note 2 - The Company negotiated to
defer payments of convertible debt interest and include the interest amount into the investment amount for conversion on closing date,
June 30, 2024. The agreement for the deferment of the interest due on July 1, 2023 for Tranche 2 of $29,264, and on October 1, 2023 for
Tranche 1 and Tranche 3 of $76,438 and $100,537, respectively.
Note 3 - Any Principal which is not
paid when due shall bear interest at the rate of the lesser of (i) 16% per annum and (ii) the maximum amount permitted by the applicable
law from the due date thereof until the same is paid.
Note 4 - Convertible promissory notes
holders were also issued common share purchase warrants (Note 9) to subscribe for, and purchase of the Company common shares at the exercise
price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization at closing date.
Note 5 - Convertible promissory notes
holders were also issued common share purchase warrants (Note 9) to subscribe for, and purchase of the Company common shares at the exercise
price of $2.7364 per share.
Note 6 - On June 15, 2024, the Company
and the convertible promissory note holders entered into a Letter of Agreement amending the maturity of the notes, June 15, 2024, to
mature on September 30, 2024.
Note 7 - On June 26, 2024, the Company
and the convertible promissory note holders entered into a Letter of Agreement amending the maturity of the notes, June 30, 2024, to
mature on September 30, 2024.
The Company may not prepay the principal
amount and the accrued and unpaid interest in whole or in part without the written consent of the convertible noteholders. The convertible
notes will rank pari passu in right of payment with respect to each other, and all payment to each of the convertible noteholders will
be made pro rata among the convertible noteholders based upon the aggregate outstanding principal amount of the convertible promissory
note immediately before any such payment.
F-
57
8
.
CONVERTIBLE
                                            NOTES (continued)
Conversion events
In the event of
a
change of control, the convertible noteholders would have the right to either:
●
convert
                                            principal and unpaid interest into shares at a conversion price which is lower of (i) the
                                            respective valuation cap (for Tranches 4 through 18, the valuation cap is reduced to $93,750,000
                                            if event of default occurs prior to conversion) divided by the diluted capitalization and
                                            (ii) discounted conversion price of 75% (with 2.5% increase in discount every 6 months from
                                            issuance date for Tranches 1 through 2) multiplied by the price per share ascribed to the
                                            common share in the change of control event; or
●
require
                                            the Company to repurchase their convertible notes in cash, in whole or in part, at a price
                                            equal to 100% of the principal amount of the convertible notes plus accrued and unpaid interest
                                            (for Tranches 1 through 3 and at 25% redemption premium for Tranches 4 through 18) thereon
                                            to the date of repurchase.
In
the event of a qualified financing, which refers to the next transaction after the issue date and before the maturity date in which the
Company issues and sells equity securities, with the principal purpose of raising capital (for Tranches 1 through 3) or a
Public
Company event, convertible notes include automatic mandatory conversion features resulting in the receipt of shares at a conversion price
which is lower of (i) the valuation cap (for Tranches 4 through 18), the cap price further reduced to $93,750,000 if event of default
occurs prior to conversion) divided by diluted capitalization immediately prior to the event of qualified financing or Public Company
event and (ii) the discounted conversion price of 25% (with 2.5% increase in discount every 6 months from issuance date for Tranches
1 through 3) applied to the lowest price paid/offered for equity security subject to a cap price of $125,000,000 multiplied by a price
per share of the qualified financing or Public Company event.
Diluted capitalization refers to aggregate
number of outstanding common shares immediately prior to the closing or occurrence of a qualified financing, change of control, or Public
Company event, as applicable.
In the event that the convertible
notes are not converted prior to maturity date, the Company is obligated to settle the convertible notes by paying in cash equivalent
to 100% of the convertible notes principal amount and the accrued and unpaid interest.
As the conversion features were not
required to be bifurcated and as none of the components of convertible note were required to be classified under equity, the Company
made the election to measure the convertible notes subsequently at fair value through profit and loss.
At inception, the proceeds from the
convertible notes issued with detachable share purchase warrants for Tranches 4 to 11, Tranches 14 to 16 and Tranche 18 to were determined
to be their fair values, were allocated between the convertible notes issued with detachable share purchase warrants based on the residual
method. During the year ended June 30, 2024, the Company issued $11,549,945 of convertible notes in Tranches 6 to 11, Tranches 14 to
16 and Tranche 18. The fair value of these convertible notes of $10,463,705 was determined as discussed below and the residual amount
of $1,086,240 (Note 9) was allocated to the share purchase warrants classified as derivative liabilities.
F-
58
8
.
CONVERTIBLE
                                            NOTES (continued)
Management has determined that due
to the complexity of the various embedded features and the short life expected of the notes, it will elect the fair value option under
ASC 825-10-1 as the instruments are eligible for the fair value election under ASC 825-10. As a result, the entire convertible promissory
note is carried at fair value and the difference between the aggregate fair value and aggregate unpaid principal balance of the convertible
notes for the year ended June 30, 2024 totaling $13,011,887 (2023 – $2,874,000, 2022 – nil) are accounted as changes in fair
value of financial liabilities in the statements of operations. No amounts were recognized in other comprehensive income as the changes
in fair value due to credit risk were nominal.
During the year ended June 30, 2024,
the Company expensed $714,297 (2023 – $346,000, 2022 – nil) in transaction costs related to issuance of convertible promissory
notes in the consolidated statements of operations.
The convertible notes are valued by
management at each measurement date based on the Company's estimated enterprise value implied by the most comparable transaction
and allocating the value to each of the Company's equity-linked instruments (preferred shares, SAFE agreements, convertible promissory
notes, stock options and common shares) based on their respective characteristics and rights. In arriving at the value attributable to
each instrument, the Company applies an option pricing model. The Company's model values the preferred shares, SAFEs, convertible
promissory notes, common shares, warrants and stock options as call options on the Company's equity value with exercise prices
based on the conversion options of the respective instruments. The model used the following assumptions during the year ended June 30,
2024 and 2023, including volatility, risk free rates and management's best estimate of the expected time for the occurrence of
a conversion event as described in Note 10 below.
9.
WARRANTS AND DERIVATIVE WARRANT
                                            LIABILITIES
The Company account for common share
purchase warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. The
assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability
pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether
the warrants are indexed to the Company's own common shares. We classify derivative warrant liabilities on the balance sheet at
fair value, and changes in fair value during the periods presented in the statement of operations, which is revalued at each balance
sheet date subsequent to the initial issuance of the common share purchase warrant. For warrants that meet the criteria for equity classification,
the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.
Between August 10, 2023 to May 29,
2024, in connection with the issuance of Tranche 6 through 18 convertible promissory notes to arms-length parties (Note 8), the Company
issued common share purchase warrants to the noteholders. Similarly, each warrant is exercisable anytime for 1 common share of the Company
at an exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization on closing date. The holder
of the common share warrants can exercise the warrant either fully or partially at any time from issuance date until its expiry, 5 years
from issuance date.
F-
59
9.
WARRANTS AND DERIVATIVE WARRANT
                                            LIABILITIES (continued)
In the event there is no effective
registration statement or prospectus available for resale of shares under the warrant agreement within 180 days following the closing
of the Public Company event, the warrant holder can exercise the warrants, in whole or in part, on a cashless basis for the number of
shares computed as:
i.
the difference between the exercise price
                                            and volume-weighted average price ("VWAP") on trading day immediately preceding
                                            the date of notice of exercise provided notice is in accordance with section 2(a) of the
                                            note common share purchase agreement.
ii.
the difference between the exercise price
                                            and, at holder's option:
a.
VWAP on trading day immediately preceding
                                            the date of notice of exercise; or
b.
Bid price of the Company's common
                                            share on principal trading market on the date of notice of exercise.
iii.
the difference between the exercise price
                                            and VWAP on date of notice of exercise.
The warrant holder for tranches 4
and tranches 6 through 11 may be entitled to additional 3% shares of the unexercised part of the warrant (up to a maximum of 8%) that
may be issued for each 30-day registration statement default past the registration deadline (i.e., 180 days of Public Company event)
along with liquidated damages up to a maximum of $250,000.
The warrant holder's option
for net cash settlement (equal to Black Scholes value) in the event a fundamental transaction occurs at or before a Public Company event
and which is within the control of the Company including approved by the Company's Board. However, if the transaction is outside
the control of the Company or board, the warrant holder shall receive the same form and type of consideration as received by common stockholders
in connection with the fundamental transaction.
Fundamental transaction refers to
one or more related transactions that results in (i) merger or consolidation of the Company with another, (ii) any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or substantially all of its assets, (iii) purchase offer, tender offer or
exchange offer to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of
50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company, (iv) reclassification,
reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively
converted into or exchanged for other securities, cash or property, or (v) a stock or share purchase agreement or other business combination
with another resulting in acquisition of 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common
equity of the Company.
Liability-classified warrants
At inception, the proceeds from the
convertible notes for Tranches 6 through 11, Tranches 14 to 16 and Tranche 18 (Note 8) were allocated between the convertible notes and
the warrants based on the residual method with $1,086,240 allocated to the warrants and since the warrants did not meet the indexation
and equity classification requirements, the warrants are classified as derivative liabilities. The warrants are subsequently remeasured
at fair value and accounted as changes in fair value of derivative liabilities in the statements of operations.
F-
60
9.
WARRANTS AND DERIVATIVE WARRANT
                                            LIABILITIES (continued)
Liability-classified warrants
(continued)
Upon exercise, the holders will pay
the Company the respective exercise price for each warrant exercised in exchange for one common share of the Company and the fair value
at the date of exercise and the associated non-cash liability will be reclassified to share capital. The non-cash liability associated
with any warrants that expire unexercised will be recorded as a gain in the consolidated statements of operations. Unexercised warrants
shall be exercised automatically on a cashless basis on the termination date.
The fair value of derivative warrant
liabilities was estimated by management at year end or each measurement date based on the Company's estimated enterprise value
implied by the most comparable transaction and allocating the value to each of the Company's equity-linked instruments (preferred
shares, SAFE agreements, convertible promissory notes, stock options and common shares) based on their respective characteristics and
rights. In arriving at the value attributable to each instrument, the Company applies an option pricing model. The Company's model
values the preferred shares, SAFEs, convertible promissory notes, common shares, warrants and stock options as call options on the Company's
equity value with exercise prices based on the conversion options of the respective instruments. The model used the following assumptions
during the year ended June 30, 2024 and 2023, including volatility, risk free rates and management's best estimate of the expected
time for the occurrence of a conversion event as described in Note 10 below.
Changes in the value of the derivative
liability related to the warrants for the year ended June 30, 2024 and the year ended June 30, 2023 were as follows:
Number of warrants
Amount
#
$
Balance, July 1, 2022
-
-
Bifurcated value of warrant (Note 8)
950,153
254,000
Change in fair value of derivative
    liabilities
-
267,950
Balance, June 30, 2023
950,153
521,950
Bifurcated value of warrant (Note 8)
3,809,030
1,086,240
Change in fair value of derivative liabilities
-
4,820,562
Liability-classified warrants reclassified
    to equity-classified warrants
(4,759,183
)
(6,428,752
)
Balance, June 30, 2024
-
-
In June 2024, the Company, with the
consent of warrant holders, amended the terms of the common share purchase warrant to be indexed to the Company's equity. These
warrants are reclassified from liability-classified warrants to equity-classified warrants and recorded as a component of additional
paid-in capital.
The warrants were initially classified
as liability and elected to measure at fair value because they failed the fixed shares to fixed monetary amount test in accordance with
ASC 815 due to the provision in section 3b of the original warrants agreement whereby the warrants' exercise price shall be reduced
to lower exercise price on:
●
the issuance of new options or
                                            common share equivalents at an exercise price that is less than the warrants' exercise
                                            price immediately before such issuance; or
●
on the modification of any existing
                                            options or common share equivalents at an exercise price that is less than the warrant's
                                            exercise price immediately before such modification
F-
61
9.
WARRANTS AND DERIVATIVE WARRANT
                                            LIABILITIES (continued)
Liability-classified warrants
(continued)
Section 3b resulted
in an adjustment to the warrants exercise price on change of existing equity-linked instruments which did not meet the definition of
a down-round feature as it was based on neither the sale nor the issuance of stock or a financial instrument. Instead, it was based on
the modification of existing instruments.
Accordingly, as the adjustment pursuant
to section 3b of the warrant agreement was not a down-round feature as defined by ASU 2017-11, the warrants failed to meet the requirements
of ASC 815 of a fixed shares for fixed monetary amount and accordingly were not considered as Indexed to the Company's own stock
pursuant to ASC 815.
The Company has amended the warrant
agreements to remove section 3b. Additionally, the warrants exercise price is modified to make it fixed at $2.7364 per common share.
As a result of these changes to the warrant agreement, the warrants are eligible to pass the fixed shares for fixed monetary amount test
and considered as indexed to the Company's own stock pursuant to ASC 815 and qualify for equity classification.
Equity-classified warrants
On March 12, 2024, March 26, 2024
and May 1, 2024, in connection with the settlement of debt (Note 5 and Note 7), the Company issued Tranche 12, 13 and 17 convertible
promissory notes to arms-length parties (Note 8) and common share purchase warrants to the debt holders. At inception, these warrants
were assessed to meet the equity classification requirements and fair value of the warrants of $416,763 was recorded as a component of
additional paid-in capital.
In connection with the issuance of
Tranche 15 and Tranche 18 convertible promissory notes to arms-length parties (Note 8), the Company issued common share purchase warrants
to the noteholders. At inception, these warrants were assessed to meet the equity classification requirements and fair value of the warrants
of $674,034 was recorded as a component of additional paid-in capital.
F-
62
9.
WARRANTS AND DERIVATIVE WARRANT
                                            LIABILITIES (continued)
The following table provides
the relevant information on the outstanding warrants as of June 30, 2024:
Date of issuance
Number of warrants outstanding
Number of warrants exercisable
Exercise price
Expiry date
#
#
$
June 16, 2023
950,153
(1)
950,153
2.7364
June 15, 2028
August 10, 2023
389,559
(1)
389,559
2.7364
August 9, 2028
September 13, 2023
387,659
(1)
387,659
2.7364
September 12, 2028
September 26, 2023
1,028,057
(1)
1,028,057
2.7364
September 25, 2028
September 30, 2023
73,088
(1)
73,088
2.7364
September 29, 2028
October 26, 2023
1,624,747
(1)
1,624,747
2.7364
October 25, 2028
December 15, 2023
133,020
(1)
133,020
2.7364
December 14, 2028
April 5, 2024
115,892
(1)
115,892
2.7364
April 4, 2029
April 26, 2024
57,008
(1)
57,008
2.7364
April 25, 2029
Liability-classified warrants issued
4,759,183
4,759,183
Liability-classified warrants reclassified
    to equity-classified warrants
(4,759,183
)
(4,759,183
)
Balance of liability-classified
    warrants as of June 30, 2024
-
-
March 12, 2024
283,294
283,294
2.7364
March 11, 2029
March 26, 2024
32,302
32,302
2.7364
March 25, 2029
April 15, 2024
548,160
548,160
2.7364
April 14, 2029
May 1, 2024
27,857
27,857
2.7364
April 30, 2029
May 29, 2024
7,309
7,309
2.7364
May 28, 2029
Equity-classified warrants issued
898,922
898,922
Liability-classified warrants reclassified
    to equity-classified warrants
4,759,183
4,759,183
Balance of equity-classified
    warrants as of June 30, 2024
5,658,105
5,658,105
(1)
In June 2024, the Company, with the consent of warrant holders,
                                            amended the terms of the common share purchase warrant to be indexed to the Company's
                                            equity. As a result, these warrants are reclassified from liability-classified warrants to
                                            equity-classified warrants and recorded as a component of additional paid-in capital
F-
63
10.
FINANCIAL LIABILITY CONVERTIBLE
                                            TO EQUITY
During the year ended June 30, 2023,
the Company issued $2,005,213 Conversion of Simple Agreements for Future Equity ("SAFE") for cash. Continuity of the SAFE
transactions for the periods are as follows:
Amount
$
Balance, July 1, 2022
-
Issued
2,005,213
Foreign exchange adjustment
(45,243
)
Changes in fair value
740,030
Balance, June 30, 2023
2,700,000
Foreign exchange adjustment
(92,543
)
Changes in fair value
592,543
Balance, June
    30, 2024
3,200,000
During the year ended June 30, 2024,
the Company expensed nil (2023 – $23,009, 2022 – $17,496) in transaction costs in relation to issuance of SAFEs in the consolidated
statements of operations.
The SAFEs are recorded as a liability
measured at fair value at inception and subsequently carried at fair value with changes in fair value for June 30, 2024 of $592,543 (2023
– $740,030, 2022 – $8,935,049) recorded in the statements of operatio
ns.
The
SAFEs may be converted or paid in cash on the occurrence of the following events/transactions before the maturity date:
●
In
                                            the event of equity financing, the Company will automatically issue to the SAFE holders a
                                            number of SAFE shares equal to the quotient obtained by dividing (i) the sum of the SAFE
                                            proceeds and the return amount (which is an amount determined by applying a rate of return
                                            of 8% per annum, on a non-compounding basis, on the SAFE Proceeds as calculated from the
                                            issue date to, but excluding, the date of expiration or termination of the SAFEs) by (ii)
                                            the conversion Price.
●
In
                                            the event of liquidation, SAFE holders at their option have a right to receive either (i)
                                            cash payment equivalent to the respective SAFE proceeds or (ii) automatically receive common
                                            shares (in the case of change of control) or listed securities (in the case of a Public company
                                            event), as applicable, that is equal to the quotient obtained by dividing (i) the sum of
                                            the SAFE proceeds and the return amount (which is an amount determined by applying a rate
                                            of return of 8% per annum, on a non-compounding basis, on the SAFE Proceeds as calculated
                                            from the issue date to, but excluding, the date of expiration or termination of the SAFEs)
                                            by (ii) the liquidity price, if the SAFE holders fails to select the cash option.
●
If
                                            there is a dissolution event, the SAFE holders at their option have a right to receive either
                                            (i) cash equivalent to the respective SAFE proceeds or (ii) automatically receive common
                                            shares that is equal to the quotient obtained by dividing (i) the sum of the SAFE proceeds
                                            and the return amount (which is an amount determined by applying a rate of return of 8% per
                                            annum, on a non-compounding basis, on the SAFE proceeds as calculated from t
he issue
                                            date to, but excluding, the date of expiration or termination of the SAFEs) by (ii) the dissolution
                                            price, if the SAFE holders fails to select the cash option.
F-
64
10.
FINANCIAL LIABILITY CONVERTIBLE
                                            TO EQUITY (continued)
At maturity, the SAFE holders automatically
receive common shares of the Company that are equal to the quotient obtained by dividing (i) the sum of the SAFE proceeds and the return
amount (which is an amount determined by applying a rate of return of 8% per annum, on a non-compounding basis, on the SAFE proceeds
as calculated from the issue date to, but excluding, the date of expiration or termination of the SAFEs) by (ii) the maturity conversion
price.
The SAFEs are valued by management
at each measurement date based on the Company's estimated enterprise value implied by the most comparable transaction and allocating
the value to each of the Company's equity-linked instruments (preferred shares, SAFE agreements, convertible promissory notes,
share purchase warrants, stock options and common shares) based on their respective characteristics and rights. In arriving at the value
attributable to each instrument, the Company applies an option pricing model. The Company's model values the preferred shares,
SAFEs, common shares, and stock options as call options on the Company's equity value with exercise prices based on the conversion
options of the respective instruments.
The model used for the valuation of
convertible promissory notes, share purchase warrants and SAFEs used the following assumptions as of June 30, 2024 and June 30, 2023,
including volatility, risk free rates and management's best estimate of the expected time for the occurrence of a conversion event:
June 30,
2024
June 30,
2023
Annualized volatility
70% – 90%
70% – 90%
Expected time to liquidity
0.5 – 1.5 year
0.5 – 1.5 year
Dividend rate
0%
0%
Risk-free interest rate
5.09%
4.76 – 5.24%
During the year ended June 30, 2024
and June 30, 2023, the common share price valuation estimate used for the SAFE valuation was $3.77 and $1.92, respectively.
11.
COMMITMENTS AND CONTINGENCIES
A summary of undiscounted liabilities
and future operating commitments as at June 30, 2024 are as follows:
Total
Within
1
                                            year
2
                                            - 5
years
Greater than
5 years
$
$
$
$
Purchase obligations
1,611,548
1,469,431
142,117
-
Investment
    obligation
(1)
1,000,000
1,000,000
-
-
Total financial
    liabilities and commitments
2,611,548
2,469,431
142,117
-
(1)
The Company entered into
                                            a strategic partnership arrangement with a third-party. As part of the agreement, the Company
                                            agree to invest an aggregate amount of $1,000,000 in the third-party upon a future financing
                                            and negotiation of terms that are agreed to by both parties during the term of the agreement.
                                            As at the date of these financial statements no such arrangement has been made.
F-
65
11.
COMMITMENTS
                                            AND CONTINGENCIES (continued)
On June 30, 2023,
the Company signed a full surrender agreement with the Lessor (Note 4) of the Surrey manufacturing facility. Per the agreement, cash
consideration must be paid on or before the dates set forth in the agreement. In the event that the Company defaults on such payment
obligations, the Company will immediately have to pay the Lessor the full amount of all rent and other amounts, which would have otherwise
been payable by the Company during the term if the lease had not surrendered, less any cash consideration paid and any rent which the
Landlord recovers (or is reasonably expected to recover) from any replacement tenant(s) at the Premises over the balance of the initial
Term of the Lease. In circumstances where a replacement tenant has not yet been secured, then such rent will be estimated as of the date
of default by an appraiser, less any costs and expenses of such reletting, including brokerage fees, solicitor's fees, tenant inducements
and of costs of alterations and repairs as may be necessary to relet the premises. On April 29, 2024 the Company requested payment deferment
of the 5th and 6
th
instalment payment due on March 1, 2024 and May 1, 2024 respectively to July 1, 2024. On June 6, 2024,
the Lessor agreed to further defer the payments due on July 1, 2024 to be paid on or before September 30, 2024.
The Company met
the eligibility criteria under the Small Business Venture Capital Act (the "Act") and was registered as an Eligible Business
Corporation ("EBC") in 2018. Under the Act, the Company was approved to raise up to $10 million through the issuance of authorized
equity capital whereby the investing shareholders received up to 30% of the amount invested as a tax credit against their B.C. provincial
taxes. Under this program, should the Company be out of compliance with the Act during the required five-year investment hold period,
it would be contingently liable to repay any tax credits previously issued to investors. At the date of these financial statements, repayable
tax credits are approximately $0.9 million. Management believes the Company is compliant with all relevant terms of the Act.
12.
SHARE CAPITAL
a)
Authorized
The authorized share capital of the
Company consists of the following:
i.
An unlimited number of common shares ("common
                                            shares") without par value; and
ii.
An unlimited number of Class Seed preferred
                                            shares, Class A preferred shares and Class B preferred shares (collectively, "preferred
                                            shares") without par value, issuable in series.
b)
Issued and outstanding
i.
As at June 30, 2024, the Company had 12,324,504
                                            (June 30, 2023 – 11,829,386) common shares outstanding.
ii.
As at June 30, 2024 and June 30, 2023,
                                            the Company had 16,758,528 preferred shares outstanding.
Common shares transactions
In the year ended June 30, 2024, the
Company issued 95,380 common shares with an estimated fair value of $260,999 (CAD$345,725) to partially settle a severance agreement
recorded in fiscal 2023 with a former executive. The remaining balance outstanding of $16,271 (Note 13) is included in accounts payable
and accrued liabilities.
F-
66
12.
SHARE CAPITAL (continued)
Preferred shares transactions
Preferred shares
    series
Preferred
                                            share outstanding
#
Amount,
                                            net of share issuance cost
$
Series 1 Class Seed Preferred
926,392
961,502
Series 2 Class Seed Preferred
477,117
143,836
Series 3 Class Seed Preferred
1,802,304
441,384
Series 4 Class Seed Preferred
157,381
102,754
Series 5 Class Seed Preferred
364,324
302,498
Series 6 Class Seed Preferred
1,312,306
1,113,885
Series 1 Class A Preferred
2,512,713
13,440,769
Series 2 Class A Preferred
5,578,780
29,841,488
Series 2 Class B Preferred
3,627,211
25,241,971
16,758,528
71,590,087
During the year ended June 30, 2024
and 2023, no preferred shares were issued.
Rights and privileges of preferred shareholders
Preferred shareholders hold the option
to convert their preferred shares to common shares at any time based on a Conversion Price. The Conversion Price is initially equal to
the price of the first share issued in the preferred shares class. Thereafter the Conversion Price is symmetrically adjusted for common
share issuances to prevent anti-dilution. The anti-dilution clause maintains the relative rights of the common and preferred shareholders,
and its effect is that those relative rights remain the same immediately before and immediately after the issuance of common shares.
On any matter presented to the shareholders
of the Company for their action or consideration at any meeting of shareholders of the Company, each holder of outstanding preferred
shares is entitled to cast the number of votes equal to the number of whole common shares into which the preferred shares are convertible
as of the record date for determining shareholders entitled to vote on such matter.
