# EDGAR Filing Document

**Accession Number:** 0001682149
**File Stem:** 0001104659-25-112637
**Filing Date:** 2025-11
**Character Count:** 271277
**Document Hash:** e6a062a88280b18ac79bee9c30b66ca9
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-25-112637.hdr.sgml**: 20251114

**ACCESSION NUMBER**: 0001104659-25-112637

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 124

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251114

**DATE AS OF CHANGE**: 20251114

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Datavault AI Inc.
- **CENTRAL INDEX KEY:** 0001682149
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-BUSINESS SERVICES, NEC [7389]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 301135279
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38608
- **FILM NUMBER:** 251487343

**BUSINESS ADDRESS:**
- **STREET 1:** 15268 NW GREENBRIER PKWY
- **CITY:** BEAVERTON
- **STATE:** OR
- **ZIP:** 97006
- **BUSINESS PHONE:** 408-627-4716

**MAIL ADDRESS:**
- **STREET 1:** 15268 NW GREENBRIER PKWY
- **CITY:** BEAVERTON
- **STATE:** OR
- **ZIP:** 97006

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** WISA TECHNOLOGIES, INC.
- **DATE OF NAME CHANGE:** 20220311

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Summit Wireless Technologies, Inc.
- **DATE OF NAME CHANGE:** 20180914

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Summit Semiconductor Inc.
- **DATE OF NAME CHANGE:** 20180501

?xml version='1.0' encoding='ASCII'? Datavault AI Inc._September 30, 2025

[**Table of Contents**](#TOC)

------

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

(Mark One)

---

| | |
|:---|:---|
| **☒** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| For the quarterly period ended September 30, 2025 | For the quarterly period ended September 30, 2025 |
| or | or |
| **☐** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

---

For the transition period from ______________to _______________.

Commission File Number: **001-38608**

**Datavault AI Inc.**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Delaware** | **30-1135279** |
| (State or other jurisdiction of incorporation or organization)  | (I.R.S. Employer Identification No.) |

---

**One Commerce Square, 24th FL**

**Philadelphia, PA 19103**

(Address of principal executive offices) (Zip Code)

**(408) 627-4716**

(Registrant's telephone number, including area code)

**N/A**

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading symbol(s)** | **Name of each exchange on which registered** |
| Common Stock, par value $0.0001 per share | DVLT | The Nasdaq Capital Market |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒&nbsp;&nbsp;&nbsp;&nbsp;No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒&nbsp;&nbsp;&nbsp;&nbsp;No ☐

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.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> 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 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;No ☒

The number of shares of the registrant's common stock outstanding as of November 11, 2025 is 285,217,148.

------

[**Table of Contents**](#TOC)

**DATAVAULT AI INC.** (formerly WiSA Technologies, Inc.) and Subsidiaries

**QUARTERLY REPORT ON FORM 10-Q**

For the quarter ended September 30, 2025

---

| | |
|:---|:---|
|  | **Page** <br>**Number**  |
| [**PART I: FINANCIAL INFORMATION**](#PARTIFINANCIALINFORMATION) |  |
| &nbsp;&nbsp;&nbsp;[Item 1. Financial Statements (unaudited)](#Item1FinancialStatements) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Condensed Consolidated Balance Sheets](#BALANCESHEETS) | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Condensed Consolidated Statements of Operations](#STATEMENTSOFOPERATIONS) | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Condensed Consolidated Statements of Stockholders' Equity](#EQUITY) | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Condensed Consolidated Statements of Cash Flows](#CASHFLOWS) | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Notes to Condensed Consolidated Financial Statements](#NOTESTOCONDENSEDCONSOLIDATEDFINANCIALSTA) | 8 |
| &nbsp;&nbsp;&nbsp;[Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](#Item2ManagementsDiscussionandAnal) | 58 |
| &nbsp;&nbsp;&nbsp;[Item 3. Quantitative and Qualitative Disclosures About Market Risk](#Item3QuantitativeandQualitativeDis) | 61 |
| &nbsp;&nbsp;&nbsp;[Item 4. Controls and Procedures](#Item4ControlsandProcedures) | 62 |
| [**PART II. OTHER INFORMATION**](#PARTIIOTHERINFORMATION) |  |
| &nbsp;&nbsp;&nbsp;[Item 1. Legal Proceedings](#Item1LegalProceedings) | 63 |
| &nbsp;&nbsp;&nbsp;[Item 1A. Risk Factors](#Item1ARiskFactors) | 63 |
| &nbsp;&nbsp;&nbsp;[Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](#Item2UnregisteredSalesofEquitySec) | 63 |
| &nbsp;&nbsp;&nbsp;[Item 3. Defaults Upon Senior Securities](#Item3DefaultsUponSeniorSecurities) | 63 |
| &nbsp;&nbsp;&nbsp;[Item 4. Mine Safety Disclosures](#Item4MineSafetyDisclosures) | 63 |
| &nbsp;&nbsp;&nbsp;[Item 5. Other Information](#Item5OtherInformation) | 63 |
| &nbsp;&nbsp;&nbsp;[Item 6. Exhibits](#Item6Exhibits) | 64 |
| [**SIGNATURES**](#SIGNATURES) | 66 |

---

[**Table of Contents**](#TOC)

#### PART I: FINANCIAL INFORMATION

#### Item 1. Financial Statements

#### DATAVAULT AI INC.

#### CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

---

| | | |
|:---|:---|:---|
|  | **September 30, 2025** | **December 31, 2024** |
|  | (unaudited) | (1) |
| Assets |  |  |
| Current Assets: |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $1683 | $3330 |
| &nbsp;&nbsp;Accounts receivable | 509 | 349 |
| &nbsp;&nbsp;Unbilled accounts receivable | 719 | 109 |
| &nbsp;&nbsp;Inventories | 994 | 1618 |
| &nbsp;&nbsp;Crypto assets | 8148 |  |
| &nbsp;&nbsp;Prepaid expenses and other current assets | 4473 | 1033 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 16526 | 6439 |
| Property and equipment, net | 303 | 58 |
| Intangible assets | 97548 | 92575 |
| Goodwill | 19135 |  |
| Investments in non-marketable securities | 4300 |  |
| Deposit for business combination |  | 1000 |
| Other assets | 846 | 553 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total assets | $138658 | $100625 |
| Liabilities, Convertible Redeemable Preferred Stock and Stockholders' Equity |  |  |
| Current Liabilities: |  |  |
| &nbsp;&nbsp;Accounts payable | $5190 | $2779 |
| &nbsp;&nbsp;Accrued liabilities | 5184 | 1334 |
| &nbsp;&nbsp;Short-term convertible notes | 12167 |  |
| &nbsp;&nbsp;Short-term convertible note payable, related party | 747 |  |
| &nbsp;&nbsp;Short-term promissory notes | 873 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 24161 | 4113 |
| Convertible note payable, net, related party, net of current | 3755 | 9569 |
| Convertible notes | 10450 |  |
| Other long term note payable | 127 |  |
| Warrant liabilities | 9 | 664 |
| Other liabilities | 648 | 553 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 39150 | 14899 |
| Commitments and contingencies (Note 10) |  |  |
| Series B convertible redeemable preferred stock, par value $0.0001; 375,000 shares authorized; 0 and 0 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Stockholders' Equity: |  |  |
| Common stock, par value $0.0001; 300,000,000 shares authorized; 217,201,387 and 52,034,060 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | 22 | 5 |
| &nbsp;&nbsp;Additional paid-in capital | 477592 | 384172 |
| &nbsp;&nbsp;Accumulated deficit | (378106) | (298451) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 99508 | 85726 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities, redeemable convertible preferred stock and stockholders' equity | $138658 | $100625 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The condensed consolidated balance sheet as of December 31, 2024 was derived from the audited consolidated balance sheet as of that date.

Note: Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-150 reverse stock split effected in April 2024, as discussed in Note 1.

The accompanying notes are an integral part of these condensed consolidated financial statements

[**Table of Contents**](#TOC)

#### DATAVAULT AI INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended September 30, 2025 and 2024

(in thousands, except share and per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(unaudited)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended September 30,**  | **Three Months Ended September 30,**  | **Nine Months Ended September 30,**  | **Nine Months Ended September 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| Revenue, net | $2904 | $1172 | $5268 | $1772 |
| Cost of revenue | 2809 | 946 | 5069 | 1618 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 95 | 226 | 199 | 154 |
| Operating Expenses: |  |  |  |  |
| &nbsp;&nbsp;Research and development | 4975 | 2225 | 11560 | 5729 |
| &nbsp;&nbsp;Sales and marketing | 2209 | 983 | 5446 | 2777 |
| &nbsp;&nbsp;General and administrative | 7667 | 2261 | 19839 | 6454 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 14851 | 5469 | 36845 | 14960 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss from operations | (14756) | (5243) | (36646) | (14806) |
| Interest expense, net | (864) | 9 | (18186) | (1260) |
| Change in fair value of 2025 and Q3 2025 notes measured at fair value | (10772) |  | (19576) |  |
| Change in fair value of convertible note to related party measured at fair value | (1119) |  | 236 |  |
| Change in fair value of warrant liabilities |  | 6 | 19 | (29120) |
| Extinguishment of debt | (5804) |  | (5804) |  |
| Other income, net | 339 | 136 | 307 | 136 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss before provision for income taxes | (32976) | (5092) | (79650) | (45050) |
| Provision for income taxes |  |  | 5 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | (32976) | (5092) | (79655) | (45050) |
| Deemed dividend on conversion of Series B preferred for common stock and repurchase of Series B preferred stock |  |  |  | (5842) |
| Deemed dividend on issuance of common stock and warrants in connection with amendment to warrants to purchase common stock |  | (2253) |  | (2253) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss attributable to common stockholders | $(32976) | $(7345) | $(79655) | $(53145) |
| Net loss per common share - basic and diluted | $(0.33) | $(1.39) | $(1.05) | $(16.81) |
| Weighted average number of common shares used in computing net loss per common share | 101110635 | 5278064 | 75898809 | 3162227 |

---

Note: Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-150 reverse stock split effected in April 2024, as discussed in Note 1.

The accompanying notes are an integral part of these condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### DATAVAULT AI INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the three and nine months ended September 30, 2025 and 2024

(in thousands, except share and per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(unaudited)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Convertible Preferred Stock** | **Convertible Preferred Stock** | **Common Shares** | **Common Shares** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | <br>**Additional**<br>**Paid-in Capital** | <br>**Accumulated**<br>**Deficit** | **Total**<br>**Stockholders'**<br>**Equity** |
| Balance as of December 31, 2024 |  | $— | 52034060 | $5 | $384172 | $(298451) | $85726 |
| Stock-based compensation |  |  | 5986893 |  | 648 |  | 648 |
| Issuance of common stock in connection with the February Offering |  |  | 4757126 | 1 | 4859 |  | 4860 |
| Issuance of common stock in connection with warrant exercise |  |  | 3246111 |  |  |  |  |
| Conversion of liability warrants to equity warrants |  |  |  |  | 15 |  | 15 |
| Net loss |  |  |  |  |  | (9563) | (9563) |
| Balance as of March 31, 2025 |  |  | 66024190 | $6 | $389694 | $(308014) | $81686 |
| Stock-based compensation |  |  | 3701197 |  | 1151 |  | 1151 |
| Issuance of common stock in connection with warrant exercise |  |  | 2989887 |  |  |  |  |
| Issuance of common stock for conversions of 2025 Notes |  |  | 1845945 |  | 1545 |  | 1545 |
| Issuance of common stock with NYIAX transaction |  |  | 1500000 |  |  |  |  |
| Issuance of warrants with the 2025 Notes |  |  |  |  | 16657 |  | 16657 |
| Issuance of common stock for the acquisition of CSI |  |  | 10600000 | 1 | 10282 |  | 10283 |
| Equity issuance costs |  |  |  |  | (137) |  | (137) |
| Net loss |  |  |  |  |  | (37116) | (37116) |
| Balance as of June 30, 2025 |  |  | 86661219 | $7 | $419192 | $(345130) | $74069 |
| Stock-based compensation |  |  | 1253313 |  | 2591 |  | 2591 |
| Issuance of common stock for the 2025 notes and Q3 notes conversions |  |  | 95506855 | 10 | 33213 |  | 33223 |
| Issuance of common stock in connection with Scilex investment |  |  | 15000000 | 2 | 7836 |  | 7838 |
| Issuance of common stock in connection with EOS conversion |  |  | 10000000 | 1 | 3099 |  | 3100 |
| Issuance of common stock for the acquisition of intangible assets |  |  | 5500000 | 1 | 3484 |  | 3485 |
| Exchange of warrants for common stock with the 10% notes extinguishment  |  |  |  |  | 3665 |  | 3665 |
| Shares issued in connection with NYIAX transaction |  |  | 3280000 | 1 | 4893 |  | 4894 |
| Equity issuance costs |  |  |  |  | (381) |  | (381) |
| Net loss |  |  |  |  |  | (32976) | (32976) |
| Balance as of September 30, 2025 |  |  | 217201387 | $22 | $477592 | $(378106) | $99508 |

---

[**Table of Contents**](#TOC)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Convertible Preferred Stock** | **Convertible Preferred Stock** | **Common Shares** | **Common Shares** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | <br>**Additional**<br>**Paid-in Capital** | <br>**Accumulated**<br>**Deficit** | **Total**<br>**Stockholders'**<br>**Equity (Deficit)** |
| Balance as of December 31, 2023 | 38335 | $247 | 222380 | $1 | $241884 | $(247042) | $(5157) |
| Stock-based compensation |  |  | 4 |  | 380 |  | 380 |
| Cumulative effect of ASU 2020-06 adoption |  | 116 |  |  | (116) |  | (116) |
| Issuance of Series B preferred stock in connection with warrant exercise, net of discounts | 29322 | 386 |  |  |  |  | - |
| Issuance of common stock in connection with conversion of Series B preferred stock | (5000) | (325) | 8038 |  | 325 |  | 325 |
| Deemed dividend on conversion of Series B preferred for common stock and repurchase of Series B preferred stock |  | 5842 |  |  | (5842) |  | (5842) |
| Repurchase of Series B preferred stock and Series B preferred stock warrants | (62657) | (6266) |  |  | 824 |  | 824 |
| Issuance of common stock, pre-funded units and warrants, net of offering costs  |  |  | 1442518 |  | 4210 |  | 4210 |
| Issuance of common stock in connection with reverse split rounding-up for fractional shares |  |  | 84255 |  |  |  | - |
| Net income |  |  |  |  |  | 2707 | 2707 |
| Balance as of March 31, 2024 |  |  | 1757195 | $1 | $241665 | $(244335) | $(2669) |
| Stock-based compensation |  |  | 255915 |  | 241 |  | 241 |
| Issuance of common stock in connection with warrant exercise |  |  | 441822 |  | 556 |  | 556 |
| Issuance of common stock and warrants, net of offering costs |  |  | 2466583 |  | 8756 |  | 8756 |
| Issuance of common stock to vendors |  |  |  |  | 360 |  | 360 |
| Restricted stock awards cancelled |  |  | (82) |  |  |  | - |
| Release of vested restricted common stock |  |  | 1 |  |  |  | - |
| Conversion of liability warrants to equity warrants |  |  |  |  | 41851 |  | 41851 |
| Net loss |  |  |  |  |  | (42665) | (42665) |
| Balance as of June 30, 2024 |  |  | 4921434 | $1 | $293429 | $(287000) | $6430 |
| Stock-based compensation |  |  | 532973 |  | 345 |  | 345 |
| Issuance of common stock in connection with warrant amendment |  |  | 887356 |  |  |  | - |
| Issuance of common stock in connection with warrant exercise |  |  | 1193721 |  | 2372 |  | 2372 |
| Restricted stock awards cancelled |  |  | (3859) |  |  |  | - |
| Issuance of common stock to vendors |  |  | 236204 |  | 240 |  | 240 |
| Net loss |  |  |  |  |  | (5092) | (5092) |
| Balance as of September 30, 2024 |  |  | 7767829 | $1 | $296386 | $(292092) | $4295 |

---

Note: Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-150 reverse stock split effected in April 2024, as discussed in Note 1.

The accompanying notes are an integral part of these condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### DATAVAULT AI INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2025 and 2024

(in thousands)

(unaudited)

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended September 30,**  | **Nine Months Ended September 30,**  |
|  | **2025** | **2024** |
| Cash flows from operating activities: |  |  |
| Net loss | $(79655) | $(45050) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | 4390 | 1323 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 7586 | 59 |
| &nbsp;&nbsp;&nbsp;Amortization of debt discounts and paid-in-kind interest | 1197 | 1260 |
| &nbsp;&nbsp;&nbsp;Change in fair value of convertible debt | 19339 |  |
| &nbsp;&nbsp;&nbsp;Fair value of equity warrants in interest expense | 16657 |  |
| &nbsp;&nbsp;&nbsp;Accreted interest on convertible notes | 280 |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of crypto currency | (310) |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of warrant liability | (19) | 29120 |
| &nbsp;&nbsp;&nbsp;Debt extinguishment | 5804 |  |
| &nbsp;&nbsp;&nbsp;NYIAX loss | 595 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (160) | 117 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unbilled accounts receivable | (342) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 787 | 877 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (3346) | (215) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | (160) | 72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 1876 | (842) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities | 2328 | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | (51) | (56) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (23204) | (13276) |
| Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Issuance of note receivable |  | (323) |
| &nbsp;&nbsp;&nbsp;Purchases of property and equipment | (52) | (28) |
| &nbsp;&nbsp;&nbsp;Acquisition of business, net | (6500) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (6552) | (351) |
| Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of convertible notes, net of issuance costs | 26093 |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of common stock, net of issuance costs | 4763 |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of common stock in connection with warrant exercise |  | 3198 |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of common stock, prefunded warrants and warrants, net of issuance costs |  | 19558 |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of short-term loan, net of issuance costs |  | 600 |
| &nbsp;&nbsp;&nbsp;Proceeds from exercise of Series B preferred stock warrants |  | 714 |
| &nbsp;&nbsp;&nbsp;Repurchase of Series B preferred stock warrants |  | (6266) |
| &nbsp;&nbsp;&nbsp;Repayment of short-term loan |  | (667) |
| &nbsp;&nbsp;&nbsp;Repurchase of common stock warrants | (622) |  |
| &nbsp;&nbsp;&nbsp;Repayment of notes principal | (2125) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 28109 | 17137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net (decrease) increase in cash and cash equivalents | (1647) | 3510 |
| Cash and cash equivalents as of beginning of period  | 3330 | 411 |
| Cash and cash equivalents as of end of period | $1683 | $3921 |
| **Noncash Investing and Financing Activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Conversion of liability warrants to equity warrants  |  | 41851 |
| &nbsp;&nbsp;&nbsp;Issuance of warrant liability in connection with financing |  | 8701 |
| &nbsp;&nbsp;&nbsp;Repurchase of Series B preferred stock |  | 5842 |
| &nbsp;&nbsp;&nbsp;Repurchase of Series B preferred stock warrants |  | 824 |
| &nbsp;&nbsp;&nbsp;Cashless exercise of warrants |  | 587 |
| &nbsp;&nbsp;&nbsp;Issuance of common stock to vendors |  | 600 |
| &nbsp;&nbsp;&nbsp;Warrant exercise in connection with loan settlement |  | 333 |
| &nbsp;&nbsp;&nbsp;Issuance of common stock in connection with Series B preferred stock |  | 325 |
| &nbsp;&nbsp;&nbsp;Capitalized acquisition costs | 117 |  |
| &nbsp;&nbsp;&nbsp;Convertible notes issued for CSI acquisition | 9718 |  |
| &nbsp;&nbsp;&nbsp;Non cash common shares issued in CSI acquisition | 10282 |  |
| &nbsp;&nbsp;&nbsp;Shares issued for Scilex investment in exchange for Bitcoin | 7595 |  |
| &nbsp;&nbsp;&nbsp;Deposit paid in December 2024 used in CSI acquisition closing | 1000 |  |
| &nbsp;&nbsp;&nbsp;Shares payable to NYIAX in share exchange agreement | 1088 |  |
| &nbsp;&nbsp;&nbsp;Reclass liability warrant to equity | 15 |  |
| &nbsp;&nbsp;&nbsp;Issuance of common stock from non-cash conversion of convertible notes | 37868 |  |
| &nbsp;&nbsp;&nbsp;Common stock issued for intangible asset acquisitions | 3346 |  |
| &nbsp;&nbsp;&nbsp;Issuance of common stock to NYIAX | 4895 |  |

---

Note: Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-150 reverse stock split effected in April 2024, as discussed in Note 1.

The accompanying notes are an integral part of these condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

#### For the Three and Nine Months Ended September 30, 2025 and 2024
(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;1. **Business and Summary of Significant Accounting Policies** 

Datavault AI Inc., formerly known as WiSA Technologies, Inc., and before then Summit Wireless Technologies, Inc. (together with its subsidiaries also referred to herein as "we", "us", "our", "Datavault", "Datavault AI" or the "Company"), was originally formed as a limited liability company in Delaware on July 23, 2010. The Company's business is to deliver the best-in-class data management and monetization, as well as using wireless audio to transmit data and audio for consumer use. Datavault stands at the forefront of innovation, delivering cutting-edge Web 3.0 data management and high-performance computing (HPC) solutions to a global audience.

On May 20, 2025, the Company completed its previously announced asset purchase of technology assets, customer contracts, trademarks, and other intellectual property (collectively, the "CSI Acquired Assets") from CompuSystems, Inc. ("CSI"). CSI is a provider of registration, data analytics, and lead management services for live events, offering customer support to clients in the trade, association, corporate, and government event markets. The results of operations of CSI are included in the unaudited condensed consolidated financial statements of the Company for the three and nine months ended September 30, 2025 since the date of acquisition.

**Nasdaq Compliance**

*Stockholders Equity Deficiency*

On July 3, 2024, the Company received a letter from the Office of General Counsel of The Nasdaq Stock Market LLC ("Nasdaq") confirming that the Company has regained compliance with the equity requirement under Nasdaq Listing Rule 5550(b)(1) (the "Equity Rule") as required by the Nasdaq Hearing Panel's (the "Panel") decision dated April 5, 2024 (the "April 2024 Decision").

The Panel has determined to impose a monitoring period (the "Monitor Period"), pursuant to Nasdaq Listing Rule 5815(d)(4)(B). If, during the Monitor Period, which lasts until July 3, 2025, the Nasdaq Listing Qualifications staff ("Staff") finds the Company again out of compliance with the Equity Rule, notwithstanding Nasdaq Listing Rule 5810(c)(2), the Company will not be permitted to provide the Staff with a plan of compliance with respect to such deficiency and Staff will not be permitted to grant additional time for the Company to regain compliance with respect to such deficiency, nor will the Company be afforded an applicable cure or compliance period pursuant to Nasdaq Listing Rule 5810(c)(3). Instead, Staff will issue a Delist Determination Letter and the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened Hearings Panel if the initial Panel is unavailable. The Company will have the opportunity to respond and present to the Panel as provided by Nasdaq Listing Rule 5815(d)(4)(C). The Company's securities may at that time be delisted from Nasdaq. The monitoring period expired July 25, 2025 with no further action required by the Company.

