Issue #3 reveals that all the creatures attacking the Heroic Warriors were sent by Damon, who is spying both He-Man and Skeletor, and despite having the halves of the Power Sword right in front of him, cannot reach them due to a stasis field.
Damon attacks Skeletor in the Cave of Power, knowing that their clashing magic energies would make them travel through unreachable corridors to Castle Grayskull itself. Skeletor reveals he knew all along and feigned ignorance while expecting Damon to make his move. Then Skeletor kills Damon.
Damon has a different look in issues #2 and #3. In issue #2 he looks like a horned demon with yellow skin, wearing a red skullcap, bracelets and loincloth. In issue #3, he looks human, with his hair and clothes following the same color pattern as his demon form.