The Company shall not declare, pay
or set aside any dividends on shares of any other class unless the holders of the preferred shares first receive, or simultaneously receive,
a dividend on each outstanding preferred share in an amount at least equal to the dividend received should the preferred shares be converted
to common shares as of the record date for determination of holders entitled to receive such dividend.
In the event of liquidation, dissolution
or winding up of the Company, before any payment shall be made to the holders of common shares by reason of their ownership thereof,
the holders of each series of preferred shares, shall be entitled to be paid out of the funds and assets available for distribution to
its shareholders, an amount per share equal to the greater of the original issue price for such series of preferred shares plus any dividends
declared but unpaid thereon, or such amount per share as would have been payable had all shares of such series of preferred shares been
converted into common shares.
F-
67
12.
SHARE CAPITAL (continued)
c)
Stock options
On August 30, 2017 (and amended on
June 24, 2021), the Board adopted a Stock Option Plan which provides that the Board may from time to time, in its discretion, grant to
directors, officers, employees, and consultants, non-transferable stock options to purchase common shares of the Company. As per the
terms of the Stock Option Plan, the requisite vesting period of the employees is generally four years.
The fair value of each stock option
grant is estimated on the date of grant using the Black-Scholes option pricing model. Refer to table below for additional information
regarding such assumptions.
During the year ended June 30, 2024,
the Company issued nil (2023 –721,568) stock options. The following assumptions were used in determining the fair value of options
granted during the year ended June 30, 2023:
June 30,
2023
Annualized volatility
80%
Expected life
10 years
Dividend rate
0%
Risk-free interest rate
3.10% to 3.14%%
Forfeiture rate
0%
Share exercise price/Share price estimate on date of grant
CAD $2.68
A summary of the changes in the Company's
stock options is as follows:
Stock options
Weighted average exercise price
Aggregate
                                            intrinsic value
#
CAD$
$
Outstanding, July 1, 2022
11,626,936
0.64
18,696,571
Granted
721,568
2.68
-
Expired
(955,045
)
0.49
1,485,013
Cancelled
(1,209,776
)
1.65
909,649
Exercised
(45,146
)
0.17
80,740
Outstanding, June 30, 2023
10,138,537
0.68
14,286,723
Expired
(118,375
)
1.60
192,664
Cancelled
(366,967
)
0.28
712,799
Exercised
(399,738
)
0.18
1,020,473
Outstanding, June 30, 2024
9,253,457
0.71
30,563,749
Stock options
Weighted average exercise price
Aggregate intrinsic value
#
CAD$
$
Exercisable, June 30, 2023
8,798,814
0.53
13,448,264
Exercisable, June 30, 2024
9,007,931
0.58
30,135,740
F-
68
12.
SHARE CAPITAL (continued)
c)
Stock options
                                            (continued)
The aggregate intrinsic value of stock
options is calculated as the difference between the exercise price of the stock options and the fair value of the Company's common
shares for all stock options that had exercise prices lower than the fair value of the Company's common shares. The weighted average
grant date fair value per share of stock options granted during the years ended June 30, 2024, 2023 and 2022 was nil, CAD$2.21 and CAD$2.35,
respectively.
The following table summarizes the
stock options outstanding as at June 30, 2024 and 2023:
Expiry date
Exercise price
2024
2023
CAD$
#
#
September 1, 2023
$
0.26
-
56,000
November 1, 2023
$
0.26
-
56,000
April 9, 2024
$
0.26
-
56,000
September 1, 2024
$
0.60
-
112,000
December 1, 2024
$
1.04
106,000
106,000
January 27, 2025
$
5.15
493,127
493,127
November 1, 2028
$
0.26
56,000
-
February 1, 2029
$
0.12
15,000
30,000
April 9, 2029
$
0.26
56,000
-
September 1, 2029
$
0.60
112,000
-
December 3, 2029
$
0.12
2,385,251
2,385,251
April 2, 2030
$
0.12
-
30,000
April 15, 2030
$
0.12
220,086
220,086
June 4, 2030
$
0.12
2,000
2,000
March 31, 2031
$
0.20
4,493,422
4,526,759
April 12, 2031
$
0.20
555,441
936,788
September 17, 2031
$
0.20
71,622
115,519
November 26, 2031
$
0.20
5,000
5,000
June 24, 2032
$
2.68
319,176
512,263
September 22, 2032
$
2.68
215,130
322,577
January 10, 2033
$
2.68
148,202
188,167
9,253,457
10,138,537
Weighted average
    remaining contractual life outstanding
6.1
                                            years
7.0
                                            years
During the year ended June 30, 2024,
the Company expensed $123,168 (2023 – $1,472,634, 2022 – $2,323,294) related to the vesting of stock options.
Cash received by the Company upon
the exercise of stock options during the years ended June 30, 2024, 2023 and 2022 amounted to $61,155, $5,751 and $40,946, respectively.
F-
69
13.
RELATED PARTY TRANSACTIONS
Parties are considered to be related
if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party
in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common
significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction
when there is a transfer of resources or obligations between related parties.
As at June 30, 2024, $404,426 (2023
- $852,436) was due for remuneration payable to key management and included in accrued liabilities (Note 5).
14.
RESEARCH AND DEVELOPMENT, NET
The following amounts are included
in research and development expenses for the year ended June 30, 2024, 2023 and 2022:
Year ended June 30,
2024
2023
2022
$
$
$
Salaries and wages
5,098,938
8,418,133
7,406,673
Lab supplies and materials
549,305
5,135,769
4,700,997
Contractors and consultants
53,673
1,129,714
3,655,903
Stock-based compensation
72,605
789,486
1,303,706
Rent and insurance
726,438
1,430,985
532,065
Travel, meals and entertainment
54,919
234,877
413,848
Subscriptions and dues
52,891
252,328
335,762
General expenses and others
44,168
163,282
444,652
Canadian Scientific Research
    & Development tax credits
(1)
(2,102,708
)
-
(570,291
)
Industrial Research Assistance Program
    grant funding
-
(102,825
)
(56,879
)
4,550,229
17,451,749
18,166,436
(1)
The Canadian Scientific Research &
                                            Development ("SR&ED") tax credits is accounted as a reduction to the research
                                            and development costs above is made up of 2022 SR&ED tax credit refund of $1,036,952
                                            (Note 7 – CAD$1,403,514) and 2023 SR&ED tax credit refund of $1,065,756 (CAD$1,461,087)
                                            which were received in the three months period ended December 31, 2023
F-
70
15.
GENERAL AND ADMINISTRATIVE
The following amounts are included
in general and administrative expenses for the year ended June 30, 2024, 2023 and 2022:
Year ended June 30,
2024
2023
2022
$
$
$
Salaries and wages
1,595,844
2,188,438
1,422,378
Contractors and consultants
1,283,259
1,141,072
1,343,542
Professional fees
310,725
1,067,552
914,818
Stock-based compensation
58,765
914,408
829,288
Rent and insurance
558,204
472,601
144,239
Travel, meals and entertainment
159,760
286,444
52,270
Subscriptions and dues
339,713
441,141
31,788
General expenses and others
142,690
325,776
39,927
Rental
    income
(1)
(152,729
)
(44,436
)
-
4,296,231
6,792,996
4,778,250
(1)
Rental income for the year ended June 30, 2024 is net of bad debt of $43,091 (2023
                                            and 2022 – nil)
16.
SALES AND MARKETING
The following amounts are included
in sales and marketing expenses for the year ended June 30, 2024, 2023 and 2022:
Year ended June 30,
2024
2023
2022
$
$
$
Marketing and promotion
390,305
1,273,680
2,587,198
Salaries and wages
456,216
793,209
1,270,935
Stock-based compensation
15,471
128,996
190,301
Contractors and consultants
8,500
98,889
11,861
Rent and insurance
111,739
435,517
136,977
General expenses and others
3,906
17,501
219,893
986,137
2,747,792
4,417,165
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17.
ASSET AND RIGHT-OF-USE ASSET IMPAIRMENT
The following amounts are included
in asset and right-of-use asset impairment for the year ended June 30, 2024, 2023 and 2022:
Year ended June 30,
2024
2023
2022
$
$
$
Impairment arising from sublease of 708 Powell:
- Right-of-use asset (Note 4)
-
175,397
-
- Leasehold improvements (Note 4)
-
48,050
-
-
223,447
-
Impairment arising from conditional surrender of leased
    Surrey manufacturing facility:
- Right-of-use asset (Note 4)
-
8,997,858
-
- Construction in progress (Note 4)
-
249,971
-
-
9,247,829
-
-
9,471,276
-
On December 14, 2022, the Company
entered into conditional surrender agreement to surrender the leased manufacturing plant in Surrey due to change in corporate direction.
In the agreement, the Company surrenders the leased property to the Lessor, covenants the Lessor to use commercially reasonable efforts
to find a replacement tenant for the lease property and agreed that the Lessor can draw on the standby letter of credit but did not release
the Company of its lease obligation. As a result, the Company impaired the assets to its recoverable amount, $nil and recorded an asset
impairment of $9,247,829. Subsequent to the impairment, the Company continued to negotiate for surrender of the leased property, to secure
full release from all the obligation related to the leased and settlement of all amounts owing which resulted in net loss on termination
of lease of $3,080,828 for the year ended June 30, 2023.
18.
GAIN FROM RELEASE OF LEASE OBLIGATION
On April 26, 2024, the Company entered
into an agreement with landlord of 708 Powell Street to terminate the lease, settle the amount owing and release Damon of all further
obligation and right to the leased property. As a result, the Company recorded a net gain on release of lease obligation of $42,297 in
the statements of operations for the year ended June 30, 2024.
Year
                                            ended
June
                                            30,
2024
$
Cash paid
36,582
Deposit forfeited
47,556
84,138
Amount owing forfeited (Note 5)
(76,854
)
Lease obligation released (Note 6)
(69,307
)
Net book value of right-of-use asset
    written-off (Note 4)
19,726
Net gain on termination
    of lease
(42,297
)
F-
72
18.
GAIN
                                            FROM RELEASE OF LEASE OBLIGATION (continued)
In 2023, the
Company signed a full surrender agreement with the Lessor to surrender the Surrey manufacturing facility and the surrender agreement
was effective as at June 30, 2023. Under this agreement, the Company reached a final and full settlement with the Lessor to fully surrender
the lease property, settling all outstanding amounts owing under the lease of Surrey manufacturing plant for a consideration made up
of the
following:
●
restricted
                                            cash deposit surrendered $1,100,248 (CAD$1,469,710), fully drawn as of June 30, 2023;
●
cash
                                            consideration of $566,465 (CAD$749,998) payable in 7 instalments over 1 year per table below;
●
issuance
                                            of $375,000 Tranche 5 convertible promissory notes (Note 8); and
●
GST
                                            owing for tenant improvements.
The
Company has made all payments in Canadian dollars as per the payment schedule below:
Consideration amount
Payment date
US$
CAD$
1
st
payment
75,527
100,000
On or before September 19, 2023
2
nd
payment
81,823
108,333
On or before September 19, 2023
3
rd
payment
81,823
108,333
On or before November 1, 2023
4
th
payment
81,823
108,333
On or before January 1, 2024
5
th
payment
81,823
108,333
On or before March 1, 2024
6
th
payment
81,823
108,333
On or before May 1, 2024
7
th
payment
81,823
108,333
On or before July 1, 2024
Total cash consideration
566,465
749,998
As a result, for the year ended June
30, 2023, the Company recorded a gain of $6,167,001 from the final settlement and abandonment of the lease as follows:
Year
                                            ended
June
                                            30,
2023
$
Settlement:
-  Restricted cash paid
1,100,248
-  Cash payable over 1 year
566,465
-  Convertible promissory note issued, at fair
    value (Note 8)
375,000
-  GST on tenant improvements
185,529
2,227,242
Lease obligation released
(8,208,714
)
Amount owing on GST for tenant improvements
(185,529
)
Gain from release of lease obligation
(6,167,001
)
Asset and right-of-use asset impairment
    for Surrey manufacturing facility (Note 17)
9,247,829
Net loss on termination
    of lease
3,080,828
Refer to Note 11 for further information
with respect to contingency in the event cash consideration is not paid on or before the dates set forth in the agreement.
F-
73
19.
FINANCE EXPENSE
Finance expense includes the following
amounts for the year ended June 30, 2024, 2023 and 2022:
Year ended June 30,
2024
2023
2022
$
$
$
Financing fees (Note 8) and other
833,904
432,312
44,817
Interest on debt
162,758
173,632
13,794
Interest on convertible notes
2,320,751
512,183
-
Interest on finance lease (Note 6)
9,499
10,606
12,435
Accretion (Note 7)
-
11,058
6,296
Interest Income
(53,405
)
(48,094
)
-
3,273,507
1,091,697
77,342
20.
INCOME TAXES
The disaggregation of the Company's
Canadian and foreign pre-tax loss for the years ended June 30, 2024, 2023, and 2022 is as follows:
Year ended June 30,
2024
2023
2022
$
$
$
Canada
(30,831,794
)
(30,976,384
)
(34,150,575
)
Foreign
(3,136,454
)
(6,036,225
)
(2,585,535
)
(33,968,248
)
(37,012,609
)
(36,736,110
)
The following is a reconciliation
between statutory income taxes and the income tax expense for year ended June 30, 2024, 2023 and 2022:
Year ended June 30,
2024
2023
2022
$
$
$
Loss for the period (100%
    in Canadian tax jurisdiction)
33,968,248
37,012,609
36,736,110
Tax recovery at statutory rate
(9,172,000
)
(9,994,000
)
(9,919,000
)
Impact of permanent differences
5,622,000
1,608,000
3,249,000
SR&ED and IRAP government assistance
(327,000
)
(209,000
)
(158,000
)
Foreign exchange and other
452,000
506,000
109,000
Change in valuation allowance
3,425,000
8,089,000
6,719,000
Income tax expense
-
-
-
Combined federal and provincial rate
27
%
27
%
27
%
F-
74
20.
INCOME TAXES
                                            (continued)
The Company's deferred tax
assets are as follows for the year end June 30, 2024, 2023 and 2022:
Year ended June 30,
2024
2023
2022
$
$
$
Deferred Tax Asset :
Financing Cost
562,282
160,869
121,085
Non-Capital loss carry forward
17,158,967
14,959,416
8,054,109
Property and equipment
368,513
426,185
556,241
ROU Liability
244,036
388,639
390,643
Capitalized R&D
1,120,043
-
-
Deductible SR&ED Pool
1,647,638
1,737,732
1,114,053
Non-refundable BC ITCs
405,957
509,027
221,052
Non-refundable Federal ITCs
285,557
382,403
158,099
Total deferred tax assets
21,792,994
18,564,272
10,615,281
Deferred Tax Liabilities :
ROU asset
(179,572
)
(346,846
)
(390,973
)
BC Proxy SR&ED
(20,194
)
(16,461
)
(24,518
)
Federal ITC claimed during the year
(208,182
)
(240,885
)
(248,464
)
Total deferred tax liabilities
(407,948
)
(604,191
)
(663,955
)
Total deferred tax assets/liabilities
21,385,046
17,960,080
9,951,326
Less: valuation allowance
(21,385,046
)
(17,960,080
)
(9,951,326
)
Net Deferred Tax
    Assets (Liability)
-
-
-
ASC 740 additionally requires a
valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
After consideration of all of the information available, management believes that significant uncertainty exists with respect to future
realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended June 30, 2024 and
2023, the change in the valuation allowance was $3,425,000 and $8,089,000, respectively.
The Company has unclaimed Canadian
SR&ED expenditures of approximately $6,102,364 as at June 30, 2024 (2023 – $6,902,000, 2022 – $4,127,000), which can
be carried forward indefinitely to reduce future years' taxable income. The balance is included as a reduction to research and
development expense.
The Company has also received approximately
$277,000 (over 2019, 2020, 2021, 2022 and 2023) in assistance from the Government of Canada through the Industrial Research Assistance
Program ("IRAP") administered by the National Research Council of Canada.
At June 30, 2024, the Company had
Canadian non-capital losses carry-forward of $58,606,697 (2023 – 48,138,000, 2022 – $27,831,000) which expires over 2037
through 2043, and a US net operating loss carry-forward of $6,357,899 (2023 – $9,020,000, 2022 – $2,571,000) which can be
carried forward subject to 80% of US federal tax income.
F-
75
20.
INCOME TAXES
                                            (continued)
The amount and expiry date of deductible
temporary differences, unused tax losses and unused tax credits for which no deferred tax asset is recognized in the statement of financial
position are as follows:
Jurisdiction
Expiry
Operating
Losses
SR&ED
Expenditure
Pool
Investment tax
credit
$
$
$
Canada
Indefinite
-
6,102,364
-
Canada
2038 – 2043
58,606,697
-
-
US
Indefinite
6,357,899
-
-
64,964,596
6,102,364
-
21.
SEGMENT REPORTING
ASC 280 - Segment Reporting establishes
standards for reporting information about operating segments on a basis consistent with internal organization reporting used by the Company's
chief operating decision maker, our CEO, for making operating decisions and assessing performance as the source for determining the Company's
reportable segments. The Company is pre-revenue and pre-production and operates as a single reportable operating segment.
The following table is our long-lived
assets information by geography as of June 30, 2024 and June 30, 2023:
June 30,
2024
June 30,
2023
$
$
Canada
676,886
1,140,519
United States
461,534
863,547
1,138,420
2,004,066
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22.
FINANCIAL
    INSTRUMENTS AND RISK MANAGEMENT
a)
Fair value of financial assets
                                            and liabilities
The Company reports all financial
assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Valuation techniques
used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative
guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value
hierarchy are as follows:
Level 1:	Inputs are quoted prices
(unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2:	Inputs are observable,
unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets
or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the related assets or liabilities.
Level 3:	Inputs are unobservable
inputs for the asset or liability. These financial instruments are measured using management's best estimate of fair value, where
the inputs into the determination of fair value require significant management judgment or estimation.
The level in the fair value hierarchy
within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value
measurement in its entirety.
All financial instruments are initially
measured and recognized at fair value, and thereafter recognized at cost, or amortized cost; except for convertible notes, warrants and
SAFEs which are subsequently measured at fair value through the statements of operations. As at June 30, 2024 and June 30, 2023, the
carrying values of cash, prepaids, deposits and other receivables, long-term deposits, accounts payable and accrued liabilities, and
customer deposits approximate their respective fair values due to the short-term nature of these instruments.
At June 30, 2024 and June 30, 2023,
the Convertible Notes and SAFEs that are measured at fair value on a recurring basis are categorized as Level 3. For assets and liabilities
recognized at fair value on a recurring basis, the Company reassesses categorization to determine whether changes have occurred between
the hierarchy levels at the end of each reporting period.
The fair value of these Level 3 financial
liabilities is determined using pricing models, discounted cash flow methodologies or similar techniques for which the determination
of fair value requires significant management judgment or estimation (see Note 10).
Areas of significant judgement are
the risk-free rate, volatility rate, dividend yield, term to liquidation, discount for lack of marketability, most recent financing rounds
and implied equity value per letter of intent.
These valuations use assumptions and
estimates the Company believes would be made by a market participant in making the same valuation. The Company reassesses these assumptions
and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained.
F-
77
22.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
A significant increase/decrease in
some of those unobservable inputs would result in a significantly higher/lower fair value measurement.
During the year ended June 30, 2024,
the Company recognized fair value adjustments with respect to financial instruments categorized as Level 3 of $18,424,992 (2023 - $3,881,980,
2022 - $8,935,049) in the statements of operations as changes in fair value of financial liabilities. No amounts were recognized in other
comprehensive income as the changes in fair value due to credit risk were nominal.
Year ended June 30,
2024
2023
2022
$
$
$
Changes in fair value of:
SAFEs
592,543
740,030
8,935,049
Convertible notes
13,011,887
2,874,000
-
Warrants
4,820,562
267,950
-
18,424,992
3,881,980
8,935,049
There were no transfers into or
out of the Level 3 hierarchy during the period ended. The table below presents the changes in Level 3 liabilities measured at fair value
on a recurring basis during the years ended June 30, 2024 and 2023.
SAFEs
Convertible notes
Warrants
$
$
$
Balance, July 1, 2022
-
-
-
Inception date
2,005,213
11,853,183
254,000
Foreign exchange
(45,243
)
-
-
Changes in fair value
740,030
2,874,000
267,950
Balance, June 30, 2023
2,700,000
14,727,183
521,950
Inception date
-
12,891,686
1,086,240
Foreign exchange a
(92,543
)
-
-
Changes in fair value
592,543
13,011,887
4,820,562
Liability-classified warrant reclassified
    to equity-classified warrant
-
-
(6,428,752
)
Balance, June 30, 2024
3,200,000
40,630,756
-
F-
78
22.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
b)
Risk management
The Company's financial instruments
are exposed to certain financial risks, including credit risk, liquidity risk and market risk.
Liquidity risk
The Company monitors its cash balances
and cash invested to ensure there is sufficient liquidity to meet its financial obligations as they come due. Liquidity management is
comprised of regular analysis, monitoring, and review of forecasted and actual cash flows and managing operation and capital finding
requirements on a planning and projected basis. The Company's accumulated deficit and expected future losses cast substantial doubt
upon the Company's ability to continue as a going concern (Note 1).
Market risk
Market risk is the risk of loss
that may arise from changes in market factors such as foreign exchange rates.
Foreign currency risk
The Company's lease liabilities
and various operating expenses on the financial statements are denominated in Canadian dollars, and therefore are exposed to fluctuations
in foreign currency exchange rates. The Company evaluated the exposure to foreign currency risk and concluded that it is not material.
23.
SUPPLEMENTAL CASH FLOW INFORMATION
Cash and restricted cash comprise
of the followings:
Year ended June 30,
2024
2023
2022
$
$
$
Cash
395,580
2,069,056
8,958,448
Restricted cash
-
-
1,140,283
395,580
2,069,056
10,098,731
Year ended June 30,
2024
2023
2022
$
$
$
Interest on finance leases paid
9,499
10,606
12,435
Interest paid on debt and convertible notes
782,623
33,993
-
F-
79
23.
SUPPLEMENTAL CASH FLOW INFORMATION (continued)
Summary of non-cash investing and
financing transactions for the year ended June 30, 2024, 2023 and 2022:
Year ended June 30,
2024
2023
2022
$
$
$
SAFEs converted to preferred shares (Note
    10)
-
-
43,389,091
Common shares issued for services (Note 12(b))
-
368,878
75,566
Operating lease capitalized
-
9,865,904
1,123,630
Convertible promissory notes issued for settlement of
    lease (Note 8 and Note 18)
-
375,000
-
Common shares issued for settlement of amount owing for
    severance payment (Note 12(b))
260,999
-
-
Convertible promissory notes issued for settlement of
    Promissory notes (Note 7 and Note 8)
775,208
-
-
Convertible promissory notes issued for settlement of
    director fees owing (Note 5 and Note 8)
164,619
-
-
Promissory notes issued in settlement of amount owing
    (Note 7)
542,753
-
-
Reclassification of liability-classified warrants to equity
    (Note 9)
6,428,752
-
-
24.
SUBSEQUENT EVENTS
In addition to subsequent events
disclosed elsewhere, the following events occurred after June 30, 2024, up to the date these financial statements were issued :
i.
On July 3, 2024, the Company issued additional
                                            senior secured promissory note in the aggregate amount of $396,000 (up to an aggregate principal
                                            amount of $1,000,000) with interest rate at 10.0% per annum in favour of Grafiti Holding
                                            Inc (Note 7).
ii.
On July 20, 2024, the Company secured
                                            $250,000 in funding from certain investors via issuance of convertible promissory notes with
                                            a valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on
                                            maturity, July 19, 2025. These convertible promissory notes holders were also issued 91,361
                                            common share purchase warrants to subscribe for, and purchase of the Company common shares
                                            at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the
                                            diluted capitalization at closing date. The holder of the common share warrants can exercise
                                            the warrant either fully or partially at any time from issuance date until its expiry, 5
                                            years from issuance date.
iii.
On July 22, 2024, the Company secured
                                            $100,000 in funding from certain investors via issuance of convertible promissory notes with
                                            a valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on
                                            maturity, July 21, 2025. These convertible promissory notes holders were also issued 36,544
                                            common share purchase warrants to subscribe for, and purchase of the Company common shares
                                            at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the
                                            diluted capitalization at closing date. The holder of the common share warrants can exercise
                                            the warrant either fully or partially at any time from issuance date until its expiry, 5
                                            years from issuance date.
F-
80
24.
SUBSEQUENT EVENTS (continued)
iv.
On July 30, 2024, the Company secured
                                            $20,000 in funding from certain investors via issuance of convertible promissory notes with
                                            a valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on
                                            maturity, July 29, 2025. These convertible promissory notes holders were also issued 7,309
                                            common share purchase warrants to subscribe for, and purchase of the Company common shares
                                            at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the
                                            diluted capitalization at closing date. The holder of the common share warrants can exercise
                                            the warrant either fully or partially at any time from issuance date until its expiry, 5
                                            years from issuance date.
v.
On August 5 2024, the Company issued
                                            promissory note to arms-length parties with principal amount of $362,476 (CAD$500,000) secured
                                            against future SR&ED tax credit refund expected to be received from year-end tax returns
                                            for 2024 submitted to CRA. The loan accrues interest at a rate of 3% per month and matures
                                            on or before November 15, 2024.
vi.
