[10-Q] WiSA Technologies, Inc. Quarterly Earnings Report
WiSA Technologies, Inc. disclosed multiple material financing and acquisition arrangements, equity issuances and related-party activity. The company recorded transactions that converted warrant liabilities to equity, reclassing approximately $41.9 million from warrant liabilities to additional paid-in capital. The company completed asset purchases with aggregate consideration including cash, convertible notes and stock: a CSI transaction with total consideration described as $32.8 million and a DV-related transaction with aggregate consideration described as $92.0 million (including 40,000,000 shares with fair value ~$82.0 million). Intangible assets of approximately $92.0 million plus capitalized fees of $575,000 were recorded, with amortization expense of about $2.3 million and $4.6 million for the three and six months ended periods referenced. Customer concentration is noted: two customers represented 25% and 13% of accounts receivable at the interim date. The company reports related-party balances and governance provisions involving EOS Holdings, including an outstanding principal balance of $8.3 million and board appointment rights. Multiple financings and registered/private placements were completed or authorized, including a February offering raising ~$5.4 million and several convertible note structures with potential share conversion features.
WiSA Technologies, Inc. ha comunicato diverse operazioni materiali di finanziamento e acquisizione, emissioni di capitale e transazioni con parti correlate. La società ha registrato conversioni di passività da warrant in patrimonio netto, riclassificando circa $41.9 million da passività da warrant in capitale versato aggiuntivo. Ha completato acquisti di attività con corrispettivi complessivi in contanti, obbligazioni convertibili e azioni: una transazione CSI per un corrispettivo totale descritto come $32.8 million e una transazione legata a DV con corrispettivo aggregato descritto come $92.0 million (inclusi 40,000,000 azioni con fair value pari a circa $82.0 million). Sono stati rilevati asset immateriali per circa $92.0 million oltre a commissioni capitalizzate di $575,000, con ammortamenti di circa $2.3 million e $4.6 million nei periodi trimestrale e semestrale indicati. Si segnala concentrazione clienti: due clienti rappresentavano il 25% e il 13% dei crediti commerciali alla data interinale. La società riporta saldi e disposizioni di governance con parti correlate legate a EOS Holdings, incluso un saldo principale residuo di $8.3 million e diritti di nomina nel consiglio. Sono state completate o autorizzate più operazioni di finanziamento e collocamenti registrati/privati, tra cui un’offerta di febbraio che ha raccolto circa $5.4 million e varie strutture di note convertibili con potenziali caratteristiche di conversione in azioni.
WiSA Technologies, Inc. divulgó múltiples acuerdos materiales de financiamiento y adquisición, emisiones de capital y operaciones con partes relacionadas. La compañía registró transacciones que convirtieron pasivos por warrants en patrimonio, reclasificando aproximadamente $41.9 million desde pasivos por warrants a capital adicional pagado. Completó compras de activos con contraprestaciones totales en efectivo, pagarés convertibles y acciones: una transacción CSI con contraprestación total descrita como $32.8 million y una transacción relacionada con DV con contraprestación agregada descrita como $92.0 million (incluyendo 40,000,000 acciones con valor razonable ~$82.0 million). Se registraron activos intangibles por aproximadamente $92.0 million más honorarios capitalizados de $575,000, con gastos de amortización de alrededor de $2.3 million y $4.6 million para los periodos trimestrales y semestrales mencionados. Se observa concentración de clientes: dos clientes representaron el 25% y el 13% de las cuentas por cobrar en la fecha interina. La compañía informa saldos con partes relacionadas y disposiciones de gobernanza que involucran a EOS Holdings, incluido un saldo principal pendiente de $8.3 million y derechos de designación en el consejo. Se completaron o autorizaron múltiples financiamientos y colocaciones registradas/privadas, incluida una oferta en febrero que recaudó ~$5.4 million y varias estructuras de pagarés convertibles con posibles características de conversión en acciones.
WiSA Technologies, Inc.는 다수의 주요 자금조달 및 인수 계약, 주식 발행 및 특수관계자 거래를 공시했습니다. 회사는 워런트 부채를 자본으로 전환하는 거래를 기록하여 약 $41.9 million을 워런트 부채에서 추가납입자본으로 재분류했습니다. 현금, 전환사채 및 주식을 포함한 총 대가로 자산 매입을 완료했으며, CSI 거래는 총 대가가 $32.8 million으로, DV 관련 거래는 총 대가가 $92.0 million으로 보고되었습니다(여기에는 공정가치 약 $82.0 million인 40,000,000주 포함). 약 $92.0 million의 무형자산과 $575,000의 자본화 수수료가 계상되었고, 언급된 분기 및 반기 기간에 각각 약 $2.3 million 및 $4.6 million의 상각비가 발생했습니다. 고객 집중도도 표기되어 있는데, 두 고객이 중간일자 미수금의 25% 및 13%를 차지했습니다. 회사는 EOS Holdings 관련 특수관계자 잔액 및 거버넌스 조항을 보고했으며, 미지급 원금 $8.3 million과 이사회 선임권을 포함합니다. 여러 건의 자금조달 및 등록/비공개 배치가 완료되거나 승인되었으며, 2월 공모로 약 $5.4 million을 조달했고 주식 전환 가능성이 있는 다양한 전환사채 구조가 포함됩니다.
WiSA Technologies, Inc. a divulgué plusieurs accords importants de financement et d’acquisition, des émissions de capitaux et des opérations avec des parties liées. La société a enregistré des opérations convertissant des passifs liés à des bons de souscription (warrants) en capitaux propres, reclassant environ $41.9 million de passifs de warrants en prime d’émission. Elle a finalisé des achats d’actifs avec une contrepartie globale en espèces, billets convertibles et actions : une opération CSI pour une contrepartie totale de $32.8 million et une opération liée à DV pour une contrepartie agrégée de $92.0 million (incluant 40,000,000 actions d’une juste valeur d’environ $82.0 million). Des actifs incorporels d’environ $92.0 million et des frais capitalisés de $575,000 ont été comptabilisés, avec des charges d’amortissement d’environ $2.3 million et $4.6 million pour les périodes trimestrielle et semestrielle indiquées. Une concentration clients est notée : deux clients représentaient 25% et 13% des créances à la date intermédiaire. La société fait état de soldes et de dispositions de gouvernance avec des parties liées concernant EOS Holdings, y compris un solde principal impayé de $8.3 million et des droits de nomination au conseil. Plusieurs financements et placements enregistrés/privés ont été réalisés ou autorisés, dont une offre en février ayant levé ~$5.4 million et plusieurs structures de billets convertibles avec des éventuelles caractéristiques de conversion en actions.