*First Bid Price Deficiency*

On April 29, 2024, the Company received a letter from Nasdaq notifying the Company that it has regained compliance with the Minimum Bid Price Requirement (defined below) pursuant to Listing Rule 5550 (a)(2), as required by the April 2024 Decision. The Company will be subject to a mandatory panel monitor for a period of one year from the date of the letter pursuant to Nasdaq Listing Rule 5815(d)(4)(B). If, within that one-year monitoring period, the Staff finds the Company again out of compliance with the Minimum Bid Price Requirement, notwithstanding Nasdaq Listing Rule 5810(c)(2), the Company will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and the Staff will not be permitted to grant additional time for the Company to regain compliance with respect to that deficiency, nor will the Company be afforded an applicable cure or compliance period pursuant to Nasdaq Listing Rule 5810 (c)(3). Instead, the Staff will issue a delist determination letter and the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened hearings panel if the initial Panel is unavailable. The one-year monitoring period has concluded with no further action required by the Company

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Business and Summary of Significant Accounting Policies,** continued

*Second Bid Price Deficiency*

On May 6, 2025, the Company received a written notification (the "May 2025 Nasdaq Letter") from the Staff that it was not in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market, as set forth under the Nasdaq Listing Rule 5550(a)(2) Minimum Bid Price Requirement, because the closing bid price of the Company's common stock was below $1.00 per share for the previous thirty (30) consecutive business days (the "Minimum Bid Price Requirement"). The May 2025 Nasdaq Letter has no immediate effect on the listing of the common stock, which will continue to trade uninterrupted on the Nasdaq Capital Market under the ticker "DVLT."

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has been granted 180 calendar days from the date of the May 2025 Nasdaq Letter, or until November 3, 2025 (the "Compliance Period"), to regain compliance with the Minimum Bid Price Requirement. If at any time during the Compliance Period, the bid price of the common stock closes at or above $1.00 per share for a minimum of ten (10) consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Minimum Bid Price Requirement and the matter will be closed.

In the event the Company does not regain compliance with the Minimum Bid Price Requirement by the end of the Compliance Period, the Company may be eligible for an additional 180-calendar day grace period. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and will need to provide written notice to Nasdaq of its intent to regain compliance with such requirement during such second compliance period.

If the Company does not regain compliance within the allotted compliance period(s), including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Common Stock will be subject to delisting from the Nasdaq Capital Market.

*Nasdaq Compliance Regained October 10, 2025*

On October 10, 2025, the Company received a letter (the "Letter") from Nasdaq confirming that the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share for the Company's common stock. As previously disclosed, on May 6, 2025, the Company received notice from Nasdaq that it was not in compliance with the minimum bid price requirement.

The Letter states that for 10 consecutive business days from September 26, 2025 through October 9, 2025, the closing bid price of the Company's common stock was at least $1.00 per share. Accordingly, the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2), and this matter is now closed.

**Reverse Stock Split**

April 2024 Reverse Stock Split

On April 4, 2024, the Board approved a 1-for-150 reverse stock split (the "April 2024 Reverse Stock Split") of our outstanding shares of common stock and authorized the filing of a certificate of amendment to our certificate of incorporation, as amended, with the Secretary of State of the State of Delaware to effect the April 2024 Reverse Stock Split. On April 12, 2024, the April 2024 Reverse Stock Split was effected and the condensed consolidated financial statements have been retroactively adjusted. All common stock share numbers, warrants to purchase common stock, prices and exercise prices have been retroactively adjusted to reflect the April 2024 Reverse Stock Split. The common stock began trading on a split-adjusted basis at the start of trading on April 15, 2024. Unless otherwise indicated, the information presented in this Quarterly Report on Form 10-Q (this "Report") gives effect to the April 2024 Reverse Stock Split.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**1.** **Business and Summary of Significant Accounting Policies,** continued

**Basis of Presentation**

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and include all adjustments necessary for the fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. The condensed consolidated financial statements reflect the accounts of Datavault AI Inc. and its wholly-owned subsidiaries, WISA Technologies Korea, LTD, a Korean limited company, which was established in September 2022, and WiSA, LLC, a Delaware limited liability company. All intercompany balances and transactions are eliminated.

**Use of Estimates**

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

**Reclassification**

Certain reclassifications have been made to prior periods' condensed consolidated financial statements to conform to the current period presentation. These reclassifications did not result in any change in previously reported net income (loss), total assets or stockholders' deficit.

**NYIAX**

During the three months ended September 30, 2025, the Company recorded an out-of-period adjustment to correct misstatements related to the accounting for its investment in NYIAX Inc. within the financial statements for the period ended June 30, 2025. In the three months ended September 30, 2025, the Company issued 2,530,000 shares of common stock to NYIAX that was contractually required to be issued on April 9, 2025 at the closing date. The Company incorrectly omitted $4.3 million in assets consisting of $1.8 million investment and $2.5 million in note receivable, understated additional paid-in capital by $4.9 million, and overstated research and development expense by $0.5 million resulting in a corresponding decrease in net loss and pre-tax loss for the three months ended June 30, 2025. The Company recorded a $4.3 million investment in NYIAX in the three months ended September 30, 2025 to recognize the fair value of the shares received from NYIAX, $1.8 million of which was received in the three months ended June 30, 2025 and properly stated in the three months ended September 30, 2025. Research and development expense was decreased in the three months ended September 30, 2025 by $0.5 million to properly reflect expense associated with recognizing the intellectual property received from NYIAX. The correction is non-cash in nature and had no impact on revenue, operating cash flows, or compliance with any debt covenants. Management evaluated the impact of the error both qualitatively and quantitatively and determined that it was not material to the financial statements for the quarter ended June 30, 2025, or the current reporting period.

#### Concentration of Credit Risk and Other Risks and Uncertainties
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents are deposited in demand and money market accounts at one financial institution. At times, such deposits may be in excess of insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents.

The Company's accounts receivable are derived from revenue earned from customers located throughout the world. The Company performs credit evaluations of its customers' financial condition and may, in certain circumstances, require full or partial payment in advance of shipping. As of September 30, 2025 and December 31, 2024, there was no allowance for credit losses. As of September 30, 2025, the Company had two customers accounting for 29% and 17% of accounts receivable. As of December 31, 2024, the Company had three customers accounting for 68%, 12% and 11% of accounts receivable.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**1.** **Business and Summary of Significant Accounting Policies,** continued

The Company had one customer accounting for 19% of its net revenue for the three months ended September 30, 2025. The Company had one customer accounting for 12% of its net revenue for the nine months ended September 30, 2025. The Company had one customer accounting for 56% of its net revenue for the three months ended September 30, 2024. The Company had three customers accounting for 38%, 15% and 12% of its net revenue for the nine months ended September 30, 2024.

The Company's future results of operations involve a number of risks and uncertainties. Factors that could affect the Company's future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, continued acceptance of the Company's products, competition from substitute products and larger companies, protection of proprietary technology, strategic relationships and dependence on key individuals.

The Company relies on sole-source suppliers to manufacture some of the components used in its product. The Company's manufacturers and suppliers may encounter problems during manufacturing due to a variety of reasons, any of which could delay or impede their ability to meet demand. The Company is heavily dependent on a single contractor in China for assembly and testing of its products, a single contractor in Japan for the production of its transmit semiconductor chips and a single contractor in China for the production of its receive semiconductor chips.

#### Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

#### Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the invoice amount and are generally not interest bearing. The Company reviews its trade receivables aging to identify specific customers with known disputes or collection issues. The Company exercises judgment when determining the adequacy of these reserves as it evaluates historical bad debt trends and changes to customers' financial conditions. No allowance for credit losses was deemed necessary as of September 30, 2025 or December 31, 2024.

#### Fair Value of Financial Instruments
Carrying amounts of certain of the Company's financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities. The carrying value of the Company's borrowings and capital lease liabilities approximates fair value based upon borrowing rates currently available to the Company for loans and capital leases with similar terms. The Company's warrant liabilities and the convertible notes payable, net to a related party and the 2025 Convertible Notes (defined below) are the only financial instruments that are adjusted to fair value on a recurring basis.

#### Inventories
Inventories, principally purchased components, are stated at the lower of cost or net realizable value. Cost is determined using an average cost, which approximates actual cost on a first-in, first-out basis. Inventory in excess of salable amounts and inventory which is considered obsolete based upon changes in existing technology is written off. At the point of loss recognition, a new lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in the new cost basis.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**1.**Business and Summary of Significant Accounting Policies, continued

#### Deferred Offering Costs
Deferred offering costs, consisting of legal, accounting and filing fees relating to public offerings, are capitalized. The deferred offering costs will be offset against public offering proceeds upon the effectiveness of an offering. In the event that an offering is terminated, deferred offering costs will be expensed. As of September 30, 2025 and December 31, 2024, the Company had capitalized $243,000 and no deferred offering costs, respectively.

#### Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over their estimated useful lives of two to five years. Leasehold improvements and assets acquired under capital lease are amortized on a straight-line basis over the shorter of the useful life or term of the lease. Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.

#### Convertible Financial Instruments
The Company bifurcates conversion options and warrants from their host instruments and accounts for them as freestanding derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable U.S. GAAP.

When the Company has determined that the embedded conversion options and warrants should be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.

Debt discounts under these arrangements are amortized to interest expense using the interest method over the earlier of the term of the related debt or their earliest date of redemption.

#### Warrants for Common Shares, Convertible Redeemable Preferred Shares, and Derivative Financial Instruments
Warrants for our common shares, convertible redeemable preferred shares, and derivative financial instruments are classified as equity if the contracts (1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). Contracts which (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) contain reset provisions that do not qualify for the scope exception are classified as equity or liabilities. The Company assesses classification of its warrants for shares of common stock and other derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.

#### Product Warranty
The Company's products are generally subject to a one-year warranty, which provides for the repair, rework, or replacement of products (at the Company's option) that fail to perform within the stated specification. The Company has assessed its historical claims and, to date, product warranty claims have not been significant. The Company will continue to assess if there should be a warranty accrual going forward.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**1.** **Business and Summary of Significant Accounting Policies,** continued

**Revenue Recognition**

The Company historically generates revenue primarily from two product categories which are the sale of consumer audio products ("Consumer Audio Products") as well as the sale of components ("Components"). With the closing of the CSI acquisition, the Company also generates revenue from registration, data analytics, and lead management services for live events, such as trade shows and conferences, in both the corporate and government sectors ("Live Events"). The Company applies the following five steps: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company considers customer purchase orders to be the contracts with a customer for Consumer Audio Products and Components. The Company also enters into contracts with customers for providing Live Events with terms of three years. The contract typically terminates after the close of the last event specified in the contract, unless both parties agree in writing to extend it. There are no termination-for-convenience clauses in the CSI contract. Contracts can only be terminated for breach or non-performance and in that circumstance, the Company must be compensated for all services up to the date of termination. Therefore, a standard CSI contract is typically not shorter than its stated term.

Revenues on Consumer Audio Products and Components, net of expected discounts, are recognized when the performance obligations of the contract with the customer are satisfied and when control of the promised goods are transferred to the customer, typically when products, which have been determined to be the only distinct performance obligations, are shipped to the customer. Expected costs of assurance warranties and claims are recognized as expense.

Revenues generated from Live Events contracts have a single performance obligation, event preparation and management. A standard CSI contract contains fixed fees for services and pass through costs and other expenses that are variable depending on the number of supplies used or personnel costs incurred which are passed through to the client and are recognized on a gross basis in revenue as costs to fulfill the contract. The contract also includes rebates payable to the client which the Company estimates as variable consideration using the most likely amount method at the outset of the contract. The entire transaction price relates to the event preparation and management performance obligation. The Company recognizes revenue as services are rendered using the input method. The Company uses the input method of labors hours expended as it provides the best depiction of the transfer of services to the client.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company for Consumer Audio Products and Components from a customer and deposited with the relevant government authority, are excluded from revenue. The Company's revenue arrangements do not contain significant financing components.

For Consumer Audio and Components, sales to certain distributors are made under arrangements which provide the distributors with price adjustments, price protection, stock rotation and other allowances under certain circumstances. The Company does not provide its customers with a contractual right of return. However, the Company accepts limited returns on a case-by-case basis. These returns, adjustments and other allowances are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized. We believe that there will not be significant changes to our estimates of variable consideration.

If a customer pays consideration, or the Company has a right to an amount of consideration that is unconditional before we transfer a good or service to the customer, those amounts are classified as contract liabilities which are included in other current liabilities when the payment is made or it is due, whichever is earlier.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**1.** **Business and Summary of Significant Accounting Policies,** continued

During the three and nine months ended September 30, 2025 and 2024, net revenue consisted of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended September 30,**  | **For the Three Months Ended September 30,**  | **For the Nine Months Ended September 30,**  | **For the Nine Months Ended September 30,**  |
| **(in thousands)** | **2025** | **2024** | **2025** | **2024** |
| Components | $630 | $984 | $1380 | $1457 |
| Consumer Audio Products | 53 | 188 | 235 | 315 |
| Live Events | 2221 |  | 3653 |  |
| &nbsp;&nbsp;Total | $2904 | $1172 | $5268 | $1772 |

---

**Contract Balances**

The Company receives payments from customers based on a billing schedule as established in our contracts to partially offset prepayments required by our vendors on long lead time materials as well as for Live Events. Amounts collected prior to the fulfillment of the performance obligation are considered contract liabilities and classified as customer advances within accrued liabilities on the consolidated balance sheets. Contract assets are recorded when the Company has a conditional right to consideration for our completed performance under the contracts. Accounts receivables are recorded when the right to this consideration becomes unconditional. The Company has $719,000 and $109,000 of contract assets as of September 30, 2025 and December 31, 2024, respectively, which are recorded in the current assets section on the condensed consolidated balance sheets. The Company expects to collect 100% of the contract assets as of September 30, 2025 in the next twelve months. During the nine months ended September 30, 2025, the Company recognized $54,000 of revenue from contract liabilities that were included in accrued liabilities on the condensed consolidated balance sheets as of December 31, 2024.

---

| | | |
|:---|:---|:---|
|  | **September 30,**  | **December 31,**  |
| **(in thousands)** | **2025** | **2024** |
| Contract Liabilities | $2157 | $174 |

---

**Revenue by Geographic Area**

In general, revenue disaggregated by geography (See Note 10) is aligned according to the nature and economic characteristics of our business and provides meaningful disaggregation of our results of operations. Since we operate in one segment, all financial segment and product line information can be found in the condensed consolidated financial statements.

#### Practical Expedients and Exemptions
As part of our adoption of Accounting Standards Codification Topic ("ASC") 606, Revenue from Contracts with Customers, the Company elected to use the following practical expedients: (i) not to adjust the promised amount of consideration for the effects of a significant financing component when the Company expects, at contract inception, that the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less; (ii) to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less; and (iii) not to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer.

In addition, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

#### Stock-Based Compensation
The Company measures and recognizes the compensation expense for restricted stock units and restricted stock awards granted to employees and directors based on the fair value of the award on the grant date.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**1.** **Business and Summary of Significant Accounting Policies,** continued

Restricted stock units give an employee an interest in Company stock but they have no tangible value until vesting is complete. Restricted stock units and restricted stock awards are equity classified and measured at the fair market value of the underlying stock at the grant date and recognized as expense over the related service or performance period. The Company elected to account for forfeitures as they occur. The fair value of stock awards is based on the quoted price of our common stock on the grant date. Compensation cost for restricted stock units and restricted stock awards is recognized using the straight-line method over the requisite service period.

**Crypto Assets**

We hold crypto assets primarily for operational purposes and to support short-term liquidity needs within our normal operating cycle. These crypto assets are received and used in the ordinary course of business, including to settle vendor payments or facilitate customer-related transactions. We reasonably expect to convert such assets to cash or utilize them in operations within a short period of time, typically within one year. All of our crypto assets are held in Bitcoin. Consistent with this intent and realization pattern, we have classified all crypto assets as current assets in our consolidated balance sheets in accordance with ASC 210-10 and ASC 350-60.

We do not hold crypto assets for long-term investment, speculative, or collateral purposes, and we do not engage in trading or financing activities involving crypto assets. Our crypto asset holdings are considered less liquid than cash and cash equivalents and may not serve as an equivalent source of liquidity during periods of market stress.

#### Research and Development

#### Research and development costs are charged to operations as incurred and include salaries, consulting expenses and an allocation of facility costs.

#### Advertising Costs
Advertising costs are charged to sales and marketing expenses as incurred. Advertising costs for the three and nine months ended September 30, 2025 were $72,000 and $247,000 respectively. Advertising costs for the three and nine months ended September 30, 2024 were $201,000 and $465,000, respectively.

#### Comprehensive Loss
Comprehensive loss represents the changes in equity of an enterprise, other than those resulting from stockholder transactions. Accordingly, comprehensive loss may include certain changes in equity that are excluded from net loss. For the three and nine months ended September 30, 2025 and 2024, the Company's comprehensive loss is the same as its net loss.

#### Foreign Currency
The financial position and results of operations of the Company's foreign operations are measured using currencies other than the U.S. dollar as their functional currencies. Accordingly, for these operations all assets and liabilities are translated into U.S. dollars at the current exchange rates as of the respective balance sheet date. Expense items are translated using the weighted average exchange rates prevailing during the period. Cumulative gains and losses from the translation of these operations' financial statements are reported as a separate component of stockholders' equity, while foreign currency transaction gains or losses, resulting from re-measuring local currency to the U.S. dollar are recorded in the condensed consolidated statement of operations in other income (expense), net and were not material for the three and nine months ended September 30, 2025 and 2024.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**1.**Business and Summary of Significant Accounting Policies, continued

#### Net Loss per Common Share
Basic and diluted net loss per common share is presented in conformity with the two-class method required for participating securities. The Company considers all series of convertible preferred stock to be participating securities. Under the two-class method, the net loss attributable to common stockholders is not allocated to the convertible preferred stock as the holders of the convertible preferred stock do not have a contractual obligation to share in the losses of the Company. Under the two-class method, net income would be attributed to common stockholders and participating securities based on their participation rights.

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares and potentially dilutive common share equivalents outstanding for the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per common share calculation, Series A 8% Senior Convertible Preferred Stock ("Series A Preferred Stock"), warrants exercisable for common stock, restricted stock units and shares issuable upon the conversion of convertible notes payable are considered to be potentially dilutive securities. Net loss is adjusted for any deemed dividends to preferred stockholders to compute income available to common stockholders.

For the nine months ended September 30, 2025, warrants to purchase 31,232,173 shares of common stock, 12 shares underlying shares of restricted stock units, 1,150,000 shares underlying shares of restricted stock units issued under an inducement grant, 8,595,182 shares underlying restricted stock awards and 500,000 shares under two grants of restricted stock under inducement grants have been excluded from the calculation of net loss per common share because the inclusion would be antidilutive.

For the nine months ended September 30, 2024, warrants to purchase 9,375,730 shares of common stock, 698,279 shares of restricted stock, 70,016 shares of restricted stock issued under an inducement grant and 14 shares underlying restricted stock units have been excluded from the calculation of net loss per common share because the inclusion would be antidilutive.

#### Income Taxes
Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is "more-likely-than-not" that some portion or all of the deferred tax assets will not be realized. The Company has recognized valuation allowances against its deferred tax assets as of September 30, 2025 and December 31, 2024. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company uses a comprehensive model for recognizing, measuring, presenting, and disclosing in the condensed consolidated financial statements tax positions taken or expected to be taken on a tax return. A tax position is recognized as a benefit only if it is "more-likely-than-not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more-likely-than-not" test, no tax benefit is recorded. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. As of September 30, 2025 and December 31, 2024, the Company recognized no interest and penalties.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Business and Summary of Significant Accounting Policies,** continued

#### Costs to Fulfill Contracts
The Company capitalizes certain pre-show indirect costs that are incurred to fulfill customer contracts when those costs relate directly to the contract, generate or enhance resources that will be used to satisfy future performance obligations, and are expected to be recoverable. Capitalized costs primarily include indirect pre-show setup activities, such as venue deposits, equipment preparation, design and technical pre-production efforts, and other pre-show fulfillment activities. The Company expenses all direct costs related to the execution of the show and all post-show costs as incurred, as those activities do not meet the criteria for capitalization under ASC 340-40.

Capitalized pre-show costs are amortized on a systematic basis that is consistent with the transfer of the related services to the customer, which the Company determines based on the percentage of completion of each contract. For example, if a contract is 20% complete as of the reporting date, 20% of the associated capitalized indirect pre-show costs are amortized. Amortization of costs to fulfill a contract is recorded in cost of sales in the condensed consolidated statements of operations.

At September 30, 2025, the balance of capitalized costs to fulfill contracts was $273,000, all of which is classified as a current asset. During the three months ended September 30, 2025, the Company recognized $170,000 of amortization related to capitalized contract fulfillment costs. No impairment losses were recognized during the period.

#### Recently Adopted Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures" to help investors better understand an entity's exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities. Furthermore, the update improves disclosures used to assess income tax information that affects cash flow forecasts and capital allocation decisions. The update is effective for public business entities for annual periods beginning after December 15, 2024, on a prospective basis but does not impact interim financial statements. The Company has adopted this standard as of January 1, 2025 and does not expect the adoption to have a material impact on its condensed consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-08, Accounting for and Disclosure of Crypto Assets (Subtopic 350-60) ("new crypto assets standard"). The new crypto assets standard requires certain crypto assets to be measured at fair value separately on the balance sheet with changes reported in the statement of operations each reporting period. The new crypto assets standard also enhances the other intangible asset disclosure requirements by requiring the name, cost basis, fair value, and number of units for each significant crypto asset holding. The Company first received crypto assets during the third quarter of 2025 and therefore adopted ASU 2023-08 as of that date. Because the Company had no crypto asset holdings prior to that period, no retrospective application or recast of prior-period financial statements was required. The adoption did not have an impact on previously reported results.

**Recently Issued and Not Yet Adopted Accounting Pronouncements**

ASU 2025-06 Internal-use software issued in September 2025, ASU 2025-06 updates guidance in Subtopic 350-40 to streamline accounting for internal-use software, particularly for agile development methods. This change was a priority for stakeholders who found it difficult to differentiate project stages for capitalizing development costs in iterative environments.

ASU 2025-05 Measurement of credit losses published in July 2025, this ASU improves guidance for measuring credit losses on accounts receivable and contract assets. It offers optional guidance to address challenges entities faced applying Topic 326 to these assets. This update aims to simplify the process for entities, such as private companies, that found it complex to develop reasonable forecasts for credit loss estimation.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Business and Summary of Significant Accounting Policies, continued** 

ASU 2024-04 Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments: The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of the annual reporting period for all entities that have adopted the amendments in Update 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statements.

ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses: The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The interim effective date was amended by Update 2025-01 "*Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures: Clarifying the Effective Date*" ("ASU 2025-01"), clarifying the interim reporting date when an entity must adopt ASU 2024-03. According to ASU 2025-01, ASU 2024-03 is effective for interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statements.

The Company has reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the consolidated financial statements as a result of future adoption.