On August 11, 2024, the Company issued
                                            another promissory note to arms-length parties with principal amount of $362,476 (CAD$500,000)
                                            secured against substantially all of the assets of the Company and rank pari passu with the
                                            promissory note issued on August 6, 2024. The loan accrues interest at a rate of 3% per month
                                            and matures on or before November 15, 2024.
vii.
On August
    30, 2024 the Company secured 6 convertible promissory notes with a valuation cap of $125,000,000 and interest rate of 12% per annum,
    payable in arrears on maturity, August 29, 2025. $185,000 has been received from 5 of the investors by August 30, 2024. The 5 convertible
    promissory note holders were issued 67,606 common share purchase warrants to subscribe for, and purchase of the Company common shares
    at the exercise price equal to the quotient of the valuation capitalization of $125,000,000 and diluted capitalization at closing
    date. The holder of the common share warrants can exercise the warrant either fully or partially at any time from the issuance until
    its expiry, 5 years from issuance date. To date the sixth investor has yet to fund the convertible promissory note of $500,000. This
    investor will be able to receive 182,721 common share purchase warrants at the time the note is funded.
viii.
On August 28, 2024 the Company entered
                                            into an amendment to the letter of agreement amending certain terms in the original engagement
                                            agreement ("Agreement") dated September 25, 2023. In the amended agreement, in
                                            lieu of the compensation described in Section 3 of the Agreement, Peikin, as assignee of
                                            Joseph Gunnar, shall receive from the Company a one-time fee of $1,000,000 in cash due and
                                            payable on the thirteen (13) month anniversary of the closing (the "Closing")
                                            of the reverse merger; and the Company shall also issue to Peikin, as assignee of Joseph
                                            Gunnar, the following amounts, any of which may be paid in securities (i.e., common stock
                                            of the post-merger Damon public company), with each issuance further made pursuant to a resale
                                            registration statement to be filed within (10) days of each payment date based on the payment
                                            schedule below:
(a)
$600,000 on the 90-day anniversary of
                                            the Closing;
(b)
$400,000 on the 180-day anniversary of
                                            the Closing; and
(c)
$300,000 on the 270-day anniversary of
                                            the Closing.
The total of $2,300,000,
of which up to $1,300,000 may potentially be paid in securities as set forth above to Peikin shall fully satisfy all obligations of the
Company to Joseph Gunnar, which obligations Joseph Gunnar has assigned to Peikin. The number of shares to calculate the USD value on
each of the three (3) issuances shall be calculated based on the Nasdaq Market Price, which is the lower of the consolidated closing
bid price for the Business Day immediately preceding each date that any one (1) of the three (3) issuances are due and payable OR the
average of the consolidated closing bid price of the post-merger Damon public company's common stock for the five (5) trading days
immediately preceding each date that any one (1) of the three (3) issuances are due and payable. Joseph Gunnar and Peikin, each respectively,
and collectively, reserve all rights with respect to compensation described in Section 3 of the Agreement if any one or more of such
issuances/remittances are not timely made.
ix.
Subsequent
    to the year end, the SAFEs issued and outstanding (Note 10) matured and were converted to 1,437,002 Damon common shares the per the
    terms of the agreement.
x.
On September 25, 2024, the Company amended the senior secured
promissory note dated June 26, 2024 (Note 7) increasing the maximum aggregate principal amount of the note from $1,000,000 to $1,150,000.
On the same date, the Company drew down an additional $200,000 on the note.
F-
81
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
As of
September 30,
2024
As of
June 30,
2024
(Unaudited)
(Audited)
Assets
Current Assets
Cash
$
175,292
$
1,148,904
Accounts receivable
55,865
30,572
Note receivable, net of $
238,103
and $
108,568
allowance for credit losses
907,897
441,432
Prepaid expenses
76,721
70,487
Other current assets
24,614
548
Total Current Assets
1,240,389
1,691,943
Property and equipment, net
2,276
2,392
Other assets
265
251
Total Assets
$
1,242,930
$
1,694,586
Liabilities and Stockholders' Deficit
Current Liabilities
Accounts payable
$
972,125
$
440,688
Accrued liabilities
104,513
59,921
Deferred revenue
151,377
144,390
Total Current Liabilities
1,228,015
644,999
Long Term Liabilities
Long term debt, net
1,974,316
1,506,561
Total Liabilities
3,202,331
2,151,560
Commitments and Contingencies
Stockholders' Deficit
Common Stock - $
0
par value, unlimited shares authorized and
4,615,384
and
3,600,001
shares issued and outstanding as of September 30, 2024 and June 30, 2024, respectively
743,637
679,302
Additional paid-in capital
627,478
627,478
Accumulated other comprehensive loss
(
11,050
)
(
8,828
)
Accumulated deficit
(
3,319,466
)
(
1,754,926
)
Total Stockholders' Deficit
(
1,959,401
)
(
456,974
)
Total Liabilities and Stockholders' Deficit
$
1,242,930
$
1,694,586
The accompanying notes are an integral part of
these condensed consolidated financial statements.
F-
82
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
September 30,
2024
2023
(Unaudited)
Revenues
$
101,969
$
97,908
Cost of Revenues
39,647
23,805
Gross Profit
62,322
74,103
Operating Expenses
Sales and marketing
43,322
44,587
General and administrative
224,614
33,208
Acquisition-related costs
1,085,297
—
Provision for credit losses
129,535
—
Total Operating Expenses
1,482,768
77,795
Loss from Operations
(
1,420,446
)
(
3,692
)
Other Income/(Expense)
Interest expense
(
168,160
)
—
Interest income
24,066
—
Total Other Income/(Expense)
(
144,094
)
—
Net Loss, before provision for income taxes
(
1,564,540
)
(
3,692
)
Income tax benefit (provision)
—
—
Net Loss
$
(
1,564,540
)
$
(
3,692
)
Net Loss Per Share - Basic and Diluted
$
(
0.39
)
$
(
0.001
)
Weighted Average Shares Outstanding
Basic and Diluted
4,006,706
3,600,001
The accompanying notes are an integral part of
these condensed consolidated financial statements.
F-
83
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS
Three Months Ended
September 30,
2024
2023
(Unaudited)
Net Loss
$
(
1,564,540
)
$
(
3,692
)
Unrealized foreign exchange loss from cumulative translation adjustments
(
2,222
)
(
1,082
)
Comprehensive Loss
$
(
1,566,762
)
$
(
4,774
)
The accompanying notes are an integral part of
these condensed consolidated financial statements.
F-
84
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(UNAUDITED)
Common Stock
Additional Paid-In
Accumulated
Other
Comprehensive
Accumulated
Total
Stockholder's
Shares
Amount
Capital
Loss
Deficit
Equity
Balance - July 1, 2023 (retroactively adjusted)
3,600,001
$
611,972
$
—
$
(
3,015
)
$
(
406,569
)
$
202,388
Net investments from Inpixon
—
32,193
—
—
—
32,193
Cumulative translation adjustment
—
—
—
(
1,082
)
—
(
1,082
)
Net loss
—
—
—
—
(
3,692
)
(
3,692
)
Balance - September 30, 2023 (retroactively adjusted)
3,600,001
$
644,165
$
—
$
(
4,097
)
$
(
410,261
)
$
229,807
Balance - July 1, 2024
3,600,001
$
679,302
$
627,478
$
(
8,828
)
$
(
1,754,926
)
$
(
456,974
)
Stock options exercised
1,015,383
64,335
—
—
—
64,335
Cumulative translation adjustment
—
—
—
(
2,222
)
—
(
2,222
)
Net loss
—
—
—
—
(
1,564,540
)
(
1,564,540
)
Balance - September 30, 2024
4,615,384
743,637
$
627,478
$
(
11,050
)
$
(
3,319,466
)
$
(
1,959,401
)
The accompanying notes are an integral part of
these condensed consolidated financial statements.
F-
85
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
Three Months Ended
September 30,
2024
2023
(Unaudited)
Cash Flows (Used In) Provided by Operating Activities
Net loss
$
(
1,564,540
)
$
(
3,692
)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
253
216
Amortization of original issue discount
82,178
—
Provision for credit losses
129,535
—
Accrued interest income
(
24,066
)
—
Accrued interest expense
50,405
—
Accrued monitoring fee expense
35,577
—
Changes in operating assets and liabilities:
Accounts receivable
(
23,541
)
47,626
Prepaid expenses and other assets
(
3,068
)
(
149
)
Accounts payable
528,078
958
Accrued liabilities
(
9,058
)
(
4,830
)
Deferred revenue
(
1,288
)
17,156
Net Cash (Used In) Provided by Operating Activities
(
799,535
)
57,285
Cash Flows Used in Investing Activities
Loan to Damon Motors
(
596,000
)
—
Net Cash Used in Investing Activities
(
596,000
)
—
Cash From Financing Activities
Proceeds from long term debt
350,000
—
Cash received from exercise of stock options
64,335
—
Net investments from Inpixon
—
32,193
Net Cash Provided By Financing Activities
414,335
32,193
Effect of Foreign Exchange Rate on Changes on Cash
7,588
(
5,308
)
Net (Decrease) Increase in Cash
(
973,612
)
84,170
Cash - Beginning of period
1,148,904
264,244
Cash - End of period
$
175,292
$
348,414
Supplemental Disclosure of cash flow information:
Cash paid for:
Interest
$
—
$
—
Income taxes
$
—
$
—
The accompanying notes are an integral part of
these condensed consolidated financial statements.
F-
86
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Note 1 - Organization and Nature of Business
Damon Inc. (formerly known as Grafiti Holding
Inc. ("Grafiti Holding")) (collectively with its subsidiaries, as appropriate, "Damon", the "Company,"
"we," "us" or "our") was incorporated in British Columbia, Canada on October 17, 2023.
Grafiti Limited (formerly known as "Inpixon
Limited") was incorporated in England and Wales on May 13, 2020. Grafiti Limited provides specialized scientific software products
and services for the environmental sciences, life sciences, behavioral sciences, medical research and engineering domains. Grafiti Limited
provides effective solutions to the scientific and engineering community to compress the time intensive process of data analysis and presentation,
thus enhancing productivity. Users of Grafiti Limited's products include government organizations, academic institutions and leading
corporations. Grafiti Limited's headquarters are located in Slough, United Kingdom, and operations for Grafiti Limited are primarily
performed in the United Kingdom.
On October 23, 2023, a Business Combination Agreement
(as amended by the First Amendment to the Business Combination Agreement dated June 18, 2024 and the Second Amendment to the Business
Combination Agreement dated September 26, 2024, the "Damon Business Combination Agreement") was entered into by and among
XTI Aerospace Inc., formerly known as "Inpixon" ("Inpixon," or "Parent"), the Company, 1444842 B.C.
LTD ("Amalco Sub"), and Damon Motors, Inc. ("Damon Motors"), pursuant to which Damon Motors will amalgamate with
Amalco Sub, a British Columbia corporation and a wholly-owned subsidiary of the Company, with Damon Motors continuing as the surviving
entity and a wholly-owned subsidiary of the Company (the "Business Combination").
Additionally, pursuant to a Separation and Distribution
Agreement, dated October 23, 2023, between Inpixon and the Company, Inpixon contributed the assets and liabilities of Grafiti Limited,
a wholly owned subsidiary of Inpixon, to the Company, the then Inpixon wholly owned subsidiary. As a result, the Company became the parent
non-operating holding company of Grafiti Limited. In connection with the spin-off of the Company from Inpixon as contemplated by the Business
Combination Agreement ("Grafiti Holding Spin-off"), on December 27, 2023 (the "record date"), Inpixon transferred
the Company's common shares to a newly-created liquidating trust, titled the Grafiti Holding Inc. Liquidating Trust (the "Trust"),
which holds the Company's common shares for the benefit of the holders of Inpixon common stock, preferred stock and those outstanding
warrants that are contractually entitled to participate in the distribution of the Company's common shares, on a pro rata basis
as of the record date (the "participating Inpixon securityholders").
As of December 26, 2023, pursuant to the Separation and Distribution
Agreement, Grafiti Limited was assigned by Inpixon to the Company. The Company consolidates Grafiti Limited via the voting interest model,
as Grafiti Limited is wholly owned by the Company. This transaction between entities under common control resulted in a change in reporting
entity and required retrospective combination of the entities for all periods presented, as if the combination had been in effect since
the inception of common control. Accordingly, the financial statements of the Company reflect the accounting of the combined acquired
subsidiary at historical carrying values except that equity reflects the equity of the Company. This change in reporting entity did not
impact net income for the periods presented. Pursuant to a Liquidating Trust Agreement, dated December 27, 2023, among Inpixon, the Company
and the initial trustee of the Trust, the Company common shares were to be held by the Trust until the registration statement on Form
10-12B filed for the spin-off (the "Registration Statement") had been declared effective by the Securities and Exchange Commission
(the "SEC"). Promptly following the effective time of the Registration Statement, the Trust will deliver the Company's
common shares to the participating Inpixon security holders, as beneficiaries of the Trust, pro rata in accordance with their ownership
of shares or underlying shares of Inpixon common stock as of the record date.
On November 12, 2024, the Trust shares were delivered
to participating Parent securityholders, and on November 13, 2024, Damon Motors and Amalco Sub amalgamated to continue as a wholly owned
subsidiary of the Company (the "Amalgamation"). Following the Amalgamation, the Company was renamed "Damon Inc."
(also referred to herein as the "combined company"). The common shares of the combined company are listed on the Nasdaq Global
Market under the ticker symbol "DMN". The Company incurred $
1,085,297
of acquisition related costs related to the Damon Business
Combination Agreement during the three months ended September 30, 2024. These costs are included in the acquisition-related costs line
in the condensed consolidated statements of operations. See Note 14.
F-
87
DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
The accompanying condensed consolidated financial
statements of the Company, show the historical financial position, results of operations, changes in stockholders' deficit and cash
flows of the Company. Prior to December 27, 2023, the Company operated as a segment of Inpixon and not as a separate entity. The operating
results of the Company prior to December 27, 2023 have been specifically identified by Inpixon's management based on the Company's
existing divisional organization and are presented on a carve-out basis. The historical costs and expenses reflected in our condensed
consolidated financial statements prior to December 27, 2023 include an allocation by time spent for certain corporate and shared service
functions. See Note 11 for further additional information regarding the Investments by Inpixon prior to December 27, 2023.
Management believes the assumptions underlying
our condensed consolidated financial statements are reasonable but may not necessarily be indicative of the costs that would have incurred
if the Company had been operated on a standalone basis for the entire periods presented. Actual costs that would have been incurred if
we had operated as a standalone company for the entirety of the periods presented would depend on multiple factors, including organizational
structure and strategic decisions made in various areas, including information technology and infrastructure. The Company also may incur
additional costs associated with being a standalone, publicly listed company that were not included in the expense allocations, prior
to December 27, 2023, and therefore, would result in additional costs that are not reflected in our historical results of operations,
financial position and cash flows.
Note 2 - Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States
of America ("GAAP"), for interim financial information and the rules and regulations of the SEC. Accordingly, they do not
include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Interim results for the three
months ended September 30, 2024 are not necessarily indicative of the results for the full year ending June 30, 2025. These interim unaudited
condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements
and notes for the years ended June 30, 2024, 2023 and 2022 included in our filings with the SEC.
Note 3 - Summary of Significant Accounting
Policies
Liquidity and Going Concern
The accompanying condensed consolidated financial
statements of the Company have been prepared assuming the Company will continue as a going concern in accordance with U.S. GAAP. The going
concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are
issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.
As of September 30, 2024, the Company has
working capital of $
12,374
, inclusive of cash of $
175,292
. For the three months ended September 30, 2024, the Company incurred a
net loss of $
1,564,540
and net cash used in operating activities during the three months ended September 30, 2024 was $
799,535
. As the
Company was part of Inpixon group of companies prior to December 27, 2023, the Company was dependent upon Inpixon for all of its working
capital and financing requirements as Inpixon uses a centralized approach to cash management and financing of its operations. This arrangement
is not reflective of the way the Company would have financed its operations had the Company been a standalone public company during the
periods presented. Prior to December 27, 2023, financial transactions relating to the Company are accounted for through Stockholders'
Equity (Deficit). Accordingly, none of Inpixon's cash, cash equivalents, or debt at the corporate level have been assigned to the
Company in the condensed consolidated financial statements. As a result of the Grafiti Holding Spin-off, the Company will no longer participate
in Inpixon's corporate-wide cash management and financing approach, and therefore the Company's ability to fund operating
needs will depend on the Company's ability to generate positive cash flows from operations, and on the Company's ability to
obtain debt financing on acceptable terms or to issue additional equity or equity-linked securities as needed.
F-
88
DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
The Company cannot assure you that we will ever
earn revenues sufficient to support our operations, or that we will ever be profitable. In order to continue our operations, the Company
supplemented the revenues earned with funding from Inpixon and other third parties. The adverse conditions detailed above indicate material
uncertainties that cast substantial doubt upon the Company's ability to continue as a going concern within one year after the financial
statement issuance date.
When substantial doubt exists, management evaluates
whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company's ability to continue as
a going concern. The mitigating effect of management's plans, however, is only considered if both (1) it is probable that the plans
will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the
plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity's ability
to continue as a going concern within one year after the date that the financial statements are issued.
Management's plans to address the uncertainty that the Company
will continue as a going concern include the business combination that occurred on November 13, 2024 as described in Note 1 above as well
as obtaining associated debt and equity financing. On November 13, 2024, the Company secured a commitment for additional financing in
the aggregate amount of $
13,000,000
under the November 2024 Debt Financing, and on November 20, 2024 the remaining $
3,150,000
of the funds
placed in escrow under the Streeterville Note (as defined below) were released to the Company which has increased the Company's
available source of funding and, accordingly, it is expected that the Company will have sufficient working capital and available funds
to continue operations for at least twelve (12) months following the date these financial statements are issued.
Use of Estimates
The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
each of the reporting periods. Actual results could differ from those estimates. The Company's significant estimates consist of:
●
the allowance for credit losses;
●
the valuation allowance for deferred tax assets.
Consolidations
The condensed consolidated financial statements
have been prepared using the accounting records of the Company and Grafiti Limited. All material inter-company balances and transactions
have been eliminated.
Accounts Receivable, net and Allowance for
Credit Losses
Accounts receivable are stated at the amount the
Company expects to collect. The Company recognizes an allowance for credit losses to ensure accounts receivables are not overstated due
to un-collectability. Allowance for credit losses are determined based on a variety of factors, including the length of time the receivables
are past due, significant one-time events and historical experience. An additional allowance for credit loss for individual accounts is
recorded when the Company becomes aware of a customer's inability to meet its financial obligation, such as in the case of bankruptcy
filings, or deterioration in such customer's operating results or financial position. If circumstances related to a customer change,
estimates of the recoverability of receivables would be further adjusted. After reviewing the collectability of the receivables the Company's
allowance for credit losses was not material as of September 30, 2024 or June 30, 2024.
F-
89
DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Financial Instruments — Credit Losses
("CECL")
The CECL impairment model is applicable to financial
assets measured at amortized cost, including loans, held-to-maturity debt securities and off-balance sheet credit exposures. The CECL
impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, that considers forecasts
of future economic conditions in addition to information about past events and current conditions. Based on this model, we analyze the
following criteria, as applicable in developing allowances for credit losses: historical loss information, the borrower's ability
to make scheduled payments, the remaining time to maturity, the value of underlying collateral, projected future performance of the borrower
and macroeconomic trends.
The Company carries its note receivable from Damon
Motors (the "Grafiti Holding Note") at its amortized cost basis in the condensed consolidated balance sheets since management
has the intent and ability to hold the Grafiti Holding Note for the foreseeable future or until maturity or payoff. The Company reviews
its loans carried at amortized cost for expected credit losses under
ASC 326, Financial Instruments - Credit Losses
, on an ongoing
basis. The Company utilized probability-of-default ("PD") and loss-given-default ("LGD") methodologies to calculate
the allowance for expected credit losses.
Under the PD×LGD method, the loss rate is
a function of two components: (1) the lifetime default rate ("PD"); and (2) the loss given default ("LGD"). Due
to the Company's limited operating history and lack of loss history, the Company derived its PD and LGD rates by considering average
historical default and recovery rates for corporate debt instruments, the borrower's current financial position, and unsupportable
forecasts utilizing default studies and hybrid quantitative regression models provided by multiple industry leading sources. The Company
uses PD and LGD rates that correspond to the customer's assumed credit rating and the contractual term of the note.
The amortized cost of the Company's Grafiti
Holding Note was $
907,897
, net of the allowance for expected credit losses of $
238,103
as of September 30, 2024 and $
441,432
, net of the
allowance for expected credit losses of $
108,568
, as of June 30, 2024.
Revenue Recognition
The Company recognizes revenue when control is
transferred of the promised products or services to its customers, in an amount that reflects the consideration the Company expects to
be entitled to in exchange for those products or services. The Company derives revenue from the sale of software and software as a service.
License Revenue Recognition
The Company enters into contracts with its customers
whereby it grants a non-exclusive license for the use of its proprietary software. The contracts provide for either (i) a one year stated
term with a one year renewal option, (ii) a perpetual term or (iii) a two year term with the option to upgrade to a perpetual license
at the end of the term. The contracts may also provide for yearly on-going maintenance services for a specified price, which includes
maintenance services, designated support, and enhancements, upgrades and improvements to the software (the "Maintenance Services"),
depending on the contract. Licenses for on-premises software provide the customer with a right to use the software as it exists when made
available to the customer. All software provides customers with the same functionality and differ mainly in the duration over which the
customer benefits from the software.
F-
90
DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
The timing of the Company's revenue recognition
related to the licensing revenue stream is dependent on whether the software licensing agreement entered into represents a good or service.
Software that relies on an entity's IP and is delivered only through a hosting arrangement, where the customer cannot take possession
of the software, is a service. A software arrangement that is provided through an access code or key represents the transfer of a good.
Licenses for on-premises software represents a good and provide the customer with a right to use the software as it exists when made available
to the customer. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality
and differ mainly in the duration over which the customer benefits from the software. Revenue from distinct on-premises licenses is recognized
at a point in time when the software is made available to the customer.
Renewals or extensions of licenses are evaluated
as distinct licenses (i.e., a distinct good or service), and revenue attributed to the distinct good or service cannot be recognized until
(1) the entity provides the distinct license (or makes the license available) to the customer and (2) the customer is able to use and
benefit from the distinct license. Renewal contracts are not combined with original contracts, and, as a result, the renewal right is
evaluated in the same manner as all other additional rights granted after the initial contract. The revenue is not recognized until the
customer can begin to use and benefit from the license, which is typically at the beginning of the license renewal period. Therefore,
the Company recognizes revenue resulting from renewal of licensed software starting at the beginning of the license renewal period.
The Company recognizes revenue related to software
as a service evenly over the service period using a time-based measure because the Company is providing continuous service and the customer
simultaneously receives and consumes the benefits provided by the Company's performance as the services are performed.
Contract Balances
The timing of the Company's revenue recognition
may differ from the timing of payment by its customers. The Company records a receivable when revenue is recognized prior to payment and
the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company
records deferred revenue until the performance obligations are satisfied. The Company had deferred revenue of $
151,377
and $
144,390
as
of September 30, 2024 and June 30, 2024, respectively, related to cash received in advance for product license and maintenance services
to be performed in future periods. The Company expects to satisfy its remaining performance obligations for these license and maintenance
services, and recognize the deferred revenue and related contract costs over the next twelve months. The Company recognized revenue of
$
57,618
during the three months ended September 30, 2024 that was included in the contract liability balance at the beginning of the period.
Costs to Obtain a Contract
The Company does not have a history of incurring
incremental costs to obtain a contract with a customer, but if the Company incurs these costs in the future, the Company will recognize
these costs as an asset that will be amortized over the expected contract term.
Cost to Fulfill a Contract
The Company incurs costs to fulfill their obligations
under a contract once it has obtained, but before transferring goods or services to the customer. The Company has determined that these
costs are immaterial. Therefore, the Company expenses the costs as they are incurred.
Multiple Performance Obligations
The Company enters into contracts with customers
for its technology licenses that may include multiple performance obligations. Each distinct performance obligation was determined by
whether the customer could benefit from the good or service on its own or together with readily available resources. The Company allocates
revenue to each performance obligation based on its standalone selling price. The Company's contracts with its customers outline
the terms of the number of software licenses to be issued and any Maintenance Services, along with the agreed-upon prices. The price for
both the licenses and any related Maintenance Fees are fixed and stated in the contract.
F-
91
DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Sales and Use Taxes
The Company presents transactional taxes such
as sales and use tax collected from customers and remitted to government authorities on a net basis.
Income Taxes
The Company accounts for income taxes using the
asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is
recognized in income or expense in the period that the change is effective. Income tax benefits are recognized when it is probable that
the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred
tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. The Company
recorded no income tax provision or benefit for the three months ended September 30, 2024 or 2023.
Net Loss Per Share
The Company computes basic and diluted earnings
per share by dividing net loss by the weighted average number of common shares outstanding during the period. Basic and diluted net loss
per common share were the same.