WiSA Technologies, Inc. gab mehrere wesentliche Finanzierungs- und Akquisitionsvereinbarungen, Aktienausgaben und Transaktionen mit nahestehenden Parteien bekannt. Das Unternehmen verbuchte Transaktionen, die Wandelanleihenverbindlichkeiten in Eigenkapital umwandelten und rund $41.9 million von Wandelverbindlichkeiten in zusätzliches eingezahltes Kapital umklassifizierten. Es wurden Vermögenskäufe mit Gesamtabfindungen in bar, wandelbaren Schuldverschreibungen und Aktien abgeschlossen: eine CSI-Transaktion mit einer Gesamtabfindung von $32.8 million und eine DV-bezogene Transaktion mit einer aggregierten Abfindung von $92.0 million (einschließlich 40,000,000 Aktien mit einem beizulegenden Zeitwert von ca. $82.0 million). Immaterielle Vermögenswerte von etwa $92.0 million sowie kapitalisierte Gebühren von $575,000 wurden aktiviert; die Abschreibungsaufwendungen beliefen sich auf etwa $2.3 million bzw. $4.6 million für die angegebenen Drei- und Sechsmonatszeiträume. Es wird eine Kundenkonzentration genannt: zwei Kunden machten am Zwischenstichtag 25% bzw. 13% der Forderungen aus. Das Unternehmen meldet salden- und governancebezogene Beziehungen zu EOS Holdings, einschließlich eines ausstehenden Kapitalbetrags von $8.3 million und Sitzberufungsrechten im Vorstand. Mehrere Finanzierungen und registrierte/privat platzierte Transaktionen wurden abgeschlossen oder genehmigt, darunter ein Februar-Angebot, das rund $5.4 million einbrachte, sowie verschiedene Strukturen von wandelbaren Schuldverschreibungen mit potenziellen Umwandlungsmerkmalen in Aktien.
- $41.9 million reclassification from warrant liabilities to additional paid-in capital reducing reported liabilities and increasing equity.
- Intangible assets recognized (~$92.0 million plus $575,000 fees) supporting acquisition accounting and clear amortization schedules ($2.3M and $4.6M recorded for the interim periods).
- Completed financings including a February offering that generated approximately $5.4 million in gross proceeds.
- Customer concentration: two customers represented 25% and 13% of accounts receivable at the interim date, increasing credit/revenue concentration risk.
- Related-party transaction and balance: EOS Holdings is a related party with an outstanding principal balance of $8.3 million and governance rights that could affect independence.
- Material potential dilution: large share-based consideration and convertible instruments, including 40,000,000 shares issued in a transaction and multiple convertible note conversion features, create substantial dilution risk to existing shareholders.
Insights
TL;DR: Significant equity-based considerational deals and reclassification of warrants materially affect capital structure and reported equity.
The company completed acquisitions and financings substantially settled via equity issuance and convertible notes, including a $92.0 million DV transaction that involved 40,000,000 shares recorded at ~$82.0 million fair value. A remeasurement and reclassification moved ~$41.9 million from warrant liabilities to additional paid-in capital, changing the company's liability profile. Multiple convertible notes and offerings (including ~$5.4 million gross from February securities) create conversion and dilution potential. Investors should treat reported intangible capitalization and ongoing amortization as meaningful non-cash charges affecting future results.
TL;DR: Related-party arrangements and governance rights introduce potential conflicts and stockholder control considerations.
The DV transaction identifies EOS Holdings as a related party and includes board appointment rights plus limits on ultimate ownership percentages; the company recorded related-party balances including an $8.3 million principal owed to EOS Holdings. Transaction amendments require disinterested board approval to modify documents, and registration/resale provisions for transferred shares were implemented. These provisions are material to corporate control and post-transaction ownership structure.
WiSA Technologies, Inc. ha comunicato diverse operazioni materiali di finanziamento e acquisizione, emissioni di capitale e transazioni con parti correlate. La società ha registrato conversioni di passività da warrant in patrimonio netto, riclassificando circa $41.9 million da passività da warrant in capitale versato aggiuntivo. Ha completato acquisti di attività con corrispettivi complessivi in contanti, obbligazioni convertibili e azioni: una transazione CSI per un corrispettivo totale descritto come $32.8 million e una transazione legata a DV con corrispettivo aggregato descritto come $92.0 million (inclusi 40,000,000 azioni con fair value pari a circa $82.0 million). Sono stati rilevati asset immateriali per circa $92.0 million oltre a commissioni capitalizzate di $575,000, con ammortamenti di circa $2.3 million e $4.6 million nei periodi trimestrale e semestrale indicati. Si segnala concentrazione clienti: due clienti rappresentavano il 25% e il 13% dei crediti commerciali alla data interinale. La società riporta saldi e disposizioni di governance con parti correlate legate a EOS Holdings, incluso un saldo principale residuo di $8.3 million e diritti di nomina nel consiglio. Sono state completate o autorizzate più operazioni di finanziamento e collocamenti registrati/privati, tra cui un’offerta di febbraio che ha raccolto circa $5.4 million e varie strutture di note convertibili con potenziali caratteristiche di conversione in azioni.