&nbsp;&nbsp;&nbsp;&nbsp;2. **Going Concern** 

The condensed consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business. As of September 30, 2025, the Company had cash and cash equivalents of $1.7 million and reported net cash used in operations of $23.0 million during the nine months ended September 30, 2025. The Company expects operating losses to continue in the foreseeable future because of additional costs and expenses related to research and development activities, plans to expand its product portfolio, and increase its market share. The Company's ability to attain profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure.

Based on current operating levels, the Company will need to raise additional funds in the next 12 months by selling additional equity or incurring debt. To date, the Company has funded its operations primarily through sales of its securities in public and private markets, proceeds from the exercise of warrants to purchase common stock and the sale of convertible notes. Additionally, future capital requirements will depend on many factors, including the rate of revenue growth, the selling price of the Company's products, the expansion of sales and marketing activities, the timing and extent of spending on research and development efforts and the continuing market acceptance of the Company's products. These factors raise substantial doubt about the Company's ability to continue as a going concern for the twelve months from the date of this Report.

Management of the Company intends to raise additional funds through the issuance of equity securities or debt. There can be no assurance that, in the event the Company requires additional financing, such financing will be available at terms acceptable to the Company, if at all. Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending could have a material adverse effect on the Company's ability to achieve its intended business objectives. As a result, the substantial doubt about the Company's ability to continue as a going concern has not been alleviated. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**3.** **Business Combination and Asset Purchase**

On May 20, 2025, the Company completed its previously announced asset purchase of technology assets, customer contracts, trademarks, and other intellectual property (collectively, the "CSI Acquired Assets") from CompuSystems, Inc. ("CSI"). At the closing (the "CSI Closing"), pursuant to an asset purchase agreement, by and between the Company and CSI, dated as of December 19, 2024, as amended by that certain amendment to the asset purchase agreement, dated as of December 30, 2024, and as further amended by that certain second amendment to the asset purchase agreement, dated as of February 25, 2025, and as further amended by that certain third amendment to the asset purchase agreement, dated March 31, 2025, and as further amended by that certain fourth amendment to the asset purchase agreement, dated May 14, 2025 (the "CSI Asset Purchase Agreement"), the Company acquired the CSI Acquired Assets for an aggregate purchase consideration of $32.8 million consisting of (i) exclusivity fee of $1.0 million paid in the fourth fiscal quarter of 2024 (the "Exclusivity Fee"), (ii) amount in cash of $1.0 million paid to an escrow account in January 2025 (the "Escrow Amount") (iii) an amount in cash equal to $5.0 million, (iv) 10,600,000 validly issued, fully paid and nonassessable shares of restricted common stock of the Company, (the "Closing Stock Consideration"), (v) $5.0 million payable in the form of the convertible note (the "Initial Convertible Note") issued by the Company to CSI, (vi) $5.0 million payable in the form of the convertible note (the "First Convertible Note") issued by the Company to CSI, (vii) $5.0 million payable in the form of convertible note (the "Second Convertible Note", and together with the Initial Convertible Note and First Convertible Note, the "CSI Convertible Notes") issued by the Company to CSI, (viii) $500,000 for the reimbursement of fees incurred by CSI due to the acquisition, and (ix) the assumption of certain transferred liabilities, as described in the CSI Asset Purchase Agreement.

Pursuant to the CSI Asset Purchase Agreement, in connection with the CSI Closing, the Company issued the CSI Convertible Notes in an aggregate principal amount of $15.0 million, each due on the second anniversary of the closing (the "Maturity Date"). For additional information on the CSI Convertible Notes, refer to Note 5, Borrowings.

The acquisition was accounted for under ASC 805, Business Combinations and uses preliminary purchase price allocations, with adjustments permitted within the measurement period (not exceeding one year). Adjustments beyond the measurement period are recorded in earnings.

A summary of the purchase consideration follows:

---

| | |
|:---|:---|
| Cash | $7500 |
| Closing Stock Consideration | 10283 |
| Convertible Notes | 9717 |
| Total purchase price consideration | $27500 |

---

Cash of $7.5 million includes initial cash paid of $1.0 million as Exclusivity Fee in December 2024, $1.0 million Break-up Fee paid in January 2025, and cash paid at closing in May 2025 amounting to $5.5 million

The preliminary purchase price and purchase price allocation pending a final valuation of assets acquired and liabilities assumed follows:

---

| | |
|:---|:---|
| Unbilled receivable | $300 |
| Inventory | 163 |
| Other assets | 202 |
| Equipment | 275 |
| Intangible assets | 8870 |
| Goodwill | 19135 |
| Accrued expenses | (104) |
| Loan for purchase of equipment  | (141) |
| Deferred revenue | (1200) |
| Total purchase consideration | $27500 |

---

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**3.** **Business Combination and Asset Purchase,** continued

The acquired intangible assets values were estimated using the discounted cash flow method and estimated discount rate. The useful lives are based on estimates of benefits derived from the future cash flows.

The acquired intangible assets, useful lives and a preliminary estimate of fair value at the acquisition date follows:

---

| | | |
|:---|:---|:---|
|  | **Useful Life (years)** | **Fair Value** |
| Tradename | 10 | $900 |
| Customer relationships | 10 | 5160 |
| Internal use technology | 4 | 2810 |
| Total |  | $8870 |

---

The results of operations of CSI are included in the unaudited condensed consolidated financial statements of the Company for the three and nine months ended September 30, 2025 since the date of acquisition. The goodwill recorded in the CSI acquisition is not deductible for tax purposes. Transaction related expenses were $475,000 for the nine months ended September 30, 2025 and are included in general and administrative expenses in the condensed consolidated statements of operations.

*Other Intangible Asset Acquisitions*

In the three months ended September 30, 2025, the Company acquired additional patents for an aggregate fair value of $3.5 million and a useful life of 10 years, based on expected future economic benefit, in exchange for the issuance of 5,500,000 shares of common stock. The Company recorded amortization expense of $73,000 for the three months ended September 30, 2025.

**EOS Asset Acquisition**

On December 31, 2024, the Company completed its asset purchase of information technology assets, certain patents and trademarks (collectively, the "Acquired Assets") from EOS Technology Holdings Inc. ("EOS Holdings"). At the closing (the "DV Closing"), pursuant to that asset purchase agreement, by and between the Company and EOS Holdings, dated as of September 4, 2024, and as amended on November 14, 2024, and as further amended from time to time (the "Asset Purchase Agreement"), the Company purchased the Acquired Assets for an aggregate purchase price of approximately $92.0 million consisting of (i) $10.0 million paid in the form of a promissory note issued by the Company to EOS Holdings (the "DV Convertible Note"), and (ii) 40,000,000 shares (the "DV Closing Stock Consideration") of validly issued, fully paid and nonassessable shares of restricted common stock of the Company, with an aggregate fair value of approximately $82.0 million based on the closing stock price of the Company on December 31, 2024. EOS Holdings is considered a related party as of the DV Closing. See Note 11 Related Parties for further details.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**3.** **Business Combination and Asset Purchase,** continued

*Second Asset Purchase Agreement Amendment*

In connection with but prior to the DV Closing, on December 31, 2024, the Company and EOS entered into a second amendment to the Asset Purchase Agreement (the "Second Asset Purchase Agreement Amendment"). Pursuant to the Second Asset Purchase Agreement Amendment, among other things, the parties agreed to enter into an earnout agreement (the "Earnout Agreement") instead of a royalty agreement as set forth in the Asset Purchase Agreement, and the parties agreed that EOS Holdings will only appoint one director at the DV Closing to the board of directors of the Company (the "Board"), and EOS Holdings will have the right to appoint one other director within ninety (90) days after the DV Closing. The parties also agreed that EOS Holdings will transfer at least eighty-one percent (81%) of the Closing Stock Consideration to its stockholders, and neither EOS Holdings nor any of its stockholders will own in excess of 19.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of the Closing Stock Consideration. Pursuant to the Second Asset Purchase Agreement Amendment, EOS Holdings agreed to file a Certificate of Amendment with the Secretary of State of the State of Delaware to change its company name, and the Company agreed to file a registration statement providing for the resale by EOS Holdings of the 3,999,911 shares of common stock issued as part of the Closing Stock Consideration. Pursuant to the Second Asset Purchase Agreement Amendment, the Company caused such registration statement to become effective prior to April 15, 2025. The Company and EOS Holdings further agreed that the Company may only amend, supplement or otherwise modify the transaction documents with approval of the disinterested members of the Board. The parties also updated the schedules describing the transferred assets and transferred liabilities.

*Earnout Agreement*

In connection with the DV Closing, the Company and EOS Holdings entered into the Earnout Agreement, dated as of December 31, 2024, pursuant to which the Company shall pay an amount equal to three percent (3%) of the gross revenue of the Company generated from or otherwise attributable to any patents and patent applications included in the Acquired Assets, subject to customary deductions calculated in accordance with U.S. GAAP, and as further set forth in the Earnout Agreement. The earnout period commenced on the DV Closing Date and will end upon the expiration of the last to expire of the patents included in the Acquired Assets (the "Term"). The Company shall make the earnout payments to EOS Holdings on a quarterly basis during the Term.

The Earnout Agreement includes customary covenants regarding how the Company can operate its business during the term of the Earnout Agreement.

The Earnout Agreement was not assigned a fair value at the purchase date as it was not deemed likely that any payments will be made as of December 31, 2024. There is no change as of September 30, 2025.

The Company accounted for the Asset Purchase Agreement as an asset purchase in accordance with ASC 805, Business Combinations (the "Screen Test"). As such, the aggregate consideration of approximately $92.0 million plus capitalized fees of $575,000 were recorded to the intangible assets acquired of patents and trademarks for $2.4 million and $90.1 million, respectively, with useful weighted average remaining lives of ten years in each case. For the three and nine months ended September 30, 2025, the amortization expense related to intangible assets was approximately $2.3 million and $7.0 million, respectively.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;4. **Balance Sheet Components** 

Inventories (in thousands):

---

| | | |
|:---|:---|:---|
|  | **September 30,** <br>**2025** | **December 31,** <br>**2024** |
| Raw materials | $208 | $392 |
| Work in progress | 127 | 137 |
| Finished goods | 659 | 1089 |
| &nbsp;&nbsp;Total inventories | $994 | $1618 |

---

Property and equipment, net (in thousands):

---

| | | |
|:---|:---|:---|
|  | **September 30,** <br>**2025** | **December 31,** <br>**2024** |
| Machinery and equipment | $1094 | $773 |
| Leasehold improvements | 31 |  |
| Furniture and fixtures | 2 |  |
| Tooling | 14 | 14 |
|  | 1141 | 787 |
| Less: Accumulated depreciation and amortization | (838) | (729) |
| &nbsp;&nbsp;Property and equipment, net | $303 | $58 |

---

Depreciation and amortization expense for the three months ended September 30, 2025 and 2024 were approximately of $43,000 and $11,000, respectively. Depreciation and amortization expense for the nine months ended September 30, 2025 and 2024 were approximately $82,000 and $59,000, respectively.

As of September 30, 2025, the future amortization of the intangibles acquired is as follows:

---

| | |
|:---|:---|
| 2025 remainder | $2732 |
| 2026 | 10926 |
| 2027 | 10926 |
| 2028 | 10926 |
| 2029 | 10496 |
| 2030 | 10224 |
| Thereafter | 41318 |
|  | $97548 |

---

Intangible assets, net consisted of the following at September 30, 2025.

---

| | | | |
|:---|:---|:---|:---|
|  | **Gross Carrying** <br>**Amount** | **Accumulated** <br>**Amortization** | **Net Carrying** <br>**Amount** |
| Patents | $93789 | $(6846) | $86943 |
| Trade names and trademarks | 3288 | (211) | 3077 |
| Customer relationships | 5160 | (187) | 4973 |
| Internal use technology | 2810 | (255) | 2555 |
|  | $105047 | $(7499) | $97548 |

---

The Company recognized amortization expense related to intangibles of $2.7 million and $7.5 million for the three and nine months ended September 30, 2025, respectively.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**4.** **Balance Sheet Components,** continued

**Notes receivable**

On April 9, 2025, the Company advanced $450,000 to NYIAX as part of the NYIAX transaction described in Note 10 Commitments and Contingencies. The Company derecognized the asset due to probability of non-payment and expensed to research and development in the condensed consolidated statement of operations for the nine months ended September 30, 2025.

On June 13, 2024, the Company entered into a Senior Secured Promissory Note and Security Agreement ("Promissory Note and Security Agreement") with EOS Holdings ("the Borrower"). Pursuant to the Promissory Note and Security Agreement, the Company agreed to provide the Borrower with a term loan in the principal amount of $150,000 ("June 2024 Note"). The June 2024 Note matures on October 11, 2024. Borrowings under the June 2024 Note bear interest at a rate per annum equal to 5.12%. On the maturity date, subject to any extension, the Borrower will be obligated to make a payment equal to all unpaid principal and accrued interest. On October 23, 2024, the Borrower and the Company agreed to amend the June 2024 Note maturity date to January 31, 2025. On December 31, 2024, the Borrower and the Company agreed to amend the December 2024 Note maturity date to the latter of the maturity date of the DV Convertible Note of December 31, 2027 or a qualified subsequent financing as determined by the DV Convertible Note agreement.

On August 7, 2024, the Company entered into a second Promissory Note and Security Agreement with the Borrower. Pursuant to the Promissory Note and Security Agreement, the Company agreed to provide the Borrower with a term loan in the principal amount of $100,000 ("August 2024 Note"). The August 2024 Note matures on December 5, 2024. Borrowings under the August 2024 Note bear interest at a rate per annum equal to 5.12%. On the maturity date, subject to any extension, the Borrower will be obligated to make a payment equal to all unpaid principal and accrued interest. On October 23, 2024, the Borrower and the Company agreed to amend the August 2024 Note maturity date to January 31, 2025. On December 31, 2024, the Borrower and the Company agreed to amend the December 2024 Note maturity date to the latter of the maturity date of the DV Convertible Note of December 31, 2027 or a qualified subsequent financing as determined by the DV Convertible Note Promissory agreement.

On September 23, 2024, the Company entered into a third Promissory Note and Security Agreement with the Borrower. Pursuant to the Promissory Note and Security Agreement, the Company agreed to provide the Borrower with a term loan in the principal amount of $73,485 (the "September 2024 Note"). The September 2024 Note matures on December 5, 2024. Borrowings under the September 2024 Note bear interest at a rate per annum equal to 5.12%. On the maturity date, subject to any extension, the Borrower will be obligated to make a payment equal to all unpaid principal and accrued interest. On October 23, 2024, the Borrower and the Company agreed to amend the September 2024 Note maturity date to January 31, 2025. On December 31, 2024, the Borrower and the Company agreed to amend the December 2024 Note maturity date to the latter of the maturity date of the DV Convertible Note of December 31, 2027 or a qualified subsequent financing as determined by the DV Convertible Note Promissory agreement.

On December 23, 2024, the Company entered into a fourth Promissory Note and Security Agreement with the Borrower. Pursuant to the Promissory Note and Security Agreement, the Company agreed to provide the Borrower with a term loan in the principal amount of $100,000 ("December 2024 Note"). The December 2024 Note matures on January 31, 2025. Borrowings under the December 2024 Note bear interest at a rate per annum equal to 5.12%. On the maturity date, subject to any extension, the Borrower will be obligated to make a payment equal to all unpaid principal and accrued interest. On December 31, 2024, the Borrower and the Company agreed to amend the December 2024 Note maturity date to the latter of the maturity date of the DV Convertible Note of December 31, 2027 or a qualified subsequent financing as determined by the DV Convertible Note Promissory agreement.

The above notes receivable were netted on the condensed consolidated balance sheet in "convertible note payable, net related party" as there is a right of offset included in the DV Convertible Note and the four amended note receivable agreements above. On February 14, 2025, $136,000 was paid off as a result of the February 2025 Offering (defined below) in which a portion of proceeds in the 2025 Offering (defined below) were used to satisfy principal on the EOS note receivables. The proceeds from the financings in April 2025 and May 2025 (See Note 5 for details on the 2025 Offerings) were netted with the note receivable balance in the nine months ended September 30, 2025 and as a result the balance is no longer outstanding as of September 30, 2025.

At September 30, 2025, the Company had recognized approximately $5,000 of interest income on the Notes Receivable.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**4.** **Balance Sheet Components,** continued

**Deposits for Business Combination**

On December 19, 2024 the Company entered into an asset purchase agreement with CompuSystems Inc ("CSI") as amended on December 30, 2024, February 25, 2025 and March 31, 2025 (the "CSI Purchase Agreement") where the Company agreed to purchase, assume and accept from CSI all of the rights, title and interests used in the acquired business, and products and services solely to the extent they utilize the transferred assets, including CSI's customer contracts, trademarks and other intellectual property (the "CSI Acquisition"). Pursuant to the CSI Purchase Agreement, the Company made an exclusivity deposit and a break-up fee deposit totaling $2.0 million. The acquisition was completed on May 20, 2025 and thus the acquisition deposits are recorded as part of purchase consideration in note 3.

Accrued liabilities (in thousands):

---

| | | |
|:---|:---|:---|
|  | **September 30,** <br>**2025** | **December 31,** <br>**2024** |
| Contract liability | $2157 | $171 |
| Accrued compensation | 713 | 217 |
| Accrued escrow liability | 500 |  |
| Accrued legal fees | 327 |  |
| Accrued vacation | 293 | 407 |
| Accrued audit fees | 249 | 224 |
| Accrued interest payable | 223 |  |
| Accrued lease liability, current portion | 159 | 106 |
| Accrued other | 563 | 209 |
| &nbsp;&nbsp;Total accrued liabilities | $5184 | $1334 |

---

&nbsp;&nbsp;&nbsp;&nbsp;5. **Borrowings** 

**January 2024 Short-Term Loan Agreement**

On January 19, 2024, the Company issued promissory notes in the aggregate principal amount of $1.0 million (the "January 2024 Promissory Notes") and common stock purchase warrants to purchase up to an aggregate of 66,665 shares (the "January 2024 Warrant Shares") of the Company's common stock, at an initial exercise price of $22.23 per share with four accredited investors (each an "Investor" and together the "Investors"). In connection with the January 2024 Promissory Notes, the Company received gross proceeds of $600,000, before fees and other expenses associated with the transaction.

The January 2024 Promissory Note was to mature on the earlier to occur of: (i) July 17, 2024 and (ii) the full or partial exercise of certain Series B Preferred Stock purchase warrants currently held by the Investor, issuable for at least 9,322 shares of the Company's Series B Convertible Preferred Stock, par value $0.0001 per share ("Series B Preferred Stock"), upon such full or partial exercise.

The January 2024 Promissory Notes did not bear interest except upon the occurrence of an Event of Default (as defined in the January 2024 Promissory Notes). The January 2024 Promissory Notes were not convertible into shares of common stock or Series B Preferred Stock.

Between the dates of January 26, 2024 and February 2, 2024, the January 2024 Promissory Notes were repaid in full following the exercise of certain of the Company's Series B Preferred Stock purchase warrants for a total of 29,322 shares of Series B Preferred Stock. The 2024 Promissory Notes were settled via the payment of $667,000 in cash and a $333,000 offset to the amount due by one of the investors from the exercise of 9,322 Series B Preferred Stock purchase warrants.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;5. **Borrowings, continued** 

In connection with the issuance of the January 2024 Warrant Shares (see Note 6 – Fair Value Measurements), the fair value of the warrants and the original issue discount for interest were recorded as debt discounts totaling $1.3 million. The debt discounts were to be amortized to interest expense over the respective term using the effective interest method. In connection with the full repayment of the January 2024 Promissory Notes, the Company recognized $1.3 million of interest expense in the nine months ended September 30, 2024.

**DV Convertible Note**

In connection with the DV Closing, the Company issued the DV Convertible Note in a principal amount of $10.0 million due on the third anniversary of the DV Closing on December 31, 2027. The Company agreed to pay interest to EOS Holdings on the aggregate unconverted and then outstanding principal amount of the note at the rate of five and twelve hundredths percent (5.12%) per annum, accruing from the DV Closing.

The DV Convertible Note can be converted at EOS Holding's option, partially or entirely, into shares of common stock, any time after the maturity date until the DV Convertible Note is fully paid off. The DV Convertible Note uses a conversion price equaling to seventy-five percent (75%) of the average VWAP (as defined in the DV Convertible Note) during the ten (10) consecutive trading days ending on the trading day that is immediately prior to the conversion date subject to a floor price of $1.116 per share. At EOS Holding's sole discretion, upon a change of control (as defined in the DV Convertible Note), the Company shall (i) cause any successor entity to assume in writing all of the obligations of the Company under the DV Convertible Note, (ii) pay or cause to be paid to EOS Holdings the Note Balance (defined below) in cash, or (iii) pay, at the closing of such change of control, in full satisfaction of the Company's obligations under the DV Convertible Note, an amount in cash or equivalent common stock to the amount EOS Holdings would have been paid if it had converted its Note Balance into shares of common stock immediately prior to such closing, at the conversion price.

The parties agreed that the Company may apply up to 25% of the amount of any payment to be made to EOS Holdings pursuant to the DV Convertible Note towards satisfaction of the amount, if any, owed by EOS Holdings to the Company under those certain senior secured promissory notes, dated June 13, 2024, August 7, 2024, September 23, 2024, and December 23, 2024 (collectively, the "Secured Notes" and the outstanding amount under the Secured Notes, collectively, the "DV Holdings Note Balance"). The Note Balance on the maturity date will be automatically reduced by the amount of the DV Holdings Note Balance.

Pursuant to the DV Convertible Note, if, at any time while the DV Convertible Note is outstanding, the Company enters into any capital raising or financing transaction, including without limitation any issuance by the Company of shares of common stock or common stock equivalents (as defined in the DV Convertible Note) for cash consideration, indebtedness or a combination of units thereof (each, a "Subsequent Financing"), then the Company shall first pay to EOS Holdings at least 10% of the gross proceeds of such Subsequent Financing to redeem all or a portion of the DV Convertible Note, plus accrued but unpaid interest, plus liquidated damages, if any, and any other amounts then owing to EOS Holdings. If the aggregate gross proceeds of Subsequent Financings reach or exceed $50.0 million, then the Company shall repay the DV Convertible Note in full, including accrued but unpaid interest, liquidated damages, if any, and any other amounts, then owing to EOS Holdings.

The DV Convertible Note includes customary event of default provisions. Upon the occurrence of an event of default, the DV Convertible Note and all amounts due thereunder shall become, upon demand by EOS Holdings, immediately due and payable in cash. Additionally, upon the occurrence of an event of default, interest shall accrue daily at the rate of ten percent (10%) per annum on the aggregate outstanding principal balance and any other amounts then owing by Company to EOS Holdings.