Fair Value of Financial Instruments
Financial instruments consist of cash, accounts
receivable, and accounts payable. The Company determines the estimated fair value of such financial instruments presented in these financial
statements using available market information and appropriate methodologies. These financial instruments are stated at their respective
historical carrying amounts, which approximate fair value due to their short-term nature.
Reclassifications
Certain prior year amounts have been reclassified
to conform to September 30, 2024 presentation. The Company notes that these reclassifications only impacted the balance sheet and did
not impact cash flows or net loss.
Recently Issued Accounting Standards Not
Yet Adopted
The Company reviewed recently issued accounting
pronouncements and concluded that they were not applicable to the condensed consolidated financial statements, except for the following:
In November 2023, the FASB issued ASU 2023-07,
"Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which amends the disclosure to improve reportable
segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an annual and interim basis
for to enable investors to develop more decision-useful financial analyses. All public entities will be required to report segment information
in accordance with the new guidance starting in annual periods beginning after December 15, 2023. The Company is currently assessing potential
impacts of ASU 2023-07 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial
statements and disclosures as the Company currently only has one reportable segment and the ASU pertains to enhanced segment reporting
disclosures.
F-
92
DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
In December 2023, the FASB issued ASU 2023-09,
"Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which amends the disclosure to address investor requests
for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation
and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures. For entities
other than public business entities, the requirements will be effective for annual periods beginning after December 15, 2025. The guidance
will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company
is currently assessing potential impacts of ASU 2023-09 and does not expect the adoption of this guidance will have a material impact
on its condensed consolidated financial statements and disclosures.
In November 2024, the FASB issued ASU No. 2024-03,
Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income
Statement Expenses
, that requires public companies to disclose, in interim and reporting periods, additional information about certain
expenses in the financial statements. For public business entities, it is effective for annual periods beginning after December 15, 2026,
and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective
basis or retrospective basis. The Company is currently evaluating the impact that the updated standard will have on the Company's
disclosures within the condensed consolidated financial statements.
Note 4 - Disaggregation of Revenue
Disaggregation of Revenue
The Company recognizes revenue when control of
the promised products or services is transferred to its customers, in an amount that reflects the consideration the Company expects to
be entitled to in exchange for those products or services. The Company derives revenue from software sales. The Company's revenue
from contracts with customers are mainly sourced from the United Kingdom, Switzerland, France, and Italy.
Revenues consisted of the following:
For the Three Months Ended
September 30,
2024
(Unaudited)
2023
(Unaudited)
Recurring revenue
$
61,202
$
49,826
Non-recurring revenue
40,767
48,082
$
101,969
$
97,908
For the Three Months Ended
September 30,
2024
(Unaudited)
2023
(Unaudited)
Revenue recognized at a point in time (1)
$
40,767
$
48,082
Revenue recognized over time (2)
61,202
49,826
Total
$
101,969
$
97,908
(1)
Software's performance obligation is satisfied at a
point in time when access to the software is provided to the customer.
(2)
Performance obligation from right to access software sales
is satisfied evenly over the service period using a time-based measure because the Company is providing continuous access to its service
and service is recognized over time.
F-
93
DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Note 5 - The Grafiti Holding Note
On June 26, 2024, the Company purchased from Damon
Motors the Grafiti Holding Note with an original principal amount of $
350,000
(the "Grafiti Holding Note"). In accordance
with the terms of the Grafiti Holding Note, the Company must loan to Damon Motors, at Damon Motors's request, additional funds up
to an aggregate principal amount, including the original principal amount, of $
1,000,000
. On September 25, 2024, the Grafiti Holding Note
was amended to increase the maximum principal amount available for borrowing to $
1,150,000
. The Grafiti Holding Note accrues interest
at a rate of
10
% per year. The debt and accrued and unpaid interest is due and payable the earlier of (a) December 31, 2024, (b) when
declared due and payable by the Company upon the occurrence of an event of default, or (c) within three business days following termination
of the Damon Business Combination Agreement. Concurrent with the original principal amount provided to Damon Motors, the Company also
loaned an additional $
200,000
to Damon Motors on June 26, 2024. During the three months ended September 30, 2024, the Company loaned Damon
Motors an additional $
596,000
. The principal balance of the Grafiti Holding Note was $
1,146,000
and $
550,000
as of September 30, 2024
and June 30, 2024, respectively. During the three months ended September 30, 2024 and September 30, 2023, the Company recognized $
24,066
and $
0
of interest income from the Grafiti Holding Note, respectively, which is included in the Other Income/Expense section of the condensed
consolidated statements of operations. The total interest accrued as of September 30, 2024 and June 30, 2024 was $
24,614
and $
548
, respectively,
and is included in the Other Current Assets line of the condensed consolidated balance sheets.
Our note receivables balance was as follows:
September 30,
2024
(Unaudited)
June 30,
2024
(Audited)
Note receivable, amortized cost
$
1,146,000
$
550,000
Less: allowance for credit losses
(
238,103
)
(
108,568
)
Note receivable, net
$
907,897
$
441,432
Current note receivable, net
$
907,897
$
441,432
Note receivable, net
$
907,897
$
441,432
A roll forward of the Company's allowance
for credit losses was as follows:
Balance at June 30, 2024
$
108,568
Provision
129,535
Balance at September 30, 2024 (Unaudited)
$
238,103
There were neither charges against the allowance
nor recoveries of previously written off amounts for the three months ended September 30, 2023.
The Company's Grafiti Holding Note represents
a variable interest in Damon Motors. As such, the Company applied ASC 810 to assess whether the Company is the primary beneficiary and
Damon Motors should be consolidated. The Company determined they are not the primary beneficiary, as the Company does not have the power
to direct the activities that most significantly affect Damon Motors's economic performance. The Company's support to Damon
Motors, and the Company's maximum exposure, consists only of the Grafiti Holding Note outlined above. The primary reason for the
financial support is to assist Damon Motors' operations until the close of the merger. As such, the Company concluded the Damon
Motors legal entity should not be consolidated.
F-
94
DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Note 6 - Accrued Liabilities
Accrued liabilities as of September 30, 2024
and June 30, 2024 consisted of the following:
As of
September 30,
As of
June 30,
2024
(Unaudited)
2024
(Audited)
Accrued compensation and benefits
$
17,326
$
19,780
Accrued bonus and commissions
3,921
3,708
Accrued interest expense
53,706
3,301
Accrued professional fees
18,390
17,393
Accrued sales and other indirect taxes payable
11,170
15,739
$
104,513
$
59,921
Note 7 - Income Taxes
There is
no
income tax provision or benefit for
the three months ended September 30, 2024 or 2023 due to a history of losses and future projected losses. A full valuation allowance
on deferred tax assets has been recorded for both periods.
Note 8 - Long-Term Debt
On June 26, 2024, the Company and Streeterville
Capital, LLC ("Streeterville" or "Investor") entered into a note purchase agreement, pursuant to which the Company
agreed to sell, and Streeterville agreed to purchase, a secured promissory note in an aggregate original principal amount of $
6,470,000
(the "Streeterville Note"). The Streeterville Note accrues interest on the outstanding balance of the note at the rate of
10
% per annum, and all principal plus accrued interest is due and payable in December 2025.
The Streeterville Note carries an original
issue discount of $
1,450,000
and $
20,000
of issuance costs to cover legal, accounting, due diligence, monitoring and other transaction
costs. On the same day, the Investor paid the purchase price of $
5,000,000
as follows: (a) $
1,150,000
to the Company; (b) $
350,000
to
Damon Motors as a senior secured loan from the Company to Damon Motors (the "Grafiti Holding Note"), and (c) $
3,500,000
into
escrow, which will be distributed to the Company upon satisfaction of certain conditions including
: (a) consummation of the Business Combination;
(b) the combined company's common shares being listed on Nasdaq; and (c) immediately following the closing of the Business Combination,
the combined company having no outstanding debt other than the Streeterville Note, certain other specified debts and trade payables incurred
in the ordinary course of business (the "Escrow Conditions"). Pursuant to the escrow agreement, if the Escrow Conditions have
not been satisfied by August 31, 2024 (the "Deadline Date"), the escrow agent may return the escrow amount to the Investor
and the Guaranties in favor of Streeterville (as defined below) to Damon Motors and Damon Motors Corporation, a Delaware corporation and
a wholly-owned subsidiary of Damon Motors. In accordance with the amendments to the escrow agreement, the Deadline Date has been extended
to November 30, 2024, Additionally, starting on the earlier of 13 months after the closing of the Business Combination or January 1, 2026,
the Investor may require the borrower to redeem up to one-sixth of the note's initial principal and accrued interest monthly, and
any unexercised redemption amounts can be carried over to future months. The Company has also agreed to not issue or sell and equity securities
for capital raising purposes without the Investor's prior consent. Additionally, the second amendment to the escrow agreement allows
for the release of funds at the discretion of the investor even if the funding conditions have not been satisfied. On September 23, 2024,
$
350,000
of the funds placed in escrow were released to the Company. On November 20, 2024 the remaining $
3,150,000
of the funds placed
in escrow were released to the Company.
F-
95
DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Long-Term Debt as of September 30, 2024 consisted of the following:
Long-Term Debt
Maturity
September 30,
2024
(Unaudited)
June 30,
2024
(Audited)
June 2024
10
% Note (net of  $
469,381
and $
450,059
unamortized debt discount and issuance costs)
12/26/2025
$
1,974,316
$
1,506,561
Total Long-Term Debt
$
1,974,316
$
1,506,561
Debt discount and issuance costs in the amount
of $
455,000
related to the Streeterville Note was recorded as a contra liability within long-term debt, which will be amortized over the
term of the note. An additional $
101,500
of debt discount was recorded as a contra liability within long-term debt during the three months
ended September 30, 2024 with the release of a portion of the funds placed in escrow. Additional debt discount and issuance costs will
be recorded as the Company receives the remaining portions of the Streeterville Note. Interest expense on long-term debt for the three
months ended September 30, 2024 totaled $
168,160
which includes $
50,405
of interest expense, $
82,178
of amortized debt discount and $
35,577
of monitoring fee amortization. There was
no
interest expense in the three months ended September 30, 2023.
The Company had
no
short-term or long-term debt
in the three months ended or as of September 30, 2023.
Note 9 - Stock Award Plans and Stock-Based
Compensation
On June 11, 2024, the Company's board of
directors adopted a 2024 Stock Incentive Plan (the "Plan"). The maximum aggregate number of common shares that may be issued
pursuant to the awards granted under the Plan (the "Share Reserve") shall initially be
10,000,000
, and the Share Reserve shall
automatically increase on the first day of each calendar year beginning January 1, 2025, by a number of shares equal to the greatest of
(i)
3,000,000
shares, (ii) twenty percent (
20
%) of the outstanding common shares on the last day of the immediately preceding calendar
quarter, or (iii) such number of common shares determined by the committee delegated by the Company's board of directors. As of
September 30, 2024, there were no un-exercised options granted to consultants of the Company and
8,984,617
options were available for
future grant under the Plan.
Incentive stock options granted under the Plan
are granted at exercise prices not less than
100
% of the estimated fair market value of the underlying common shares at date of grant.
The exercise price per share for incentive stock options may not be less than
110
% of the estimated fair value of the underlying common
shares on the grant date for any individual possessing more that
10
% of the total outstanding common shares of the Company. Options granted
under the Plan vest over periods ranging from immediately to
four years
and are exercisable over periods not exceeding
ten years
.
As of September 30, 2024, there were
no
non-vested
stock options and no unrecognized stock option compensation so the fair value of non-vested options was $
0.0
million.
All of the
1,015,383
of stock options granted
during the fiscal year ended June 30, 2024 were exercised on various dates between August 21, 2024 and September 4, 2024 for which the
Company received $
64,335
for the exercise of the stock options which is included on the Common Stock line of the condensed consolidated
statements of changes in stockholders' equity (deficit).
F-
96
DAMON INC. (FORMERLY
GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
See below for a summary of the stock options granted
under the Plan:
Total
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
(in thousands)
Outstanding at July 1, 2024
1,015,383
$
0.06336
$
—
Granted
—
—
—
Exercised
(
1,015,383
)
0.06336
—
Expired
—
—
—
Forfeitures
—
—
—
Outstanding at September 30, 2024
—
$
—
$
—
Exercisable at September 30, 2024
—
$
—
$
—
Note 10 - Credit Risk and Concentrations
During the three months ended September 30, 2024
the Company had two customers that accounted for a total of
31
% of revenues. During the three months ended September 30, 2023, the Company
had one customer that accounted for
10
% of revenues.
As of September 30, 2024, three customers
represented approximately
75
% of total accounts receivable. As of September 30, 2023, four customers represented approximately
77
% of
total accounts receivable.
As of September 30, 2024 and June 30, 2024,
the majority of cost of goods sold was related to related party expenses as discussed in Note 11. Therefore, there are no significant
concentrations of purchases or accounts payable.
Note 11 - Net Investments from Inpixon
Prior to the transaction on December 27, 2023,
the Company incurred expenses that were paid by Inpixon. The expenses incurred consist of salaries and benefits to certain employees of
Inpixon that provided services for the Company. Inpixon allocated expenses to the Company based on the estimated time spent by each Inpixon
employee. In addition, the Company recorded cost of sales for the use of Inpixon's software. The Company also recorded adjustments
to these condensed consolidated financial statements to record cost of sales at market value based on the price Inpixon would charge third
parties for the use of the Inpixon's software with industry consistent margins. The Company settled the amounts through equity.
The Company has recorded these amounts as a change in stockholders' equity (deficit) of $
32,193
for the three months ended September
30, 2023.
Note 12 - Grafiti LLC Transactions
Distributor Agreement
On July 19, 2024, Grafiti Limited entered into
a Distributor Agreement with Grafiti LLC. Grafiti LLC is
100
% owned by Nadir Ali who was a director and officer of Damon as of September
30, 2024. Nadir Ali resigned as director and officer of Damon upon the closing of the Business Combination on November 13, 2024. Under
the Distributor Agreement, Grafiti LLC granted Grafiti Limited a non-exclusive, non-transferable right and license to market and distribute
SAVES (statistical analytics and visualization) products in the United Kingdom and other agreed-upon territories. Grafiti Limited will
pay Grafiti LLC the then-current prices for the products, subject to a discount of up to
50
% if certain revenue targets are met or other
arrangements agreed upon by the parties. The deemed effective date of the Distributor Agreement is retroactive to January 1, 2024, and
will remain in effect for one year from the effective date, automatically renewing for successive one-year periods unless either party
provides advance notice prior to the end of the current term to not extend. Either party may terminate the agreement without cause by
providing at least 90 days' prior written notice, or immediately for specified reasons, including an uncured breach or bankruptcy.
As of June 30, 2024 Grafiti Limited owed Grafiti LLC $
42,896
under the agreement which is included in the Accounts Payable line on the
condensed consolidated balance sheets. The Company has recorded the amounts related to the recognized revenue during the three months
ended September 30, 2024 and 2023 as cost of revenues on the Company's condensed consolidated statement of operations of $
39,647
and $
0
, respectively. As of September 30, 2024 Grafiti Limited owed Grafiti LLC $
50,341
under the agreement which is included in the Accounts
Payable line on the condensed consolidated balance sheets.
F-
97
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2024 AND 2023
Administrative Support Service Agreement
On July 19, 2024, Grafiti Limited entered into
an Administrative Support Service Agreement with Grafiti LLC. Under the Administrative Support Service Agreement, Grafiti LLC agreed to
provide accounting, tax, and other administrative sales support services to Grafiti Limited for $
5,080
per month, with the amount subject
to a
5
% annual increase by Grafiti LLC. The Administrative Support Service Agreement is deemed to have commenced on January 1, 2024, and
remains in effect for one year from the effective date, automatically renewing for successive one-year periods unless either party provides
advance notice prior to the end of the current term to not extend. The Company has recorded these amounts as general and administrative
costs on the Company's condensed consolidated statement of operations of $
15,240
and $
0
for the three months ended September 30,
2024 and 2023, respectively. As of September 30, 2024, Grafiti Limited owed Grafiti LLC $
15,240
under the agreement which is included
in the Accounts Payable line on the condensed consolidated balance sheets.
Note 13 - Commitments and
Contingencies
Litigation
Certain conditions may exist as of the date the
condensed consolidated financial statements are issued which may result in a loss to the Company, but which will only be resolved when
one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves
an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted
claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims,
as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that
it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would
be accrued in the Company's financial statements. If the assessment indicates that a potentially material loss contingency is not
probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and an estimate
of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally
not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters
will not materially and adversely affect the Company's business, financial position, and results of operations or cash flows. However,
the performance of our Company's business, financial position, and results of operations or cash flows may be affected by unfavorable
resolution of any particular matter.
Leases
The Company has a twelve month operating lease
for administrative offices in the United Kingdom for $
360
per month which expires on April 30, 2025. The Company also has a storage space
lease that it retains for $
300
per month that renews on an annual basis in October of each year.
F-
98
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Advisory Services and Consulting Agreements
Nadir Ali
The Company entered into a consulting agreement
with Mr. Ali on September 25, 2024 pursuant to which it agreed to pay a fee of $
15,000
per month for services rendered to the Company
since April 1, 2024 until the end of the month of the closing of the Business Combination pursuant to which Mr. Ali will advise on public
company reporting and compliance matters, business development, growth strategies and other operational matters as requested.
As compensation under the consulting agreement,
Mr. Ali is entitled to a fee of $
325,000
upon closing the Business Combination and his monthly fee will increase to $
54,167
per month
beginning on the first of each month following the closing of the Business Combination through the remainder of the term of the agreement.
Unless otherwise terminated earlier pursuant to
the consulting agreement, the agreement will continue for a period of six months following the closing of the Business Combination which
may be extended for additional terms, upon mutual consent. The Company has the right to terminate the consulting agreement with 30 days'
notice; however, if it is terminated by the Company prior to the six month anniversary of the closing of the Business Combination (the
"Ali Guaranteed Period") for any reason other than the gross negligence, recklessness or willful misconduct of Mr. Ali, the
monthly fee will continue to be paid for the remainder of the Ali Guaranteed Period. Mr. Ali has the right to terminate the consulting
agreement with 30 days' notice for specified reasons, including the Company's failure to make timely payments, gross negligence,
recklessness, willful misconduct, or the filing of bankruptcy by the Company. In such cases, the monthly fee for the remainder of the
Ali Guaranteed Period will continue to be paid.
As of September 30, 2024, the Company owed Mr.
Ali $
30,000
for services provided under the consulting agreement.
Melanie Figueroa
The Company entered into a consulting agreement
on September 25, 2024 with Ms. Figueroa pursuant to which it agreed to pay a fee of $
15,000
per month for services rendered to the Company
since April 1, 2024 until the end of the month of the closing of the Business Combination pursuant to which Ms. Figueroa will provide
advisory services with respect to her knowledge and expertise related to Company's public company reporting and compliance matters
and corporate business development and growth strategies.
As compensation under the consulting agreement,
Ms. Figueroa is entitled to a fee of $
175,000
upon closing the Business Combination and her monthly fee will increase to $
29,167
per month
beginning on the first of each month following the closing of the Business Combination through the remainder of the term of the agreement.
Unless otherwise terminated earlier pursuant to
the consulting agreement, the agreement will continue for a period of six months following the closing of the Business Combination which
may be extended for additional terms, upon mutual consent. The Company has the right to terminate the consulting agreement with 30 days'
notice; however, if it is terminated by the Company prior to the six month anniversary of the closing of the Business Combination (the
"Figueroa Guaranteed Period") for any reason other than the gross negligence, recklessness or willful misconduct of Ms. Figueroa,
the monthly fee will continue to be paid for the remainder of the Figueroa Guaranteed Period. Ms. Figueroa has the right to terminate
the consulting agreement with 30 days' notice for specified reasons, including the Company's failure to make timely payments,
gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by the Company. In such cases, the monthly fee for the
remainder of the Figueroa Guaranteed Period will continue to be paid.
As of September 30, 2024, the Company owed Ms.
Figueroa $
30,000
for services provided under the consulting agreement.
F-
99
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Wendy Loundermon
The Company entered into a consulting agreement
with Mrs. Loundermon on September 25, 2024 pursuant to which it agreed to pay a fee of $
10,000
per month for services rendered to the
Company since April 1, 2024 until the end of the month of the closing of the Business Combination pursuant to which Mrs. Loundermon will
provide advisory services with respect to her knowledge and expertise regarding the transition of the Company's financial reporting
function to ensure continuity of business operations.
As compensation under the consulting agreement,
Mrs. Loundermon is entitled to a fee of $
150,000
upon closing the Business Combination and her monthly fee will increase to $
25,000
per
month beginning on the first of each month following the closing of the Business Combination through the remainder of the term of the
agreement.
Unless otherwise terminated earlier pursuant to
the consulting agreement, the agreement will continue for a period of six months following the closing of the Business Combination which
may be extended for additional terms, upon mutual consent. The Company has the right to terminate the consulting agreement with 30 days'
notice; however, if it is terminated by the Company prior to the six month anniversary of the closing of the Business Combination (the
"Loundermon Guaranteed Period") for any reason other than the gross negligence, recklessness or willful misconduct of Mrs.
Loundermon, the monthly fee will continue to be paid for the remainder of the Loundermon Guaranteed Period. Mrs. Loundermon has the right
to terminate the consulting agreement with 30 days' notice for specified reasons, including the Company's failure to make
timely payments, gross negligence, recklessness, willful misconduct, or the filing of bankruptcy by the Company. In such cases, the monthly
fee for the remainder of the Loundermon Guaranteed Period will continue to be paid.
As of September 30, 2024, the Company owed Mrs.
Loundermon $
20,000
for services provided under the consulting agreement.
F-
100
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Note 14 - Subsequent Events
Trust Shares Distribution
As described in Note 1, on October 23, 2023, Parent
and the Company entered into a Separation and Distribution Agreement, pursuant to which all of the outstanding shares of Grafiti Limited
were transferred to the Company, such that on December 26, 2023, Grafiti Limited became a wholly-owned subsidiary of the Company. Following
the reorganization, and in connection with the spin-off of the Company from Parent, on December 27, 2023 (the "record date"),
all of the outstanding common shares of the Company (the "Trust Shares") were transferred to the Grafiti Holding Inc. Liquidating
Trust (the "Trust"), to be held for the benefit of holders of the Parent's common stock, preferred stock and those outstanding
warrants that are contractually entitled to participate in the distribution, on a pro rata basis as of the record date (collectively,
the "participating Parent securityholders"). On November 12, 2024, the Trust Shares were delivered to participating Parent
securityholders, on a pro rata at a ratio of
1
for
50
resulting in the distribution of
3,536,746
Trust Shares to participating Parent
securityholders.
Amalgamation
Also as described in Note 1, on October 23, 2023,
the Company, Parent, Damon Motors, and Amalco Sub entered into the Damon Business Combination Agreement. On November 13, 2024, Damon Motors
and Amalco Sub amalgamated to continue as a wholly owned subsidiary of the Company (the "Amalgamation"). Following the Amalgamation,
the Company was renamed "Damon Inc." (also referred to herein as the "combined company"). Pursuant to the Plan
of Arrangement under the laws of British Columbia, as contemplated in the Damon Business Combination Agreement, securityholders of Damon
Motors exchanged their securities of Damon Motors for amalgamation consideration consisting of:
(i)
14,761,045
common shares
of the Company, also known as "Subordinate Voting Shares"
(ii)
1,391,181
multiple voting
shares of the Company, which are convertible into common shares of the Company on a 1 for 1 basis, issued to Jay Giraud, the combined
company's CEO and director, and its controlled entity,
(iii) warrants to purchase
2,186,498
common shares of the Company at an exercise price of $
7.81
per share, with terms substantially similar to those of Damon Motors's
warrants, issued to former Damon Motors warrant holders, and
(iv) options to purchase
1,942,127
common shares at exercise prices between $
0.57
and $
12.73
, issued to former Damon Motors option holders under the Company's equity
incentive plans.
The exchanges are based on an exchange ratio determined
according to the formula in the Damon Business Combination Agreement.
The combined company commenced trading on the
Nasdaq Global Market on November 18, 2024 under the symbol "DMN".
As a result of the closing of the Business Combination,
a change in control of the Company has occurred, and Damon Motors became a wholly owned subsidiary of the Company. Following the issuance
of the amalgamation consideration pursuant to the Plan of Arrangement, the Company's security holders immediately prior to the effective
time of the Amalgamation (the "Effective Time") retained beneficial ownership of approximately
18
% of the outstanding common
shares of the Company on a fully-diluted basis and Damon Motors security holders immediately prior to the Effective Time acquired beneficial
ownership of common shares amounting to approximately
82
% of the outstanding common shares of the Company on a fully-diluted basis.
Creation and Conversion of Multiple Voting
Shares
Prior to the Effective Time, on November 12, 2024,
the Company filed a Notice of Alteration with the Province of British Columbia Registrar of Companies to amend its Notice of Articles
to, among other things, reflect the amended articles of the Company authorizing, among other things, the creation of a class of Multiple
Voting Shares and setting out the rights and restrictions attaching to the Multiple Voting Shares and the common shares.