WiSA Technologies, Inc. divulgó múltiples acuerdos materiales de financiamiento y adquisición, emisiones de capital y operaciones con partes relacionadas. La compañía registró transacciones que convirtieron pasivos por warrants en patrimonio, reclasificando aproximadamente $41.9 million desde pasivos por warrants a capital adicional pagado. Completó compras de activos con contraprestaciones totales en efectivo, pagarés convertibles y acciones: una transacción CSI con contraprestación total descrita como $32.8 million y una transacción relacionada con DV con contraprestación agregada descrita como $92.0 million (incluyendo 40,000,000 acciones con valor razonable ~$82.0 million). Se registraron activos intangibles por aproximadamente $92.0 million más honorarios capitalizados de $575,000, con gastos de amortización de alrededor de $2.3 million y $4.6 million para los periodos trimestrales y semestrales mencionados. Se observa concentración de clientes: dos clientes representaron el 25% y el 13% de las cuentas por cobrar en la fecha interina. La compañía informa saldos con partes relacionadas y disposiciones de gobernanza que involucran a EOS Holdings, incluido un saldo principal pendiente de $8.3 million y derechos de designación en el consejo. Se completaron o autorizaron múltiples financiamientos y colocaciones registradas/privadas, incluida una oferta en febrero que recaudó ~$5.4 million y varias estructuras de pagarés convertibles con posibles características de conversión en acciones.
WiSA Technologies, Inc.는 다수의 주요 자금조달 및 인수 계약, 주식 발행 및 특수관계자 거래를 공시했습니다. 회사는 워런트 부채를 자본으로 전환하는 거래를 기록하여 약 $41.9 million을 워런트 부채에서 추가납입자본으로 재분류했습니다. 현금, 전환사채 및 주식을 포함한 총 대가로 자산 매입을 완료했으며, CSI 거래는 총 대가가 $32.8 million으로, DV 관련 거래는 총 대가가 $92.0 million으로 보고되었습니다(여기에는 공정가치 약 $82.0 million인 40,000,000주 포함). 약 $92.0 million의 무형자산과 $575,000의 자본화 수수료가 계상되었고, 언급된 분기 및 반기 기간에 각각 약 $2.3 million 및 $4.6 million의 상각비가 발생했습니다. 고객 집중도도 표기되어 있는데, 두 고객이 중간일자 미수금의 25% 및 13%를 차지했습니다. 회사는 EOS Holdings 관련 특수관계자 잔액 및 거버넌스 조항을 보고했으며, 미지급 원금 $8.3 million과 이사회 선임권을 포함합니다. 여러 건의 자금조달 및 등록/비공개 배치가 완료되거나 승인되었으며, 2월 공모로 약 $5.4 million을 조달했고 주식 전환 가능성이 있는 다양한 전환사채 구조가 포함됩니다.
WiSA Technologies, Inc. a divulgué plusieurs accords importants de financement et d’acquisition, des émissions de capitaux et des opérations avec des parties liées. La société a enregistré des opérations convertissant des passifs liés à des bons de souscription (warrants) en capitaux propres, reclassant environ $41.9 million de passifs de warrants en prime d’émission. Elle a finalisé des achats d’actifs avec une contrepartie globale en espèces, billets convertibles et actions : une opération CSI pour une contrepartie totale de $32.8 million et une opération liée à DV pour une contrepartie agrégée de $92.0 million (incluant 40,000,000 actions d’une juste valeur d’environ $82.0 million). Des actifs incorporels d’environ $92.0 million et des frais capitalisés de $575,000 ont été comptabilisés, avec des charges d’amortissement d’environ $2.3 million et $4.6 million pour les périodes trimestrielle et semestrielle indiquées. Une concentration clients est notée : deux clients représentaient 25% et 13% des créances à la date intermédiaire. La société fait état de soldes et de dispositions de gouvernance avec des parties liées concernant EOS Holdings, y compris un solde principal impayé de $8.3 million et des droits de nomination au conseil. Plusieurs financements et placements enregistrés/privés ont été réalisés ou autorisés, dont une offre en février ayant levé ~$5.4 million et plusieurs structures de billets convertibles avec des éventuelles caractéristiques de conversion en actions.
WiSA Technologies, Inc. gab mehrere wesentliche Finanzierungs- und Akquisitionsvereinbarungen, Aktienausgaben und Transaktionen mit nahestehenden Parteien bekannt. Das Unternehmen verbuchte Transaktionen, die Wandelanleihenverbindlichkeiten in Eigenkapital umwandelten und rund $41.9 million von Wandelverbindlichkeiten in zusätzliches eingezahltes Kapital umklassifizierten. Es wurden Vermögenskäufe mit Gesamtabfindungen in bar, wandelbaren Schuldverschreibungen und Aktien abgeschlossen: eine CSI-Transaktion mit einer Gesamtabfindung von $32.8 million und eine DV-bezogene Transaktion mit einer aggregierten Abfindung von $92.0 million (einschließlich 40,000,000 Aktien mit einem beizulegenden Zeitwert von ca. $82.0 million). Immaterielle Vermögenswerte von etwa $92.0 million sowie kapitalisierte Gebühren von $575,000 wurden aktiviert; die Abschreibungsaufwendungen beliefen sich auf etwa $2.3 million bzw. $4.6 million für die angegebenen Drei- und Sechsmonatszeiträume. Es wird eine Kundenkonzentration genannt: zwei Kunden machten am Zwischenstichtag 25% bzw. 13% der Forderungen aus. Das Unternehmen meldet salden- und governancebezogene Beziehungen zu EOS Holdings, einschließlich eines ausstehenden Kapitalbetrags von $8.3 million und Sitzberufungsrechten im Vorstand. Mehrere Finanzierungen und registrierte/privat platzierte Transaktionen wurden abgeschlossen oder genehmigt, darunter ein Februar-Angebot, das rund $5.4 million einbrachte, sowie verschiedene Strukturen von wandelbaren Schuldverschreibungen mit potenziellen Umwandlungsmerkmalen in Aktien.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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For the quarterly period ended | |
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or | |
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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:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
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(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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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.
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).
