Share Capital and Other Components of Equity

12 Months Ended

Jun. 30, 2025

Share Capital and Other Components of Equity [Abstract]

Share capital and other components of equity

13. Share capital and other components of equity

Share capital

a) Authorized

The authorized share capital of the Company consists of the following:

● An unlimited number of common shares without par value;

● An unlimited number of multiple voting shares without par value.

b) Issued and outstanding

● As of June 30, 2025, the Company had 19,603,815 (June 30, 2024 – 20,758) common shares outstanding;

● As of June 30, 2025, the Company had nil (June 30, 2024 – nil) multiple voting shares outstanding;

● As of June 30, 2025, the Company had nil (June 30, 2024 – 3,528,408) preferred shares outstanding.

March 2025 financing

On March 21, 2025, the Company completed public offering of 1,015,200 units at a price of $16.25 per unit. Each unit consisted of one common share and one Series A warrant to purchase one common share. The Company also issued 50,760 Series A warrants to the underwriters. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 152,280 common shares, and/or 152,280 Series A warrants, to cover over-allotments. On March 21, 2025, the underwriters partially exercised its overallotment option with respect to 152,280 Series A warrants.

Each Series A warrant will be immediately exercisable upon issuance at an initial exercise price of $24.375 per common share, subject to adjustment on the First Reset Date and the Second Reset Date and subject to a floor price therein. The floor price has been set at $3.1375. Additionally, under the alternate cashless exercise option of the Series A warrants, during the period of 90 calendar days following the issue date of the Series A warrants, a holder of the Series A warrant has the right to receive, without payment of any additional cash to the Company, an aggregate number of shares equal to the product of (x) the aggregate number of common shares that would be issuable upon a cash exercise of the Series A warrant and (y) two and a half (2.5).

Transaction costs consisted of legal, accounting, underwriting discount and other costs incurred that were directly related to the issuance of the units. Pursuant to the terms of the Underwriting Agreement, the underwriters received a cash fee of six and a half percent (6.5%) of the aggregate gross proceeds as underwriting discounts and commissions. The Company also paid the Underwriter’s out-of-pocket accountable expenses of $100,000. The Company incurred other transaction costs in the amount of $594,167.

Gross proceeds to the Company, before deducting underwriting commissions and other offering expenses, were $16,516,035. The Company allocated the proceeds first to the warrants based on their fair values as determined at initial measurement, with the remaining proceeds allocated to common shares. Transaction costs are allocated to the separable financial instruments based on a relative fair value basis, compared to total proceeds received. Transaction costs allocated to warrant liabilities are expensed as incurred, presented as non-operating expenses in the accompanying statements of operations. Transaction costs allocated to the common stocks were charged against the carrying value of the common shares. The Company recognized transaction costs for issuance of warrants of $2,424,033, which was included in the finance expense in the statements of operations for the year ended June 30, 2025. The Company received proceeds of $19,035 from the issuance of overallotment warrants. As the fair value of the overallotment warrants exceeded the proceeds, the Company recognized $2,315,311 loss from issuance, which was included in the finance expense in the statements of operations for the year ended June 30, 2025.

At the closing of the financing, the Company issued 1,015,200 common shares, 1,015,200 Series A warrants, 50,760 underwriters warrants, and 152,280 overallotment warrants. The gross proceeds from the offering, excluding the over allotment proceeds, of $16,497,000 was first allocated to the fair value of the Series A Warrants of $15,689,207 and the remaining $807,793 allocated to the fair value of the common stock, net of allocated issuance costs of $108,642, resulting in net proceed allocated to the common stock of $699,151.

The warrants issued within the units and the overallotment warrants were accounted for as liabilities as they represent an obligation to deliver a variable number of shares of common stock in the future. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the consolidated statements of operations. The Company recognized warrant liabilities of $18,023,553 at inception. The fair value of the warrants were measured using its quoted market price, assuming all the warrants will be exercised at the second reset price of $3.1375, under the alternate cashless exercise option.

The underwriters’ warrants were classified as a contingently redeemable warrant in accordance with ASC 718, since these warrants did qualify for equity classification, but could be settled in cash or other assets in the event that another person or entity becomes the beneficial owner of 50% of the outstanding shares of the Company’s common stock. Because this contingently redeemable feature could result in the warrant holders receiving additional compensation not on par with the holders of Common Stock, the underwriters’ warrants were classified as temporary equity and therefore reported in “Mezzanine Equity” at inception. The Company recognized mezzanine equity of $784,000 at inception. As of June 30, 2025, all the underwriters’ warrants were exercised.

A summary of the changes in the fair value of the warrant liability Level 3 roll forward was as follows:

Warrants classified as liability	Number of warrants			Amount
				$
Balance, July 1, 2024		-		$	-
Issuance of warrants in the units		1,015,200			15,689,207
Issuance of overallotment warrants		152,280			2,334,346
Converted to common shares		(1,167,461	)		(18,023,263	)
Balance, June 30, 2025		19		$	290

Warrants classified as mezzanine equity	Number of warrants			Amount
				$
Balance, July 1, 2024		-		$	-
Issuance of underwriters’ warrants		50,760			784,000
Converted to common shares		(50,760	)		(784,000	)
Balance, June 30, 2025		-		$	-

As of June 30, 2025, 18,347,303 common shares were issued for 1,218,221 warrants exercised, and $18,023,262 warrants liabilities and $784,000 mezzanine equity were transferred to equity.