On December 4, 2024, following the resignation
of Damon Jay Giraud, the former President, Chief Executive Officer, and Executive Chairman of the Company, all
1,391,181
Multiple Voting
Shares of the Company held by Mr. Giraud were converted into common shares on a one-for-one basis.
F-
101
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Financing Agreements
Streeterville June 2024 Note – Amended
Security Agreements
On November 13, 2024, prior to the closing of
the Business Combination, (a) the Company entered into an amendment to the Security Agreement, dated June 26, 2024 by and between the
Company and Streeterville Capital LLC delivered in connection with the Streeterville Note in an aggregate principal amount of $
6,470,000
,
whereby the Company granted to Streeterville a security interest in all right, title, interest, claims and demands to its assets, and
(b) Damon Motors entered into a security agreement with Streeterville, whereby Damon Motors granted to Streeterville a security interest
in all right, title, interest, claims and demands to its assets, and (c) Damon Motors entered into an IP security agreement with Streeterville,
whereby Damon Motors granted to Streeterville a security interest in certain of its intellectual property. Streeterville's security
over the Company's assets ranks pari passu with the security granted under the November 2024 Debt Financing (as described in greater
detail below) pursuant to an intercreditor agreement dated as of November 13, 2024 (the "Intercreditor Agreement").
November 2024 Debt Financing
East-West
On November 13, 2024, the Company and East West
Utah limited liability company, an affiliate of Streeterville, entered into a note purchase agreement, pursuant to which the Company agreed
to sell, and East West agreed to purchase, a secured promissory note in an aggregate original principal amount of $
8,385,000
(the "East
West Note") (the "East West Financing"). The East West Note carries an original issue discount of $
1,885,000
. For as
long as the East West funding conditions (as defined in the East West Note) are satisfied on each applicable funding date (unless waived
by East West), the proceeds from the East West Note will be funded in tranches in accordance with the following schedule: (a) $
2,000,000
on January 31, 2025, (b) $
1,500,000
on April 30, 2025, (c) $
1,500,000
on July 31, 2025, and (d) $
1,500,000
on September 30, 2025.
For each $
1.00
in funds the Company raises in
the sale of any of its equity shares in a financing for the purpose of raising capital as part of any public offering of its equity securities
pursuant to a registration statement, at East West's sole election, East West may reduce its next funding obligation by $
0.50
. The
East West Note will mature on the date that is
18
months from issuance of the initial tranche of funding thereunder. For each $
1.00
funded
by lender under the East West Note, an additional $
0.29
in original issue discount will be added to the outstanding balance. It bears
interest at
10
% per annum, which will increase to
22
% or the maximum permitted by applicable law upon the occurrence of an event of default
(as defined in the East West Note). In such an event, East West may declare the outstanding balance, multiplied by 110%, immediately due.
Upon a change of control, the balance, multiplied by 110%, will also become due.
Beginning on the date that is the earlier of (i)
thirteen months from the closing date of the Business Combination and (ii) January 1, 2026, East West shall have the right to require
the Company to redeem up to an aggregate of one sixth of the initial principal balance of the East West Note plus any interest accrued
thereunder each month (each monthly exercise, a "East West Monthly Redemption Amount") by providing written notice to the
Company, provided however that if East West does not exercise the East West Monthly Redemption Amount in a corresponding month, then such
East West Monthly Redemption Amount shall be available for East West to redeem in any future month in addition to such future month's
East West Monthly Redemption Amount.
In connection with the East West Financing, Damon
Motors Corporation, a Delaware corporation and a wholly-owned subsidiary of Damon (the "Damon Motors Subsidiary"), and Damon
Motors each entered into a guaranty, dated as of November 13, 2024, whereby Damon Motors and the Damon Motors Subsidiary guaranteed the
performance of the Company's obligations under the East West Note.
F-
102
DAMON INC. (FORMERLY GRAFITI HOLDING INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Additionally, the Company's obligations
under the East West Note are secured. On November 13, 2024, prior to the closing of the Business Combination, (a) Damon entered a security
agreement with East West whereby Damon granted to East West a security interest in all right, title, interest, claims and demands to its
assets, and (b) Damon Motors entered into a security agreement with East West whereby Damon Motors granted to East West a security interest
in all right, title, interest, claims and demands to its assets, and (c) Damon Motors entered into an IP security agreement with East
West whereby Damon Motors granted to East West a security interest in certain of its intellectual property.
Braebeacon
On November 13, 2024, the Company and Braebeacon
Holdings Inc. ("BHI") entered into a note purchase agreement (the "BHI Note Purchase Agreement") pursuant to which
the Company agreed to sell, and BHI agreed to purchase, a secured promissory note in an aggregate original principal amount of $
8,385,000
(the "BHI Note") (the "BHI Financing"; together with the East West Financing, the "November 2024 Debt Financing").
The BHI Note carries an original issue discount of $
1,885,000
. For as long as the BHI funding conditions (as defined in the BHI Note)
are satisfied on each applicable funding date (unless waived by BHI, the proceeds from the BHI Note will be funded in tranches in accordance
with the following schedule: (a) $
2,000,000
on January 31, 2025, (b) $
1,500,000
on April 30, 2025, (c) $
1,500,000
on July 31, 2025, and
(d) $
1,500,000
on September 30, 2025.
Each $
1.00
in funds the Company raises in the
sale of any of its equity shares in a financing for the purpose of raising capital as part of any public offering of its securities pursuant
to a registration statement, at BHI's sole election, BHI may reduce its next funding obligation by $
0.50
. For each $
1.00
funded
by Lender under the BHI Note, an additional $
0.29
in original issue discount will be added to the outstanding balance. The BHI Note will
mature on
18
months from issuance of the initial tranche of funding thereunder. It bears interest at
10
% per annum, which will increase
to
22
% or the maximum permitted by applicable law upon the occurrence of an event of default (as defined in the BHI Note). In such an
event, BHI may declare the outstanding balance, multiplied by 110%, immediately due. Upon a change of control, the balance, multiplied
by 110%, will also become due.
Beginning on the date that is the earlier of (i)
thirteen months from the closing date of the Business Combination and (ii) January 1, 2026, BHI shall have the right to require the Company
to redeem up to an aggregate of one sixth of the initial principal balance of the BHI Note plus any interest accrued thereunder each month
(each monthly exercise, a "BHI Monthly Redemption Amount") by providing written notice to the Company, provided however that
if BHI does not exercise the BHI Monthly Redemption Amount in a corresponding month, then such BHI Monthly Redemption Amount shall be
available for BHI to redeem in any future month in addition to such future month's BHI Monthly Redemption Amount.
In connection with the BHI Financing, the Damon
Motors Subsidiary and Damon Motors, each entered into a guaranty, dated as of November 13, 2024, whereby Damon Motors and the Damon Motors
Subsidiary guaranteed the performance of the Company's obligations under the BHI Note.
Additionally, the Company's obligations
under the BHI Note are secured. On November 13, 2024, prior to the closing of the Business Combination, (a) Damon entered a security agreement
with BHI whereby Damon granted to BHI a security interest in all right, title, interest, claims and demands to its assets, and (b) Damon
Motors entered into a security agreement with BHI whereby Damon Motors granted to BHI a security interest in all right, title, interest,
claims and demands to its assets, and (c) Damon Motors entered into an IP security agreement with BHI whereby Damon Motors granted to
BHI a security interest in certain of its intellectual property.
Pursuant to the Intercreditor Agreement, each
of Streeterville, East West and BHI have agreed to rank pari passu in connection with the above noted financing transactions.
Streeterville Securities Purchase Agreement
On December 20, 2024, the Company entered into
a securities purchase agreement with Streeterville Capital, LLC ("Streeterville"), pursuant to which the Company agreed to
issue and sell to Streeterville pre-paid purchases at an aggregate purchase price of up to $
10,000,000
for the purchase of the Company's
common shares. Each pre-paid purchase includes an original issue discount of
7
% and accrues interest at an annual rate of
8
%. As consideration
for Streeterville's commitment, the Company also agreed to issue
343,053
common shares to Streeterville. For the initial pre-paid
purchase, which closed on December 20, 2024, Streeterville paid $
2,000,000
, creating in an initial principal balance of $
2,140,000
. Also,
$
100,000
from the initial pre-paid purchase funding, and
15
% of the funding from subsequent pre-paid purchases, shall be used to repay
the indebtedness under the secured promissory note issued to Streeterville in June 2024 with an original principal amount of $
6,470,000
.
NASDAQ Notice of Deficiency
On January 7, 2025, the Company received a written
notice The Nasdaq Stock Market LLC notifying the Company that, for the 30 consecutive business days from November 18, 2024 to January
6, 2025, the Company's Market Value of Listed Securities ("MVLS") was below the minimum of $
50
million required for
continued listing on The Nasdaq Global Market. The Company has until July 7, 2025, to regain compliance. The Company intends to monitor
its MVLS and evaluate available options to resolve the deficiency. Additionally, the Company may consider applying to transfer the listing
of its securities to The Nasdaq Capital Market.
Maxim Financial Advisory Agreement
Effective January 7, 2025, we entered into a Financial
Advisory Agreement with Maxim Group LLC (together with its affiliates and subsidiaries, "Maxim"). Pursuant to this agreement,
Maxim has been appointed to provide advisory services to the Company, including consultation on capital raising matters such as a private
placement of equity or equity-linked securities. As compensation for past advisory services following the listing of the Company on Nasdaq,
the Company has issued
514,579
common shares to Maxim Partners LLC, with piggyback registration rights. Maxim's engagement will
terminate 90 days from the execution date.
F-
103
DAMON
MOTORS INC.
CONDENSED
INTERIM UNAUDITED CONSOLIDATED BALANCE SHEETS
As of September
30, 2024 and June 30, 2024
(Expressed
in United States dollars)
September 30,
2024
(unaudited)
June 30,
2024
$
$
ASSETS
Current assets
Cash
113,549
395,580
Funding receivable
1,004,022
-
Other current assets
115,806
90,921
Current assets
1,233,377
486,501
Non-current assets
Premises lease deposits
127,309
126,431
Property and equipment, net
941,807
1,138,420
Non-current assets
1,069,116
1,264,851
Total assets
2,302,493
1,751,352
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
6,657,291
5,924,121
Customer deposits
476,404
482,575
Current portion of operating lease liabilities
363,640
443,519
Current portion of finance lease liabilities
7,329
7,141
Short-term debt
2,507,214
1,099,489
Convertible notes
46,294,751
40,630,756
Financial liability convertible to equity
-
3,200,000
Current liabilities
56,306,629
51,787,601
Non-current liabilities
Non-current portion of operating lease liabilities
175,493
235,492
Non-current portion of finance lease liabilities
178,008
177,403
Non-current liabilities
353,501
412,895
Total liabilities
56,660,130
52,200,496
SHAREHOLDERS' DEFICIT
Common shares without par value, unlimited shares authorized, 13,761,506 shares issued and outstanding as of September 30, 2024 (June 30, 2024 – 12,324,504)
5,138,751
1,938,751
Preferred shares without par value, unlimited shares authorized, 16,758,528 shares issued and outstanding as of September 30, 2024 and June 30, 2024 (Liquidation preference : $48,215,054)
71,590,087
71,590,087
Additional paid in capital
16,933,294
16,629,612
Accumulated deficit
(148,019,769
)
(140,607,594
)
Total shareholders' deficit
(54,357,637
)
(50,449,144
)
Total liabilities and shareholders' deficit
2,302,493
1,751,352
Going Concern
(Note 1)
Commitments
and Contingencies (Note 12)
Subsequent
Events (Note 19)
The
accompanying notes are an integral part of these consolidated financial statements.
F-
104
DAMON
MOTORS INC.
CONDENSED
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three
months ended September 30, 2024 and 2023
(Expressed
in United States dollars)
Three months ended
September 30,
2024
Three months ended
September 30,
2023
Expenses
Research and development, net of tax credits
57,221
1,937,227
General and administrative
790,027
1,092,282
Sales and marketing
174,166
376,312
Depreciation
67,248
80,138
Transaction costs
748,541
458,232
Foreign currency transaction loss/(gain)
62,738
(159,457
)
Loss from Operations
1,899,941
3,784,734
Other expenses
Changes in fair value of financial liabilities
4,657,388
827,304
Finance expense
854,846
765,153
5,512,234
1,592,457
Net loss before income tax
7,412,175
5,377,191
Income tax expense
-
-
Net loss
7,412,175
5,377,191
Loss per share:
Basic and diluted – common shares
(0.54
)
(0.45
)
Weighted average number of shares outstanding:
Basic and diluted – common shares
13,745,886
11,851,349
The
accompanying notes are an integral part of these consolidated financial statements.
F-
105
DAMON
MOTORS INC.
CONDENSED
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
For the three
months ended September 30, 2024 and 2023
(Expressed
in United States dollars)
Common shares
Preferred shares
Additional paid in capital
Accumulated Deficit
Shareholders'
deficit
#
$
#
$
$
$
$
As of June 30, 2024
12,324,504
1,938,751
16,758,528
71,590,087
16,629,612
(140,607,594
)
(50,449,144
)
Conversion of Simple Agreements for Future Equity (SAFEs) at maturity
1,437,002
3,200,000
-
-
-
-
3,200,000
Stock-based compensation
-
-
-
-
16,295
-
16,295
Common share purchase warrants issued in connection with convertible promissory notes
-
-
-
-
287,387
-
287,387
Net loss
-
-
-
-
-
(7,412,175
)
(7,412,175
)
As of September 30, 2024
13,761,506
5,138,751
16,758,528
71,590,087
16,933,294
(148,019,769
)
(54,357,637
)
As of June 30, 2023
11,829,386
1,285,788
16,758,528
71,590,087
9,294,030
(106,639,346
)
(24,469,441
)
Issuance of shares, net of issuance costs
95,380
260,999
-
-
-
-
260,999
Stock-based compensation
-
-
-
-
204,159
-
204,159
Stock options exercised
130,936
149,166
-
-
(129,642
)
-
19,524
Loss for the year
-
-
-
-
-
(5,377,191
)
(5,377,191
)
As of September 30, 2023
12,055,702
1,695,953
16,758,528
71,590,087
9,368,547
(112,016,537
)
(29,361,950
)
The
accompanying notes are an integral part of these consolidated financial statements.
F-
106
DAMON
MOTORS INC.
CONDENSED
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three
months ended September 30, 2024 and 2023
(Expressed
in United States dollars)
Three months ended
September 30,
2024
Three months ended
September 30,
2023
$
$
Operating activities
Net loss:
(7,412,175
)
(5,377,191
)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation
67,248
80,138
Amortization of operating lease right-of-use asset
129,365
136,698
Stock-based compensation
16,295
204,159
Accrued interest added to debt
809,520
446,699
Changes in fair value of financial liabilities
4,657,388
827,304
Foreign exchange loss/(gain)
20,309
(121,753
)
Changes in operating assets and liabilities:
Other current assets and premises lease deposits
(25,763
)
24,756
Funding receivable
(1,004,022
)
-
Accounts payable and accrued liabilities
733,170
(467,843
)
Operating lease
(145,735
)
(67,583
)
Customer deposits
(6,171
)
12,067
Cash used in operating activities
(2,160,571
)
(4,302,549
)
Financing activities
Payments on finance leases
(1,759
)
(3,083
)
Proceeds from convertible notes
555,000
4,950,000
Proceeds from senior secured promissory notes
596,000
-
Proceeds from promissory notes
729,299
-
Repayment of SR&ED loan
-
(37,837
)
Proceeds from exercise of stock options
-
19,524
Cash provided by financing activities
1,878,540
4,928,604
Net change in cash during the period
(282,031
)
626,055
Cash at beginning of period
395,580
2,069,056
Cash at end of period (Note 18)
113,549
2,695,111
Supplemental
Cash Flow Information (Note 18)
The
accompanying notes are an integral part of these consolidated financial statements.
F-
107
DAMON
MOTORS INC.
NOTES TO
THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three
months ended September 30, 2024 and 2023
(Expressed
in United States dollars)
1.
NATURE
                                            OF OPERATIONS AND GOING CONCERN
Nature
of operations
Damon
Motors Inc. was incorporated on July 22, 2016, under the laws of British Columbia. The Company's registered address is Suite 2300,
Bentall 5, 550 Burrard Street, Vancouver, British Columbia, V6C 2B5 and head office and principal address is 704 Alexander Street, Vancouver,
British Columbia, V6A 1E3, Canada. The Company is a leading light electric vehicle manufacturer currently focused on electric motorcycles
including proprietary electric powertrain, shifting and predictive awareness technologies. The Company has a single reportable segment
given that the Company is engaged in the manufacture of motorcycles in North America, and management views the business as a single reporting
segment. See Segment Reporting (Note 16).
On
April 26, 2021, the Company formed a wholly owned subsidiary, Damon Motors Corporation, a corporation organized and registered in the
state of Delaware, USA.
These
condensed interim unaudited consolidated financial statements include the accounts of Damon Motors Inc. and Damon Motors Corporation,
collectively the "Company."
Going
concern
The
accompanying condensed interim unaudited consolidated financial statements of the Company have been prepared assuming the Company will
continue as a going concern in accordance with U.S. GAAP. The going concern basis of presentation assumes that the Company will continue
in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities
and commitments in the normal course of business.
The
Company is subject to a number of risks, including, but not limited to, the need for successful development of products, the need for
additional capital (or financing) to fund operating losses (see below), competition from substitute products and services from larger
companies, protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with changes
in electric automotive technology. The Company's ability to continue as a going concern is dependent upon its ability to obtain
the necessary financing to fund its research and development, complete the construction of its manufacturing facility for the eventual
production of electrical motorcycles and meets its obligations and repay its liabilities arising from normal business operations when
they come due.
The
Company has incurred net losses of $7,412,175 and utilized $2,160,571 of cash in operations for the three months ended September 30,
2024 and has accumulated a deficit as of September 30, 2024 of $148,019,769 and expects to incur future additional losses. These conditions
indicate material uncertainties that cast substantial doubt upon the Company's ability to continue as a going concern within one
year after financial statement issuance date.
When
substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about
the Company's ability to continue as a going concern. The mitigating effect of management's plans, however, is only considered
if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements
are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial
doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are
issued.
F-
108
DAMON
MOTORS INC.
NOTES TO
THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three
months ended September 30, 2024 and 2023
(Expressed
in United States dollars)
1.
NATURE
                                            OF OPERATIONS AND GOING CONCERN (continued)
Going
concern
(continued)
Management's
plans to address the uncertainty that the Company will continue as a going concern include the business combination as well as obtaining
associated debt and equity financing. There is no assurance that the Company's plans to consummate the business combination will
be successful and the Company cannot provide assurance that the Company will secure financing in a timely manner, nor can they provide
assurance that the business combination will be completed. As such, the substantial doubt of the Company's ability to continue
as a going concern has not been alleviated by management's plans.
2.
BASIS
                                            OF PRESENTATION
a)
Basis
                                            of presentation
The
accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States ("U.S. GAAP") and applicable rules and regulations of the Securities and Exchange
Commission ("SEC") regarding financial reporting. Accordingly, they do not include all of the information and footnotes required
by U.S. GAAP for annual audited financial statements and should be read in conjunction with the Company's annual audited consolidated
financial statements as at and for the year ended June 30, 2024.
The
same accounting policies were used in the preparation of these unaudited condensed interim condensed interim unaudited consolidated financial
statements as for the most recent audited annual consolidated financial statements. These condensed interim consolidated financial statements
are unaudited and reflect adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary
to provide a fair statement of results for the interim periods in accordance with U.S. GAAP.
b)
Basis
                                            of measurement
These
financial statements have been prepared on a historical cost basis except for certain financial instruments which are measured at their
fair value as explained in the accounting policies set out below. In addition, these financial statements have been prepared using the
accrual basis of accounting.
c)
Consolidated
                                            statements
The
condensed interim unaudited consolidated financial statements incorporate the financial statements of the Company and its consolidated
subsidiary, Damon Motors Corporation, over which the Company has control. Control occurs when the Company has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power over the
investee to affect its returns. All intercompany transactions and balances between the Company and the subsidiary are eliminated upon
consolidation.
F-
109
DAMON
MOTORS INC.
NOTES TO
THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three
months ended September 30, 2024 and 2023
(Expressed
in United States dollars)
2.
BASIS
                                            OF PRESENTATION (continued)
d)
Business
                                            combination with XTI Aerospace, Inc. ("XTI Aerospace" and formerly known as Inpixon)
On
October 23, 2023, Damon Motors Inc. ("Damon") entered into a Business Combination agreement ("BCA") with XTI
Aerospace (NASDAQ: XTIA), Grafiti Holding Inc. ("Grafiti"), a British Columbia corporation and wholly owned subsidiary of XTI
Aerospace , 1444842 B.C. Ltd., and a wholly owned subsidiary of Grafiti ("Amalco Sub"), pursuant to which it is proposed
that Amalco Sub and Damon amalgamate under the laws of British Columbia, Canada with the amalgamated company (the "Damon Surviving
Corporation") continuing as a wholly owned subsidiary of Grafiti (the "Business Combination").
The
Business Combination is subject to material conditions, including approval of the Business Combination by securities holders of Damon,
approval of the issuance of Grafiti Common Shares to Damon securities holders pursuant to the Business Combination Agreement by a British
Columbia court after a hearing upon the fairness of the terms and conditions of the Business Combination Agreement as required by the
exemption from registration provided by Section 3(a)(10) under the Securities Act of 1933, and approval of the listing of the Grafiti
Common Shares on the Nasdaq Stock Market ("Nasdaq") under the ticker symbol DMN, after giving effect to the Business Combination.
Upon
the consummation of the Business Combination (the "Closing"), both Grafiti Limited (formerly known as Inpixon UK Ltd.), a
subsidiary of Grafiti and the Damon Surviving Corporation will be wholly owned subsidiaries of Grafiti, which will adopt a new name as
determined by Damon.
Holders
of Grafiti Common Shares and warrants, including management of XTI Aerospace that hold Grafiti Common Shares immediately prior to the
closing of the Business Combination, are anticipated to retain approximately 18.75% of the outstanding capital stock of the combined
company, determined on a fully diluted basis. Damon shareholders are anticipated to hold approximately 81.25% of the combined company,
determined on a fully diluted basis. It is anticipated that public trading for the Grafiti Common Shares on the Nasdaq would begin following
the consummation of the Business Combination.
Following
the signing of the Business Combination agreement, on October 26, 2023, Damon issued a convertible promissory note to XTI Aerospace in
an aggregate principal amount of $3.0 million (Note 8) together with the Share purchase Warrants (Note 9) pursuant to a private placement.
The convertible promissory note has a 12% annual interest rate, payable in arrears on the maturity date, June 15, 2024. The full principal
balance and interest on the convertible promissory note will automatically convert into common shares of Damon upon the public listing
of Damon or a successor issuer thereof on a national securities exchange (a "Public Company Event").
On
June 15, 2024, the Company and XTI Aerospace signed a Letter of Agreement amending the maturity date of the notes to September 30, 2024.
On
September 11, 2024, the Company and XTI Aerospace signed another Letter of Agreement amending the maturity date of the notes to October
31, 2024, subject to an additional tolling period of 30 days at the election of the Company upon notice by the Company to the note holders.
F-
110
DAMON
MOTORS INC.
NOTES TO
THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three
months ended September 30, 2024 and 2023
(Expressed
in United States dollars)
3.
SIGNIFICANT
                                            ACCOUNTING POLICIES
a)
Significant
                                            accounting policies
The
accounting policies followed in these condensed interim consolidated financial statements are consistent with those disclosed in Note
3 of the Company's consolidated financial statements for the year ended June 30, 2024.
b)
Critical
                                            accounting estimates and judgements in applying the Company's accounting policies
The
preparation of condensed interim unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of expenses during the reporting periods. Management estimates are periodically
reviewed in light of changes in circumstances, facts and experience and noted that there has been no significant change in estimates
of judgements in the reporting periods. Areas of judgment that have the most significant effect on the amounts recognized in the condensed
interim unaudited consolidated financial statements are disclosed in Note 3 of the Company's consolidated financial statements
for the year ended June 30, 2024.
c)
Reclassifications
Certain
prior period amounts in the condensed interim unaudited consolidated financial statements and notes thereto have been reclassified to
conform to current period presentation. These reclassifications did not impact the previously reported net loss, stockholders'
equity or cash flows, as they represent a reorganization of the presentation of the financial statements rather than a change in the
underlying accounting principles or policies.
d)
Recent
                                            accounting pronouncements not yet adopted
In
November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures",
which amends the disclosure to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant
segment expenses on an annual and interim basis for to enable investors to develop more decision-useful financial analyses. All public
entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after
December 15, 2023. The Company is currently assessing potential impacts of ASU 2023-06 and does not expect the adoption of this guidance
will have a material impact on its condensed consolidated financial statements and disclosures as disclosed in Note 16.
In
December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which
amends the disclosure to address investor requests for more transparency about income tax information through improvements to income
tax disclosures primarily related to the rate reconciliation and income taxes paid information and includes certain other amendments
to improve the effectiveness of income tax disclosures. For entities other than public business entities, the requirements will be
effective for annual periods beginning after December 15, 2025. The guidance will be applied on a prospective basis with the option
to apply the standard retrospectively. Early adoption is permitted. The Company is currently assessing potential impacts of ASU
2023-09 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial
statements and disclosures and the Company is in a loss position and not incurring any tax expenses.