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 ☐ |
Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check-mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 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
The number of shares of the registrant’s common stock outstanding as of August 18, 2025 is
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DATAVAULT AI INC. (formerly WiSA Technologies, Inc.) and Subsidiaries
QUARTERLY REPORT ON FORM 10-Q
For the quarter ended June 30, 2025
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PART I: FINANCIAL INFORMATION |
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Item 1. Financial Statements (unaudited) |
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Condensed Consolidated Balance Sheets | 3 |
Condensed Consolidated Statements of Operations | 4 |
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) | 5 |
Condensed Consolidated Statements of Cash Flows | 6 |
Notes to Condensed Consolidated Financial Statements | 7 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 51 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 54 |
Item 4. Controls and Procedures | 54 |
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PART II. OTHER INFORMATION |
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Item 1. Legal Proceedings | 55 |
Item 1A. Risk Factors | 55 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 55 |
Item 3. Defaults Upon Senior Securities | 55 |
Item 4. Mine Safety Disclosures | 55 |
Item 5. Other Information | 55 |
Item 6. Exhibits | 56 |
SIGNATURES | 59 |
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PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
DATAVAULT AI INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
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Assets |
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Current Assets: |
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Cash and cash equivalents | | $ | | | $ | |
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Prepaid expenses and other current assets | |
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Total current assets | |
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Property and equipment, net | |
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Intangible assets | | | | | | |
Goodwill | | | | | | — |
Deposit for business combination | | | — | | | |
Other assets | |
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Total assets | | $ | | | $ | |
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Liabilities, Convertible Redeemable Preferred Stock and Stockholders’ Equity | |
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Current Liabilities: | |
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Accounts payable | | $ | | | $ | |
Accrued liabilities | |
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Convertible note payable, net, related party, current | |
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Total current liabilities | | | | | | |
Convertible note payable, net, related party, net of current | | | | | | |
2025 Convertible Notes | | | | | | — |
Convertible Notes to CSI shareholders | | | | | | — |
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Total liabilities | |
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Commitments and contingencies (Note 8) | |
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Series B Convertible Redeemable Preferred Stock, par value $ | | | — | | | — |
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Common stock, par value $ | |
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Total liabilities, convertible preferred stock and stockholders’ equity | | $ | | | $ | |
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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
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DATAVAULT AI INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 2025 and 2024
(in thousands, except share and per share data)
(unaudited)
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Revenue, net | | $ | |
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Operating Expenses: | |
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| |
|
| |
Loss from operations | |
| ( |
|
| ( | |
| ( |
|
| ( |
| | | | | | | | | | | | |
Interest expense, net | |
| ( |
|
| ( | |
| ( |
|
| ( |
Change in fair value of 2025 Notes measured at fair value | | | ( | | | — | | | ( | | | — |
Change in fair value of convertible note to related party measured at fair value | | | | | | — | | | | | | — |
Change in fair value of warrant liabilities | |
| |
|
| ( | |
| |
|
| ( |
Other expense, net | | | ( | | | ( | | | ( | | | — |
Loss before provision for income taxes | | | ( | | | ( | | | ( | | | ( |
Provision for income taxes | |
| |
|
| — | |
| |
|
| — |
Net loss | | | ( |
| | ( | | | ( |
| | ( |
Deemed dividend on conversion of Series B preferred for common stock and repurchase of Series B preferred stock | | | — | | | — | | | — | | | ( |
Net loss attributable to common stockholders | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Net loss per common share - basic and diluted | | $ | ( |
| $ | ( | | $ | ( |
| $ | ( |
Weighted average number of common shares used in computing net loss per common share | |
| |
|
| | |
| |
|
| |
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.
4
Table of Contents
DATAVAULT AI INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the three and six months ended June 30, 2025 and 2024
(in thousands, except share and per share data)
(unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | Total | |
| | Convertible Preferred Stock | | | Common Shares | | Additional | | Accumulated | | Stockholders’ | |||||||||
|
| Shares |
| Amount |
|
| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Equity (Deficit) | |||||
Balance as of December 31, 2024 |
| — | | $ | — | |
| | | $ | | | $ | | | $ | ( | | $ | |
Stock-based compensation | | — | | | — | | | | | | — | | | | | | — | | | |
Issuance of common stock in connection with the February Offering | | — | | | — | | | | | | | | | | | | — | | | |
Issuance of common stock in connection with warrant exercise |
| — | |
| — | |
| | |
| — | |
| — | |
| — | |
| — |
Conversion of liability warrants to equity warrants | | — | | | — | | | — | | | — | | | | | | — | | | |
Net loss | | — | | | — | | | — | | | — | | | — | | | ( | | | ( |
Balance as of March 31, 2025 | | — | | | — | | | | | $ | | | $ | | | $ | ( | | $ | |
Stock-based compensation | | — | | | — | | | | | | — | | | | | | — | | | |
Issuance of common stock in connection with warrant exercise | | — | | | — | | | | | | — | | | — | | | — | | | — |
Issuance of common stock for conversions | | — | | | — | | | | | | — | | | | | | — | | | |
Issuance of common stock with NYIAX transaction | | — | | | — | | | | | | — | | | — | | | — | | | — |
Issuance of warrants with the 2025 Notes | | — | | | — | | | — | | | — | | | | | | — | | | |
Issuance of common stock for the acquisition of CSI | | — | | | — | | | | | | | | | | | | — | | | |
Equity issuance costs | | — | | | — | | | — | | | — | | | ( | | | — | | | ( |
Net loss | | — | | | — | | | — | | | — | | | — | | | ( | | | ( |
Balance as of June 30, 2025 |
| — | | | — | |
| | | $ | | | $ | | | $ | ( | | $ | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | Total | |
| | Convertible Preferred Stock | | | Common Shares | | Additional | | Accumulated | | Stockholders’ | |||||||||
|
| Shares |
| | Amount |
|
| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Equity (Deficit) | ||||
Balance as of December 31, 2023 | | | | $ | | | | | | $ | | | $ | | | $ | ( | | $ | ( |
Stock-based compensation | | — | | | — | | | | | | — | | | | | | — | | | |
Cumulative effect of ASU 2020-06 adoption | | — | | | | | | — | | | — | | | ( | | | — | | | ( |
Issuance of Series B preferred stock in connection with warrant exercise, net of discounts | | | | | | | | — | | | — | | | — | | | — | | | — |
Issuance of common stock in connection with conversion of Series B preferred stock | | ( | | | ( | | | | | | — | | | | | | — | | | |
Deemed dividend on conversion of Series B preferred for common stock and repurchase of Series B preferred stock | | — | | | | | | — | | | — | | | ( | | | — | | | ( |
Repurchase of Series B preferred stock and Series B preferred stock warrants | | ( | | | ( | | | — | | | — | | | | | | — | | | |
Issuance of common stock, pre-funded units and warrants, net of offering costs | | — | | | — | | | | | | — | | | | | | — | | | |
Issuance of common stock in connection with reverse split rounding-up for fractional shares | | — | | | — | | | | | | — | | | — | | | — | | | — |
Net income | | — | | | — | | | — | | | — | | | — | | | | | | |
Balance as of March 31, 2024 |
| — | | | — | | | | | $ | | | $ | | | $ | ( | | $ | ( |
Stock-based compensation | | — | | | — | | | | | | — | | | | | | — | | | |
Issuance of common stock in connection with warrant exercise | | — | | | — | | | | | | — | | | | | | — | | | |
Issuance of common stock and warrants, net of offering costs | | — | | | — | | | | | | — | | | | | | — | | | |
Issuance of common stock to vendors | | — | | | — | | | — | | | — | | | | | | — | | | |
Restricted stock awards cancelled | | — | | | — | | | ( | | | — | | | — | | | — | | | — |
Release of vested restricted common stock | | — | | | — | | | | | | — | | | — | | | — | | | — |
Conversion of liability warrants to equity warrants | | — | | | — | | | — | | | — | | | | | | — | | | |
Net loss | | — | | | — | | | — | | | — | | | — | | | ( | | | ( |
Balance as of June 30, 2024 | | — | | | — | | | | | $ | | | $ | | | $ | ( | | $ | |
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.