The Company elected the fair value method for the DV Convertible Note outstanding of $10.0 million as of December 31, 2024 due to the embedded derivatives identified within the agreement requiring recurring fair value measurements. The note is valued using level 3 inputs. See Note 6, Fair Value Measurements for further information on inputs.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;5. **Borrowings, continued** 

On February 14, 2025, the Company paid a portion of principal and interest of $406,000, net, as a result of the February 2025 Public Offering (defined below in Note 7). On April 2, 2025 and May 20, 2025 in connection with the 2025 Notes financing, the Company paid an aggregate of $675,000 in principal balance. On August 6, 2025, in connection with the Q3 2025 financing, the Company paid $250,000 and on September 26, 2025 the Company paid $725,000. For the nine months ended September 30, 2025, the Company paid an aggregate of $2.5 million in cash payments of $2.1 million and through offsetting against the note receivable of $0.4 million. See Note 6 fair value measurements for further disclosures.

On September 7, 2025 the Company extinguished a portion of the principal and interest of $3.2 million in an Amendment and Conversion Agreement with the EOS for 10,000,000 shares. The balance as of September 30, 2025 and December 31, 2024 was $4.5 million and $10.0 million. The fair value was $4.5 million as of September 30, 2025.

The DV Convertible Note was netted with the notes receivable from EOS Holdings in "convertible note payable, net, related party" on the condensed consolidated balance sheets as of December 31, 2024 as EOS Holdings agreed to offset the outstanding balance on the DV Convertible Note with the notes receivable at maturity or at a qualifying capital raising or financing transaction noted above. The notes receivable from EOS Holdings was fully paid off in the nine months ended September 30, 2025 due to the financing activity noted above.

***April Securities Purchase Agreement***

On April 3, 2025, the Company completed the initial closing of its previously announced transaction (the "April 2025 Offerings") in which, pursuant to a securities purchase agreement (the "April 2025 Purchase Agreement") between the Company and certain institutional investors (the "April 2025 Purchasers"), dated March 31, 2025, the April 2025 Purchasers agreed to purchase from the Company (a) in a registered direct offering, senior secured convertible notes having an aggregate principal amount of $5.5 million (the "Initial Notes") for an aggregate purchase price of $5.0 million and senior secured convertible notes having an aggregate principal amount of $11.1 million (the "Additional Notes", and together with the Initial Notes, the ("2025 Notes") for an aggregate purchase price of $10.0 million upon satisfaction of certain closing conditions applicable to the Initial Notes and Additional Notes, respectively and (b) in a concurrent private placement, common stock purchase warrants ("2025 Warrants") to purchase up to 19,346,101 shares of common stock of the Company, of which warrants to purchase up to 6,448,700 shares of common stock were issued in connection with the issuance of the Initial Notes (the "April 2025 Initial Warrants") and warrants to purchase up to 12,897,401 shares of common stock will be issued in connection with the issuance of the Additional Notes (the "Additional Warrants"). The warrants meet the equity classification guidance. See note 7 for additional information.

The closing of the Additional Notes and Additional Warrants (the "Additional Closing," and together with the initial closing, the "2025 Closings") took place on May 20, 2025. The Company received stockholders approval of the issuance of the shares of common stock issuable upon conversion of the 2025 Notes and exercise of the 2025 Warrants and a one-time reset, at the Company's option, of the exercise price of outstanding common stock purchase warrants held by the April 2025 Purchasers that do not contain "alternative cashless exercise" features ("Stockholder Approval").

Pursuant to the April 2025 Purchase Agreement, until the date that is 18 months after the date on which the 2025 Notes are no longer outstanding, the April 2025 Purchasers have the right, but not the obligation, to participate in any issuance by the Company of any debt, preferred stock, shares of common stock or securities convertible into shares of common stock (a "Subsequent Financing") up to a maximum of 65% of such Subsequent Financing on the same terms, conditions and price provided to other investors in such Subsequent Financing.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;5. **Borrowings, continued** 

*2025 Convertible Notes*

The 2025 Notes carry a 10% original issue discount, and mature 18 months from the date of issuance. No interest accrues during the term of the 2025 Notes, unless an event of default occurs, in which case interest will accrue at a rate of 12% per annum. The obligations under these 2025 Notes rank senior to all other existing indebtedness and equity of the Company. The 2025 Notes are convertible into shares of the Company's common stock at any time at the option of the holders thereof, in whole or in part, into such number of shares of common stock (the "Conversion Shares") at an initial conversion price equal to $1.00 per share (the "Conversion Price"). Alternatively, the Notes are convertible at a price (the "Alternate Conversion Price") equal to the greater of (x) the Floor Price (as defined below) and (y) 90% of the lowest volume weighted adjusted price of the shares of Common Stock (the "VWAP") in the ten (10) trading days prior to the applicable conversion date ("Alternate Conversions").

The conversion price of the 2025 Notes is subject to a floor price of $0.1794 (the "Floor Price").

In the event the Alternate Conversion Price would be lower than the Floor Price, the Company is required to compensate the holders of the 2025 Notes by paying the holders in cash an amount (the "Alternate Conversion Floor Amount") equal to the product obtained by multiplying (A) the VWAP on the day the holder delivers the applicable conversion notice and (B) the difference obtained by subtracting (I) the number of shares of common stock delivered (or to be delivered) to the holder on the applicable share delivery date with respect to such Alternate Conversion from (II) the quotient obtained by dividing (x) the applicable conversion amount that the holder has elected to be the subject of the applicable Alternate Conversion, by (y) the applicable Alternate Conversion Price without being limited by the Floor Price.

Under the 2025 Notes, the Company is required to use up to 30% of the proceeds from future financings to redeem the 2025 Notes in an amount equal to the aggregate principal amount of the 2025 Notes being redeemed from such proceeds multiplied by 105%. The 2025 Notes contain 4.99/9.99% beneficial ownership limitations and customary provisions regarding events of defaults and negative covenants.

The Company elected the fair value option to account for the 2025 Notes. The fair value on issuance of the 2025 Notes was $23.2 million which exceeded the proceeds of $13.7 million by $9.5 million for which the Company recorded a day one loss. The financing terms were deemed reasonable due to the Company's liquidity position. Accordingly, the Company recorded in interest expense a charge of $6.5 million to mark the 2025 Notes to fair value in the condensed consolidated statement of operations. The original issue discount of $1.7 million and fees of $1.3 million were expensed in interest expense in the condensed consolidated statement of operations for the three and nine months ended September 30, 2025. In the three months ended September 30, 2025, the remaining balance of the 2025 Notes were fully converted for $15.6 million principal and 64,442,462 shares of common stock in cashless conversions. For the nine months ended September 30, 2025, the 2025 Notes were fully converted for $16.7 million principal and 66,288,407 shares of common stock in cashless conversions. The fair value of the 2025 Notes converted in the three and nine months ended September 30, 2025 was $20.9 million and $22.5 million, respectively, and was recorded to additional paid in capital on the condensed consolidated balance sheets and was estimated used inputs of the level 3 hierarchy. The 2025 Notes were fully converted at September 30, 2025.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;5. **Borrowings, continued** 

*Security Agreement and Guarantee*

In connection with the initial closing on April 3, 2025, the Company entered into (i) a security agreement (the "Security Agreement"), which grants to the holders of the Notes a security interest in all of the assets of the Company, and (ii) a subsidiary guarantee (the "Subsidiary Guarantee"), pursuant to which all domestic subsidiaries of the Company have guaranteed the Company's obligations under the Notes.

*Placement Agency Agreement*

As previously announced, in connection with the April 2025 Offerings, the Company entered into a placement agency agreement (the "April 2025 Placement Agency Agreement") with Maxim Group LLC (the "Placement Agent") on March 31, 2025, pursuant to which the Placement Agent agreed to act as placement agent on a "reasonable best efforts" basis in connection with the April 2025 Offerings. Pursuant to the April 2025 Placement Agency Agreement and in connection with initial closing, the Company paid the Placement Agent an aggregate fee equal to 8.0% of the gross proceeds raised at the initial closing and reimbursed the Placement Agent an amount up to $15,000 for expenses in connection with the Offerings.

In addition to similar rights previously granted to the Placement Agent, pursuant to the Placement Agency Agreement, the Company granted the Placement Agent a right of first refusal for a period of 30 days from August 22, 2025 to provide investment banking services to the Company on an exclusive basis, exercisable in the Placement Agent's discretion. Under the Placement Agency Agreement, for a period of nine (9) months from the Initial Closing, the Company will pay the Placement Agent a cash fee equal to 7.0% of the gross proceeds of any capital raising activity received by the Company from the Purchasers in the Offerings.

*August Securities Purchase Agreement*

On August 4, 2025, the Company, entered into a Securities Purchase Agreement (the "August Purchase Agreement") with certain institutional investors (the "August Purchasers"), pursuant to which the August Purchasers agreed to purchase from the Company in a registered direct offering (the "August Offering"), senior secured convertible notes having an aggregate principal amount of $6.7 million (the "August Initial Notes") for an aggregate purchase price of $6.0 million and senior secured convertible notes having an aggregate principal amount of $6.7 million (the "September Additional Notes", and together with the August Initial Notes, the "Q3 2025 Notes") for an aggregate purchase price of $6.0 million upon satisfaction of certain closing conditions applicable to the August Initial Notes and September Additional Notes, respectively. The closing of August Initial Notes (the "August Initial Closing") occurred on August 6, 2025.

*Additional Closing*

The closing of the September Additional Notes (the "September Additional Closing," and together with the August Initial Closing, the "August and September Closings") occurred, and the September Additional Notes were issued, on September 30, 2025.

*Obligations Under the Purchase Agreement*

The Company agreed, (i) not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of shares of common stock or securities convertible into shares of common stock until 45 days after the date of each August and September Closing, and (ii) not to issue certain securities if the issuance would constitute a variable rate transaction until no August Purchasers holds any Q3 2025 Notes.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;5. **Borrowings, continued** 

Until the date that is 18 months after the date on which the Q3 2025 Notes are no longer outstanding, the August Purchasers have the right, but not the obligation, to participate in any issuance by the Company of any debt, preferred stock, shares of common stock or securities convertible into shares of common stock (a "Subsequent Financing") up to a maximum of 65% of such Subsequent Financing on the same terms, conditions and price provided to other investors in such Subsequent Financing.

*Q3 2025 Notes*

The Q3 2025 Notes carry a 10% original issue discount, and mature 18 months from the date of issuance. No interest accrues during the term of the Q3 2025 Notes, unless an event of default occurs, in which case interest will accrue at a rate of 12% per annum. The obligations under these Q3 2025 Notes rank senior to all other existing indebtedness and equity of the Company. The Q3 2025 Notes are convertible at any time at the option of the holders thereof, in whole or in part, into such number of shares of common stock (the "Q3 2025 Conversion Shares") at an initial conversion price equal to $1.00 per share (the "Q3 2025 Conversion Price"). Alternatively, the Q3 2025 Notes are convertible at the holder's election, at a price (the "Q3 2025 Alternate Conversion Price") equal to the greater of (x) the floor price (as defined below) and (y) 80% of the lowest volume weighted adjusted price of the shares of Common Stock (the "VWAP") in the twenty (20) trading days prior to the applicable conversion date ("Alternate Conversions").

The conversion price of the Notes is subject to a floor price of $0.1019 (the "Q3 2025 Floor Price").

In the event the Q3 2025 Alternate Conversion Price would be lower than the Q3 2025 Floor Price, the Company is required to compensate the holders of the Q3 2025 Notes by paying the holders in cash an amount (the "Q3 2025 Alternate Conversion Floor Amount") equal to the product obtained by multiplying (A) the VWAP on the day the holder delivers the applicable conversion notice and (B) the difference obtained by subtracting (I) the number of shares of common stock delivered (or to be delivered) to the holder on the applicable share delivery date with respect to such Q3 2025 Alternate Conversion from (II) the quotient obtained by dividing (x) the applicable conversion amount that the holder has elected to be the subject of the applicable Q3 2025 Alternate Conversion, by (y) the applicable Q3 2025 Alternate Conversion Price without being limited by the Q3 2025 Floor Price.

Under the Q3 2025 Notes, the Company is required to use up to 20% of the proceeds from future financings to redeem the Q3 2025 Notes in an amount equal to the aggregate principal amount of the Q3 2025 Notes being redeemed from such proceeds multiplied by 105%.

The Q3 2025 Notes contain 4.99/9.99% beneficial ownership limitations and customary provisions regarding events of defaults and negative covenants.

The Q3 2025 Notes are secured by all of the assets of the Company pursuant to a security agreement and guaranteed by a subsidiary of the Company pursuant to a subsidiary guarantee, both of which were entered into on August 6, 2025.

The Company elected the fair value option to account for the Q3 2025 Notes. The fair value on issuance of the Q3 2025 Notes was $21.6 million which exceeded the proceeds of $11.5 million by $10.1 million for which the Company recorded a day one loss. The financing terms were deemed reasonable due to the Company's liquidity position. Accordingly, the Company recorded in interest expense a charge of $7.8 million to mark the Q3 2025 Notes to fair value in the condensed consolidated statement of operations. The original issue discount of $1.3 million and fees of $1.0 million were expensed in interest expense in the condensed consolidated statement of operations for the three and nine months ended September 30, 2025. In the three months ended September 30, 2025, the Q3 2025 Notes were partially converted for $6.7 million principal and 31,064,393 shares of common stock in cashless conversions. The fair value of the Q3 2025 Notes converted was $12.3 million and was recorded to additional paid in capital on the condensed consolidated balance sheets and was estimated used inputs of the level 3 hierarchy. The fair value of the Q3 2025 Notes at September 30, 2025 was $12.2 million also estimated using inputs from the level 3 hierarchy. See Note 6 fair value measurements for further disclosures.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**5.** **Borrowings,** continued

In connection with the Q3 2025 Notes, the Company agreed to exchange outstanding warrants of 30,738,449 million in exchange for the issuance of 30,738,449 shares of common stock. The incremental change in fair value of $3.7 million, representing losses recognized in connection with the modification and exchange of the convertible notes, is included in extinguishment expense on the condensed consolidated statement of operations. In addition, in connection with the Q3 2025 Notes, the Company agreed to modify the 2025 Notes to a lower Alternate Conversion Price. This resulted in an incremental fair value loss of $2.1 million, representing losses recognized in connection with the modification and exchange of the convertible notes, which is included in extinguishment expense on the condensed consolidated statement of operations.

*Bridge Financing*

For the three months ended September 30, 2025, the Company entered into two financing arrangements in September 2025 and received proceeds of $0.9 million. We incurred origination fees of $65,000 and interest fees of $146,000. Both financings were paid in full in October 2025.

The Company was in non-compliance with the Q3 2025 Notes for permitted indebtedness in excess of $200,000 as of September 30, 2025 as a result of the above financing arrangements. The non-compliance was cured as of October 1, 2025. For further details, see Note 13 Subsequent Events. No further covenant violations are on-going.

*CSI Convertible Notes*

In connection with the CSI Asset Purchase Agreement, the Company issued the CSI Convertible Notes in an aggregate principal amount of $15.0 million, each due on the second anniversary of the closing (the "Maturity Date"). The Company agreed to pay interest to CSI on the aggregate unconverted and then outstanding principal amount of the First Convertible Note and Second Convertible Note at the rate of five percent (5%) per annum, and on the aggregate unconverted and then outstanding principal amount of the Initial Convertible Note at the rate of ten percent (10%) per annum. The Company agreed to pay interest accruing from the six-month anniversary of the closing on the First Convertible Note and from the nine-month anniversary of the closing on the Second Convertible Note on the unpaid balance of such principal amount no less frequently than quarterly per calendar quarter. The payment of the accrued interest shall occur on the last business day of each calendar quarter.

If the Initial Convertible Note has not been satisfied in full within three (3) months after the Closing Date, then at CSI's option, it shall be convertible to shares of common stock, in increments of $500,000, at a price of $1.14 per share. The Company shall also repay the principal amount and all accrued interest under the Initial Convertible Note in full, without a penalty, within three (3) business days after the Company raises an additional amount of capital totaling at least $15.0 million.

The First Convertible Note can be converted, partially or entirely, into shares of common stock, any time after the six-month anniversary of the closing until the First Convertible Note is fully paid off. The Second Convertible Note can be converted, partially or entirely, into shares of common stock, any time after the nine-month anniversary of the closing until the Second Convertible Note is fully paid off. The First Convertible Note and Second Convertible Note use a conversion price equaling to the average VWAP during the thirty (30) consecutive trading days ending on the trading day that is immediately prior to the conversion date subject to a floor price of $1.40 per share and ceiling price of $2.50 per share (the "Conversion Price"). The entire outstanding principal and accrued interest shall automatically be converted into shares of common stock on the Maturity Date at the Conversion Price.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**5.** **Borrowings,** continued

The Company evaluated the agreement under ASC 815 Derivatives and Hedging ("ASC 815"). ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. None of the embedded terms required bifurcation and liability classification. The CSI Convertible Notes were measured at fair value at issuance of aggregate of $9.7 million. Refer to Note 3 for more details. The CSI Convertible Notes carrying value at September 30, 2025 was $10.5 million, net of a discount of $4.6 million. Discount accretion expense was $0.5 million and $0.7 million for the three and nine months ended September 30, 2025, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;6. **Fair Value Measurements** 

The Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Each level of input has different levels of subjectivity and difficulty involved in determining fair value.

● Level 1 – Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date. Therefore, determining fair value for Level 1 investments generally does not require significant judgment, and the estimation is not difficult.

● Level 2 – Pricing is provided by third-party sources of market information obtained through investment advisors. The Company does not adjust for or apply any additional assumptions or estimates to the pricing information received from its advisors.

● Level 3 – Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions. The determination of fair value for Level 3 instruments involves the most management judgment and subjectivity. The Company's financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024 by level within the fair value hierarchy, are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **(in thousands)** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
|  | <br>**Quoted prices** <br>**in active**<br>**markets** | **Significant**<br>**other**<br>**observable**<br>**inputs** | <br>**Significant**<br>**unobservable**<br>**inputs** |
|  | (Level 1) | (Level 2) | (Level 3) |
| Liabilities: |  |  |  |
| &nbsp;&nbsp;Convertible note payable | $— | $— | $16668 |
| &nbsp;&nbsp;Warrant liabilities | $— | $— | $9 |

---

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**6.** **Fair Value Measurements,** continued

A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company's 2025 Notes that are categorized within Level 3 of the fair value hierarchy as of September 30, 2025 is as follows:

---

| | |
|:---|:---|
| **Inputs** | **September 30, 2025** |
| Stock price | 1.09 |
| Conversion price | $1.00 |
| Conversion discount | 80% |
| Volatility (annual) | 155.06% |
| Risk-free rate | 3.94% |
| Dividend rate |  |
| Years to maturity | .25 |
| Estimated future financing amount | $150 million |
| Discount rate | 13.52% |

---

A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company's DV Note that are categorized within Level 3 of the fair value hierarchy as of September 30, 2025 is as follows:

---

| | |
|:---|:---|
| **Inputs** | **September 30, 2025** |
| Stock price | 0.31 |
| Conversion price | $1.12 |
| Volatility (annual) | 103.98% |
| Risk-free rate | 3.94% |
| Dividend rate |  |
| Years to maturity | .31 |
| Estimated future financing amount | $150 million |
| Discount rate | 15.42% |

---

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**6.** **Fair Value Measurements,** continued

---

| | | | |
|:---|:---|:---|:---|
| **(in thousands)** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | <br>**Quoted prices** <br>**in active**<br>**markets** | **Significant**<br>**other**<br>**observable**<br>**inputs** | <br>**Significant**<br>**unobservable**<br>**inputs** |
| Liabilities: | (Level 1) | (Level 2) | (Level 3) |
| &nbsp;&nbsp;Convertible note payable | $— | $— | $10000 |
| &nbsp;&nbsp;Warrant liabilities | $— | $— | $664 |

---

There were no transfers between Level 1, 2 or 3 during the three and nine months ended September 30, 2025 or 2024.

***Warrant Liabilities***

On March 26, 2024, the Company amended the terms of certain warrant agreements to remove certain exercise price reset, right to reprice and/or share adjustment provisions ("Reset Provisions") following a reverse split, in addition to other revisions to the warrants. In April 2024, the Company effected the April 2024 Reverse Stock Split thereby removing the Reset Provisions ("Reset Amendment Effective Date") and in accordance with provisions in certain of the warrants issued warrants to purchase an additional 5,602,693 shares of common stock. Accordingly, the Company remeasured the warrant liability for each of the amended warrants following the Reset Amendment Effective Date and recorded that amount to change in fair value of warrant liabilities with a corresponding increase to warrant liabilities. Following the Reset Amendment Effective Date, such warrants were no longer deemed to be liability warrants but were now classified as equity warrants. In connection with this reclassification the Company reclassed approximately $41.9 million from warrant liabilities to additional paid in capital.

The following table includes a summary of changes in fair value of the Company's warrant liabilities measured at fair value using significant unobservable inputs (Level 3) as of September 30, 2025 and 2024. For September 30, 2025, the fair value of the common warrants was determined using the Black-Scholes Model based on the following key inputs and assumptions: common stock price of $1.09; exercise price of $3.20 to $1,574; expected yield of 0.0%; expected volatility of 162.8%; risk-free interest rate of 3.68% and expected life of 2.2 to 2.3 years.

---

| | | |
|:---|:---|:---|
| | **For the nine months ended September 30,**  | **For the nine months ended September 30,**  |
| <br>**(in thousands)** | **2025** | **2024** |
| Beginning balance | $664 | $5460 |
| Additions |  | 8701 |
| Change in fair value | (19) | 29120 |
| Exercise of warrant liabilities |  | (587) |
| Repurchase | (621) | (824) |
| Conversion of liability warrants to equity warrants | (15) | (41851) |
| Ending balance | $9 | $19 |

---

The changes in fair value of the warrant liabilities are recorded in change in fair value of warrant liabilities in the condensed consolidated statements of operations.

**Convertible Notes**

As described in Note 5, the Company elected the fair value option on the DV Convertible Note issued on December 31, 2024. The Company uses level 3 inputs to measure the fair value in subsequent periods. The Company recorded a $1.1 million loss and a $0.2 million gain on the DV Convertible Note for the three and nine months ended September 30, 2025, respectively.

As described in Note 5, the Company elected the fair value option on the 2025 Convertible Notes and Q3 2025 Convertible Notes and recorded a net loss of $10.8 million and $19.6 million for the three and nine months ended September 30, 2025, respectively. The Company uses level 3 inputs to measure the fair value in subsequent periods.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**6.** **Fair Value Measurements,** continued

The following table includes a summary of changes in fair value of the Company's convertible notes.

---

| | | |
|:---|:---|:---|
| | **For the nine months ended September 30,**  | **For the nine months ended September 30,**  |
| <br>**(in thousands)** | **2025** | **2024** |
| Beginning balance | $10000 | $— |
| Additions | 25557 |  |
| Change in fair value recorded in interest expense | 19339 |  |
| Amounts settled on DV note | (2499) |  |
| Debt extinguishment | 2139 |  |
| Partial conversion on DV note | (3100) |  |
| Conversion of 10% notes | (34768) |  |
| Ending balance | $16668 | $— |

---

**Fair Value of Crypto Assets**

The following table summarizes Crypto assets held for operations (in thousands, except units):

---

| | | | |
|:---|:---|:---|:---|
|  | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
|  | **Units** | **Cost Basis** | **Fair Value** |
| Bitcoin | 71 | $7838 | $8148 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Units** | **Cost Basis** | **Fair Value** |
| Bitcoin |  | $— | $— |

---

The Bitcoin remains contractually restricted and cannot be used or converted until the restriction period ends without permission from the September Purchaser (defined below), which restriction period is expected to end in November 2025.