F-
111
DAMON MOTORS
INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
3.
SIGNIFICANT ACCOUNTING POLICIES (continued)
d)
Recent accounting pronouncements not yet adopted (continued)
In November 2024, the FASB issued ASU
No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation
of Income Statement Expenses", that requires public companies to disclose, in interim and reporting periods, additional information
about certain expenses in the financial statements. For public business entities, it is effective for annual periods beginning after December
15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective
basis or retrospective basis. The Company is currently evaluating the impact that the updated standard will have on the Company's
disclosures within the condensed consolidated financial statements.
4.
FUNDING RECEIVABLE
Included in funding receivable is FY2024
Canadian Scientific Research & Development ("SR&ED") tax credit receivable. On October 4, 2024, the Company received
the Notice of Assessment for 2024 SR&ED tax credit refund amount of $1,004,022 (CAD$1,355,329) from CRA and the tax credit refund
was received in full on October 16, 2024.
The Company accounts for these credits
as a reduction to research and development costs and will recognize these claims when it is probable that the expense incurred qualify
for the government grant claim and that the Company has complied with all the conditions to realize the claim. Otherwise, the recognition
of government grant claim would be deferred until the recognition criteria are satisfied.
5.
PROPERTY AND EQUIPMENT,
                                            NET
Construction
in Progress
Equipment and
leasehold
improvements
Operating
lease right-of-
use asset
Financing
lease right-of-
use asset
Total
$
$
$
$
$
Cost
Balance, July 1, 2023
-
1,131,295
2,358,899
259,211
3,749,405
Impairment
-
-
(572,171
)
-
(572,171
)
Balance, June 30, 2024 and September 30, 2024
-
1,131,295
1,786,728
259,211
3,177,234
Accumulated depreciation
Balance, July 1, 2023
-
517,524
1,107,514
120,301
1,745,339
Depreciation
-
256,977
542,496
46,447
845,920
Impairment
-
-
(552,445
)
-
(552,445
)
Balance, June 30, 2024
-
774,501
1,097,565
166,748
2,038,814
Depreciation
-
56,862
129,365
10,386
196,613
Balance, September 30, 2024
-
831,363
1,226,930
177,134
2,235,427
Carrying amount
Balance, June 30, 2024
-
356,794
689,163
92,463
1,138,420
Balance, September 30, 2024
-
299,932
559,798
82,077
941,807
F-
112
DAMON MOTORS
INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
5.
PROPERTY AND EQUIPMENT,
                                            NET (continued)
During the three months ended September
30, 2024, the Company incurred amortization of right of use asset in the consolidated statements of operations of $129,365 (three months
ended September 30, 2023 – $136,698) which is included in the above table under depreciation.
6.
ACCOUNTS PAYABLE AND
                                            ACCRUED LIABILITIES
September 30,
2024
June 30,
2024
$
$
Accounts payable
3,946,727
3,172,403
Accrued wages
1,404,758
1,408,358
Accrued liabilities and other payables
1,305,806
1,343,360
6,657,291
5,924,121
As at September 30, 2024, $207,350
(June 30, 2024 - $220,526) was related to severance and included in accrued wages.
Included in accrued liabilities and
other payables is an amount owing for the surrender and settlement of lease of Surrey manufacturing facility of $240,843 as of September
30, 2024 (June 30, 2024 - $237,452). On April 29, 2024 the Company requested payment deferment of the instalment payment due on March
1, 2024 and May 1, 2024 respectively to July 1, 2024. On September 6, 2024, the Lessor agreed to defer the payments due on July 1, 2024
to be paid on or before September 30, 2024.
On October 1, 2024, the Company and
the Lessor signed an amendment to the Surrender of Lease Agreement whereby the Lessor hereby agrees to a waiver of breach by the Company
of its payment obligations in subsection 3.1(e), (f) and (g) of the Surrender of Lease Agreement by the Tenant. In addition, the subsections
(e), (f) and (g) of Section 3.1 of the Surrender of Lease Agreement are deleted in their entirety and replaced, whereby the Company agrees
to pay the Lessor the instalment amount of Canadian dollars $108,333 for each instalment, 30 days, 60 days and 90 days respectively, following
the completion of the Business Combination.
7.
LEASES
The
Company has operating leases for its office spaces and finance leases for its equipment trailer.
The
lease liability in connection with operating and finance leases are included in non-current lease liabilities and current portion of lease
liabilities on the consolidated balance sheets as follows:
Operating
lease
Finance
leases
September 30,
2024
$
$
$
Non-current portion of lease liabilities
175,493
178,008
353,501
Current portion of lease liabilities
363,640
7,329
370,969
Total lease liabilities
539,133
185,337
724,470
F-
113
DAMON MOTORS
INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
7.
LEASES (continued)
Operating
lease
Finance
leases
June 30,
2024
$
$
$
Non-current portion of lease liabilities
235,492
177,403
412,895
Current portion of lease liabilities
443,519
7,141
450,660
Total lease liabilities
679,011
184,544
863,555
The
right-of-use assets in connection with leases are included under property and equipment on the consolidated balance sheets and are separately
disclosed in Note 5.
The
following lease costs are included in the consolidated statements of operations:
Three months
ended
September 30,
2024
Three months
ended
September 30,
2023
$
$
Finance lease costs:
Amortization of right-of-use assets
10,386
11,835
Interest on lease liability
2,240
2,492
Operating lease costs
145,735
216,832
Rental income
-
(57,753
)
Total lease costs
158,361
173,406
The
future payments due under operating and finance leases as at September 30, 2024 is as follows:
Operating
lease
Finance
leases
Total
$
$
$
Undiscounted lease payments:
2025
400,024
16,164
416,188
2026
181,767
183,697
365,464
Total undiscounted lease payments
581,791
199,861
781,652
Discount
(42,658
)
(14,524
)
(57,182
)
Lease liabilities
539,133
185,337
724,470
F-
114
DAMON MOTORS
INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
8.
SHORT-TERM DEBT
SR&ED
financing
Promissory
note
Secured
promissory
note
Senior
secured
promissory
note
Total
$
$
$
$
$
Balance, July 1, 2023
1,095,837
761,713
-
-
1,857,550
Promissory notes issued as settlement and payment of professional fees owing
-
542,753
-
-
542,753
Funds advanced
-
-
-
550,000
550,000
Foreign exchange adjustment
(45,612
)
(14,030
)
-
-
(59,642
)
Interest paid, net of interest capitalized
(133,686
)
33,658
-
603
(99,425
)
Repayment of principal
(916,539
)
-
-
-
(916,539
)
Debt settled via issuance of convertible promissory notes and common share purchase warrants (Note 9)
-
(775,208
)
-
-
(775,208
)
Balance, June 30, 2024
-
548,886
-
550,603
1,099,489
Funds advanced
-
-
729,299
596,000
1,325,299
Foreign exchange adjustment
-
-
11,900
-
11,900
Interest capitalized
-
8,193
38,322
24,011
70,526
Balance, September 30, 2024
-
557,079
779,521
1,170,614
2,507,214
Promissory
note
On April 16, 2024, the Company signed
an agreement to issue as payment and settlement of professional fees owing, a promissory note in the aggregate amount of $542,753 with
an interest rate at 5.5% per annum in favour of Wilson Sonsini Goodrich & Rosati Professional Corporation ("WSGR"). All
unpaid principal, together with any then unpaid and accrued interest and other amounts payable hereunder shall be due and payable on the
earliest of (i) September 1, 2024; (ii) the closing of a Debt Financing or Equity Financing; (iii) the closing of a Change of Control
transaction; (iv) the Company becomes cash flow positive and is in a position to make payment on the outstanding invoices; or (v) upon
the occurrence of an Event of Default. If all unpaid principal and accrued interest shall not be paid when otherwise due, the interest
rate per annum on the note shall increase from 5.5% per annum to 7% per annum.
On September 16, 2024, the Company
signed amendment to the promissory note agreement with WSGR to modify the due date September 1, 2024 above to October 31, 2024.
Secured
promissory note
On
August 5 2024, the Company issued a promissory note to arms-length parties with principal amount of $364,649 (CAD$500,000) secured against
future SR&ED tax credit refund expected to be received from year-end tax returns for 2024 submitted to CRA and substantially all of
the assets of the Company. The loan accrues interest at a rate of 3% per month and matures on or before November 15, 2024.
On
August 11, 2024, the Company issued another promissory note to arms-length parties with principal amount of $364,650 (CAD$500,000) secured
against substantially all of the assets of the Company on a pari passu basis with the promissory note issued on August 6, 2024. The loan
accrues interest at a rate of 3% per month and matures on or before November 15, 2024.
F-
115
DAMON MOTORS
INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
8.
SHORT-TERM DEBT (continued)
Senior
secured promissory note
On June 26, 2024 and June 28, 2024,
the Company issued a senior secured promissory note ("Senior Secured Note") in the aggregate amount of $350,000 and $200,000
respectively (up to an aggregate principal amount of $1,000,000) with interest rate at 10.0% per annum in favour of Grafiti Holding Inc
("Grafiti"). All unpaid principal, together with any then unpaid and accrued interest and other amounts payable hereunder
shall be due and payable on the earliest of (i) December 31, 2024; (ii) upon the occurrence of an event of default; (iii) within three
business days as defined in the Business Combination Agreement ("BCA") following termination of the BCA by borrower or lender
pursuant to Section 9.1(b) of the BCA or by lender pursuant to Section 9.1(d) of the BCA. The Senior Secured Note is secured by substantially
all of the assets of the Company.
On July 3, 2024, the Company received
an additional loan under the senior secured promissory note in the aggregate amount of $396,000. On September 25, 2024, the Company amended
the senior secured promissory note dated June 26, 2024 increasing the maximum aggregate principal amount of the note from $1,000,000 to
$1,150,000. On the same date, the Company drew down an additional $200,000 on the note.
The
weighted average interest rate on the debt is 17.2% as of September 30, 2024 (2023 – 14.9%).
9.
CONVERTIBLE NOTES
$
Balance, July 1, 2023
14,727,183
Funds advanced
11,549,945
Convertible note issued for settlement of debt
1,308,441
Warrant bifurcated classified as liability (Note 10)
(1,086,240
)
Warrant bifurcated classified as equity
(674,034
)
Interest accrued, net of capitalized interest paid
1,793,574
Changes in fair value of financial liabilities
13,011,887
Balance, June 30, 2024
40,630,756
Funds advanced
555,000
Warrant bifurcated classified as equity
(287,387
)
Interest accrued
738,994
Changes in fair value of financial liabilities
4,657,388
Balance, September 30, 2024
46,294,751
In
July and August 2024, the Company issued four tranches of convertible promissory notes ("Tranche 19" to "Tranche 22")
to arms-length parties with an aggregate principal amount of $555,000 at valuation cap of $125,000,000 and interest rate of 12% per annum,
payable in arrears on the maturity date, one year from issuance of the note. Any Principal which is not paid when due shall bear interest
at the rate of the lesser of (i) 16% per annum and (ii) the maximum amount permitted by the applicable law from the due date thereof until
the same is paid. The convertible promissory notes holders were also issued 202,820 common share purchase warrants to subscribe for, and
purchase of the Company common shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted
capitalization at closing date.
For
details of the terms and conditions of the common share purchase warrants issued, refer to Note 10.
F-
116
DAMON MOTORS
INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
9.
CONVERTIBLE NOTES (continued)
Summary of the convertible notes issued
and their key terms are as follows:
Tranche
Date of issuance
Amount
issued
Valuation
cap
Interest
rate
Interest
    due date
Maturity
    date
$
$' million
%
Tranche 1
October to November 2022
5,700,000
125
(1)
12
%
(1)
October 1, 2023
(1)(2)
October 31, 2024
(7)
October 31, 2024
(7)
Tranche 2
January to February 2023
1,020,000
150
12
%
July 1, 2023
(2)
October 31, 2024
(7)
October 31, 2024
(7)
February 2023
100,000
125
12
%
July 1, 2023
(2)
October 31, 2024
(7)
October 31, 2024
(7)
Tranche 3
April to May 2023
1,900,000
125
12
%
October 1, 2023
(2)
October 31, 2024
(7)
October 31, 2024
(7)
Tranche 4
September 16, 2023
2,500,000
125
12
%
October 31, 2024
(3)(4)(6)
October 31, 2024
(6)
Tranche 5
September 30, 2023
375,000
125
12
%
October 31, 2024
(7)
October 31, 2024
(7)
Tranche 6
August 10, 2023
1,025,000
125
12
%
October 31, 2024
(3)(4)(6)
October 31, 2024
(6)
Tranche 7
September 13, 2023
1,020,000
125
12
%
October 31, 2024
(3)(4)(6)
October 31, 2024
(6)
Tranche 8
September 26, 2023
2,705,000
125
12
%
October 31, 2024
(3)(4)(6)
October 31, 2024
(6)
Tranche 9
September 30, 2023
200,000
125
12
%
October 31, 2024
(3)(4)(7)
October 31, 2024
(7)
Tranche 10
October 26, 2023
4,275,000
125
12
%
October 31, 2024
(3)(4)(6)
October 31, 2024
(6)
Tranche 11
December 15, 2023
350,000
125
12
%
October 31, 2024
(3)(4)(6)
October 31, 2024
(6)
Tranche 12
March 12, 2024
775,208
125
12
%
March 11, 2025
(3)(5)
March 11, 2025
Tranche 13
March 26, 2024
88,391
125
12
%
March 25, 2025
(3)(5)
March 25, 2025
Tranche 14
April 5, 2024
304,945
125
12
%
October 31, 2024
(3)(4)(6)
October 31, 2024
(6)
Tranche 15
April 15, 2024
1,500,000
125
12
%
October 31, 2024
(3)(4)(6)
October 31, 2024
(6)
Tranche 16
April 26, 2024
150,000
125
12
%
October 31, 2024
(3)(4)(6)
October 31, 2024
(6)
Tranche 17
May 1, 2024
76,228
125
12
%
April 30, 2025
(3)(5)
April 30, 2025
Tranche 18
May 29, 2024
20,000
125
12
%
May 28, 2025
(3)(5)
May 28, 2025
Balance, June 30, 2024
24,084,772
Tranche 19
July 20, 2024
250,000
125
12
%
July 19, 2025
(3)(5)
July 19, 2025
Tranche 20
July 22, 2024
100,000
125
12
%
July 21, 2025
(3)(5)
July 21, 2025
Tranche 21
July 30, 2024
20,000
125
12
%
July 29, 2025
(3)(5)
July 29, 2025
Tranche 22
August 30, 2024
185,000
125
12
%
August 29, 2025
(3)(5)
August 29, 2025
Balance, September 30, 2024
24,639,772
Note
1 - On April 25, 2023, the Tranche 1 convertible notes with aggregate principal amount of $700,000 has its terms amended to revise
the valuation cap from $350,000,000 to $125,000,000 and revise the interest rate from 8% per annum to 12% per annum, payable in
arrears on October 1, 2023. On October 11, 2023, the convertible notes holder with aggregate principal amount of $5,000,000 had its
terms amended to revise the valuation cap from $350,000,000 to $125,000,000 and the interest rate revised from 8% per annum to 12%
per annum, payable in arrears on October 1, 2023.
Note
2 - The Company negotiated to defer payments of convertible debt interest and include the interest amount into the investment amount for
conversion on maturity. The agreement for the deferment of the interest due on July 1, 2023 for Tranche 2 of $29,264, and on October 1,
2023 for Tranche 1 and Tranche 3 of $76,438 and $100,537, respectively to maturity date.
Note
3 - Any Principal which is not paid when due shall bear interest at the rate of the lesser of (i) 16% per annum and (ii) the maximum amount
permitted by the applicable law from the due date thereof until the same is paid.
Note
4 - Convertible promissory notes holders were also issued common share purchase warrants (Note 10) to subscribe for, and purchase of the
Company common shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization
at closing date.
Note
5 - Convertible promissory notes holders were also issued common share purchase warrants (Note 10) to subscribe for, and purchase of the
Company common shares at the exercise price of $2.7364 per share.
Note
6 - On June 15, 2024, the Company and the convertible promissory note holders entered into a Letter of Agreement amending the maturity
of the notes, June 15, 2024, to mature on September 30, 2024. The maturity date of the notes was further amended on September 11, 2024
to mature on October 31, 2024, subject to an additional tolling period of 30 days at the election of the Company upon notice by the Company
to the note holders.
Note
7 - On June 26, 2024, the Company and the convertible promissory note holders entered into a Letter of Agreement amending the maturity
of the notes, June 30, 2024, to mature on September 30, 2024. The maturity date of the notes was further amended on September 11, 2024
to mature on October 31, 2024, subject to an additional tolling period of 30 days at the election of the Company upon notice by the Company
to the note holders.
F-
117
DAMON MOTORS
INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
9.
CONVERTIBLE NOTES (continued)
On September 11, 2024, the Company
and the convertible promissory note holders entered into a Letter of Agreement under the same term, further amending the maturity of the
notes, September 30, 2024 to mature on October 31, 2024, subject to an additional tolling period of 30 days at the election of the Company
upon notice by the Company to the note holders.
The
Company may not prepay the principal amount and the accrued and unpaid interest in whole or in part without the written consent of the
convertible noteholders. The convertible notes will rank pari passu in right of payment with respect to each other, and all payment to
each of the convertible noteholders will be made pro rata among the convertible noteholders based upon the aggregate outstanding principal
amount of the convertible promissory note immediately before any such payment.
Conversion
events
In
the event of a change of control, the convertible noteholders would have the right to either:
●
convert
principal and unpaid interest into shares at a conversion price which is lower of (i) the respective valuation cap (for Tranches 4 through
22, the valuation cap is reduced to $93,750,000 if event of default occurs prior to conversion) divided by the diluted capitalization
and (ii) discounted conversion price of 75% (with 2.5% increase in discount every 6 months from issuance date for Tranches 1 through
2) multiplied by the price per share ascribed to the common share in the change of control event; or
●
require
the Company to repurchase their convertible notes in cash, in whole or in part, at a price equal to 100% of the principal amount of the
convertible notes plus accrued and unpaid interest (for Tranches 1 through 3 and at 25% redemption premium for Tranches 4 through 22)
thereon to the date of repurchase.
In
the event of a qualified financing, which refers to the next transaction after the issue date and before the maturity date in which the
Company issues and sells equity securities, with the principal purpose of raising capital (for Tranches 1 through 3) or a Public Company
event, convertible notes include automatic mandatory conversion features resulting in the receipt of shares at a conversion price which
is lower of (i) the valuation cap (for Tranches 4 through 22), the cap price further reduced to $93,750,000 if event of default occurs
prior to conversion) divided by diluted capitalization immediately prior to the event of qualified financing or Public Company event and
(ii) the discounted conversion price of 25% (with 2.5% increase in discount every 6 months from issuance date for Tranches 1 through 3)
applied to the lowest price paid/offered for equity security subject to a cap price of $125,000,000 multiplied by a price per share of
the qualified financing or Public Company event.
Diluted
capitalization refers to aggregate number of outstanding common shares immediately prior to the closing or occurrence of a qualified financing,
change of control, or Public Company event, as applicable.
In
the event that the convertible notes are not converted prior to maturity date, the Company is obligated to settle the convertible notes
by paying in cash equivalent to 100% of the convertible notes principal amount and the accrued and unpaid interest.
As
the conversion features were not required to be bifurcated and as none of the components of convertible note were required to be classified
under equity, the Company made the election to measure the convertible notes subsequently at fair value through profit and loss.
F-
118
DAMON MOTORS
INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
9.
CONVERTIBLE NOTES (continued)
At
inception, the proceeds from the convertible notes issued with detachable share purchase warrants for Tranches 4 to 11, Tranches 14 to
16 and Tranche 22 to were determined to be their fair values, were allocated between the convertible notes issued with detachable share
purchase warrants based on the residual method. During the three months ended September 30, 2024, the Company issued $555,000 of convertible
notes in Tranches 19 to 22. The fair value of these convertible notes of $267,613 was determined as discussed below, with the residual
amount of $287,387 (Note 10) allocated to the share purchase warrants assessed to meet the equity classification requirements and was
recorded as a component of additional paid-in capital.
Management
has determined that due to the complexity of the various embedded features and the short life expected of the notes, it will elect the
fair value option under ASC 825-10-1 as the instruments are eligible for the fair value election under ASC 825-10. As a result, the entire
convertible promissory note is carried at fair value and the difference between the aggregate fair value and aggregate unpaid principal
balance of the convertible notes for the three months ended September 30, 2024 totaling $4,657,388 (three months ended September 30, 2023
– $1,250,971) are accounted as changes in fair value of financial liabilities in the statements of operations. No amounts were recognized
in other comprehensive income as the changes in fair value due to credit risk were nominal.
During
the three months ended September 30, 2024, the Company expensed $nil (three months ended September 30, 2023 – $280,000) in transaction
costs related to issuance of convertible promissory notes in the consolidated statements of operations.
The
convertible notes are valued by management at each measurement date based on the Company's estimated enterprise value implied by
the most comparable transaction and allocating the value to each of the Company's equity-linked instruments (preferred shares, SAFE
agreements, convertible promissory notes, stock options and common shares) based on their respective characteristics and rights. In arriving
at the value attributable to each instrument, the Company applies an option pricing model. The Company's model values the preferred
shares, SAFEs, convertible promissory notes, common shares, warrants and stock options as call options on the Company's equity value
with exercise prices based on the conversion options of the respective instruments. The model used the following assumptions as at September
30, 2024 and June 30, 2024, including volatility, risk free rates and management's best estimate of the expected time for the occurrence
of a conversion event as described below.
September 30,
2024
June 30,
2024
Annualized volatility
70% – 90
%
70% – 90
%
Expected time to liquidity
0.5 – 1.5 year
0.5 – 1.5 year
Dividend rate
0
%
0
%
Risk-free interest rate
3.98
%
5.09
%
F-
119
DAMON MOTORS
INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
10.
WARRANTS AND DERIVATIVE WARRANT LIABILITIES
The
Company accounts for common share purchase warrants as either equity instruments or derivative liabilities depending on the specific terms
of the warrant agreement. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet
the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under
ASC 815, including whether the warrants are indexed to the Company's own common shares. We classify derivative warrant liabilities
on the balance sheet at fair value, and changes in fair value during the periods presented in the statement of operations, which is revalued
at each balance sheet date subsequent to the initial issuance of the common share purchase warrant. For warrants that meet the criteria
for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.
In
July and August 2024, in connection with the issuance of Tranche 19 through 22 convertible promissory notes to arms-length parties (Note
9), the Company issued 202,820 common share purchase warrants to the noteholders. Similarly, each warrant is exercisable anytime for 1
common share of the Company at an exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization
on closing date. The holder of the common share warrants can exercise the warrant either fully or partially at any time from issuance
date until its expiry, 5 years from issuance date.
In
the event there is no effective registration statement or prospectus available for resale of shares under the warrant agreement within
180 days following the closing of the Public Company event, the warrant holder can exercise the warrants, in whole or in part, on a cashless
basis for the number of shares computed as:
i.
the difference between the exercise price and volume-weighted average
price ("VWAP") on trading day immediately preceding the date of notice of exercise provided notice is in accordance with section
2(a) of the note common share purchase agreement.
ii.
the difference between the exercise price and, at holder's option:
a.
VWAP on trading day immediately preceding the date of notice of exercise;
or
b.
Bid price of the Company's common share on principal trading market
on the date of notice of exercise.
iii.
the difference between the exercise price and VWAP on date of notice
of exercise.
The
warrant holder for tranches 4 and tranches 6 through 11 may be entitled to additional 3% shares of the unexercised part of the warrant
(up to a maximum of 8%) that may be issued for each 30-day registration statement default past the registration deadline (i.e., 180 days
of Public Company event) along with liquidated damages up to a maximum of $250,000.
The
warrant holder's option for net cash settlement (equal to Black Scholes value) in the event a fundamental transaction occurs at
or before a Public Company event and which is within the control of the Company including approved by the Company's Board. However,
if the transaction is outside the control of the Company or board, the warrant holder shall receive the same form and type of consideration
as received by common stockholders in connection with the fundamental transaction.
F-
120
DAMON MOTORS
INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
10.
WARRANTS AND DERIVATIVE WARRANT LIABILITIES (continued)
Fundamental
transaction refers to one or more related transactions that results in (i) merger or consolidation of the Company with another, (ii) any
sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets, (iii) purchase
offer, tender offer or exchange offer to sell, tender or exchange their shares for other securities, cash or property and has been accepted
by the holders of 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company,
(iv) reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the
Common Shares are effectively converted into or exchanged for other securities, cash or property, or (v) a stock or share purchase agreement
or other business combination with another resulting in acquisition of 50% or more of the outstanding Common Shares or 50% or more of
the voting power of the common equity of the Company.
Upon
exercise, the holders will pay the Company the respective exercise price for each warrant exercised in exchange for one common share of
the Company and the fair value at the date of exercise and the associated non-cash liability will be reclassified to share capital. The
non-cash liability associated with any warrants that expire unexercised will be recorded as a gain in the consolidated statements of operations.