5
Table of Contents
DATAVAULT AI INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2025 and 2024
(in thousands)
(unaudited)
| | | | | | |
| | Six Months Ended June 30, | ||||
|
| 2025 |
| 2024 | ||
Cash flows from operating activities: |
| |
|
| |
|
Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| |
Stock-based compensation | | | | | | |
Depreciation and amortization | | | | | | |
Amortization of debt discounts | | | | | | |
Change in fair value of convertible debt | |
| | |
| — |
Fair value of equity warrants in interest expense | | | | | | — |
Accreted interest on CSI Convertible Notes | | | | | | — |
Shares payable to NYIAX | | | | | | — |
Change in fair value of warrant liability | | | ( | | | |
Changes in operating assets and liabilities: | |
| | |
| |
Accounts receivable | |
| ( | |
| |
Unbilled accounts receivable | | | | | | - |
Inventories | |
| | |
| |
Prepaid expenses and other current assets | |
| | |
| ( |
Other assets | | | | | | |
Accounts payable | |
| | |
| ( |
Accrued liabilities | |
| ( | |
| |
Other liabilities | |
| ( | |
| ( |
Net cash used in operating activities | |
| ( | |
| ( |
| | | | | | |
Cash flows from investing activities: | |
|
| |
|
|
Issuance of note receivable | | | — | | | ( |
Purchases of property and equipment | |
| ( | |
| ( |
Cash paid for acquisition of CSI, net | | | ( | | | — |
Net cash used in investing activities | |
| ( | |
| ( |
| | | | | | |
Cash flows from financing activities: | |
|
| |
|
|
Proceeds from issuance of convertible notes, net of issuance costs | | | | | | — |
Proceeds from issuance of common stock, net of issuance costs | | | | | | — |
Proceeds from issuance of common stock in connection with warrant exercise | | | — | | | |
Proceeds from issuance of common stock and warrants, net of offering costs | | | — | | | |
Proceeds from issuance of short-term loan, net of issuance costs | | | — | | | |
Proceeds from exercise of warrants | | | — | | | |
Repurchase of Series B preferred stock warrants | | | — | | | ( |
Repayment of short-term loan | | | — | | | ( |
Repurchase of common stock warrants | | | ( | | | — |
Repayment of convertible notes principal and accrued interest | | | ( | | | — |
Net cash provided by financing activities | |
| | |
| |
| | | | | | |
Net decrease in cash and cash equivalents | |
| ( | |
| |
Cash and cash equivalents as of beginning of period | |
| | |
| |
Cash and cash equivalents as of end of period | | | | | $ | |
| | | | | | |
Noncash Investing and Financing Activities: | |
|
| |
|
|
Conversion of liability warrants to equity warrants | | | — | | $ | |
Issuance of warrant liability in connection with financing | | | — | | $ | |
Deemed dividend on conversion of Series B preferred stock and repurchase of Series B preferred stock | | | — | | $ | |
Unpaid financings issuance costs | | | — | | $ | |
Cashless exercise of warrants | | | — | | $ | |
Issuance of common stock to vendors | | | — | | $ | |
warrant exercise in connection with loan settlement | | | — | | $ | |
Issuance of common stock in connection with Series B preferred stock | | | — | | $ | |
Capitalized acquisition costs | | $ | | | | — |
CSI Convertible Notes issued for CSI acquisition | | $ | | | $ | — |
Non cash common shares issued in CSI acquisition | | $ | | | | — |
Deposit paid in December 2024 used in CSI acquisition closing | | $ | | | | — |
Shares payable to NYIAX in share exchange agreement | | $ | | | | — |
Reclass liability warrant to equity | | $ | | | $ | — |
May 2025 10% note conversions | | $ | | | $ | — |
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.
6
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
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 six months ended June 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
7
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
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.
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.
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.
8
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
1. | Business and Summary of Significant Accounting Policies, continued |
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.
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 June 30, 2025 and December 31, 2024, there was
The Company had
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.
9
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
| 1. | Business and Summary of Significant Accounting Policies, continued |
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.
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 June 30, 2025 and December 31, 2024, the Company had capitalized
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
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.
10
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
1. | Business and Summary of Significant Accounting Policies, continued |
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
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.
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Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
1.Business and Summary of Significant Accounting Policies, continued
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.