As of June 30, 2025, 19 Series A Warrants remain outstanding, which may result in the issuance of up to 365 additional common shares, assuming exercise on an alternate cashless basis at the floor price of $3.1375.

Other activities

On July 1, 2024, the Company issued 2,420 common shares in connection with the conversion of SAFE with an estimated fair value of $3,200,000 (Note 12).

On November 13, 2024, in connection with the reverse acquisition treatment of the Business Combination, the Company effectively issued 36,923 new common shares. At the closing of the Business Combination, the Company also issued 78,085 new common shares for the conversion of all 28,227 issued and outstanding preferred shares and issued 27,786 new common shares for the conversion of convertible notes. For clarification, these issuances occurred at the Damon Motors level prior to the exchange of Damon Motors securities into Pubco securities at the closing of the Business Combination.

Immediately following the Business Combination, the Company (i.e., Pubco) had 155,041 common shares outstanding without par value and 11,129 multiple voting shares outstanding. The holder of each common share is entitled to one vote. Subsequent to the closing of the Business Combination, the 11,129 multiple voting shares were converted to common shares.

During the year ended June 30, 2025, the Company issued 196 common shares for the service fee in connection with the Business Combination, 3,216 common shares for investor relationship service received, and 4,116 common shares for advisory service received.

During the year ended June 30, 2025, the Company issued 2,744 common shares in connection with entering the Securities Purchase Agreement with Streeterville. Also, the Company issued 65,068 in connection with the share purchase made by Streeterville under the Securities Purchase Agreement. Also see Note 9.

During the year ended June 30, 2025 and 2024, no preferred shares were issued.

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 years ended June 30, 2025 and 2024, the Company issued nil stock options.

A summary of the changes in the Company’s stock options is as follows:

	June 30, 2025					June 30, 2024
	Options (#)			Weighted average exercise price		Options (#)			Weighted average exercise price
Outstanding, beginning of year		15,586		$	421		17,076		$	406
Expired/cancelled		(9,805	)		493		(817	)		356
Exercised		-			-		(673	)		108
Outstanding, end of year		5,781			187		15,586			421
Exercisable, end of year		5,677			161		15,172			344
Weighted average fair value at grant date of options granted		n/a					n/a
Total intrinsic value of options exercised	$	-				$	1,020,473
Total intrinsic value of options outstanding	$	-				$	30,563,749
Total intrinsic value of options exercisable	$	-				$	30,135,740

Details of stock options outstanding at June 30, 2025 were as follows:

Exercise price		Weighted average contractual life		Number of options outstanding		Number of options exercisable
$	71		0.46		4,412		4,412
$	119		1.87		868		868
$	154		2.71		94		94
$	1,591		7.21		407		303
					5,781		5,677

During the year ended June 30, 2025, the Company recognized stock-based compensation expense of $63,539 (2024 – $146,841).

Stock-based compensation expense recorded in	June 30, 2025		June 30, 2024
General and administrative expenses	$	9,138	$	58,765
Research and development expenses		48,706		72,605
Sales and marketing expenses		5,695		15,471
	$	63,539	$	146,841

Cash received by the Company upon the exercise of stock options during the year ended June 30, 2025 amounted to $nil (2024 – $61,155).

Warrants

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.

During the year ended June 30, 2025, in connection with the issuance of convertible promissory notes to arms-length parties (Note 10), the Company issued 1,631 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 $875,127 was recorded as a component of additional paid-in capital.

Warrants of the Company classified as equity are composed of the following as at June 30, 2025:

Date of issuance	Number of warrants outstanding		Number of warrants exercisable		Exercise price		Expiry date
June 16, 2023		2,664		2,664		976	June 15, 2028
August 10, 2023		1,091		1,091		976	August 9, 2028
September 13, 2023		1,086		1,086		976	September 12, 2028
September 26, 2023		2,882		2,882		976	September 25, 2028
September 30, 2023		204		204		976	September 29, 2028
October 26, 2023		4,556		4,556		976	October 25, 2028
December 15, 2023		372		372		976	December 14, 2028
April 5, 2024		324		324		976	April 4, 2029
April 26, 2024		159		159		976	April 25, 2029
March 12, 2024		794		794		976	March 11, 2029
March 26, 2024		90		90		976	March 25, 2029
April 15, 2024		1,537		1,537		976	April 14, 2029
May 1, 2024		78		78		976	April 30, 2029
May 29, 2024		20		20		976	May 28, 2029
July 20, 2024		256		256		976	July 19, 2029
July 22, 2024		102		102		976	July 21, 2029
July 30, 2024		20		20		976	July 29, 2029
August 30, 2024		189		189		976	August 29, 2029
October 8, 2024		512		512		976	October 7, 2029
October 18, 2024		51		51		976	October 17, 2029
November 12, 2024		499		499		976	November 11, 2029
		17,486		17,486