Unexercised warrants shall be exercised automatically on a cashless basis on the termination date.
Liability-classified
warrants
At
inception, the proceeds from the convertible notes were allocated between the convertible notes and the warrants based on the residual
method allocated to the warrants and for the warrants that did not meet the indexation and equity classification requirements, the warrants
are classified as derivative liabilities. The warrants are subsequently remeasured at fair value and accounted as changes in fair value
of derivative liabilities in the statements of operations.
The
fair value of derivative warrant liabilities was estimated by management at year end or each measurement date based on the Company's
estimated enterprise value implied by the most comparable transaction and allocating the value to each of the Company's equity-linked
instruments (preferred shares, SAFE agreements, convertible promissory notes, stock options and common shares) based on their respective
characteristics and rights. In arriving at the value attributable to each instrument, the Company applies an option pricing model. The
Company's model values the preferred shares, SAFEs, convertible promissory notes, common shares, warrants and stock options as call
options on the Company's equity value with exercise prices based on the conversion options of the respective instruments. The model
used the following assumptions as at September 30, 2024 and June 30, 2024, including volatility, risk free rates and management's
best estimate of the expected time for the occurrence of a conversion event as described in Note 9 above.
F-
121
DAMON MOTORS INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
10.
WARRANTS AND DERIVATIVE WARRANT LIABILITIES (continued)
Liability-classified
warrants
(continued)
Changes
in the value of the derivative liability related to the warrants for the three months ended September 30, 2024 and the year ended June
30, 2024 were as follows:
Number of
warrants
Amount
#
$
Balance, July 1, 2023
950,153
521,950
Bifurcated value of warrant (Note 9)
3,809,030
1,086,240
Change in fair value of derivative liabilities
-
4,820,562
Liability-classified warrants reclassified to equity-classified warrants
(4,759,183
)
(6,428,752
)
Balance, June 30, 2024 and September 30, 2024
-
-
In
June 2024, the Company, with the consent of warrant holders, amended the terms of the common share purchase warrant to be indexed to the
Company's equity. These warrants are reclassified from liability-classified warrants to equity-classified warrants and recorded
as a component of additional paid-in capital.
The
warrants were initially classified as liability and elected to measure at fair value because they failed the fixed shares to fixed monetary
amount test in accordance with ASC 815 due to the provision in section 3b of the original warrants agreement whereby the warrants'
exercise price shall be reduced to lower exercise price on:
●
the issuance of new options or common share equivalents at an exercise
price that is less than the warrants' exercise price immediately before such issuance; or
●
on the modification of any existing options or common share equivalents
at an exercise price that is less than the warrant's exercise price immediately before such modification
Section
3b resulted in an adjustment to the warrants exercise price on change of existing equity-linked instruments which did not meet the definition
of a down-round feature as it was based on neither the sale nor the issuance of stock or a financial instrument. Instead, it was based
on the modification of existing instruments.
Accordingly,
as the adjustment pursuant to section 3b of the warrant agreement was not a down-round feature as defined by ASU 2017-11, the warrants
failed to meet the requirements of ASC 815 of a fixed shares for fixed monetary amount and accordingly were not considered as Indexed
to the Company's own stock pursuant to ASC 815.
The
Company has amended the warrant agreements to remove section 3b. Additionally, the warrants exercise price is modified to make it fixed
at $2.7364 per common share. As a result of these changes to the warrant agreement, the warrants are eligible to pass the fixed shares
for fixed monetary amount test and considered as indexed to the Company's own stock pursuant to ASC 815 and qualify for equity classification.
F-
122
DAMON MOTORS INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
10.
WARRANTS AND DERIVATIVE WARRANT LIABILITIES (continued)
Equity-classified
warrants
In
connection with the issuance of Tranche 19 to Tranche 22 convertible promissory notes to arms-length parties (Note 9), the Company issued
common share purchase warrants to the noteholders. At inception, these warrants were assessed to meet the equity classification requirements
and fair value of the warrants of $287,387 was recorded as a component of additional paid-in capital.
The following table provides
the relevant information on the outstanding warrants as of September 30, 2024:
Date of issuance
Number of
warrants
outstanding
Number of
warrants
exercisable
Exercise
price
Expiry date
#
#
$
June 16, 2023
950,153
(1)
950,153
2.7364
June 15, 2028
August 10, 2023
389,559
(1)
389,559
2.7364
August 9, 2028
September 13, 2023
387,659
(1)
387,659
2.7364
September 12, 2028
September 26, 2023
1,028,057
(1)
1,028,057
2.7364
September 25, 2028
September 30, 2023
73,088
(1)
73,088
2.7364
September 29, 2028
October 26, 2023
1,624,747
(1)
1,624,747
2.7364
October 25, 2028
December 15, 2023
133,020
(1)
133,020
2.7364
December 14, 2028
April 5, 2024
115,892
(1)
115,892
2.7364
April 4, 2029
April 26, 2024
57,008
(1)
57,008
2.7364
April 25, 2029
Liability-classified warrants issued
4,759,183
4,759,183
Liability-classified warrants reclassified to equity-classified warrants
(4,759,183
)
(4,759,183
)
Balance of liability-classified warrants as of June 30, 2024 and September 30, 2024
-
-
March 12, 2024
283,294
283,294
2.7364
March 11, 2029
March 26, 2024
32,302
32,302
2.7364
March 25, 2029
April 15, 2024
548,160
548,160
2.7364
April 14, 2029
May 1, 2024
27,857
27,857
2.7364
April 30, 2029
May 29, 2024
7,309
7,309
2.7364
May 28, 2029
Equity-classified warrants issued
898,922
898,922
Liability-classified warrants reclassified to equity-classified warrants
4,759,183
4,759,183
Balance of equity-classified warrants as of June 30, 2024
5,658,105
5,658,105
July 20, 2024
91,361
91,361
2.7364
July 19, 2029
July 22, 2024
36,544
36,544
2.7364
July 21, 2029
July 30, 2024
7,309
7,309
2.7364
July 29, 2029
August 30, 2024
67,606
67,606
2.7364
August 29, 2029
Balance of equity-classified warrants as of September 30, 2024
5,860,925
5,860,925
(1)
In June 2024, the Company, with the consent of warrant holders, amended
the terms of the common share purchase warrant to be indexed to the Company's equity. As a result, these warrants are reclassified
from liability-classified warrants to equity-classified warrants and recorded as a component of additional paid-in capital
F-
123
DAMON MOTORS INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
11.
FINANCIAL LIABILITY CONVERTIBLE TO EQUITY
Amount
$
Balance, July 1, 2023
2,700,000
Foreign exchange adjustment
(92,543
)
Changes in fair value
592,543
Balance, June 30, 2024
3,200,000
Converted to common shares (Note 13)
(3,200,000
)
Balance, September 30, 2024
-
From
August through September 2022, the Company entered into multiple SAFE agreements certain investors and received $2,005,213. The SAFEs
are recorded as a liability measured at fair value at inception and subsequently carried at fair value with changes in fair value recorded
in the statements of operations.
The SAFEs may be converted or paid
in cash on the occurrence of the following events/transactions before the maturity date:
●
In the event of equity financing, the Company will automatically issue to the SAFE holders a number of
SAFE shares equal to the quotient obtained by dividing (i) the sum of the SAFE proceeds and the return amount (which is an amount determined
by applying a rate of return of 8% per annum, on a non-compounding basis, on the SAFE Proceeds as calculated from the issue date to, but
excluding, the date of expiration or termination of the SAFEs) by (ii) the conversion Price.
●
In the event of liquidation, SAFE holders at their option have a right to receive either (i) cash payment
equivalent to the respective SAFE proceeds or (ii) automatically receive common shares (in the case of change of control) or listed securities
(in the case of a Public company event), as applicable, that is equal to the quotient obtained by dividing (i) the sum of the SAFE proceeds
and the return amount (which is an amount determined by applying a rate of return of 8% per annum, on a non-compounding basis, on the
SAFE Proceeds as calculated from the issue date to, but excluding, the date of expiration or termination of the SAFEs) by (ii) the liquidity
price, if the SAFE holders fails to select the cash option.
●
If there is a dissolution event, the SAFE holders at their option have a right to receive either (i) cash
equivalent to the respective SAFE proceeds or (ii) automatically receive common shares that is equal to the quotient obtained by dividing
(i) the sum of the SAFE proceeds and the return amount (which is an amount determined by applying a rate of return of 8% per annum, on
a non-compounding basis, on the SAFE proceeds as calculated from the issue date to, but excluding, the date of expiration or termination
of the SAFEs) by (ii) the dissolution price, if the SAFE holders fails to select the cash option.
At
maturity, the SAFE holders automatically receive common shares of the Company that are equal to the quotient obtained by dividing (i)
the sum of the SAFE proceeds and the return amount (which is an amount determined by applying a rate of return of 8% per annum, on a non-compounding
basis, on the SAFE proceeds as calculated from the issue date to, but excluding, the date of expiration or termination of the SAFEs) by
(ii) the maturity conversion price.
On
July 1, 2024, the SAFEs matured and the SAFE holders received 1,437,002 common shares (Note 13).
F-
124
DAMON MOTORS INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
11.
FINANCIAL LIABILITY CONVERTIBLE TO EQUITY (continued)
The
SAFEs are valued by management at each measurement date based on the Company's estimated enterprise value implied by the most comparable
transaction and allocating the value to each of the Company's equity-linked instruments (preferred shares, SAFE agreements, convertible
promissory notes, share purchase warrants, stock options and common shares) based on their respective characteristics and rights. In arriving
at the value attributable to each instrument, the Company applies an option pricing model. The Company's model values the preferred
shares, SAFEs, common shares, and stock options as call options on the Company's equity value with exercise prices based on the
conversion options of the respective instruments.
The
model used for the valuation of convertible promissory notes, share purchase warrants and SAFEs used certain assumptions as of September
30, 2024 and June 30, 2024, including volatility, risk free rates and management's best estimate of the expected time for the occurrence
of a conversion event as described in Note 9 above.
During the year ended June 30, 2024,
the common share price valuation estimate used for the SAFE valuation immediately prior to the conversion of the SAFEs was $3.77.
12.
COMMITMENTS AND CONTINGENCIES
A summary of undiscounted liabilities
and future operating commitments as at September 30, 2024:
Total
Within
1 year
2 - 5
years
Greater than
5 years
$
$
$
$
Purchase obligations
1,611,529
1,490,185
121,344
-
Investment obligation
(1)
1,000,000
1,000,000
-
-
Total financial liabilities and commitments
2,611,529
2,490,185
121,344
-
(1)
The Company entered into a strategic partnership arrangement with a
third-party. As part of the agreement, the Company agree to invest an aggregate amount of $1,000,000 in the third-party upon a future
financing and negotiation of terms that are agreed to by both parties during the term of the agreement. As at the date of these financial
statements no such arrangement has been made.
On
September 30, 2023, the Company signed a full surrender agreement with the Lessor of the Surrey manufacturing facility. Per the agreement,
cash consideration must be paid on or before the dates set forth in the agreement. In the event that the Company defaults on such payment
obligations, the Company will immediately have to pay the Lessor the full amount of all rent and other amounts, which would have otherwise
been payable by the Company during the term if the lease had not surrendered, less any cash consideration paid and any rent which the
Landlord recovers (or is reasonably expected to recover) from any replacement tenant(s) at the Premises over the balance of the initial
Term of the Lease. In circumstances where a replacement tenant has not yet been secured, then such rent will be estimated as of the date
of default by an appraiser, less any costs and expenses of such reletting, including brokerage fees, solicitor's fees, tenant inducements
and of costs of alterations and repairs as may be necessary to relet the premises. On April 29, 2024 the Company requested payment deferment
of the 5th and 6th instalment payment due on March 1, 2024 and May 1, 2024 respectively to July 1, 2024. On September 6, 2024, the Lessor
agreed to further defer the payments due on July 1, 2024 to be paid on or before September 30, 2024. On October 1, 2024, the Company and
the Lessor signed an amendment to the Surrender of Lease Agreement whereby the Lessor hereby agrees to a waiver of breach by the Company
of its payment obligations in subsection 3.1(e), (f) and (g) of the Surrender of Lease Agreement by the Tenant and further delay payments
due (see Note 6).
F-
125
DAMON MOTORS INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
12.
COMMITMENTS AND CONTINGENCIES (continued)
The
Company met the eligibility criteria under the Small Business Venture Capital Act (the "Act") and was registered as an Eligible
Business Corporation ("EBC") in 2018. Under the Act, the Company was approved to raise up to $10 million through the issuance
of authorized equity capital whereby the investing shareholders received up to 30% of the amount invested as a tax credit against their
B.C. provincial taxes. Under this program, should the Company be out of compliance with the Act during the required five-year investment
hold period, it would be contingently liable to repay any tax credits previously issued to investors. At the date of these financial statements,
repayable tax credits are approximately $0.6 million. Management believes the Company is compliant with all relevant terms of the Act.
13.
SHARE CAPITAL
a)
Authorized
The
authorized share capital of the Company consists of the following:
i.
An unlimited number of common shares ("common shares") without
par value; and
ii.
An unlimited number of Class Seed preferred shares, Class A preferred
shares and Class B preferred shares (collectively, "preferred shares") without par value, issuable in series.
b)
Issued and outstanding
i.
As at September 30, 2024, the Company had 13,761,506 (June 30, 2024
– 12,324,504) common shares outstanding.
ii.
As at September 30, 2024 and June 30, 2024, the Company had 16,758,528
preferred shares outstanding.
Common
shares transactions
On July 1, 2024, the Company issued
1,437,002 common shares in connection with the conversion of SAFE with an estimated fair value of $3,200,000 (Note 11).
Preferred shares transactions
Preferred shares series
Preferred
share
outstanding
Amount, net
of share
issuance
cost
#
$
Series 1 Class Seed Preferred
926,392
961,502
Series 2 Class Seed Preferred
477,117
143,836
Series 3 Class Seed Preferred
1,802,304
441,384
Series 4 Class Seed Preferred
157,381
102,754
Series 5 Class Seed Preferred
364,324
302,498
Series 6 Class Seed Preferred
1,312,306
1,113,885
Series 1 Class A Preferred
2,512,713
13,440,769
Series 2 Class A Preferred
5,578,780
29,841,488
Series 2 Class B Preferred
3,627,211
25,241,971
16,758,528
71,590,087
During the three months ended September
30, 2024 and 2023, no preferred shares were issued.
F-
126
DAMON MOTORS INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
13.
SHARE CAPITAL (continued)
Rights and privileges of preferred shareholders
Preferred shareholders hold the option
to convert their preferred shares to common shares at any time based on a Conversion Price. The Conversion Price is initially equal to
the price of the first share issued in the preferred shares class. Thereafter the Conversion Price is symmetrically adjusted for common
share issuances to prevent anti-dilution. The anti-dilution clause maintains the relative rights of the common and preferred shareholders,
and its effect is that those relative rights remain the same immediately before and immediately after the issuance of common shares.
On any matter presented to the shareholders
of the Company for their action or consideration at any meeting of shareholders of the Company, each holder of outstanding preferred shares
is entitled to cast the number of votes equal to the number of whole common shares into which the preferred shares are convertible as
of the record date for determining shareholders entitled to vote on such matter.
The Company shall not declare, pay
or set aside any dividends on shares of any other class unless the holders of the preferred shares first receive, or simultaneously receive,
a dividend on each outstanding preferred share in an amount at least equal to the dividend received should the preferred shares be converted
to common shares as of the record date for determination of holders entitled to receive such dividend.
In the event of liquidation, dissolution
or winding up of the Company, before any payment shall be made to the holders of common shares by reason of their ownership thereof, the
holders of each series of preferred shares, shall be entitled to be paid out of the funds and assets available for distribution to its
shareholders, an amount per share equal to the greater of the original issue price for such series of preferred shares plus any dividends
declared but unpaid thereon, or such amount per share as would have been payable had all shares of such series of preferred shares been
converted into common shares.
c)
Stock options
On August 30, 2017 (and amended on
September 24, 2021), the Board adopted a Stock Option Plan which provides that the Board may from time to time, in its discretion, grant
to directors, officers, employees, and consultants, non-transferable stock options to purchase common shares of the Company. As per the
terms of the Stock Option Plan, the requisite vesting period of the employees is generally four years.
The
fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. During the three
months ended September 30, 2024, the Company issued nil (three months ended September 30, 2023 – nil) stock options.
A
summary of the changes in the Company's stock options is as follows:
Stock
options (#)
Outstanding, July 1, 2023
10,138,537
Expired
(118,375
)
Cancelled
(366,967
)
Exercised
(399,738
)
Outstanding, June 30, 2024
9,253,457
Expired
(16,934
)
Cancelled
(15,336
)
Outstanding, September 30, 2024
9,221,187
F-
127
DAMON MOTORS INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
13.
SHARE CAPITAL (continued)
During
the three months ended September 30, 2024, the Company expensed $16,295 (three months ended September 30, 2023 – $204,159) related
to the vesting of stock options.
Cash
received by the Company upon the exercise of stock options during the three months ended September 30, 2024 amounted to $nil (three months
ended September 30, 2023 – $19,524).
14.
RELATED PARTY TRANSACTIONS
Parties are considered to be related
if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party
in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common
significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction
when there is a transfer of resources or obligations between related parties.
As at September 30, 2024, $410,059
(2023 - $404,426) was due for remuneration payable to key management and included in accrued liabilities (Note 6).
15.
INCOME TAXES
As of September 30, 2024 and 2023,
the Company's deferred tax liability was zero. Cumulative deferred tax assets are fully reserved as there is not sufficient evidence
to conclude it is more likely than not the deferred tax assets are realizable. No current liability for federal state income taxes has
been included in these condensed interim unaudited consolidated financial statements due to the loss for the periods.
16.
SEGMENT REPORTING
ASC 280 - Segment Reporting establishes
standards for reporting information about operating segments on a basis consistent with internal organization reporting used by the Company's
chief operating decision maker, our CEO, for making operating decisions and assessing performance as the source for determining the Company's
reportable segments. The Company is pre-revenue and pre-production and operates as a single reportable operating segment.
The following table is our long-lived
assets information by geography as of September 30, 2024 and June 30, 2024:
September 30,
2024
June 30,
2024
$
$
Canada
585,701
676,886
United States
356,106
461,534
941,807
1,138,420
F-
128
DAMON MOTORS INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
17.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
a)
Fair value of financial assets and liabilities
The Company reports all financial assets
and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Valuation techniques
used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance
establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy
are as follows:
Level 1:
Inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2:
Inputs are observable, unadjusted quoted prices in active markets
for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active,
or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets
or liabilities.
Level 3:
Inputs are unobservable inputs for the asset or liability. These
financial instruments are measured using management's best estimate of fair value, where the inputs into the determination of fair
value require significant management judgment or estimation.
The level in the fair value hierarchy
within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement
in its entirety.
All financial instruments are initially
measured and recognized at fair value, and thereafter recognized at cost, or amortized cost; except for convertible notes, warrants and
SAFEs which are subsequently measured at fair value through the statements of operations. As at September 30, 2024 and June 30, 2024,
the carrying values of cash, prepaids, deposits and other receivables, long-term deposits, accounts payable and accrued liabilities, and
customer deposits approximate their respective fair values due to the short-term nature of these instruments.
At September 30, 2024 and June 30,
2024, the convertible notes and SAFEs that are measured at fair value on a recurring basis are categorized as Level 3. For assets and
liabilities recognized at fair value on a recurring basis, the Company reassesses categorization to determine whether changes have occurred
between the hierarchy levels at the end of each reporting period.
The fair value of these Level 3 financial
liabilities is determined using pricing models, discounted cash flow methodologies or similar techniques for which the determination of
fair value requires significant management judgment or estimation (see Note 9).
Areas of significant judgement are
the risk-free rate, volatility rate, dividend yield, term to liquidation, discount for lack of marketability, most recent financing rounds
and implied equity value per letter of intent.
These valuations use assumptions and
estimates the Company believes would be made by a market participant in making the same valuation. The Company reassesses these assumptions
and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained.
F-
129
DAMON MOTORS INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
17.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
A significant increase/decrease in
some of those unobservable inputs would result in a significantly higher/lower fair value measurement.
During the three months ended September
30, 2024, the Company recognized fair value adjustments with respect to financial instruments categorized as Level 3 of $4,657,388 (three
months ended September 30, 2023 - $827,304) in the statements of operations as changes in fair value of financial liabilities. No amounts
were recognized in other comprehensive income as the changes in fair value due to credit risk were nominal.
Three months ended
September 30, 2024
Three months ended
September 30, 2023
$
$
Changes in fair value of:
SAFEs
-
(144,083
)
Convertible notes
4,657,388
1,250,971
Warrants
-
(279,584
)
4,657,388
827,304
There were no transfers into or out
of the Level 3 hierarchy during the period ended. The table below presents the changes in Level 3 liabilities measured at fair value on
a recurring basis during the three months ended September 30, 2024 and year ended June 30, 2024.
SAFEs
Convertible notes
Warrants
$
$
$
Balance, July 1, 2023
2,700,000
14,727,183
521,950
Inception date
-
12,891,686
1,086,240
Foreign exchange a
(92,543
)
-
-
Changes in fair value
592,543
13,011,887
4,820,562
Liability-classified warrant reclassified to equity-classified warrant
-
-
(6,428,752
)
Balance, June 30, 2024
3,200,000
40,630,756
-
Inception date
-
1,006,607
-
Foreign exchange
-
-
-
Converted to common shares
(3,200,000
)
-
-
Changes in fair value
-
4,657,388
-
Balance, September 30, 2024
-
46,294,751
-
F-
130
DAMON MOTORS INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
17.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
b)
Risk management
The Company's financial instruments
are exposed to certain financial risks, including credit risk, liquidity risk and market risk.
Liquidity risk
The Company monitors its cash balances
and cash invested to ensure there is sufficient liquidity to meet its financial obligations as they come due. Liquidity management is
comprised of regular analysis, monitoring, and review of forecasted and actual cash flows and managing operation and capital finding requirements
on a planning and projected basis. The Company's accumulated deficit and expected future losses cast substantial doubt upon the
Company's ability to continue as a going concern (Note 1).
Market risk
Market risk is the risk of loss that
may arise from changes in market factors such as foreign exchange rates.
Foreign currency risk
The Company's lease liabilities
and various operating expenses on the financial statements are denominated in Canadian dollars, and therefore are exposed to fluctuations
in foreign currency exchange rates. The Company evaluated the exposure to foreign currency risk and concluded that it is not material.
18.
SUPPLEMENTAL CASH FLOW INFORMATION
Three months ended
September 30, 2024
Three months ended
September 30, 2023
$
$
Interest on finance leases paid
2,240
2,492
Interest paid on debt and convertible notes
-
33,993
Summary of non-cash investing and financing
transactions for the three months ended September 30, 2024 and 2023:
Three months ended
September 30, 2024
Three months ended
September 30, 2023
$
$
SAFEs converted to common stocks shares (Note 11 and 13)
3,200,000
-
Common shares issued for settlement of amount owing for severance payment
-
260,999
F-
131
DAMON MOTORS INC.
NOTES TO THE CONDENSED INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2024 and 2023
(Expressed in United States dollars)
19.
SUBSEQUENT EVENTS
In addition to subsequent events disclosed
elsewhere, the following events occurred after September 30, 2024, up to the date these financial statements were issued :
i.
On October 8, 2024, the Company secured $500,000 in funding from certain investors via issuance of convertible
promissory notes with a valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on maturity, October 7, 2025.
These convertible promissory notes holders were also issued 182,721 common share purchase warrants to subscribe for, and purchase of the
Company common shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization
at closing date. The holder of the common share warrants can exercise the warrant either fully or partially at any time from issuance
date until its expiry, 5 years from issuance date.
ii.
On October 4, 2024, the Company received the Notice of Assessment for 2024 SR&ED tax credit refund
amount of $1,004,022 (CAD$1,355,329) from CRA and the tax credit refund was received in full on October 16, 2024.
iii.
On October 9, 2024, the Company issued promissory note to arms-length parties with principal amount of
$200,000. The loan accrues interest at a rate of 18% per annum and shall become due and payable in full on the earlier of (i) 60 days
from the funds are advanced; or (ii) five (5) business days following the completion of the liquidity event. The liquidity event refers
to the business combination with Grafiti Holding Inc ("Grafiti"), following which Damon will become a wholly owned subsidiary
of Grafiti and Grafiti's securities will become listed and trading on the Nasdaq.
iv.
On October 18, 2024, the Company secured $50,000 in funding from certain investors via issuance of convertible
promissory notes with a valuation cap of $125,000,000 and interest rate of 12% per annum, payable in arrears on maturity, October 17,
2025. These convertible promissory notes holders were also issued 18,272 common share purchase warrants to subscribe for, and purchase
of the Company common shares at the exercise price equal to the quotient of the valuation cap of $125,000,000 and the diluted capitalization
at closing date. The holder of the common share warrants can exercise the warrant either fully or partially at any time from issuance
date until its expiry, 5 years from issuance date.
v.