During the three and six months ended June 30, 2025 and 2024, net revenue consisted of the following:
| | | | | | | | | | | | |
|
| For the Three Months Ended June 30, |
| For the Six Months Ended June 30, | ||||||||
(in thousands) | | 2025 |
| 2024 | | 2025 |
| 2024 | ||||
Components | | $ | | | $ | | | $ | | | $ | |
Consumer Audio Products | |
| | |
| | |
| | |
| |
Live Events | | | | | | — | | | | | | — |
Total | | $ | | | $ | | | $ | | | $ | |
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 $
| | | | | | |
| | June 30, | | December 31, | ||
(in thousands) |
| 2025 |
| 2024 | ||
Contract Liabilities | | $ | | | $ | |
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
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
1.Business and Summary of Significant Accounting Policies, continued
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
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.
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.
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 six months ended June 30, 2025 were $
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 six months ended June 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 six months ended June 30, 2025 and 2024.
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 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
For the six months ended June 30, 2025, warrants to purchase
For the six months ended June 30, 2024, warrants to purchase
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 June 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 June 30, 2025 and December 31, 2024, the Company recognized
14
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
| 1. | Business and Summary of Significant Accounting Policies, continued |
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.
Recently Issued and Not Yet Adopted Accounting Pronouncements
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 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.
15
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
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 June 30, 2025, the Company had cash and cash equivalents of $
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.
16
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 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 $
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 $
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 |
| $ | |
Closing Stock Consideration | |
| |
Convertible Notes | |
| |
Total purchase price consideration | | $ | |
Cash of $
The preliminary purchase price and purchase price allocation pending a final valuation of assets acquired and liabilities assumed follows:
| | | |
Unbilled receivable |
| $ | |
Inventory | |
| |
Other assets | |
| |
Equipment | |
| |
Intangible assets | |
| |
Goodwill | |
| |
Accrued expenses | |
| ( |
Loan for purchase of equipment | |
| ( |
Deferred revenue | | | ( |
Total purchase consideration | | $ | |
17
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 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 |
| | | $ | | |
Customer relationships |
| | |
| | |
Internal use technology |
| | |
| | |
Total | | | | | $ | |
The results of operations of CSI are included in the unaudited condensed consolidated financial statements of the Company for the three and six months ended June 30, 2025 since the date of acquisition. The goodwill recorded in the CSI acquisition is not deductible for tax purposes. Transaction related expenses were $
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 $
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
18
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
3.Business Combination and Asset Purchase, continued
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 (
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 June 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 $
19
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
4. | Balance Sheet Components |
Inventories (in thousands):
| | | | | | |
| | June 30, | | December 31, | ||
|
| 2025 |
| 2024 | ||
Raw materials | | $ | | | $ | |
Work in progress | | | | | | |
Finished goods | |
| | |
| |
Total inventories | | $ | | | $ | |
Property and equipment, net (in thousands):
| | | | | | |
| | June 30, | | December 31, | ||
|
| 2025 |
| 2024 | ||
Machinery and equipment | | $ | | | $ | |
Leasehold improvements | |
| | |
| — |
Furniture and fixtures | |
| | |
| — |
Tooling | |
| | |
| |
| |
| | |
| |
Less: Accumulated depreciation and amortization | |
| ( | |
| ( |
Property and equipment, net | | $ | | | $ | |
Depreciation and amortization expense for the three months ended June 30, 2025 and 2024 were approximately of $
As of June 30, 2025, the future amortization of the intangibles acquired is as follows:
| | | |
2025 remainder |
| $ | |
2026 | |
| |
2027 | |
| |
2028 | |
| |
2029 | |
| |
2030 | |
| |
Thereafter | |
| |
| | $ | |
Intangible assets, net consisted of the following at June 30, 2025.
| | | | | | | | | |
| | Gross Carrying | | Accumulated | | Net Carrying | |||
|
| Amount |
| Amortization |
| Amount | |||
Patents | | $ | | | $ | ( | | $ | |
Trade names and trademarks | |
| | |
| ( | |
| |
Customer relationships | |
| | |
| ( | |
| |
Internal use technology | |
| | |
| ( | |
| |
| | $ | | | $ | ( | | $ | |
20
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
4.Balance Sheet Components, continued
Notes receivable
On April 9, 2025, the Company advanced $
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 $
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 $
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 $
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 $
The above notes receivable are netted on the condensed consolidated balance sheet in “convertible note payable, net related party” as of June 30, 2025 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, $
At June 30, 2025, the Company had recognized approximately $
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Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 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 $
Accrued liabilities (in thousands):
| | | | | | |
| | June 30, | | December 31, | ||
|
| 2025 |
| 2024 | ||
Customer advance | | $ | | | $ | |
Accrued compensation | | | | | | |
Accrued lease liability, current portion | | | | | | |
Accrued vacation | |
| | |
| |
Accrued audit fees | |
| | |
| |
Accrued payable to NYIAX | | | | | | — |
Accrued other | | | | | | |
Total accrued liabilities | | $ | | | $ | |
5. | Borrowings |
January 2024 Short-Term Loan Agreement
On January 19, 2024, the Company issued promissory notes in the aggregate principal amount of $
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
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
22
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
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 $
DV Convertible Note
In connection with the DV Closing, the Company issued the DV Convertible Note in a principal amount of $
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 (
The parties agreed that the Company may apply up to
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
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 (
The Company elected the fair value method for the DV Convertible Note outstanding of $
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
5. | Borrowings, continued |
On February 14, 2025, the Company paid a portion of principal and interest of $
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 three months ended June 30, 2025 due to the financing activity noted above.