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity** 

February 2024 Series B Preferred Stock and Series B Preferred Stock Warrants Repurchase

On February 13, 2024, the Company and its Series B Preferred Stock and Series B Preferred Stock Warrants holders entered into an arrangement where the Company agreed to repurchase 62,657 Series B Preferred Stock shares and 81,315 Series B Preferred Stock warrants for a total of $6.3 million. Unamortized discounts to the Series B Preferred Stock of $5.4 million were immediately recorded as a deemed dividend as of repurchase date. The remaining fair value of the Series B Preferred Stock Warrant Liability of $824,000 was adjusted against additional paid-in-capital on repurchase date.

Other Deemed Dividends

The total of deemed dividends (as discussed in this section, the Conversion of Series B Preferred Stock and February 2024 Series B Preferred Stock and Series B Preferred Stock Warrants Repurchase sections above) amounted to $5.8 million for the year ended December 31, 2024 and was recorded as an adjustment to net loss available to common stockholders on the Company's consolidated statement of operations.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity, continued** 

**Common Stock**

February 2024 Issuance of Common Stock and Pre-Funded Common Stock Warrants

On February 13, 2024, the Company consummated a public offering (the "February 2024 Public Offering") of 158,227 units (the "February Units") and 867,373 pre-funded units (the "February Pre-Funded Units"). Each February Unit was issued at $9.75 per unit and included one share of common stock and one common stock warrant (the "February Common Warrants") exercisable for one share of common stock at a $9.75 exercise price. Each February Pre-Funded Unit was issued at $9.735 per unit and included one pre-funded common stock warrant (the "February Pre-Funded Warrants"), exercisable for one share of common stock at an initial exercise price of $0.015 and one February Common Warrant. The gross proceeds from the issuance of the February Units and the February Pre-Funded Units were $1.5 million and $8.4 million, respectively, for total aggregate proceeds of $10.0 million before broker fees and related expenses of approximately $998,000. As a result of certain price protection clauses, the February Common Warrants did not meet the criteria for equity classification and thus are subject to liability treatment. Accordingly, of the $10 million gross proceeds from the February 2024 Public Offering, an amount of $6.3 million, representing the fair value of the February Common Warrants as of the issuance date was allocated to the February Common Warrants liability, with the residual proceeds of $3.7 million allocated to the common stock and February Pre-Funded Warrants, which met the criteria for equity classification.

Of the gross broker fees and related expenses of approximately $998,000, the Company allocated $368,000 to the issued common stock and February Pre-Funded Warrants, which were recorded as a reduction of additional paid-in-capital. The remaining issuance cost of $630,000 was allocated to the February Common Warrants and was expensed on the date of issuance as such warrants were recorded at fair value.

March 2024 Issuance of Common Stock, Prefunded Common Stock Warrants and Common Stock Warrants

On March 26, 2024, the Company entered into a Securities Purchase Agreement with certain purchasers where the Company issued 417,833 shares of common stock, 93,342 pre-funded common stock warrants (the "March Pre-Funded Warrants") and common stock warrants (the "March Common Warrants") to purchase up to 511,175 shares of common stock at an initial exercise price of $6.00 per share (known in aggregate as the "March 2024 Offering"). Total proceeds per the Securities Purchase Agreement amounted to $2.3 million before broker fees and other related expenses of approximately $388,000. As a result of certain price protection clauses, the March Common Warrants did not meet the criteria for equity classification and thus are subject to liability treatment. Accordingly, of the $2.3 million gross proceeds from the March public offering, an amount of $1.2 million, representing the fair value of the March Common Warrants as of the issuance date was allocated to the March Common Warrants liability, with the residual proceeds of $1.1 million allocated to the common stock and March Pre-Funded Warrants, which met the criteria for equity classification.

Of the gross broker fees and related expenses of approximately $388,000, the Company allocated $181,000 to the issued common stock and the March Pre-Funded Warrants, which were recorded as a reduction of additional paid-in-capital. The remaining issuance cost of $207,000 was allocated to the March Common Warrants and was expensed on the date of issuance as such warrants were recorded at fair value.

April 2024 Issuances of Common Stock and Common Stock Warrants

On April 17, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 225,834 shares of common stock at $3.321 per share, and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 225,834 shares of common stock, at an initial exercise price of $3.196 per share (the "Initial April 2024 Registered Direct Offering and Concurrent Private Placement"). The Initial 2024 Registered Direct Offering and Concurrent Private Placement closed on April 19, 2024 and the Company received gross proceeds of approximately $750,000 before deducting placement agent fees and other offering expenses of approximately $159,000.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity, continued** 

On April 19, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 361,904 shares of common stock at $5.25 per share, and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 542,856 shares of common stock, at an initial exercise price of $5.06 per share (the "Second April 2024 Registered Direct Offering and Concurrent Private Placement"). The Second 2024 Registered Direct Offering and Concurrent Private Placement closed on April 23, 2024 and the Company received gross proceeds of approximately $1.9 million before deducting placement agent fees and other offering expenses of approximately $268,000.

On April 26, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 418,845 shares of common stock at $5.73 per share, and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 418,845 shares of common stock, at an initial exercise price of $5.60 per share (the "Third April 2024 Registered Direct Offering and Concurrent Private Placement"). The Third 2024 Registered Direct Offering and Concurrent Private Placement closed on April 30, 2024 and the Company received gross proceeds of approximately $2.4 million before deducting placement agent fees and other offering expenses of approximately $298,000.

May 2024 Issuances of Common Stock and Common Stock Warrants

On May 13, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 785,000 shares of common stock at $3.31 per share, and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 785,000 shares of common stock, at an initial exercise price of $3.18 per share (the "Initial May 2024 Registered Direct Offering and Concurrent Private Placement"). The Initial May 2024 Registered Direct Offering and Concurrent Private Placement closed on May 15, 2024 and the Company received gross proceeds of approximately $2.6 million before deducting placement agent fees and other offering expenses of approximately $314,000.

On May 15, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 675,000 shares of common stock at $3.61 per share, and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 675,000 shares of common stock, at an initial exercise price of $3.48 per share (the "Second May 2024 Registered Direct Offering and Concurrent Private Placement"). The Second May 2024 Registered Direct Offering and Concurrent Private Placement closed on May 17, 2024 and the Company received gross proceeds of approximately $2.4 million before deducting placement agent fees and other offering expenses of approximately $290,000.

For the three months ended June 30, 2024, the Company's board of directors approved the issuance of a total of 136,203 shares of common stock to two vendors for investor relations services. The fair value of such common shares was calculated to be $360,000 and was recorded to other assets and additional paid in capital. The fair value of such shares will be amortized over the service period of each agreement which ranged from 6 months to 12 months. The shares of common stock will be issued in July 2024.

Exchange Agreements

On September 10, 2024, the Company entered into exchange agreements (each, an "Exchange Agreement") with certain holders (the "Holders") of common stock purchase warrants exercisable for an aggregate of up to 5,135,182 shares of common stock, originally issued on February 13, 2024 and having a then-current exercise price of $1.83 (such warrants, the "February 2024 Warrants"). Pursuant to the Exchange Agreements, the Holders agreed to exchange their February 2024 Warrants for newly issued common stock purchase warrants exercisable for an aggregate of up to 5,135,182 shares of common stock, at an exercise price of $2.21 per share (such warrants, the "Exchange Warrants", and such shares of common stock issuable upon exercise thereof, the "Exchange Warrant Shares"). The Exchange Warrants are immediately exercisable.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity, continued** 

Warrant Side Letter Agreements

Also on September 10, 2024, following completion of the transactions contemplated by the September 2024 Warrant Inducement (see below), the Company entered into side letter agreements (each, a "Side Letter Agreement") with the Holders with respect to (i) those certain common stock purchase warrants of the Company, originally issued to the Holders on March 27, 2024, as amended (the "March 2024 Warrants"), (ii) those certain common stock purchase warrants of the Company, originally issued to the Holders on April 19, 2024, as amended (the "1st April 2024 Warrants"), (iii) those certain common stock purchase warrants of the Company, originally issued to the Holders on April 23, 2024 (the "2nd April 2024 Warrants"), (iv) those certain common stock purchase warrants of the Company, originally issued to the Holders on April 30, 2024 (the "3rd April 2024 Warrants"), (v) those certain common stock purchase warrants of the Company, originally issued to the Holders on May 15, 2024 (the "1st May 2024 Warrants"), and (vi) those certain common stock purchase warrants of the Company, originally issued to the Holders on May 17, 2024 (the "2nd May 2024 Warrants", and collectively with the March 2024 Warrants, the 1st April 2024 Warrants, the 2nd April 2024 Warrants, the 3rd April 2024 Warrants, and the 1st May 2024 Warrants, the "Original Warrants"), which Holders are also parties to (i) that certain securities purchase agreement, dated as of March 26, 2024 (the "March 2024 Purchase Agreement"), (ii) that certain securities purchase agreement, dated as of April 17, 2024 (the "1st April 2024 Purchase Agreement"), (iii) that certain securities purchase agreement, dated as of April 19, 2024 (the "2nd April 2024 Purchase Agreement"), (iv) that certain securities purchase agreement, dated as of April 26, 2024 (the "3rd April 2024 Purchase Agreement"), (v) that certain securities purchase agreement, dated as of May 13, 2024 (the "1st May 2024 Purchase Agreement"), and (vi) that certain securities purchase agreement, dated as of May 15, 2024 (the "2nd May 2024 Purchase Agreement", and collectively with the March 2024 Purchase Agreement, the 1st April 2024 Purchase Agreement, the 2nd April 2024 Purchase Agreement, the 3rd April 2024 Purchase Agreement, and the 1st May Purchase Agreement, the "Original Purchase Agreements") with the Company.

Pursuant to the Side Letter Agreements, (a) the Holders agreed to (i) amend the "Fundamental Transaction" provisions in the Original Warrants, so that the "Black Scholes Value" clauses in such provisions will be removed in their entirety, effective immediately following receipt of stockholder approval of (a) the issuance of the New Warrant Shares (as defined below) and (b) the issuance of shares of common stock pursuant to the alternative cashless exercise provisions of the 1st April 2024 Warrants, the 2nd April 2024 Warrants, the 3rd April 2024 Warrants, the 1st May 2024 Warrants, and the 2nd May 2024 Warrants, (ii) remove the "Stockholder Meeting" provisions in the March 2024 Purchase Agreement, effective immediately, (iii) amend the "Stockholder Meeting" provisions in the remaining Original Purchase Agreements such that the Company is first obligated to call a stockholder meeting to approve the issuance of the shares of common stock issuable upon exercise of the Original Warrants no later than December 31, 2024, and thereafter, to re-call a stockholder meeting, if necessary, every six months until such stockholder approval is obtained, and (iv) remove the "Subsequent Equity Sales" and "Registration Statement" provisions in the March 2024 Purchase Agreement; and (b) as inducements to and in consideration for each Holder's agreement to amend the Original Warrants and the Original Purchase Agreements in accordance with the applicable Side Letter Agreement, the Company agreed to issue to the Holders an aggregate of 887,356 shares of common stock (the "New Shares") and common stock purchase warrants (each, a "New Warrant", and collectively, the "New Warrants") exercisable for up to an aggregate of 5,391,747 shares of common stock (the "New Warrant Shares"), such New Shares to be issued upon execution of the Side letter Agreements, and such New Warrants to be issued upon the receipt of stockholder approval referred to in (a)(i) above. The New Warrants will have a per share exercise price equal to $2.21, will contain 4.99/9.99% beneficial ownership limitations, will be exercisable at any time on or after the Stockholder Approval Date (as defined in the New Warrants) and will expire five years thereafter.

Once exercisable, the New Warrants may be exercised, in certain circumstances, on a cashless basis pursuant to the formula contained in the New Warrants. The holder of a New Warrant may also effect an "alternative cashless exercise" commencing on the Stockholder Approval Date. In such event, the aggregate number of shares of common stock issuable in such alternative cashless exercise pursuant to any given notice of exercise electing to effect an alternative cashless exercise shall equal the product of (x) the aggregate number of shares of common stock that would be issuable upon exercise of the New Warrant in accordance with the terms of the New Warrant if such exercise were by means of a cash exercise rather than a cashless exercise and (y) 1.0.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity, continued** 

The fair value of the 887,356 shares of common stock was calculated to be approximately $2.1 million, based on the common stock price of the date of issuance of $2.40. The incremental fair value of the Exchange Warrants was calculated to be approximately $123,000 and was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of the exchange of $2.40; expected yield of 0.0%; expected volatility of 143%; risk-free interest rate of 3.43% and expected life of 5 years. The fair value of approximately $2.3 million, which is the combination of the issuance of 887,356 common shares and the Exchange Warrants were treated as equity instruments. The approximately $2.3 million is considered a deemed dividend for the three and nine months ended September 30, 2024 and was recorded as an adjustment to net loss available to common stockholders on the Company's condensed consolidated statement of operations.

**For the three months ended September 30, 2024, the Company's board of directors approved the issuance of a total of 100,000 shares of common stock to one vendor for financial advisory services. The fair value of such common shares was calculated to be $240,000 and was recorded to other assets and additional paid in capital. The fair value of such shares will be amortized over the service period of 12 months. The shares of common stock were issued in July 2024.**

#### Warrants for Common Shares
A summary of the warrant activity and related information for the three and nine months ended September 30, 2025 and 2024 is provided as follows.

In connection with the January 2024 Promissory Notes, the Company issued common stock purchase warrants to investors to purchase up to 66,665 shares of the Company's common stock, at an initial exercise price of $22.23 per share. The grant date fair value of such warrant was $860,000, which was recorded as a liability with the offset recorded to additional paid-in capital on the consolidated balance sheets. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $15.99; expected yield of 0.0%; expected volatility of 119%; risk-free interest rate of 4.31% and expected life of 5 years.

In connection with the February 2024 Public Offering, the Company issued common stock purchase warrants to investors to purchase up to 1,025,600 shares of the Company's common stock, at an initial exercise price of $9.75 per share. The grant date fair value of such warrant was $6,308,000, which was recorded as a liability with the offset recorded to additional paid-in capital on the consolidated balance sheets. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $7.62; expected yield of 0.0%; expected volatility of 119%; risk-free interest rate of 4.31% and expected life of 5 years.

In connection with the March 2024 Offering, the Company issued common stock purchase warrants to investors to purchase up to 511,175 shares of the Company's common stock, at an initial exercise price of $6.00 per share. The grant date fair value of such warrant was $1,227,000, which was recorded as a liability with the offset recorded to additional paid-in capital on the consolidated balance sheets. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $3.18; expected yield of 0.0%; expected volatility of 119%; risk-free interest rate of 4.21% and expected life of 5 years.

In connection with the Initial April 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 225,834 shares of the Company's common stock, at an initial exercise price of $3.196 per share. The grant date fair value of such warrant was $1.3 million, which was recorded as equity. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $6.06; expected yield of 0.0%; expected volatility of 135%; risk-free interest rate of 4.63% and expected life of 5 years.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity, continued** 

In connection with the Second April 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 542,856 shares of the Company's common stock, at an initial exercise price of $5.06 per share. The grant date fair value of such warrant was $2.6 million, which was recorded as equity. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $5.39; expected yield of 0.0%; expected volatility of 135%; risk-free interest rate of 4.63% and expected life of 5 years.

In connection with the Third April 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 418,845 shares of the Company's common stock, at an initial exercise price of $5.60 per share. The grant date fair value of such warrant was $2.0 million, which was recorded as equity. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $5.54; expected yield of 0.0%; expected volatility of 135%; risk-free interest rate of 4.63% and expected life of 5 years.

In connection with the Initial May 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 785,000 shares of the Company's common stock, at an initial exercise price of $3.18 per share. The grant date fair value of such warrant was $2.5 million, which was recorded as equity. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $3.50; expected yield of 0.0%; expected volatility of 137%; risk-free interest rate of 4.35% and expected life of 5 years.

In connection with the Second May 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 675,000 shares of the Company's common stock, at an initial exercise price of $3.48 per share. The grant date fair value of such warrant was $1.9 million, which was recorded as equity. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $3.26; expected yield of 0%; expected volatility of 137%; risk-free interest rate of 4.35% and expected life of 5 years.

On March 26, 2024, the Company entered into a warrant amendment agreement (the "Warrant Amendment Agreement") with certain holders of (i) the New Common Stock Warrants, (ii) the common stock purchase warrants dated January 23, 2024 (the "January 2024 Warrants"), and (iii) the February Common Warrants (together with the New Common Stock Warrants and the January 2024 Warrants, the "Original Warrants"), whereby the holders agreed to (i) amend the New Common Stock Warrants and the January 2024 Warrants so such warrants shall not be exercisable until one or more certificates of amendment to the Company's certificate of incorporation, as amended, are filed with the Secretary of State of the State of Delaware to effectuate an increase in authorized shares of capital stock of the Company and a reverse stock split of the Company's outstanding shares of common stock; and (ii) remove certain exercise price reset, right to reprice and/or share adjustment provisions in the Original Warrants, to be effective following the first adjustments following the April 2024 Reverse Stock Split.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity, continued** 

February 2024 Warrants Black Scholes Value Payout

On December 31, 2024 on the closing of the DV Asset Acquisition, a provision requiring a Black Scholes Value payout was triggered in the remaining outstanding February 2024 Warrants. This provision was triggered because the DV Asset Acquisition met the criteria for a fundamental change as described in the warrant agreement. The Black Scholes Value payout was valued at $1.96 per share and there was an aggregate number of warrants outstanding of 328,483. In order to receive the payout, holders must elect within 30 days of the fundamental change otherwise the warrants convert to warrants in the Company. The warrants were equity classified prior to the close of the DV Asset Acquisition and were reclassified to liability treatment as a result of the payout liability on December 31, 2024. In the three months ended March 31, 2025, 316,415 warrants received requests from the holders to receive the Black Scholes Value payout and thus were paid in cash $622,000 with the remaining unrequested warrants being reclassified to equity treatment as the January 30, 2025 deadline passed and they reverted to equity warrants. The Company recognized a gain of $8,000 as a result of reclassifying the warrants to equity.

July 2023 Warrant Inducement

On July 26, 2023, the Company entered into warrant exercise inducement offer letters (the "July Inducement Letters") with holders of the May Inducement Warrants pursuant to which the Company agreed to issue new inducement warrants (the "July Inducement Warrants") to purchase a number of shares of common stock equal to 100% of the number of shares of common stock received upon exercise of the May Inducement Warrants during the period provided for in the July Inducement Letters, with such July Inducement Warrants to be issued on substantially the same terms as the May Inducement Warrants. The holders exercised 3,400 May Inducement Warrants pursuant to certain of the July Inducement Letters, and the Company received aggregate gross proceeds of approximately $678,000 from such exercises. In exchange for the exercises of the May Inducement Warrants, the Company issued July Inducement Warrants exercisable for an aggregate of up to 3,400 shares of common stock at an initial exercise price of $193.50 per share.

Each July Inducement Warrant was immediately exercisable upon issuance and will expire on the fifth anniversary of its issuance. The exercise price of the July Inducement Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company's common stock. The July Inducement Warrants are callable by the Company at a redemption price of $75.00 per July Inducement Warrant, provided that the resale of the shares of common stock underlying the July Inducement Warrants are then registered or may be resold under Rule 144 under the Securities Act.

During the three months ended March 31, 2023, 18 warrants to purchase common stock were exercised for cash, resulting in proceeds of approximately $32,000. In addition, during the three months ended March 31, 2023, 7,454 warrants were exercised using an alternative cashless exercise provision, resulting in the issuance 5,705 shares of common stock.

In connection with the January 2024 Promissory Notes, the Company issued common stock purchase warrants to investors to purchase up to 66,665 shares of the Company's common stock, at an initial exercise price of $22.23 per share. The grant date fair value of such warrant was $860,000, which was recorded as a liability with the offset recorded to additional paid-in capital on the condensed consolidated balance sheets. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $15.99; expected yield of 0.0%; expected volatility of 119%; risk-free interest rate of 4.31% and expected life of 5 years.

In connection with February 2024 Public Offering, the Company issued common stock purchase warrants to investors to purchase up to 1,025,600 shares of the Company's common stock, at an initial exercise price of $9.75 per share. The grant date fair value of such warrant was $6.3 million, which was recorded as a liability with the offset recorded to additional paid-in capital on the condensed consolidated balance sheets. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $7.62; expected yield of 0.0%; expected volatility of 119%; risk-free interest rate of 4.31% and expected life of 5 years.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity, continued** 

In connection with March 2024 Offering, the Company issued common stock purchase warrants to investors to purchase up to 511,175 shares of the Company's common stock, at an initial exercise price of $6.00 per share. The grant date fair value of such warrant was $1.2 million, which was recorded as a liability with the offset recorded to additional paid-in capital on the condensed consolidated balance sheets. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $3.18; expected yield of 0.0%; expected volatility of 119%; risk-free interest rate of 4.21% and expected life of 5 years.

On March 26, 2024, the Company entered into a warrant amendment agreement (the "Warrant Amendment Agreement") with certain holders of (i) the New Common Stock Warrants, (ii) the common stock purchase warrants dated January 23, 2024 (the "January 2024 Warrants"), and (iii) the February Common Warrants (together with the New Common Stock Warrants and the January 2024 Warrants, the "Original Warrants"), whereby the holders agreed to (i) amend the New Common Stock Warrants and the January 2024 Warrants so such warrants shall not be exercisable until one or more certificates of amendment to the Company's certificate of incorporation, as amended, are filed with the Secretary of State of the State of Delaware to effectuate an increase in authorized shares of capital stock of the Company and a reverse stock split of the Company's outstanding shares of common stock; and (ii) remove certain exercise price reset, right to reprice and/or share adjustment provisions in the Original Warrants, to be effective following the first adjustments following the April 2024 Reverse Stock Split.

In connection with the Initial April 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 225,834 shares of the Company's common stock, at an initial exercise price of $3.196 per share. The grant date fair value of such warrant was $1.3 million, which was recorded as equity. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $6.06; expected yield of 0.0%; expected volatility of 135%; risk-free interest rate of 4.63% and expected life of 5 years.

In connection with the Second April 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 542,856 shares of the Company's common stock, at an initial exercise price of $5.06 per share. The grant date fair value of such warrant was $2.6 million, which was recorded as equity. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $5.39; expected yield of 0.0%; expected volatility of 135%; risk-free interest rate of 4.63% and expected life of 5 years.

In connection with the Third April 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 418,845 shares of the Company's common stock, at an initial exercise price of $5.60 per share. The grant date fair value of such warrant was $2.1 million, which was recorded as equity. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $5.54; expected yield of 0.0%; expected volatility of 135%; risk-free interest rate of 4.63% and expected life of 5 years.

In connection with the Initial May 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 785,000 shares of the Company's common stock, at an initial exercise price of $3.18 per share. The grant date fair value of such warrant was $2.5 million, which was recorded as equity. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $3.50; expected yield of 0.0%; expected volatility of 137%; risk-free interest rate of 4.35% and expected life of 5 years.