On November 11, 2024, the Company signed another amendment to the promissory note agreement with WSGR
to modify the due date of October 31, 2024 to December 15, 2024.
F-
132
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses,
payable by the registrant in connection with the registration of our common shares. All amounts are estimates except the Securities and
Exchange Commission registration fee.
Amount to
Item
Be Paid*
Securities and Exchange Commission registration fee
$
1,955.86
Blue Sky fees and expenses
*
Legal fees and expenses
*
Accounting fees and expenses
*
Printing expenses
*
Miscellaneous
*
Total
$
1,955.86
*
Estimates not presently known.
We will bear all costs, expenses and fees in connection
with the registration of the securities, including with regard to compliance with state Securities or "blue sky" laws. The
Selling Securityholders, however, will bear all underwriting commissions and discounts, if any, attributable to their sale of the securities.
All amounts are estimates except the SEC registration fee.
Item 14. Indemnification of Directors and Officers
Division 5 of Part 5
of the
Business Corporations Act
(British Columbia) provides that a corporation may (a) indemnify an eligible party
against all eligible penalties to which the eligible party is or may be liable and (b) after the final disposition of an eligible
proceeding, pay the expenses (not including judgments, penalties, fines or amounts paid in settlement of a proceeding) actually and reasonably
incurred by an eligible party in respect of that proceeding.
An "eligible party"
means an individual who (a) is or was a director or officer of the corporation, (b) is or was a director or officer of another
corporation (i) at a time when the other corporation is or was an affiliate of the corporation, or (ii) at the request of the
corporation, or (c) at the request of the corporation, is or was, or holds or held a position equivalent to that of, a director or
officer of a partnership, trust, joint venture or other unincorporated entity.
An "eligible proceeding"
means a proceeding in which an eligible party or any of the heirs and personal or other legal representatives of the eligible party, by
reason of the eligible party being or having been a director or officer of, or holding or having held a position equivalent to that of
a director or officer of, the corporation or an associated corporation (a) is or may be joined as a party, or (b) is or may
be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding.
A corporation must, after
the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by the eligible party in respect of
that proceeding if the eligible party (a) has not been reimbursed for those expenses, and (b) is wholly successful, on the merits
or otherwise, in the outcome of the proceeding or is substantially successful on the merits in the outcome of the proceeding.
II-
1
A corporation may pay, as
they are incurred in advance of the final disposition of an eligible proceeding, the expenses actually and reasonably incurred by an eligible
party in respect of that proceeding, provided the corporation first receives from the eligible party a written undertaking that, if it
is ultimately determined that the payment of expenses is prohibited, the eligible party will repay the amounts advanced.
Notwithstanding any of the
foregoing, a corporation must not indemnify an eligible party or pay the expenses of an eligible party if any of the following circumstances
apply:
●
if the indemnity or payment is made under an earlier agreement
to indemnify or pay expenses and, at the time that the agreement to indemnify or pay expenses was made, the corporation was prohibited
from giving the indemnity or paying the expenses by its memorandum or articles;
●
if the indemnity or payment is made otherwise than under an
earlier agreement to indemnify or pay expenses and, at the time that the indemnity or payment is made, the corporation is prohibited
from giving the indemnity or paying the expenses by its memorandum or articles;
●
if, in relation to the subject matter of the eligible proceeding,
the eligible party did not act honestly and in good faith with a view to the best interests of the corporation or the associated corporation,
as the case may be;
●
in the case of an eligible proceeding other than a civil proceeding,
if the eligible party did not have reasonable grounds for believing that the eligible party's conduct in respect of which the proceeding
was brought was lawful.
If an eligible proceeding
is brought against an eligible party by or on behalf of the corporation or by or on behalf of an associated corporation, the corporation
must not (a) indemnify the eligible party in respect of the proceeding or (b) pay the expenses of the eligible party in respect
of the proceeding.
A corporation may purchase
and maintain insurance for the benefit of an eligible party or the heirs and personal or other legal representatives of the eligible party
against any liability that may be incurred by reason of the eligible party being or having been a director or officer of, or holding or
having held a position equivalent to that of a director or officer of, the corporation or an associated corporation.
Our Articles provide that,
subject to the
Business Corporations Act
(British Columbia), (a) until the date and time that is the sixth anniversary
of 12:01 a.m. (Vancouver) on the closing date of the Business Combination (the "Effective Time"), the Company must indemnify
and use commercially reasonable efforts to purchase and maintain insurance for the benefit of its director, former directors or officers
of the Company and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be
liable, and the Company must, in advance of the final disposition of an eligible proceeding, pay the expenses actually and reasonably
incurred by such person in respect of that proceeding; and (b) after the Effective Time, the Company must indemnify an eligible party
and their respective heirs and personal or other legal representatives against all eligible penalties to which such eligible party is
or may be liable, and the Company must, must, after final disposition of an eligible proceeding, pay the expenses actually and reasonably
incurred by such person in respect of that proceeding. Each eligible party is deemed to have contracted with the Company on this term.
The Articles also provide
that the Company may indemnify any person, subject to any restrictions in the
Business Corporations Act
(British Columbia).
Our Articles defines the following
terms: (1) an "eligible penalty" means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement
of, an "eligible proceeding"; (2) an "eligible party" means a director or former director of the Company;
(3) an "eligible proceeding" means a legal proceeding or investigative action (whether current, threatened, pending or
completed), in which an eligible party or any of the heirs and personal or other legal representatives of the eligible party, by reason
of the eligible party being or having been a director or alternate director of the Company (a) is or may be joined as a party, or
(b) is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding; and (4) "expenses"
has the meaning set out in the
Business Corporations Act
(British Columbia).
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2
Our Articles provide that
the Company may purchase and maintain insurance for the benefit of any person (or his or her heirs or legal personal representatives)
who is or was a director, alternative director, officer, employee or agent, or held or holds such position or a position equivalent to
the foregoing (each, an "insured party") with respect to (i) the Company; (ii) a corporation at a time when the
corporation was an affiliate of the Company; (iii) at the request of the Company, served in such capacity with respect to a corporation,
partnership, trust, joint venture or other unincorporated entity, against any liability that may be incurred by him or her acting in such
capacity
.
We have entered into an indemnification
agreement with each of our officers and directors pursuant to which they will be indemnified by us, subject to certain limitations, for
any liabilities incurred by them in connection with their role as officers or directors of the Company.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing
provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
Item 15. Recent Sales of Unregistered Securities
Issuance of Options and Exercised Shares
In August 2024, the Company
issued an aggregate of 1,015,383 common shares to Nadir Ali, then CEO and director of the Company, and certain members of the Parent's
management team prior to the consummation of the merger transaction between XTI Aircraft Company and the Parent, which they acquired through
the exercise of stock options granted under the Company's 2024 Stock Incentive Plan. Each transaction was exempt from the registration
requirements of the Securities Act pursuant to Section 4(a)(2) or Rule 701 of the Securities Act.
Issuance of the Amalgamation Consideration
Upon the Closing, pursuant
to the Plan of Arrangement under the laws of British Columbia, as contemplated by the Business Combination Agreement, securityholders
of Damon Motors exchanged their securities of Damon Motors for amalgamation consideration (the "Amalgamation Consideration")
consisting of: (i) 14,764,803 common shares of the Company; (ii) 1,391,181 multiple voting shares of the Company, which are convertible
into common shares of the Company on a 1 for 1 basis, issued to Jay Giraud, the Company's then CEO and director, and its controlled
entity; (iii) warrants to purchase 2,186,478 common shares of the Company at an exercise price of $7.81 per share, with terms substantially
similar to those of Damon Motors's warrants, issued to former Damon Motors warrant holders, and (iv) options to purchase 1,942,127
common shares at exercise prices between $0.57 and $12.73, issued to former Damon optionholders under the Company's equity incentive
plans. The Amalgamation Consideration was issued pursuant to the exemption from registration provided by Section 3(a)(10) of the Securities
Act, on the basis that these securities were issued pursuant to the Plan of Arrangement, the fairness of which was approved by the Supreme
Court of British Columbia.
Note Financing in connection with the Business Combination
In June 2024, the Company
issued a secured note to Streeterville in an aggregate original principal amount of $6,470,000. Subsequently, on the Closing Date, the
company issued two secured note, each in the aggregate original principal amount of $8,385,000, to two institutional investors. These
notes were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act, on the basis that these
notes have been issued to institutional accredited investors and the Company did not engage in any general solicitation in connection
with such offer and sale.
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Fees to be Paid to Former Financial Advisor
On August 28, 2024, Damon
Motors entered into a further amendment to its engagement agreement with Joseph Gunnar & Co., LLC ("Joseph Gunnar") and
Mark Peikin ("Peikin"), as amended (the "Engagement Agreement"). Pursuant to the amendment, in lieu of the compensation
described in the Engagement Agreement, Peikin, as assignee of Joseph Gunnar, shall receive from Damon Motors a one-time fee of $1,000,000
in cash due and payable on the thirteen month anniversary of the closing of the Business Combination; and Damon Motors shall also cause
to be issued to Peikin, as assignee of Joseph Gunnar, the following amounts, any of which may be paid in common shares of the Company,
with each issuance further made pursuant to a resale registration statement to be filed within ten days of each payment date based on
the payment schedule below: (a) $600,000 on the 90-day anniversary of the Closing; (b) $400,000 on the 180-day anniversary of the Closing;
and (c) $300,000 on the 270-day anniversary of the Closing. The total of $2,300,000, of which up to $1,300,000 may potentially be paid
in securities as set forth above to Peikin shall fully satisfy all obligations of Damon Motors to Joseph Gunnar, which obligations Joseph
Gunnar has assigned to Peikin. The number of shares to calculate the USD value on each of the three issuances shall be calculated based
on the Nasdaq Market Price, which is defined as the lower of (i) the consolidated closing bid price for the business day immediately preceding
each date that any one of the three issuances are due and payable or (ii) the average of the consolidated closing bid price of the Company's
common shares for the five trading days immediately preceding each date that any one of the three issuances are due and payable. Any common
shares to be issued to Peikin as described herein will be issued pursuant to the exemption from registration provided by Section 4(a)(2)
of the Securities Act, on the basis that these shares will be issued to an accredited investor and the Company did not engage in any general
solicitation in connection with such offer and sale.
Securities Purchase Agreement with Streeterville
On December 20, 2024, the
Company entered into the Securities Purchase Agreement with Streeterville and agreed to issue and sell to Streeterville one or more Pre-Paid
Purchases at an aggregate purchase price of up to $10,000,000 for the purchase of the Company's common shares. As consideration
for Streeterville's commitment, the Company also agreed to issue 343,053 common shares to Streeterville (the "Commitment Shares")
The offer and sale of the Pre-Paid purchases, the Commitment Shares and the common shares issuable under the Pre-Paid Purchases were not
registered under the Securities Act, in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act, on the
basis that these securities are issued to an institutional accredited investor and the Company did not engage in any general solicitation
in connection with such offer and sale.
Compensation Shares to Marketing
Service Provider
On December 16, 2024, the
Company issued 401,884 common shares to a marketing service provider for its past services to Damon Motors. The offer and sale of the
shares were not registered under the Securities Act, in reliance on an exemption from registration under Section 4(a)(2) of the Securities
Act, on the basis that these securities are issued to an entity accredited investor and the Company did not engage in any general solicitation
in connection with such offer and sale.
Financial Advisory Agreement with
Maxim
On January 7, 2025, the Company
entered into a Financial Advisory Agreement with Maxim Group LLC (together with its affiliates and subsidiaries, "Maxim").
As compensation for past advisory services following the listing of the Company on Nasdaq, the Company issued 514,579 common shares to
Maxim Partners LLC, with piggyback registration rights. The offer and sale of the shares to Maxim Partners LLC were not registered under
the Securities Act, in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act, on the basis that these
securities are issued to an institutional accredited investor and the Company did not engage in any general solicitation in connection
with such offer and sale.
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4
Item 16.
Exhibits
Exhibit
Number
Exhibit Description
2.1+
Separation Agreement, dated as of October 23, 2023, between Grafiti Holding Inc. and Inpixon (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Inpixon on October 23, 2023)
2.2+
Business Combination Agreement among Inpixon, Grafiti Holding Inc., 1444842 B.C. Ltd and Damon Motors, Inc., dated as of October 23, 2023 (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Inpixon on October 23, 2023)
2.3
Amendment to Business Combination Agreement, dated as of June 18, 2024, among XTI Aerospace, Inc., Grafiti Holding Inc., 1444842 B.C. Ltd. and Damon Motors Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by XTI Aerospace, Inc. on June 24, 2024)
2.4
Second Amendment to Business Combination Agreement, dated as of September 26, 2024, among XTI Aerospace, Inc., Grafiti Holding Inc., 1444842 B.C. Ltd. and Damon Motors Inc. (incorporated by reference to Exhibit 2.4 to Amendment No. 1 to the Registration Statement on Form 10 filed by the Registrant on September 26, 2024)
3.1
Articles of Grafiti Holding Inc. (incorporated by reference to Exhibit A in Exhibit 2.1 to the Current Report on Form 8-K filed by XTI Aerospace, Inc. (
f/k/a
Inpixon) on October 23, 2023)
3.2
Certificate of Incorporation and Note of Articles dated December 6, 2024 (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q filed by the Registrant on December 18, 2024)
4.1
Secured Promissory Note, dated as of November 13, 2024, issued to East West Capital, LLC (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
4.2
Secured Promissory Note, dated as of November 13, 2024, issued to Braebeacon Holdings, Inc. (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
4.3
Form of Warrant issued to former warrant holders of Damon Motors, Inc. (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
5.1*
Opinion of Norton Rose Fulbright Canada LLP
10.1
Liquidating Trust Agreement among Inpixon, Grafiti Holding Inc. and Melanie Figueroa, as initial trustee, dated as of December 27, 2023 (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.2#
Grafiti Holding Inc. 2024 Stock Incentive Plan. (incorporated by reference to Exhibit 10.3 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.3#
Form of Stock Option Agreement under Grafiti Holding Inc. 2024 Stock Incentive Plan. (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.4
Distributor Agreement, dated as of July 19, 2024, between Grafiti LLC and Grafiti Limited. (incorporated by reference to Exhibit 10.13 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.5
Administrative Support Service Agreement, dated as of July 19, 2024, between Grafiti LLC and Grafiti Limited. (incorporated by reference to Exhibit 10.14 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.6
Note Purchase Agreement, dated as of June 26, 2024, between Grafiti Holding Inc. and Streeterville Capital LLC. (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.7
Secured Promissory Note, dated as of June 26, 2024, issued to Streeterville Capital LLC. (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
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5
10.8
Security Agreement, dated as of June 26, 2024, between Grafiti Holding Inc. and Streeterville Capital LLC. (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.9
Guaranty, dated as of June 26, 2024, by Damon Motors, Inc. in favor of Streeterville Capital LLC. (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.10
Guaranty, dated as of June 26, 2024, by Damon Motors Corporation in favor of Streeterville Capital LLC. (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.11
Escrow Agreement, dated June 26, 2024, among Grafiti Holding Inc., Damon Motors, Inc., Damon Motors Corporation, Streeterville Capital LLC and Hansen Black Anderson Ashcraft PLLC as escrow agent. (incorporated by reference to Exhibit 10.11 to Amendment No. 1 to the Registration Statement on Form 10 filed by the Registrant on September 26, 2024)
10.12
Amendment to Escrow Agreement, dated September 5, 2024, among Grafiti Holding Inc., Damon Motors, Inc., Damon Motors Corporation, Streeterville Capital LLC and Hansen Black Anderson Ashcraft PLLC as escrow agent. (incorporated by reference to Exhibit 10.12 to Amendment No. 1 to the Registration Statement on Form 10 filed by the Registrant on September 26, 2024)
10.13
Second Amendment to Escrow Agreement, dated September 20, 2024 among Grafiti Holding Inc., Damon Motors, Inc., Damon Motors Corporation, Streeterville Capital LLC and Hansen Black Anderson Ashcraft PLLC as escrow agent. (incorporated by reference to Exhibit 10.13 to Amendment No. 1 to the Registration Statement on Form 10 filed by the Registrant on September 26, 2024)
10.14
Senior Secured Promissory Note, dated as of June 26, 2024, by Damon Motors Inc. (incorporated by reference to Exhibit 10.10 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.15
Amendment to Senior Secured Promissory Note, dated September 25, 2024, between Grafiti Holding Inc. and Damon Motors Inc. (incorporated by reference to Exhibit 10.15 to Amendment No. 1 to the Registration Statement on Form 10 filed by the Registrant on September 26, 2024)
10.16
Security and Pledge Agreement, dated as of June 26, 2024, between Grafiti Holding Inc. and Damon Motors Inc. (incorporated by reference to Exhibit 10.11 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.17
Guaranty, dated as of June 26, 2024, by Damon Motors Corporation in favor of Grafiti Holding Inc. (incorporated by reference to Exhibit 10.12 to the Registration Statement on Form 10 filed by the Registrant on July 25, 2024)
10.18
Amendment No. 1, dated as of October 31, 2024, between Grafiti Holding Inc. and Streeterville Capital LLC.  (incorporated by reference to Exhibit 10.27 to the Registration Statement on Form S-1/A filed by the Registrant on November 1, 2024)
10.19
Third Amendment to Escrow Agreement, dated as of October 31, 2024, among Grafiti Holding Inc., Damon Motors, Inc., Damon Motors Corporation, Streeterville Capital LLC and Hansen Black Anderson Ashcraft PLLC as escrow agent (incorporated by reference to Exhibit 10.28 to the Registration Statement on Form S-1/A filed by the Registrant on November 1, 2024)
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10.20
Amendment to Security Agreement, dated as of November 13, 2024, between the Company and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.21
Security Agreement, dated as of November 13, 2024, between the Company and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.22
Intellectual Property Security Agreement, dated as of November 13, 2024, between the Company and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.23
Intercreditor Agreement, dated as of November 13, 2024, among the Company, Damon Motors, Inc., Streeterville Capital, LLC and Braebeacon Holdings, Inc. (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.24
Note Purchase Agreement, dated as of November 13, 2024, between the Company and East West Capital, LLC (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.25
Security Agreement, dated as of November 13, 2024, between the Company and East West Capital, LLC (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.26
Security Agreement, dated as of November 13, 2024, between Damon Motors, Inc. and East West Capital, LLC (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.27
Intellectual Property Security Agreement, dated as of November 13, 2024, between Damon Motors, Inc. and East West Capital, LLC (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.28
Guaranty, dated as of November 13, 2024, by Damon Motors, Inc. in favor of East West Capital, LLC (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.29
Guaranty, dated as of November 13, 2024, by Damon Motors Corporation in favor of East West Capital, LLC (incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.30
Note Purchase Agreement, dated as of November 13, 2024, between the Company and Braebeacon Holdings, Inc. (incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.31
Security Agreement, dated as of November 13, 2024, between the Company and Braebeacon Holdings Inc. (incorporated by reference to Exhibit 10.12 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.32
Security Agreement, dated as of November 13, 2024, between Damon Motors, Inc. and Braebeacon Holdings Inc. (incorporated by reference to Exhibit 10.13 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.33
Intellectual Property Security Agreement, dated as of November 13, 2024, between Damon Motors, Inc. and Braebeacon Holdings Inc.  (incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.34
Guaranty, dated as of November 13, 2024, by Damon Motors, Inc. in favor of Braebeacon Holdings Inc. (incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
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10.35
Guaranty, dated as of November 13, 2024, by Damon Motors Corporation in favor of Braebeacon Holdings Inc. (incorporated by reference to Exhibit 10.16 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.36
Lockup Release Agreement, dated as of November 11, 2024, among House of Lithium, Damon Motors Inc. and the Company (incorporated by reference to Exhibit 10.17 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.37
Lockup Release Agreement, dated as of October 10, 2024, among Eadwacer Holdings, LLC, Damon Motors Inc. and the Company (incorporated by reference to Exhibit 10.20 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.38#
Executive Employment Agreement, dated September 12, 2023, between Damon Motors Inc. and Jay Giraud (incorporated by reference to Exhibit 10.21 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.39#
Employment Side Letter Agreement, dated October 17, 2024, between Damon Motors Inc. and Jay Giraud (incorporated by reference to Exhibit 10.22 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.40#
Executive Employment Agreement, dated January 12, 2024, between Damon Motors Inc. and Bal Bhullar  (incorporated by reference to Exhibit 10.23 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.41#
Employment Side Letter Agreement, dated August 26, 2024, between Damon Motors Inc. and Bal Bhullar (incorporated by reference to Exhibit 10.24 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.42#
Executive Employment Agreement, dated June 13, 2024, between Damon Motors Inc. and Derek Dorresteyn (incorporated by reference to Exhibit 10.25 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.43#
Employment Side Letter Agreement, dated October 17, 2024, between Damon Motors Inc. and Derek Dorresteyn  (incorporated by reference to Exhibit 10.26 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.44#
Executive Employment Agreement, dated July 11, 2022, between Damon Motors Inc. and Amber Spencer  (incorporated by reference to Exhibit 10.27 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.45#
Interim Executive Employment Agreement, dated December 4, 2024, between Damon Motors Inc. and Dominique Kwong (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on December 10, 2024)
10.46#
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on December 10, 2024)
10.47+
Securities Purchase Agreement, dated December 20, 2024, between Damon Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on December 23, 2024)
10.48
Registration Rights Agreement, dated December 20, 2024, between Damon Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on December 23, 2024)
10.49
Consulting Agreement, dated as of September 25, 2024, between Grafiti Holding Inc. and Nadir Ali. (incorporated by reference to Exhibit 10.24 to Amendment No. 1 to the Registration Statement on Form 10 filed by the Registrant on September 26, 2024)
10.50
Consulting Agreement, dated as of September 25, 2024, between Grafiti Holding Inc. and Melanie Figueroa. (incorporated by reference to Exhibit 10.25 to Amendment No. 1 to the Registration Statement on Form 10 filed by the Registrant on September 26, 2024)
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10.51
Consulting Agreement, dated as of September 25, 2024, between Grafiti Holding Inc. and Wendy Loundermon. (incorporated by reference to Exhibit 10.26 to Amendment No. 1 to the Registration Statement on Form 10 filed by the Registrant on September 26, 2024)
10.52
Form of Lockup Agreement by and among Grafiti Holding Inc., Damon Motors, Inc. and certain securityholders who are insiders incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed by XTI Aerospace, Inc. on October 23, 2023)
10.53
Coattail Agreement, dated as of November 13, 2024, by and among Grafiti Holding Inc., Jay Giraud and Odyssey Trust Company (incorporated by reference to Exhibit 10.18 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
10.54
Founder Agreement, dated as of November 13, 2024, by and between Grafiti Holding Inc. and Jay Giraud (incorporated by reference to Exhibit 10.19 to the Current Report on Form 8-K filed by the Registrant on November 18, 2024)
21.1
List of Subsidiaries (incorporated by reference to Exhibit 21.1 to Amendment No. 1 to the Registration Statement on Form 10 filed by the Registrant on September 26, 2024)
23.1*
Consent of Marcum LLP for Damon Inc. (formerly Grafiti Holding Inc.)
23.2*
Consent of Marcum LLP for Damon Motors Inc.
23.3*
Consent of BDO Canada LLP for Damon Motors Inc.
23.4*
Consent of Norton Rose Fulbright Canada LLP (included in Exhibit 5.1)
24.1*
Power of Attorney (included on the signature page to this registration statement)
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
107*
Filing Fee Table
*
Filed herewith.
+
Schedules and exhibits have been omitted pursuant to Item 601(b)(2)
of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
#
Indicates a management contract or compensatory plan.
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9
Item 17. Undertakings
The undersigned registrant
hereby undertakes:
A.To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To
include any prospectus required by section 10(a)(3) of the Securities Act;
(ii) To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement.
Notwithstanding the foregoing,
any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in
the maximum aggregate offering price set forth in the "
Calculation of Registration Fee
" table in the effective registration
statement; and
(iii) To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
B. That,
for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
C. To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.
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D. That,
for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part
of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used
after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is
part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
E. That,
for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the
securities, that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
F. Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Vancouver, Province of British Columbia, on January 16, 2025.
DAMON INC.
/s/ Dominique Kwong
Dominique Kwong
Interim Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE
PRESENTS, that each person whose signature appears below hereby constitutes and appoints Dominique Kwong and Baljinder Bhullar, and each
of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, including
post-effective amendments, and registration statements filed pursuant to Rule 462 under the Securities Act, and to file the same, with
all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent and each of them, full power and authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith and about the premises, as fully for all intents and purposes as they, he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and agent or any of them, or their, his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements
of the Securities Act of 1933, as amended, this registration statement has been signed by the following person on behalf of the registrant
and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Dominique Kwong
Interim Chief Executive Officer and Director
January 16, 2025
Dominique Kwong
(Principal Executive Officer)
/s/ Baljinder Bhullar
Chief Financial Officer and Director
January 16, 2025
Baljinder Bhullar
(Principal Financial Officer and Principal Accounting Officer)
/s/ Karan Sodhi
Director
January 16, 2025
Karan Sodhi
/s/ Shashi Tripathi
Director
January 16, 2025
Shashi Tripathi
/s/ Melanie Figueroa
Director
January 16, 2025
Melanie Figueroa
II-12