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 $
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
2025 Convertible Notes
The 2025 Notes carry a
The conversion price of the 2025 Notes is subject to a floor price of $
24
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
5. | Borrowings, continued |
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
The Company elected the fair value option to account for the 2025 Notes. The fair value on issuance of the 2025 Notes was $
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
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
25
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
5. | Borrowings, continued |
CSI Convertible Notes
In connection with the CSI Asset Purchase Agreement, the Company issued the CSI Convertible Notes in an aggregate principal amount of $
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 $
The First Convertible Note can be converted, partially or entirely, into shares of common stock, any time after the
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 $
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. |
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
6.Fair Value Measurements, continued
| ● | 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 June 30, 2025 and December 31, 2024 by level within the fair value hierarchy, are as follows: |
| | | | | | | | | |
(in thousands) | | June 30, 2025 | |||||||
| | | | Significant | | | | ||
| | Quoted prices | | other | | Significant | |||
| | in active | | observable | | unobservable | |||
| | markets | | inputs | | inputs | |||
|
| (Level 1) |
| (Level 2) |
| (Level 3) | |||
Liabilities: | | |
| | |
| | |
|
Convertible note payable | | $ | — | | $ | — | | $ | |
Warrant liabilities | | $ | | | $ | | | $ | |
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 June 30, 2025 is as follows:
| | | | | |
Inputs |
| June 30, 2025 |
| Initial valuation |
|
Stock price |
|
| $ | | |
Conversion price | | $ | | $ | |
Conversion discount | | | | ||
Volatility (annual) | | | | ||
Risk-free rate | | | | ||
Dividend rate | | — | | — | |
Years to maturity | | | | ||
Estimated future financing amount | | $ | | $ | |
Discount rate | | | |
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 June 30, 2025 is as follows:
| | | |
Inputs |
| June 30, 2025 |
|
Stock price |
| | |
Conversion price | | $ | |
Volatility (annual) | | | |
Risk-free rate | | | |
Dividend rate | | — | |
Years to maturity | | | |
Estimated future financing amount | | $ | |
Discount rate | | |
27
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
6.Fair Value Measurements, continued
| | | | | | | | | |
(in thousands) | | December 31, 2024 | |||||||
| | | | Significant | | | | ||
| | Quoted prices | | other | | Significant | |||
| | in active | | observable | | unobservable | |||
| | markets | | inputs | | inputs | |||
Liabilities: |
| (Level 1) |
| (Level 2) |
| (Level 3) | |||
Convertible note payable | | $ | | | $ | | | $ | |
Warrant liabilities | | $ | | | $ | | | $ | |
There were
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
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 June 30, 2025 and 2024. For June 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 $
| | | | | | |
| | For the six months ended June 30, | ||||
(in thousands) |
| 2025 | | 2024 | ||
Beginning balance | | $ | |
| $ | |
Additions | |
| — | |
| |
Change in fair value | |
| ( | |
| |
Exercise of warrant liabilities | |
| — | |
| ( |
Repurchase | | | ( | | | ( |
Conversion of liability warrants to equity warrants | | | ( | | | ( |
Ending balance | | $ | | | $ | |
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 $
As described in Note 5, the Company elected the fair value option on the 2025 Convertible Notes issued in the three months ended June 30, 2025 and recorded a net loss of $
28
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 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 six months ended June 30, | ||||
(in thousands) | | 2025 | | 2024 | ||
Beginning balance | | $ | | | $ | — |
Additions | |
| | |
| — |
Change in fair value recorded in interest expense | |
| | |
| — |
Payment on DV note | |
| ( | |
| — |
Conversion of 10% notes | |
| ( | |
| — |
Ending balance | | $ | | | $ | — |
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
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 $
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
Of the gross broker fees and related expenses of approximately $
29
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
7. | Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued |
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
Of the gross broker fees and related expenses of approximately $
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,
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,
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,
30
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
7. | Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued |
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,
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,
For the three months ended June 30, 2024, the Company’s board of directors approved the issuance of a total of
Warrants for Common Shares
A summary of the warrant activity and related information for the three and six months ended June 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
In connection with the February 2024 Public Offering, the Company issued common stock purchase warrants to investors to purchase up to
In connection with the March 2024 Offering, the Company issued common stock purchase warrants to investors to purchase up to
31
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
7. | Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued |
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
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
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
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
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
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.
32
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
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 $
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
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
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
33
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
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
April 2025 Cashless Warrant Exercises
On April 1, 2025,
April and May 2025 Warrants
In connection with the April 2025 Offerings, the Company issued
During the six months ended June 30, 2025, three holders of warrants executed their right under the “alternative cashless exercise” provision to effect a cashless exercise of a total of
Warrants exercisable as of June 30, 2025 exclude warrants to purchase
34
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
7. | Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued |
Information regarding warrants for common stock outstanding and exercisable as of June 30, 2025 is as follows:
| | | | | | |
| | Warrants | | Weighted Average | | Warrants |
Exercise | | Outstanding as of | | Remaining | | Exercisable as of |
Price |
| June 30, 2025 |
| Life (years) |
| June 30, 2025 |
$ |
| |
|
| | |
$ |
| |
|
| | |
$ |
| |
|
| | |
$ |
| |
|
| | |
$ |
| |
|
| |
| * | Weighted average |
Information regarding warrants for common stock outstanding and exercisable as of December 31, 2024 is as follows:
| | | | | | |
|
| Warrants |
| Weighted Average |
| Warrants |
Exercise | | Outstanding as of | | Remaining | | Exercisable as of |
Price | | December 31, 2024 | | Life (years) | | December 31, 2024 |
$ |
| |
|
| | |
$ |
| |
|
| | |
$ |
| |
|
| | |
$ |
| |
|
| | |
$ |
| |
|
| | |
$ |
| |
|
| |
| * | Weighted average |
Warrants exercisable as of December 31, 2024 exclude warrants to purchase
35
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 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
A summary of activity related to restricted stock awards with service-based vesting conditions for the six months ended June 30, 2025 is presented below:
| | | | | |
|
| |
| Weighted-Average | |
Stock Awards | | Shares | | Grant Date Fair Value | |
Non-vested as of January 1, 2025 | | | | $ | |
Granted |
| | | $ | |
Vested |
| ( | | $ | |
Forfeited |
| ( | | $ | |
Non-vested as of June 30, 2025 |
| | | $ | |
A summary of activity related to restricted stock awards with performance-based vesting conditions for the six months ended June 30, 2025 is presented below:
| | | | | |
| | | | Weighted-Average | |
Stock Awards |
| Shares |
| Grant Date Fair Value | |
Non-vested as of January 1, 2025 |
| — | | $ | — |
Granted |
| | | $ | |
Vested |
| — | | $ | — |
Forfeited |
| — | | $ | — |
Non-vested as of June 30, 2025 |
| | | $ | |
36
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
8.Stock-Based Compensation, continued
As of June 30, 2025, the unamortized compensation costs related to the unvested restricted stock awards with service based vesting conditions was approximately $
For the three and six months ended June 30, 2025,
Inducement Grants
On September 13, 2021, Eric Almgren joined the Company as Chief Strategist and was issued
On September 30, 2024, the Company issued
On January 2, 2025, the Company issued
On May 20, 2025, the Company issued
37
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 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 six months ended June 30, 2025 is presented below:
| | | | | |
| | | | Weighted-Average | |
Stock Units |
| Shares |
| Grant Date Fair Value | |
Non-vested as of January 1, 2025 |
| | | $ | |
Granted |
| — | | $ | — |
Vested |
| ( | | $ | |
Forfeited |
| — | | $ | — |
Non-vested as of June 30, 2025 |
| | | $ | |
As of June 30, 2025, the unamortized compensation cost related to the unvested restricted stock units was approximately $
For the six months ended June 30, 2025, no shares of restricted stock units were released under the 2022 Plan. For the six months ended June 30, 2024,
9. | Income Taxes |
The Company recorded no provision for income taxes for the six months ended June 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 June 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 six months ended June 30, 2025 and 2024 was calculated on a jurisdiction basis.