In connection with the Second May 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 675,000 shares of the Company's common stock, at an initial exercise price of $3.48 per share. The grant date fair value of such warrant was $1.9 million, which was recorded as equity. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $3.26; expected yield of 0%; expected volatility of 137%; risk-free interest rate of 4.35% and expected life of 5 years.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity, continued** 

September 2024 Warrant Inducement

On September 10, 2024, the Company entered into warrant exercise inducement offer letters (the "September 2024 Inducement Letters") with holders of the Exchange Warrants pursuant to which the Company agreed to issue new inducement warrants (the "September 2024 Inducement Warrants") to purchase a number of shares of common stock equal to 65% of the number of shares of common stock received upon exercise of the Exchange Warrants during the period provided for in the September 2024 Inducement Letters, with such September 2024 Inducement Warrants to be issued on substantially the same terms as the Exchange Warrants. The holders exercised 1,193,721 Exchange Warrants pursuant to the September 2024 Inducement Letters, and the Company received aggregate gross proceeds of approximately $2.6 million from such exercises. In exchange for the exercises of the Exchange Warrants, the Company issued September 2024 Inducement Warrants exercisable for an aggregate of up to 775,920 shares of common stock at an exercise price of $2.21 per share. Each September 2024 Inducement Warrant is subject to shareholder approval and will expire on the fifth anniversary of such approval. As amended, the inducement offering period is set to close at 5:00 p.m. ET on November 30, 2024.

The grant date fair value of the 775,920 warrants was approximately $1,574,000, which were treated as equity instruments. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of between $1.71 and $2.40; expected yield of 0%; expected volatility of 143%; risk-free interest rate of between 3.43% and 3.52% and expected life of 5 years.

February 2025 Registered Direct Transaction

On February 14, 2025, the Company closed an offering (the "February 2025 Offering") pursuant to a securities purchase agreement (the "February 2025 Purchase Agreement") with certain investors (the "February 2025 Investors"). In the February 2025 Offering, the Company issued and sold to the February 2025 Investors in a registered direct offering, (a) an aggregate of 4,757,126 shares (the "February 2025 Shares") of common stock of the Company, and (b) common stock purchase warrants (the "February 2025 Warrants", and together with the Shares, the "February 2025 Securities") exercisable for an aggregate of up to 4,757,126 shares of common stock, at an exercise price of $1.14 per share (the "February 2025 Warrant Shares") at a combined offering price of $1.14 per share and accompanying February 2025 Warrant, for aggregate gross proceeds of approximately $5.4 million.

The February 2025 Warrants are immediately exercisable upon issuance and will expire on the fifth anniversary of the issuance date of the February 2025 Warrants. The February 2025 Warrants may be exercised, in certain circumstances, on a cashless basis pursuant to the formula contained in the February 2025 Warrants.

The grant date fair value of the 4,757,126 warrants was approximately $5.3 million, which were treated as equity instruments. The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption: common stock price on the date of grant of $1.22; expected yield of 0%; expected volatility of 143.4%; risk-free interest rate of 4.3% and expected life of 5 years.

*Obligations Under the Purchase Agreement*

Pursuant to the February 2025 Purchase Agreement, the Company agreed, subject to certain exceptions, (i) not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of its shares of common stock or securities convertible into common stock until 30 days after the closing date of the February 2025 Offering, and (ii) not to issue certain securities if the issuance would constitute a variable rate transaction for a period of 4 months from the closing date of the February 2025 Offering, in each case unless the Company is required to complete a financing prior to the applicable date in order to satisfy Nasdaq's continued listing requirements.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity, continued** 

*Placement Agency Agreement*

In connection with the February 2025 Offering, on February 13, 2025, the Company entered into a placement agency agreement (the "February 2025 Placement Agency Agreement") with Maxim Group LLC (the "February 2025 Placement Agent"), pursuant to which the February 2025 Placement Agent agreed to act as placement agent on a "reasonable best efforts" basis in connection with the February 2025 Offering. Pursuant to the February 2025 Placement Agency Agreement, the Company agreed to pay the February 2025 Placement Agent an aggregate fee equal to 7.0% of the gross proceeds raised in the February 2025 Offering and reimburse the February 2025 Placement Agent an amount up to $75,000 for expenses in connection with the February 2025 Offering. The Company also issued the February 2025 Placement Agent a private warrant (the "February 2025 Placement Agent Warrant") to purchase up to 5.0% of the aggregate number of February 2025 Securities sold in the February 2025 Offering, or warrants to purchase up to 475,713 shares of common stock (such shares, the "February 2025 Placement Agent Warrant Shares"), at an exercise price equal to 125.0% of the offering price per share of common stock and accompanying February 2025 Warrant, or $1.425 per share. The February 2025 Placement Agent Warrants will be exercisable 6 months after the commencement of sales in the February 2025 Offering and will expire on the five year anniversary of the initial exercise date.

*April 2025 Cashless Warrant Exercises*

On April 1, 2025, 2,989,887 shares of common stock were issued pursuant to the cashless exercise terms of the warrants issued between April 2024 through September 2024.

*April and May 2025 Warrants*

In connection with the April 2025 Offerings, the Company issued 6,448,700 warrants to purchase common stock on April 3, 2025 and 12,897,401 warrants to purchase common stock on May 19, 2025. The 2025 Warrants have an initial exercise price of $0.8615 per share. The Initial Warrants are exercisable and expire five (5) years from the date of such effectiveness. The Additional Warrants are exercisable immediately upon issuance and expire five (5) years from the date of issuance. The exercise price of the 2025 Warrants is subject to (a) downward adjustment in the event the Company issues shares of common stock or common stock equivalents having an effective price lower than the then current exercise price of the 2025 Warrants, subject to certain exceptions and (b) standard, proportional adjustments in the event of certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate changes. The Warrants contain 4.99/9.99% beneficial ownership limitations. The warrants met the requirements for equity classification and the fair value upon issuance was recorded to interest expense on the condensed consolidated statement of operations for $16.7 million due to the fair value of the 2025 Convertible Notes exceeding proceeds on issuance.

During the nine months ended September 30, 2025, three holders of warrants executed their right under the "alternative cashless exercise" provision to effect a cashless exercise of a total of 6,235,998 shares of common stock.

*Securities Purchase Agreement*

On September 25, 2025, the Company entered into a Securities Purchase Agreement (the "September Purchase Agreement") with Scilex Holding Company, a Delaware corporation (the "September Purchaser), to sell in a registered offering, (a) 15,000,000 shares (the "September Shares") of common stock of the Company, and (b) a pre-funded warrant (the "Pre-Funded Warrant") to purchase 263,914,094 shares (the "Pre-Funded Warrant Shares") of common stock, for an aggregate purchase price of $150.0 million in the native currency of the Bitcoin blockchain ("BTC") upon satisfaction of certain closing conditions applicable to the September Shares and Pre-Funded Warrant, respectively.

The BTC to be paid to the Company in both Closings (as defined below) will be valued at the spot exchange rate for BTC as published by Coinbase.com at 8:00 p.m. (New York City time) on the trading day immediately prior to the September Initial Closing Date (as defined below).

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity, continued** 

The closing with respect to the September Shares (the "September Initial Closing") took place on September 26, 2025 (the date of the Initial Closing, the "September Initial Closing Date"). The closing with respect to the Pre-Funded Warrant (the "Pre-Funded Warrant Additional Closing," and together with the September Initial Closing, the "BTC Closings"), subject to the satisfaction of certain additional closing conditions, will take place on the trading day (the date of the immediate after the Company receives the approval of its stockholders (i) as required by Nasdaq rules with respect to the transactions contemplated by the September Purchase Agreement including with respect to issuance of all of the Pre-Funded Warrant Shares and (ii) with respect to an amendment to the Company's certificate of incorporation to increase the number of shares of common stock authorized for issuance to up to 1,500,000,000 (or such greater amount as is necessary to issue the Pre-Funded Warrant Shares to the September Purchaser).

On the September Initial Closing, the Company received approximately 71 BTC with an aggregate fair value of $7.8 million at the date of receipt. As of September 30, 2025, the fair value of the BTC was $8.1 million and is recorded in Crypto assets on the condensed consolidated balance sheets. The gain of $0.3 million is recorded in Other income, net on the condensed consolidated statement of operations.

The Pre-Funded Warrant will be issued in the Pre-Funded Warrant Additional Closing, will be immediately exercisable upon issuance without any beneficial ownership limitation at an exercise price of $0.0001 per share, and will remain exercisable until exercised in full. As a result, no amounts were recorded for the Pre-Funded Warrants as of September 30, 2025.

As a condition to the September Initial Closing, the Company was required to obtain stockholder support agreements (the "Voting Agreements") from stockholders holding an aggregate of 38,000,000 shares of common stock, pursuant to which each such stockholder will agree to vote their shares of common stock in favor of the proposals for the stockholder approval at any stockholder meeting held for that purpose. Additionally, each of the directors and executive officers of the Company, pursuant to lock-up agreements, agreed not to sell or transfer any of the Company securities which they hold, subject to certain exceptions, until the Pre-Funded Warrant Additional Closing Date.

*Obligations Under the September Purchase Agreement*

The Company agreed in the September Purchase Agreement (i) not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of shares of common stock or securities convertible into shares of common stock until 45 days after the September Initial Closing Date, and (ii) not to issue certain securities if the issuance would constitute a variable rate transaction until the Pre-Funded Warrant Additional Closing Date.

Within 25 days of the September Initial Closing Date, the Company is required to file with the SEC a preliminary proxy statement for the purpose of obtaining the stockholder approval, and obtain such approval within 75 days of the September Initial Closing Date at a meeting of stockholders. In the event that the stockholder approval is not obtained on or prior to such deadline, the Company is required to hold another stockholder meeting within 45 days, and continue to hold an additional stockholder meeting every fourth month thereafter until the Stockholder Approval is obtained.

The Company agreed, until and including the Pre-Funded Warrant Additional Closing Date and without the prior written consent of the September Purchaser, not to use, offer, sell or otherwise dispose of or announce the offering of, any BTC paid to the Company in the September Initial Closing or publicly announce any intention to do any of the foregoing.

*Purchaser Rights*

The September Purchaser has the right, until the Pre-Funded Warrant Additional Closing Date, but not the obligation, to participate in any issuance by the Company of any debt, preferred stock, shares of common stock or securities convertible into shares of common stock (a "Subsequent Placement") up to a maximum of 20% of such Subsequent Placement on the same terms, conditions and price provided to other investors in such Subsequent Placement.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;7. **Convertible Redeemable Preferred Stock and Stockholders' Equity, continued** 

Upon the September Initial Closing, (i) for so long as the September Purchaser beneficially owns an aggregate of at least 10% of the issued and outstanding shares of common stock, the September Purchaser may designate two directors to the board of directors of the Company, and (ii) for so long as the September Purchaser beneficially owns at least 5% but no more than 10% of the issued and outstanding shares of common stock, the September Purchaser may designate one director to the board of directors of the Company.

Warrants exercisable as of September 30, 2025 exclude warrants to purchase 1 share of common stock issued to a marketing firm, which vest upon the achievement of certain milestones, purchase warrants for 475,713 awarded to the Placement Agent, and warrants to purchase 12,068 shares of common stock issued to investors that participated in the February 2024 Public Offering that requires shareholder approval prior to the warrants being exercisable.

Information regarding warrants for common stock outstanding and exercisable as of September 30, 2025 is as follows:

---

| | | | |
|:---|:---|:---|:---|
| <br>**Exercise**<br>**Price** | **Warrants**<br>**Outstanding as of**<br>**September 30, 2025** | **Weighted Average**<br>**Remaining**<br>**Life (years)** | **Warrants**<br>**Exercisable as of**<br>**September 30, 2025** |
| $0.86 - $2.21 | 31225786 | 4.6 | 30799666 |
| $3.20 - $6.00 | 465 | 2.1 | 465 |
| $1,574.00 - $22,800.00 | 5845 | 2.3 | 5845 |
| $38,250.00 - $66,900.00 | 77 | 0.3 | 76 |
| $1.57\* | 31232173 | 4.6 | 30806052 |

---

\* Weighted average

\*\*Refer to Note 13 Subsequent Events for details on the exchange of 30,738,449 million warrants to common stock on October 2, 2025.

Information regarding warrants for common stock outstanding and exercisable as of December 31, 2024 is as follows:

---

| | | | |
|:---|:---|:---|:---|
| <br>**Exercise**<br>**Price** | **Warrants**<br>**Outstanding as of**<br>**December 31, 2024** | **Weighted Average**<br>**Remaining**<br>**Life (years)** | **Warrants**<br>**Exercisable as of**<br>**December 31, 2024** |
| $1.83 - $2.21 | 12589095 | 3.9 | 9746909 |
| $3.18 - $3.48 | 618617 | 7.0 | 618617 |
| $5.06 - $6.00 | 320559 | 7.3 | 320559 |
| $1,574.00 - $30,000.00 | 5860 | 3.0 | 5860 |
| $38,250.00 - $262,500.00 | 203 | 0.6 | 202 |
| $3.87\* | 13534334 | 4.1 | 10692147 |

---

\* Weighted average

Warrants exercisable as of December 31, 2024 exclude warrants to purchase 1 share of common stock issued to a marketing firm, which vest upon the achievement of certain milestones, warrants to purchase 2,513,703 shares of common stock issued to investors that participated in the December Inducement Agreement that requires shareholder approval prior to the warrants being exercisable and warrants to purchase 328,483 shares of common stock issued to investors that participated in the February 2024 Public Offering that requires shareholder approval prior to the warrants being exercisable, for which all have been recorded as a liability due to the triggering with the Datavault Transaction of the Black Scholes Value payout provision.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**8.** **Stock-Based Compensation**

2018 Long Term Stock Incentive Plan

On January 30, 2018, the Company's board of directors approved the establishment of the Company's 2018 Long-Term Stock Incentive Plan (the "LTIP") and termination of its Carve-Out Plan. Under the LTIP, the aggregate maximum number of shares of common stock (including shares underlying options) that may be issued under the LTIP pursuant to awards of Restricted Shares or Options will be limited to 15% of the outstanding shares of common stock, which calculation shall be made on the first trading day of each new fiscal year; provided that, in any year no more than 8% of the common stock or derivative securitization with common stock underlying 8% of the common stock may be issued in any fiscal year. At a Special Meeting of Stockholders on January 24, 2023, the Company's stockholders approved certain amendments to the LTIP to: (i) increase the annual share limit of common stock that may be issued in any single fiscal year only for the 2023 fiscal year under the LTIP from 8% of the shares of common stock outstanding to 15% of the shares of common stock outstanding (which amount equates to the maximum amount that may be issued in the aggregate under the LTIP), and (ii) permit immediately quarterly calculations based on the number of shares of common stock outstanding as of the first trading day of each fiscal quarter, rather than solely as of the first trading day of the fiscal year. At a Special Meeting of Stockholders on March 15, 2024, the Company's stockholders further approved an amendment to the LTIP to increase the annual share limit of common stock that may be issued only for the 2024 fiscal year under the LTIP from 8% of the shares of common stock outstanding to 15% of the shares of common stock outstanding (which amount equates to the maximum amount that may be issued in the aggregate under the LTIP). At the annual meeting of stockholders held on December 20, 2024 stockholders voted to remove the annual share limit of common stock that may be issued for a certain fiscal year under the LTIP. As a result of this change, the maximum number of shares of common stock that may be subject to equity awards is limited to 15% of the shares of common stock outstanding, which calculation is made using the number of common stock outstanding as of the first trading day of each fiscal quarter. As of September 30, 2025, up to 24,045,590 shares of common stock are available for grants to participants under the LTIP.

A summary of activity related to restricted stock awards with service-based vesting conditions for the nine months ended September 30, 2025 is presented below:

---

| | | |
|:---|:---|:---|
| <br>**Stock Awards** | <br>**Shares** | **Weighted-Average** <br>**Grant Date Fair Value** |
| Non-vested as of January 1, 2025 | 669344 | $3.08 |
| &nbsp;&nbsp;Granted | 8967625 | $0.84 |
| &nbsp;&nbsp;Vested | (2476129) | $1.49 |
| &nbsp;&nbsp;Forfeited | (581222) | $1.47 |
| Non-vested as of September 30, 2025 | 6579618 | $0.77 |

---

A summary of activity related to restricted stock awards with performance-based vesting conditions for the nine months ended September 30, 2025 is presented below:

---

| | | |
|:---|:---|:---|
| <br>**Stock Awards** | <br>**Shares** | **Weighted-Average** <br>**Grant Date Fair Value** |
| Non-vested as of January 1, 2025 |  | $— |
| &nbsp;&nbsp;Granted | 1955000 | $1.04 |
| &nbsp;&nbsp;Vested |  | $— |
| &nbsp;&nbsp;Forfeited |  | $— |
| Non-vested as of September 30, 2025 | 1955000 | $1.04 |

---

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**8.** **Stock-Based Compensation,** continued

As of September 30, 2025, the unamortized compensation costs related to the unvested restricted stock awards with service based vesting conditions was approximately $6.0 million which is to be amortized on a straight-line basis over a weighted-average period of approximately 2.12 years. As of September 30, 2025, the unamortized compensation costs related to the unvested restricted stock awards with performance based vesting criteria was $1.4 million which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.39 years. These performance awards vest upon the achievement of the Company's aggregate revenue equaling or exceeding $40.0 million over a trailing 12 calendar month period ending on or prior to the date that is 5 years from the grant date. The performance awards are assigned a 100% probability to achieve the performance conditions.

For the three and nine months ended September 30, 2025, 748,817 and 805,906 shares of restricted stock awards were released under the LTIP with an intrinsic value of $297,280 and $344,361.

Acceleration of Grants

In the three months ended September 30, 2025, certain employees terminated and received accelerated vesting for all unvested awards. The Company recorded $1.4 million in additional stock-based compensation expense in the three and nine months ended September 30, 2025.

Inducement Grants

On September 13, 2021, Eric Almgren joined the Company as Chief Strategist and was issued 21 shares of restricted common stock as an inducement grant ("September 2021 Inducement Grant"). As of September 30, 2025, all compensation cost related to the September 2021 Inducement Grant was expensed. As of September 30, 2025, 16 shares are unvested.

On September 30, 2024, the Company issued 70,000 shares of restricted common stock at a fair value per share of $1.77, to Stanley Mbugua, the Company's Chief Accounting Officer, as an inducement grant ("September 2024 Inducement Grant") pursuant to an inducement award agreement dated as of the same date. Due to the Company closing the acquisition of Data Vault on December 31, 2024, the September 2024 Inducement Grant vesting was fully accelerated due to the change in control that occurred. As of September 30, 2025, there is no unamortized compensation cost related to the September 2024 Inducement Grant.

On January 2, 2025, the Company issued 1,200,000 units of restricted stock at a fair value per share of $2.04, to Nathaniel Bradley, the Company's Chief Executive Officer, as an inducement grant ("Bradley Inducement Grant") pursuant to an inducement award agreement dated December 31, 2024. Of this grant, 600,000 units have service-based conditions and vest in 3-month equal installments over a 36-month period, while the other 600,000 units have performance-based condition and vest upon the Company's aggregate revenue equaling or exceeding $40,000,000 over the trailing 12 calendar month period ending on or prior to the date that is 5 years from the grant date. As of September 30, 2025, the unamortized compensation cost related to the Bradley Inducement Grant was approximately $1.7 million which is being amortized on a straight-line basis over a period of 1.92 years.

On May 20, 2025, the Company issued 500,000 units of restricted stock at a fair value per share of $0.97, to Mark LoGuirato, as an inducement grant ("LoGuirato Inducement Grant") pursuant to an inducement award agreement dated May 20, 2025. Of this grant, 250,000 awards have service-based conditions and vest in 3-month equal installments over a 36-month period, while the other 250,000 awards have performance-based condition and vest upon the Company's CSI revenue equaling or exceeding $25,000,000 over trailing 12 calendar month period ending on or prior to the date that is 5 years from the grant date. As of September 30, 2025, the unamortized compensation cost related to the LoGuirato Inducement Grant was approximately $401,000 which is being amortized on a straight-line basis over a period of 2.50 years.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**8.** **Stock-Based Compensation,** continued

#### 2022 Plan
A summary of activity related to restricted stock units under the Company's Technical Team Retention Plan of 2022 (the "2022 Plan") for the nine months ended September 30, 2025 is presented below:

---

| | | |
|:---|:---|:---|
| <br>**Stock Units** | <br>**Shares** | **Weighted-Average**<br>**Grant Date Fair Value** |
| Non-vested as of January 1, 2025 | 14 | $6407.00 |
| &nbsp;&nbsp;Granted |  | $— |
| &nbsp;&nbsp;Vested | (6) | $6500.00 |
| &nbsp;&nbsp;Forfeited |  | $— |
| Non-vested as of September 30, 2025 | 8 | $6392.00 |

---

As of September 30, 2025, the unamortized compensation cost related to the unvested restricted stock units was approximately $46,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 0.97 years.

For the nine months ended September 30, 2025, no shares of restricted stock units were released under the 2022 Plan. For the nine months ended September 30, 2024, 3 shares of restricted stock units were released under the 2022 Plan.

&nbsp;&nbsp;&nbsp;&nbsp;9. **Income Taxes** 

The Company recorded no provision for income taxes for the nine months ended September 30, 2025 and 2024.

For interim periods, the Company estimates its annual effective income tax rate and applies the estimated rate to the year-to-date income or loss before income taxes. The Company also computes the tax provision or benefit related to items reported separately and recognizes the items net of their related tax effect in the interim periods in which they occur. The Company also recognizes the effect of changes in enacted tax laws or rates in the interim periods in which the changes occur.

As of September 30, 2025 and December 31, 2024, the Company retains a full valuation allowance on its deferred tax assets. The realization of the Company's deferred tax assets depends primarily on its ability to generate taxable income in future periods. The amount of deferred tax assets considered realizable in future periods may change as management continues to reassess the underlying factors it uses in estimating future taxable income.

The provision for income taxes for the nine months ended September 30, 2025 and 2024 was calculated on a jurisdiction basis.

&nbsp;&nbsp;&nbsp;&nbsp;10. **Commitments and Contingencies** 

#### Operating Leases
The Company leases office space under a non-cancellable operating lease that expired in January 2024 and had an option to renew this lease, with renewal rates to be negotiated. Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date we take possession of the property. At lease inception, we determine the lease term by assuming the exercise of those renewal options that are reasonably assured. The exercise of lease renewal options is at our sole discretion. The lease term is used to determine whether a lease is financing or operating and is used to calculate straight-line rent expense. Additionally, the depreciable leasehold improvements is limited by the expected lease term. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;10. **Commitments and Contingencies, continued** 

The following table reflects our lease assets and our lease liabilities at September 30, 2025 and December 31, 2024 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **September 30,** <br>**2025** | **December 31,**<br>**2024** |
| Assets: |  |  |
| &nbsp;&nbsp;Operating lease right-of-use assets | $699 | $536 |
| Liabilities: |  |  |
| &nbsp;&nbsp;Operating lease liabilities, current | $159 | $106 |
| &nbsp;&nbsp;Operating lease liabilities, non-current | $648 | $553 |

---

Operating lease right-of-use assets are included in other assets. Operating lease liabilities, current, are included in accrued liabilities and Operating lease liabilities, non-current, are include in other liabilities on the condensed consolidated balance sheets.

**Lease Costs:**

The components of lease costs were as follows (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Nine Months Ended**  | **Nine Months Ended**  |
|  | **September 30,**  | **September 30,**  | **September 30,**  | **September 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| Operating lease cost | $48 | $41 | $116 | $136 |
| Short term lease cost | $35 | 9 | $59 | 24 |
| Total lease cost | $83 | $50 | $175 | $160 |

---

As of September 30, 2025, the maturity of operating lease liabilities was as follows (in thousands):

---

| | |
|:---|:---|
| Payments due in: |  |
| Year ending December 31, 2025 (3 months remaining) | $63 |
| Year ending December 31, 2026 | 259 |
| Year ending December 31, 2027 | 266 |
| Year ending December 31, 2028 | 275 |
| Year ending December 31, 2029 | 180 |
| Total minimum lease payments | 1043 |
| Less: Amounts representing interest | (236) |
| Present value of operating lease obligations | $807 |

---

**Lease Term and Discount Rate:**

---

| | |
|:---|:---|
|  | **September 30, 2025** |
| Weighted-average remaining lease term (in years) | 3.87 |
| Weighted-average discount rate | 13.6% |

---

The discount rate was calculated by using the Company's estimated incremental borrowing rate.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;10. **Commitments and Contingencies, continued** 

**Other Information:**

Supplemental cash flow information related to leases was as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** <br>**September 30, 2025** | **Nine Months Ended** <br>**September 30, 2025** |
| Operating cash outflows from operating leases | $52 | $143 |

---

#### Contingencies
In the normal course of business, the Company may become involved in legal proceedings. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of a possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred.

The Company's management does not believe that any such matters, individually or in the aggregate, will have a materially adverse effect on the Company's condensed consolidated financial statements.

***NYIAX Agreements***

*Exchange Agreement*

On March 16, 2025, the Company entered into a share exchange agreement (the "Exchange Agreement") with NYIAX, Inc., a Delaware corporation ("NYIAX"), pursuant to which NYIAX exchanged 900,000 shares (the "NYIAX Shares") of NYIAX's common stock, par value $0.0001 per share (the "NYIAX Common Stock"), for aggregate consideration of up to 5,000,000 shares of common stock (collectively, the "Exchange"). The Exchange Agreement closed on April 9, 2025.

Pursuant to the Exchange Agreement, as full consideration for the sale, assignment, transfer and delivery of the NYIAX Shares by NYIAX to the Company, the Company agreed to issue to NYIAX (i) 3,000,000 shares of common stock (such shares of common stock, the "NYIAX Closing Shares"), and (ii) 2,000,000 shares of common stock (such shares of common stock, the "NYIAX Additional Shares"), The NYIAX Closing Shares will be issued in four equal quarterly tranches starting from the closing.

The NYIAX Additional Shares will be issued only upon completion of a complete advertising cycle for a third party clientele, and upon the parties' mutual written agreement that the Adio platform has been integrated into the NYIAX platform upon completion of the advertising cycle. The NYIAX Additional Shares will be issued within thirty (30) days from the completion of the integration.

The Exchange Agreement includes customary representations and warranties and various customary covenants and closing conditions that are subject to certain limitations, including, without limitation, certain agreements.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;10. **Commitments and Contingencies, continued** 

*Intellectual Property Cross-License Agreement*

In connection with the Exchange, on March 16, 2025, the Company entered into a white label, co-marketing and intellectual property cross-license agreement (the "License Agreement") with NYIAX, pursuant to which the Company received a non-exclusive license under certain of NYIAX's jointly owned patent rights and know-how, and a non-exclusive license to white label NYIAX's proprietary software-as-a-service advertising brokerage platform, all within the field of data, information and asset monetization and exchange. In exchange, the Company granted to NYIAX a non-exclusive license under certain of the Company's wholly owned patent rights, know-how and trademarks, including with respect to the Company's Adio platform, in the field of advertising buying, selling and brokerage.

Pursuant to the License Agreement, as consideration for the services provided by NYIAX pursuant to the License Agreement and the rights to access and use the NYIAX platform granted to the Company, and upon the terms and subject to all of the conditions contained in the License Agreement, the Company agreed to issue to NYIAX 2,530,000 shares (such shares, the "NYIAX Consideration Shares") of common stock.

Pursuant to the License Agreement, in consideration of the rights granted to NYIAX under the License Agreement, NYIAX agreed to pay to the Company a license fee in the form of a convertible promissory note in the aggregate amount $2,500,000 (the "NYIAX Convertible Note"). The NYIAX Convertible Note is due on the first anniversary of the closing (the "Maturity Date"). NYIAX agreed to pay interest to the Company on the aggregate unconverted and then outstanding principal amount of the NYIAX Convertible Note at the rate of four percent (4%) per annum, accruing from the closing. The NYIAX Convertible Note may be prepaid in full at NYIAX's election.

The NYIAX Convertible Note will automatically convert at the earlier of (i) the Maturity Date, and (ii) the first underwritten public offering of NYIAX pursuant to an effective registration statement under the Securities Act, covering the offer and sale by NYIAX of its equity securities, as a result of or following which NYIAX shall be a reporting issuer under the Exchange Act, and NYIAX's common stock is listed on the Trading Market (as defined in the NYIAX Convertible Note), at a conversion price of $2.00 per share.

The Company entered into an Extinguishment Agreement with NYIAX in September 2025 to convert the NYIAX Convertible Note to 1,250,000 shares of NYIAX in full repayment of the note.

The License Agreement includes customary representations and warranties and various customary covenants and closing conditions that are subject to certain limitations, including, without limitation, certain agreements.

*Software Development Agreement*

In connection with the Exchange, on March 16, 2025, the Company entered into a software development agreement (the "Software Development Agreement") with NYIAX, pursuant to which NYIAX has engaged the Company to develop certain software and provide certain additional professional services as the parties will agree under one or more statements of work.

The Software Development Agreement includes customary representations and warranties and various customary covenants and closing conditions that are subject to certain limitations, including, without limitation, certain agreements.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;10. **Commitments and Contingencies, continued** 

*Lock-up Agreements*

On April 9, 2025, the Company and NYIAX entered into the Lock-Up Agreements (defined below). In connection with the Exchange Agreement, the Company agreed to enter into a lock-up agreement in respect of the NYIAX Shares, pursuant to which the NYIAX Shares shall be subject to lock-up restrictions for four (4) years from the issuance (the "Datavault Lock-Up Agreement). Concurrently, NYIAX agreed to enter into (i) a lock-up agreement in respect of the Additional Shares to be issued by the Company to NYIAX pursuant to the Exchange Agreement, pursuant to which the Additional Shares shall be subject to lock-up restrictions for two (2) years from the issuance (the "Additional Lock-Up Agreement"), (ii) a lock-up agreement in respect of the consideration shares (the "Consideration Shares") to be issued by the Company to NYIAX pursuant to that certain White Label, Co-Marketing and Intellectual Property Cross-License Agreement, by and between the Company and NYIAX, dated as of March 16, 2025, pursuant to which the Consideration Shares shall be subject to lock-up restrictions for one (1) year from the issuance (the "Consideration Lock-Up Agreement"), and (iii) a lock-up agreement in respect of the Closing Shares to be issued by the Company to NYIAX pursuant to the Exchange Agreement, pursuant to which the Closing Shares shall be subject to lock-up restrictions for one (1) year from the issuance (the "Closing Lock-Up Agreement", and together with the Datavault Lock-Up Agreement, the Additional Lock-Up Agreement, and the Consideration Lock-Up Agreement, the "Lock-Up Agreements").

The Company accounted for the NYIAX transactions as a collaborative arrangement and allocated fair values of exchanged assets on their relative fair value. The common stock consideration of aggregate of 7,530,000 shares, including the 2,000,000 contingently issuance shares which are considered probable to be issued, was measured at the closing date of April 9, 2025 for an aggregate fair value of $4.9 million and is recorded to additional paid-in capital on the condensed consolidated balance sheet. The NYIAX common shares received in the aggregate of 2,150,000 were valued at $4.3 million and are recorded as an investment at fair value under the measurement alternative of ASC 321 at the close date fair value of $2 per share on the condensed consolidated balance sheet. The fair value method was determined due to the Company not having significant influence over NYIAX. IP licenses received from NYIAX represents the net amount of the shares exchanged and is expensed to research and development of $0.6 million on the condensed consolidated statement of operations.

The Company's IP license granted to NYIAX represents functional intellectual property accounted for under ASC 606 with point-in-time revenue recognition. Initial value allocated of $2.5 million is based on the fair value of the NYIAX Convertible Note. However, as the collaborative arrangement includes consideration paid to the customer, NYIAX, for distinct goods and services for which the fair value was not reasonably estimable, the transaction price was reduced for any consideration paid in excess of goods or services with a readily determinable fair value, the NYIAX Investment. Accordingly, the transaction price was reduced to zero as the excess fair value of the consideration paid to the customer was in excess of $2.5 million.

The contingently issuance shares are accounted for under ASC 718, Share-based payments as an equity-classified share-based payment to a customer. Due to the probable achievement of the performance condition on the grant date, the shares are initially recorded at the grant date fair value of $1.3 million with no subsequent remeasurement.

*IBM Purchase Commitment for Programs*

On July 7, 2025, the Company entered into a purchase commitment for programs (the "IBM Purchase Commitment") with International Business Machines Corporation ("IBM"), to purchase certain subscriptions from IBM program offerings (the "Programs"). IBM agreed to license the Programs to the Company for two payments of $18.9 million on June 30, 2025 and $4.8 million on September 30, 2025, respectively (the "Program Payments"). According to an Embedded Solution Agreement (the "Base Agreement"), of which the Purchase Commitment and the Cloud Services Agreement (as defined below) form a part, the Program Payments become due once an invoice is sent from IBM to the Company and are due within 30 days of receipt of the invoice.

On September 23, 2025, the Company entered into an amendment to the IBM Purchase Commitment (the "Amendment 1") to amend the payment schedule to be as follows: $2.5 million to be paid at the time of the agreement, $3.3 million on December 23, 2025 and eight payments of $2.2 million each quarter after that to end with the final payment on December 23, 2027. The Company having paid $2.5 million on August 8, 2025, the total payments are $25.8 million.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;10. **Commitments and Contingencies, continued** 

Under the IBM Purchase Commitment, the Company must send a report to IBM every 90 days summarizing the use of each Program. The Company may license the Programs to end-users, subject to certain limitations, restrictions, and requirements. The Company must use its own intellectual property to add value to the Programs and describe this value to IBM as well as bundle it within the Programs when licensing to end-users.

The IBM Purchase Commitment includes customary representations and warranties and various customary covenants and closing conditions that are subject to certain limitations, including in the Base Agreement.

Payments under the IBM Purchase Commitment are capitalized to prepaid expenses and are amortized on a straight-line basis over the contractual term, which ends on June 29, 2028, with amortization recorded to research and development expense in the same manner as the related hosting fees. As of September 30, 2025, the Company had approximately $23.3 million of remaining purchase commitments payable under the agreement.

*Cloud Services Subscription Agreement*

On July 7, 2025, the Company entered into a cloud services subscription agreement (the "Cloud Services Agreement") with IBM, pursuant to which the Company has agreed to purchase certain subscriptions to IBM cloud services (the "Cloud Services").

The Company has selected their Cloud Services, with the minimum value of the Cloud Services actually purchased within each annual period being (i) $105,564 in the first year, (ii) $2,111,850 in the second year, and (iii) $4,117,292.40 in the third year. If the Cloud Services purchased in an annual period exceed the minimum, that surplus amount can be removed from the required minimum for the following year. If the Cloud Services purchased in an annual period are below the minimum, the Company must place an order covering the additional amount within seven days of the end of the applicable annual period. If the Company does not place that additional order, IBM may invoice the Company and require the Company to pay that additional amount to reach the minimum for the applicable annual period.

Pursuant to the Cloud Services Agreement, the Company must use its own intellectual property to add value to the Cloud Services for end-users of the Cloud Services.

The Cloud Services Agreement includes customary representations and warranties and various customary covenants and closing conditions that are subject to certain limitations, including in the Base Agreement.

The Company is recording the expense as subscription licenses expense in the research and development line item on the condensed consolidated statement of operations.

&nbsp;&nbsp;&nbsp;&nbsp;11. **Related Parties** 

#### Nathaniel Bradley and EOS Holdings
Nathaniel Bradley, the Chief Executive Officer ("CEO") of the Company, is a control person of EOS Holdings which became a related party of the Company at the close of the DV Asset Acquisition on December 31, 2024. In addition, Sonia Choi, the Company's Chief Marketing Officer is the spouse of the Company's CEO and holds the position of Chief Marketing Officer of EOS Holdings, a related party of the Company. EOS Holdings received 3,999,911 shares of common stock of the Company at the close of the transaction. As described in Note 5 Borrowings, the Company owes $4.6 million of principal balance under the DV Convertible Note to EOS Holdings as of September 30, 2025. In the third quarter of 2025, EOS Holdings exercised its conversion right under the DV Convertible Note, converting approximately $3.2 million of the principal balance into shares of the Company's common stock. The Company has recorded $5,000 in interest income on the notes receivable for the nine months ended September 30, 2025.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;11. **Related Parties, continued** 

**In addition to the DV Convertible Note and the Data Vault Note Balance, on January 16, 2025, the Company entered into a Transition Services Agreement ("Transition Services Agreement") to receive from EOS Holdings, employees to provide transition services in connection with the Acquired Assets for a period of up to three months. For the three and nine months ended September 30, 2025, the Company has paid $160,000 and $661,000 to EOS Holdings and has a balance due to EOS as of September 30, 2025 of $160,000. No fees were paid to EOS Holdings during the quarter ended September 30, 2024 in connection with the Transition Services Agreement.**

#### Helge Kristensen
Mr. Kristensen has served as a member of the Company's board of directors since 2010. Mr. Kristensen serves as vice president of Hansong Technology, an original device manufacturer of audio products based in China, president of Platin Gate Aps, a company with focus on service-branding in lifestyle products as well as pro line products based in Denmark and co-founder and director of Inizio Capital, an investment company based in the Cayman Islands.

For the three months ended September 30, 2025 and 2024, Hansong Technology purchased modules from the Company of approximately $14,000 and $3,000, respectively, and made payments to the Company of approximately $681,000 and $38,000, respectively. At September 30, 2025, there was a Hansong deposit liability of $605,000. See Note 1 for further details regarding contract liabilities. At September 30, 2025 and 2024, Hansong Technology owed the Company approximately $0 and $4,000, respectively. For the three months ended September 30, 2025 and 2024, Hansong Technology sold speaker products to the Company of approximately $5,000 and $0, respectively, and the Company made payments to Hansong Technology of approximately $48,000 and $96,000 respectively. At September 30, 2025 and 2024, the Company owed Hansong Technology approximately $0 and $67,000, respectively.

For the nine months ended September 30, 2025 and 2024, Hansong Technology purchased modules from the Company of approximately $51,000 and $38,000, respectively, and made payments to the Company of approximately $681,000 and $38,000, respectively. For the nine months ended September 30, 2025 and 2024, Hansong Technology sold speaker products to the Company of approximately $6,000 and $1,000, respectively, and the Company made payments to Hansong Technology of approximately $50,000 and $184,000, respectively.

As of September 30, 2025 and December 31, 2024, Mr. Kristensen owned less than 1.0% of the outstanding shares of the Company's common stock.

&nbsp;&nbsp;&nbsp;&nbsp;12. **Segment Information** 

The Company has adopted ASU 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures* and has revised prior year disclosures to conform with the current year presentation. The Company operates in one business segment. Our chief decision-maker, the President and Chief Executive Officer, evaluates our performance based on company-wide consolidated results.

Operating segments have been identified based on the financial information utilized by the Company's Chief Executive Officer, the chief operating decision maker ("CODM"). The CODM uses net income as a measure of profitability to assess segment performance and deciding on how to allocate resources such as capital investments, share repurchases, and acquisitions. The CODM does not use or receive total assets by segment to make decisions regarding resources; therefore, the total asset disclosure by segment has not been included.

The Company operates in one business segment. Our chief decision-maker, the Chief Executive Officer, evaluates our performance based on company-wide consolidated results.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

**12.** **Segment Information** continued

The following table reflects results of operations of the Company's reportable segment (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended September 30,**  | **For the Three Months Ended September 30,**  | **For the Nine Months Ended September 30,**  | **For the Nine Months Ended September 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| Net revenue | 2904 | 1172 | 5268 | 1772 |
| Cost of net revenue | 2809 | 946 | 5069 | 1618 |
| Salaries, benefits, and stock based compensation expense | 6362 | 2554 | 14585 | 7142 |
| Other segment expenses | 5734 | 2904 | 14679 | 7759 |
| Depreciation and amortization expense | 2755 | 11 | 7581 | 59 |
| Interest (expense), net | (864) | 9 | (18186) | (1260) |
| Other (expense) income, net | (17366) | 142 | (24818) | (28984) |
| Income tax expense | 0 |  | 5 |  |
| Net loss | $(32976) | $(5092) | $(79655) | $(45050) |

---

Net revenue from customers is designated based on the geographic region to which the product is delivered. Net revenue by geographic region for the three and nine months ended September 30, 2025 and 2024 was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the Three Months Ended**  | **For the Three Months Ended**  | **For the Nine Months Ended**  | **For the Nine Months Ended**  |
| | **September 30,**  | **September 30,**  | **September 30,**  | **September 30,**  |
| <br>**(in thousands)** | **2025** | **2024** | **2025** | **2024** |
| Asia Pacific | $608 | $877 | $1173 | $1229 |
| North America | 2279 | 161 | 3893 | 275 |
| Europe | 17 | 134 | 202 | 268 |
| Total | $2904 | $1172 | $5268 | $1772 |

---

Substantially all of our long-lived assets are located in the United States.

&nbsp;&nbsp;&nbsp;&nbsp;**13.** **Subsequent Events** 

*Bridge Financing*

On October 10, 2025, the Company entered into a financing agreement for $1.4 million in proceeds net of fees of $60,000. The Company agreed to pay $87,000 weekly financing charges and the estimated term is 183 calendar days from the time of funding.

*Q3 2025 Notes Conversion*

On October 1, 2025, the Q3 2025 Notes were fully converted. The Company issued 31,064,393 shares of common stock and the Q3 2025 Notes are no longer outstanding. For further details on the Q3 2025 Notes, see Note 5 Borrowings.

*Warrant Exchange*

On October 2, 2025, the Company closed the Warrant Exchange Agreement entered into on August 4, 2025 entered into in connection with the Q3 2025 Notes to exchange 30,738,005 common stock warrants into shares of common stock. The stock was issued on October 2, 2025 and the warrants are no longer outstanding. For further details, see Note 5 Borrowings.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;**13.** **Subsequent Events** (continued)

*October Purchase Agreement*

On October 24, 2025, the Company entered into a securities purchase agreement (the "October Purchase Agreement") with certain investors ("October Investor", and collectively, the "October Investors"), pursuant to which the Company agreed to issue and sell to the October Investors, in a registered direct offering, (a) an aggregate of 1,470,588 shares (the "October Initial Shares") of common stock of the Company at a price of $0.34 per share and (b) an aggregate of 4,255,319 shares (the "October Additional Shares") of common stock at a price of $0.47 per share, for aggregate gross proceeds of approximately $2.5 million.

The closing with respect to the October Initial Shares took place on October 29, 2025. The closing with respect to the October Additional Shares, subject to the satisfaction of certain additional closing conditions, is expected to take place on the business day immediately after the Company receives the approval of its stockholders with respect to an amendment to the Company's certificate of incorporation to increase the number of shares of common stock authorized for issuance to an amount sufficient to satisfy the Company's existing contractual obligations.

*Acquisition of API Media*

On October 28, 2025, the Company announced that it had entered into a definitive agreement to acquire API Media, a privately held technology provider headquartered in New Jersey (the "API Purchase Agreement"), for consideration of cash of $14.0 million. API Media delivers audio-visual and IT services for large-scale sporting events and enterprise clients. On October 28, 2025, the Company paid a deposit of $1.0 million to API.

Under the terms of the agreement, the Company will acquire 100% of the equity interests of API Media in an all-cash transaction, which is expected to close in December 2025, subject to customary closing conditions and regulatory approvals. The API Purchase Agreement can be terminated by mutual written consent of the parties, and also by either party after December 5, 2025 (the "Outside Date"), if the closing has not occurred by the Outside Date; *provided*, *however*, that the right to terminate shall not be available to a party whose material breach of the API Purchase Agreement has been the principal cause of, or primarily resulted in, the failure of the closing to occur. Additionally the API Purchase Agreement can be terminated by either party if a final, non-appealable order, decree or ruling enjoining or otherwise prohibiting consummation of the purchase has been issued by any governmental authority or if the other party is in breach of the API Purchase Agreement which has not been cured within ten (10) days of written notice of such breach (provided that such terminating party has not committed a material breach which is the principal cause of the failure to close).

Following completion of the acquisition, the API Media brand will be retained, and the business will operate as part of the Company's enterprise data-activation and monetization segment.

The Company expects to account for the transaction as a business combination in accordance with ASC 805, Business Combinations. The Company is currently evaluating the preliminary purchase price allocation, including the fair values of the assets to be acquired, liabilities to be assumed, and any resulting goodwill or intangible assets. Because the transaction had not closed as of September 30, 2025, no amounts related to this acquisition are included in the accompanying consolidated financial statements.

*Letter of Intent to Acquire NYIAX Inc.*

On October 13, 2025, the Company entered into a letter of intent ("LOI") to acquire NYIAX Inc., a technology and services company with operations in the United States, Europe, and Dubai. NYIAX operates a proprietary blockchain-enabled advertising and data-exchange platform jointly developed with Nasdaq and owns an associated portfolio of intellectual-property rights.

The proposed transaction is subject to the negotiation and execution of a definitive acquisition agreement, approval by the Company's stockholders and Nasdaq, and other customary closing conditions. If consummated, the transaction is expected to close in the first quarter of 2026.

#### **Table of Contents**

#### DATAVAULT AI INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;**13.** **Subsequent Events** (continued)

The Company anticipates accounting for any completed transaction as a business combination under ASC 805, Business Combinations. Because only a non-binding LOI had been executed as of September 30, 2025, no amounts related to this potential acquisition have been reflected in the accompanying consolidated financial statements.

*Scilex Licensing Agreement*

On November 3, 2025, the Company entered into a License Agreement (the "Scilex License Agreement") with Scilex Holding Company ("Scilex"), to grant to Scilex a worldwide, exclusive, non-transferable license, with the right to sublicense, under the patents and know-how to research, develop, make, have made, use, sell, have sold, offer for sale, import, export, register, market, promote, advertise, commercialize and distribute the proprietary materials including a suite of patents related to the Company's data platforms and any products created therefrom within the target market.

The target market is industries including biotechnology, biopharmaceutical, genetic, diagnostic, and data-related industries, and any markets relating to the generation, use, storage, analysis, tokenization, and exchange of DNA, genetic, diagnostic, and therapeutic data or materials.

The Scilex License Agreement expires upon the expiry of the patents underlying the proprietary materials, at which point the license shall become perpetual, irrevocable, non-exclusive and royalty-free. The Scilex License Agreement is subject to earlier termination if, among other things: (i) either party ceases to exist or becomes insolvent, (ii) either party commits a material breach of the Scilex License Agreement, (iii) Scilex fails to make any required payment to the Company that is not cured within 15 days, or (iv) Scilex does not achieve and maintain annual royalty payments to the Company of a minimum of $1.0 million after 24 months following the date of the Scilex License Agreement.

As consideration for the license, Scilex agreed to pay the Company (a) a non-refundable license fee of $10.0 million, payable in four equal installments of $2.5 million on or before the last day of each fiscal quarter, beginning on December 31, 2025, (b) subject to achievement of certain net sales for the licensed product up to an aggregate of $2,550.0 million, and (c) a five-percent (5%) royalty on net sales of the product during the applicable royalty term under the Scilex License Agreement.

*Dream Bowl Tokens*

Subsequent to September 30, 2025, the Board of Directors approved the creation of the Dream Bowl 2026 Meme Coin digital tokens ("Dream Bowl Tokens") and authorized the engagement of Teknos Associates to perform an independent valuation of the tokens. The Board also declared a dividend of one Dream Bowl Token per share of Company Common Stock (including securities entitled to participate on an as-converted basis), payable to stockholders of record as of November 28, 2025, subject to certain conditions, including receipt of the valuation report and confirmation of adequate statutory surplus. The dividend is expected to be paid within 60 days after the record date unless modified or revoked by the Board. This subsequent event did not require adjustment to the Company's September 30, 2025 consolidated financial statements.

[**Table of Contents**](#TOC)

**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.**

**Cautionary Notice Regarding Forward Looking Statements**

This Report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as "anticipate," "believe," "estimate," "intend," "could," "should," "would," "may," "seek," "plan," "might," "will," "expect," "predict," "project," "forecast," "potential," "continue," negatives thereof or similar expressions. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of Datavault AI Inc,'s (the "Company", "our", "us" or "we") operations; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future operations, future cash needs, business plans and future financial results, and any other statements that are not historical facts.

From time to time, forward-looking statements also are included in our other periodic reports on Form 10-K, 10-Q and 8-K, in our press releases, in our presentations, on our website and in other materials released to the public. Any or all of the forward-looking statements included in this Report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, including risks related to market, economic and other conditions; the Company's ability to continue as a going concern; the Company's ability to manage costs and execute on its operational and budget plans; and, the Company's ability to achieve its financial goals. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

**Overview**

Datavault AI Inc. (Nasdaq: DVLT) is an innovative technology licensing company revolutionizing data management, valuation, and monetization through its portfolio of patented, secure platforms. Our proprietary high-performance computing ("HPC") infrastructure and advanced software empower global businesses with innovative, AI-driven solutions tailored for the Web 3.0 ecosystem. Central to our offerings are our flagship AI agents—Data Vault®, DataValue®, DataScore®, and Data Vault Bank®—which leverage generative AI to deliver enterprise-grade capabilities for data ownership immutability, real-time experiential observability, precise asset valuation, and secure monetization. Operating through two synergistic divisions—Data Science and Acoustic Science—we optimize revenue streams across industries such as sports, entertainment, biotech, fintech, and energy. With a seasoned executive leadership team and robust engineering expertise, Datavault AI is poised to capitalize on the growing demand for data-driven solutions, unlocking transformative opportunities in an increasingly digital world.

*Strategic Acquisition of CompuSystems, Inc.*

On May 20, 2025, we finalized the strategic acquisition of CompuSystems, Inc. ("CSI") assets, a pivotal milestone in our growth strategy. This acquisition enhances our capabilities in event management and data monetization, particularly in the sports, entertainment, and venue markets, by integrating CSI's historical, present, and future data with our patented Web 3.0 technologies, including Data Vault, Adio, and WiSA.

[**Table of Contents**](#TOC)

To date, our operations have been funded through sales of our common and preferred equity, proceeds from the exercise of warrants to purchase common stock, sale of debt instruments, and revenue from the sale of our products. Our condensed consolidated financial statements contemplate the continuation of our business as a going concern. However, we are subject to the risks and uncertainties associated with an emerging business, as noted above we have no established source of capital, and we have incurred recurring losses from operations since inception.

**Comparison of the Three and Nine Months Ended September 30, 2025 and 2024**

***Revenue***

Revenue for the three months ended September 30, 2025 was $2.9 million, an increase of $1.7 million or 148% compared to the revenue for the three months ended September 30, 2024 of $1.2 million. The increase was a result of the acquisition of CSI.

Revenue for the nine months ended September 30, 2025 was $5.3 million, an increase of $3.5 million or 197% compared to the revenue for the nine months ended September 30, 2024 of $1.8 million. The increase was a result of the acquisition of CSI.

***Gross Profit and Operating Expenses***

**Gross Profit**

Gross profit for the three months ended September 30, 2025 was $95,000 compared to a gross profit of $226,000 for the three months ended September 30, 2024. The gross profit as a percent of sales was 3% for the three months ended September 30, 2025, compared to the gross profit of 19% for the three months ended September 30, 2024. The decrease in gross profit is due to the inclusion of lower-margin revenue as a result of the acquisition of CSI.

Gross profit for the nine months ended September 30, 2025 was $199,000 compared to a gross profit of $154,000 for the nine months ended September 30, 2024. The gross profit as a percent of sales was 4% for the nine months ended September 30, 2025, compared to the gross profit of 9% for the nine months ended September 30, 2024. The decrease in gross profit is due to the inclusion of lower-margin revenue as a result of the acquisition of CSI.

**Research and Development**

Research and development expenses for the three months ended September 30, 2025 were $5.0 million, an increase of $2.8 million, compared to the research and development expenses for the three months ended September 30, 2024 of $2.2 million. The increase in research and development expenses is primarily driven by IBM Watsonx AI subscription licenses of $2.2 million and higher stock-based compensation of $1.1 million, offset partially by decreases in research and development expenses due to the adjustment related to the acquisition of NYIAX assets of $0.5 million.

Research and development expenses for the nine months ended September 30, 2025 were $11.6 million, an increase of $5.9 million compared to the research and development expenses for the nine months ended September 30, 2024 of $5.7 million. The increase in research and development expenses is primarily driven by IBM Watsonx AI subscription licenses of $2.2 million, the increase in research and development expenses of $1.3 million related to the acquisition of NYIAX assets, NFL Alumni license and Brookhaven National Laboratory research, higher headcount resulting in increased salaries, wages, benefits, and stock-based compensation of $1.9 million, and legal expenses related to intellectual property of $0.4 million.

**Sales and Marketing**

Sales and marketing expenses for the three months ended September 30, 2025 were $2.2 million, an increase of $1.2 million compared to the sales and marketing expenses for the three months ended September 30, 2024 of $1.0 million. The increase in sales and marketing expenses is primarily related to an increase in headcount resulting in increased salaries and wages, benefits and stock-based compensation of $1.1 million and consulting expenses of $0.1 million.

[**Table of Contents**](#TOC)

Sales and marketing expenses for the nine months ended September 30, 2025 were $5.4 million, an increase of $2.6 million compared to the sales and marketing expenses for the nine months ended September 30, 2024 of $2.8 million. The increase in sales and marketing expenses is primarily related to an increase in headcount resulting in increased salaries and wages, benefits and stock-based compensation of $2.0 million, and increased consulting expenses of $0.6 million.

**General and Administrative**

General and administrative expenses for the three months ended September 30, 2025 were $7.7 million, an increase of $5.4 million compared to general and administrative expenses for the three months ended September 30, 2024 of $2.3 million. The increase in general and administrative expenses is primarily driven by higher amortization of intangibles assets of $2.7 million related to the Data Vault asset acquisition that closed on December 31, 2024 and IP acquisitions from Turner Global Media LLC and Web Access LLC closed in July 2025, an increase in headcount resulting in increased salaries and wages, commissions, benefits and stock-based compensation of $1.5 million, increased consulting and legal expenses of $0.7 million and $0.5 million respectively.

General and administrative expenses for the nine months ended September 30, 2025 were $19.8 million, an increase of $13.3 million, compared to the general and administrative expenses for the three months ended September 30, 2024 of $6.5 million. The increase in general and administrative expenses is primarily driven by higher amortization of intangibles assets of $7.5 million related to the Data Vault asset acquisition that closed on December 31, 2024 and IP acquisitions from Turner Global Media LLC and Web Access LLC closed in July 2025, an increase in headcount resulting in increased salaries and wages, commissions, benefits and stock-based compensation of $3.5 million, increased consulting expense of $1.6 million, increased legal and accounting fees of $0.9 million and $0.2 million, respectively, offset partially by decreases in investor relations of $0.4 million.

Interest expense, net for the three months ended September 30, 2025 was $0.9 million, an increase of $0.9 million compared to the interest income for the three months ended September 30, 2024 of $9,000. Interest expense increased due to an increase in borrowings.

Interest expense, net for the nine months ended September 30, 2025 was $18.2 million, an increase of $16.9 million compared to the interest expense for the nine months ended September 30, 2024 of $1.3 million. The increase in interest expense, net for the nine months ended September 30, 2025, is due to the issuance of the Additional Warrants with the 2025 Notes fair value at issuance of $16.7 million and increased borrowings.

Change in fair value of convertible notes measured at fair value increased to $10.8 million for the three months ended September 30, 2025 compared to none for the three months ended September 30, 2024 due to the issuance of the 2025 Notes and recording the issuance fair value of $10.8 million, including original issue discount of $1.3 million and fees of $1.0 million.

Change in fair value of convertible notes measured at fair value increased to $19.6 million for the nine months ended September 30, 2025 compared to none for the nine months ended September 30, 2024 due to the issuance of the 2025 Notes and recording the issuance fair value of $19.6 million, including the original issue discount of $3.0 million and fees of $2.3 million.

Change in fair value of convertible note to related party measured at fair value increased to $1.1 million in the three months ended September 30, 2025 compared to none in the three months ended September 30, 2024 due to an increase in the DV Note fair value of $1.1 million.

Change in fair value of convertible note to related party measured at fair value increased to a gain of $0.2 million in the nine months ended September 30, 2025 compared to none in the nine months ended September 30, 2024 due to an increase in the DV note fair value of the note of $1.1 million offset by a decrease in the DV note fair value of $1.3 million.

Change in other income, net increased to income of $0.3 million for the three and nine months ended September 30, 2025 for an increase of $0.2 million over the three and nine months ended September 30, 2024 due to the unrealized gain on the fair value of bitcoin intangible assets at September 30, 2025.

[**Table of Contents**](#TOC)

**Debt Extinguishment**

Debt extinguishment expense in the three and nine months ended September 30, 2025 was $5.8 million due to the extinguishment of the convertible notes issued in April and May 2025 with the issuance of the convertible notes in August. The Company recognized the pre-modification fair value and the post modification incremental fair value change in the April and May notes due to the decrease in the alternative conversion feature and recorded $2.1 million in expense and the exchange of 30,738,449 outstanding warrants held by the holders of the April and May notes for common stock for which the Company recognized the incremental fair value of $3.7 million.

**Change in Fair Value of Warrant Liability**

Change in fair value of warrant liability for the three months ended September 30, 2025 was zero compared to a loss of $6,000 for the three months ended September 30, 2024.

Change in fair value of warrant liability for the nine months ended September 30, 2025 was a gain of $19,000 compared to a loss of $29,120,000 for the nine months ended September 30, 2024. The change in fair value of the warrant liability for the nine months ended September 30, 2024 was due to the issuance of additional warrants to purchase 5,602,693 shares of common stock and the subsequent valuing of such warrants. The additional warrants were issued as a result of provision in certain of the warrant agreements that was triggered following the Company's reverse stock split that occurred in April 2024. There was no such activity in the nine months ended September 30, 2025.

**Liquidity and Capital Resources**

Cash and cash equivalents as of September 30, 2025 were $1.7 million compared to $3.3 million, as of December 31, 2024.

We recorded a net loss of $33.0 million and $79.7 million, respectively, for the three and nine months ended September 30, 2025 and used net cash in operating activities of $23 million for the nine months ended September 30, 2025 vs $13.3 million for the nine months ended September 30, 2024. Excluding non-cash adjustments, the primary reasons for the increase in the use of net cash from operating activities during the nine months ended September 30, 2025, was related to an increase in the net loss.

Cash provided by financing activities for the nine months ended September 30, 2025 and 2024 totaled approximately $28.1 million and $17.1 million, respectively.

Cash used in investing activities for the nine months ended September 30, 2025 and 2024 totaled approximately $6.6 million and $0.4 million, respectively. The increase was due to the acquisition of CSI on May 20, 2025.

We have financed our operations to date primarily through the issuance of equity securities, proceeds from the exercise of warrants to purchase common stock and sale of debt instruments. In August 2025 and September 2025, we received $5.5 million and $6 million in proceeds from the issuance of the Q3 2025 Notes. In April 2025 and May 2025 we received $4.5 million and $9.2 million in proceeds from the issuance of the 2025 Notes. In February 2025, we received aggregate gross proceeds of approximately $5.4 million in our registered direct offering. In January 2024, we received gross proceeds of $600,000 from the issuance of promissory notes and common stock purchase warrants to certain accredited investors. In February 2024, we received gross proceeds of approximately $10.0 million from the public offering of 1,025,600 units, with each unit consisting of one share of common stock (or pre-funded warrant in lieu thereof) and one warrant, each to purchase one (1) share of common stock. In March 2024 we received gross proceeds of approximately $2.3 million from the issuance of 417,833 shares of common stock, 93,342 pre-funded common stock warrants and the issuance of 511,175 warrants to purchase common stock. We will need to raise additional proceeds via the issuance of equity securities and/or the sale of debt instruments in the remainder of 2025 and 2026 to fund operations.

**Off-Balance Sheet Arrangements**

We have no off-balance sheet arrangements.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk.**

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.

[**Table of Contents**](#TOC)

**Item 4. Controls and Procedures.**

**Evaluation of Disclosure Controls and Procedures**

We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission ("SEC") rules and forms and to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures. Based on the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2024, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

**Changes in Internal Controls**

There were no changes in the Company's internal control over financial reporting that occurred during the three months ended September 30, 2025 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

[**Table of Contents**](#TOC)

**PART II. OTHER INFORMATION**

**Item 1. Legal Proceedings**

From time to time we may be involved in various claims and legal actions arising in the ordinary course of our business. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, or any of our subsidiaries in which an adverse decision could have a material adverse effect upon our business, operating results, or financial condition.

**Item 1A. Risk Factors**

As a smaller reporting company, the Company is not required to include the disclosure required under this Item 1A.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds**

On July 25, 2025, the Company entered into a subscription agreement (the "Subscription Agreement") with a certain investor, pursuant to which the Company is offering an aggregate of 284,091 unregistered shares of the Company's common stock (the "Subscription Securities") in a private placement, for an aggregate subscription amount of $250,000.08. The Subscription Securities are subject to certain transfer restrictions pursuant to the Subscription Agreement. The Subscription Agreement includes customary representations and warranties and various customary covenants and closing conditions that are subject to certain limitations.

All other information required by Item 701 of Regulation S-K as to all unregistered sales of equity securities of the Company during the period covered by this Report have previously been included in Current Reports on Form 8-K filed with the SEC.

**Item 3. Defaults Upon Senior Securities**

None.

**Item 4. Mine Safety Disclosures**

Not applicable.

**Item 5. Other Information**

None.

[**Table of Contents**](#TOC)

**Item 6. Exhibits**

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| | |
|:---|:---|
| **Exhibit**<br>**Number** | **Description** |
| 2.1 | [Third Amendment to Asset Purchase Agreement, by and among the Company and CompuSystems, Inc., dated as of March 31, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on April 2, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925031132/tm2511063d1_ex2-1.htm) |
| 2.2 | [Fourth Amendment to Asset Purchase Agreement, by and among the Company and CompuSystems, Inc., dated as of May 14, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on May 15, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925049498/tm2515254d1_ex2-1.htm) |
| 3.1 | [Certificate of Amendment to the Company's Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on March 25, 2024 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on March 26, 2024).](https://www.sec.gov/Archives/edgar/data/1682149/000110465924038684/tm249783d1_ex3-1.htm) |
| 3.2 | [Certificate of Amendment to the Company's Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on April 12, 2024 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on April 12, 2024).](https://www.sec.gov/Archives/edgar/data/1682149/000110465924046753/tm2411698d1_ex3-1.htm) |
| 3.3 | [Certificate of Amendment to Certificate of Incorporation of Datavault AI, Inc., filed with the Secretary of State of the State of Delaware on September 25, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 26, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925093893/tm2526979d1_ex3-1.htm) |
| 3.4 | [Amendment to Bylaws of Datavault AI, Inc., effective September 25, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 26, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925093893/tm2526979d1_ex3-2.htm) |
| 4.1 | [Form of Senior Secured Promissory Note (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 4, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925073703/tm2522493d1_ex4-1.htm) |
| 4.2 | [Convertible Promissory Note Amendment and Conversion Agreement by and between the Company and EOS, dated as of September 7, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 8, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925088049/tm2525483d1_ex4-1.htm) |
| 4.3 | [Form of Pre-Funded Warrant (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 26, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925093831/tm2526979d2_ex4-1.htm) |
| 4.4 | [Form of Senior Secured Promissory Note issued on September 30, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on October 1, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925095668/tm2527645d1_ex4-1.htm) |
| 10.1 | [Stock Purchase Agreement, by and between the Company and the Sellers, dated July 13, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 17, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925068671/tm2520909d1_ex10-1.htm) |
| 10.2 | [IP Sale and Assignment Agreement, dated July 12, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 17, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925068679/tm2520861d1_ex10-1.htm) |
| 10.3 | [Equity Distribution Agreement, dated July 21, 2025, by and between the Company and Maxim Group LLC (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 22, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925069446/tm2521239d1_ex1-1.htm) |
| 10.4 | [Form of Waiver Agreement (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 22, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925069446/tm2521239d1_ex10-1.htm) |
| 10.5 | [Subscription Agreement, dated as of July 25, 2025, by and between the Company and the Subscriber thereto (incorporated by reference to Exhibit 10.24 to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 19, 2025)](https://www.sec.gov/Archives/edgar/data/1682149/000141057825001857/dvlt-20250630xex10d24.htm) |
| 10.6 | [Web Access IP Purchase Agreement, dated as of July 30, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 30, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925072283/tm2521921d1_ex10-1.htm) |
| 10.7 | [Registration Rights Agreement, dated as of July 30, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 30, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925072283/tm2521921d1_ex10-2.htm) |
| 10.8 | [Form of Securities Purchase Agreement, dated August 4, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 4, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925073703/tm2522493d1_ex10-1.htm) |
| 10.9 | [Form of Security Agreement (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 4, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925073703/tm2522493d1_ex10-2.htm) |
| 10.10 | [Form of Subsidiary Guaranty (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 4, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925073703/tm2522493d1_ex10-3.htm) |
| 10.11 | [Form of Exchange Agreement, dated August 4, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 4, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925073703/tm2522493d1_ex10-4.htm) |
| 10.12 | [Form of Note Amendment (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 4, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925073703/tm2522493d1_ex10-5.htm) |
| 10.13 | [Form of Placement Agency Agreement, dated August 4, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 4, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925073703/tm2522493d1_ex10-6.htm) |

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[**Table of Contents**](#TOC)

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| | |
|:---|:---|
| 10.14 | [Amendment to Stock Purchase Agreement (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 22, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925081876/tm2524125d1_ex10-1.htm) |
| 10.15 | [Securities Purchase Agreement between Datavault AI Inc. and Scilex Holding Company, dated September 26, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 26, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925093831/tm2526979d2_ex10-1.htm) |
| 10.16 | [Form of Voting Agreement (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 26, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925093831/tm2526979d2_ex10-2.htm) |
| 10.17 | [Amendment to the IBM Agreement, dated September 22, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 26, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925093893/tm2526979d1_ex10-1.htm) |
| 10.18 | [Form of Senior Secured Promissory Note issued on September 30, 2025 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on October 1, 2025).](https://www.sec.gov/Archives/edgar/data/1682149/000110465925095668/tm2527645d1_ex4-1.htm) |
| 31.1 | [Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).](dvlt-20250930xex31d1.htm) |
| 31.2 | [Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).](dvlt-20250930xex31d2.htm) |
| 32.1 | [Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).](dvlt-20250930xex32d1.htm) |
| 32.2 | [Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).](dvlt-20250930xex32d2.htm) |
| 101 | Interactive Data Files (embedded within the Inline XBRL document) |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

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[**Table of Contents**](#TOC)

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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| | | |
|:---|:---|:---|
|  | **Datavault AI Inc.** | **Datavault AI Inc.** |
| Date: November 14, 2025 | By: | /s/ Nathaniel Bradley |
|  |  | Name: Nathaniel Bradley |
|  |  | Chief Executive Officer |
|  |  | (Duly Authorized Officer and Principal Executive Officer) |
| Date: November 14, 2025 | By: | /s/ Brett Moyer |
|  |  | Name: Brett Moyer |
|  |  | Title: Chief Financial Officer  |
|  |  | (Principal Financial Officer) |

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## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION**

**PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF**

**THE SARBANES-OXLEY ACT OF 2002**

I, Nathaniel Bradley, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Datavault AI Inc. (the "registrant"):

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures; and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: November 14, 2025 | /s/ Nathaniel Bradley | /s/ Nathaniel Bradley |
|  | Name: | Nathaniel Bradley |
|  | Title: | Chief Executive Officer |
|  |  | (Principal Executive Officer) |

---

------

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION**

**PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF**

**THE SARBANES-OXLEY ACT OF 2002**

I, Brett Moyer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Datavault AI Inc. (the "registrant"):

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures; and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: November 14, 2025 | /s/ Brett Moyer | /s/ Brett Moyer |
|  | Name: | Brett Moyer |
|  | Title: | Chief Financial Officer |
|  |  | (Principal Financial Officer) |

---

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## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report on Form 10-Q of Datavault AI Inc. (the "Company") for the period ended September 30, 2025 (the "Report"), I, Nathaniel Bradley, Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: November 14, 2025 | /s/ Nathaniel Bradley | /s/ Nathaniel Bradley |
|  | Name: | Nathaniel Bradley |
|  | Title: | Chief Executive Officer |
|  |  | (Principal Executive Officer) |

---

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report on Form 10-Q of Datavault AI Inc. (the "Company") for the period ended September 30, 2025 (the "Report"), I, Brett Moyer, Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: November 14, 2025 | /s/ Brett Moyer | /s/ Brett Moyer |
|  | Name: | Brett Moyer |
|  | Title: | Chief Financial Officer |
|  |  | (Principal Financial Officer) |

---

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

------