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
38
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
10. | Commitments and Contingencies, continued |
The following table reflects our lease assets and our lease liabilities at June 30, 2025 and December 31, 2024 (in thousands):
| | | | | | |
|
| June 30, |
| December 31, | ||
| | 2025 | | 2024 | ||
Assets: | | | | | | |
Operating lease right-of-use assets | | $ | | | $ | |
| | | | | | |
Liabilities: | |
|
| |
|
|
Operating lease liabilities, current | | $ | | | $ | |
Operating lease liabilities, non-current | | $ | | | $ | |
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 | | Six Months Ended | |||||||
| | June 30, | | June 30, | |||||||
| | 2025 |
| 2024 |
| 2025 |
| 2024 | |||
Operating lease cost | | $ | | | $ | | | $ | | | |
Short term lease cost | | $ | | | $ | | | | | | |
Total lease cost | | $ | | | $ | | | $ | | | |
As of June 30, 2025, the maturity of operating lease liabilities was as follows (in thousands):
| | | |
Payments due in: |
| | |
Year ending December 31, 2025 (6 months remaining) |
| $ | |
Year ending December 31, 2026 |
| | |
Year ending December 31, 2027 | | | |
Year ending December 31, 2028 | | | |
Year ending December 31, 2029 | | | |
Total minimum lease payments | | | |
Less: Amounts representing interest |
| | ( |
Present value of operating lease obligations | | $ | |
Lease Term and Discount Rate:
| | | |
|
| June 30, 2025 | |
Weighted-average remaining lease term (in years) |
| | |
Weighted-average discount rate |
| | % |
The discount rate was calculated by using the Company’s estimated incremental borrowing rate.
39
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
10. | Commitments and Contingencies, continued |
Other Information:
Supplemental cash flow information related to leases was as follows (in thousands):
| | | | | | |
|
| Three Months Ended |
| Six Months Ended | ||
| | June 30, 2025 | | June 30, 2025 | ||
Operating cash outflows from operating leases | | $ | | | $ | |
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
Pursuant to the Exchange Agreement, as full consideration for the sale, assignment, transfer and delivery of the NYIAX Shares by NYIAX to the Company, and upon the terms and subject to all of the conditions contained in the Exchange Agreement, the Company agreed to issue to NYIAX (i)
The 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 (as defined in the Exchange Agreement) has been integrated into the NYIAX Platform (as defined in the Exchange Agreement) upon completion of the advertising cycle. The Additional Shares will be issued within thirty (
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.
40
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
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 (as defined in the License Agreement), 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 (as defined in the License Agreement) 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
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 $
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 $
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.
41
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
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 (
The Company recorded the first and second allotment of common stock of
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
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 six months ended June 30, 2025, the Company has paid $
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.
42
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
11. | Related Parties, continued |
For the three months ended June 30, 2025 and 2024, Hansong Technology purchased modules from the Company of approximately $
For the six months ended June 30, 2025 and 2024, Hansong Technology purchased modules from the Company of approximately $
As of June 30, 2025 and December 31, 2024, Mr. Kristensen owned less than
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
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
The following table reflects results of operations of the Company’s reportable segment (in thousands):
| | | | | | | | | | | | |
| | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | ||||||||
|
| 2025 | | 2024 |
| 2025 | | 2024 | ||||
Net revenue | | $ | |
| $ | | | $ | |
| $ | |
Cost of net revenue |
| | | | | | | | |
| | |
Salaries, benefits, and stock based compensation expense |
| | | | | | | | |
| | |
Other segment expenses |
| | | | | | | | |
| | |
Depreciation and amortization expense |
| | | | | | | | |
| | |
Interest (expense), net |
| | ( | | | ( | | | ( |
| | ( |
Other (expense) income, net |
| | ( | | | ( | | | ( |
| | ( |
Income tax expense |
| | | | | — | | | |
| | — |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
43
Table of Contents
DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
12.Segment Information continued
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 six months ended June 30, 2025 and 2024 was as follows:
| | | | | | | | | | | | |
| | For the Three Months Ended | | For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
(in thousands) |
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
Asia Pacific | | $ | | | $ | | | $ | | | $ | |
North America | | | | | | | | | | | | |
Europe | |
| | |
| | |
| | |
| |
Total | | $ | | | $ | | | $ | | | $ | |
Substantially all of our long-lived assets are located in the United States.
13. | Subsequent Events |
On July 13, 2025, the Company entered into a Stock Purchase Agreement (the “API Purchase Agreement”) with API Media Innovations Inc., a New Jersey corporation (“API Media”), David Reese and Frank Tomaino (Mr. Tomaino together with Mr. Reese, the “Sellers” and each a “Seller”), pursuant to which the Company agreed to purchase from the Sellers all of the outstanding shares of common stock of API Media (the “API Shares”) for an aggregate purchase price of (i) an amount in cash equal to $
The API Notes shall be in a form agreed to among the Company and the Sellers and will payable in eight equal quarterly installments at the end of every three months following the closing of the purchase and sale of the API Shares (the “API Closing”), with the final payment due on the second anniversary of the API Closing. The Company has agreed to pay interest at the rate of ten percent (
The API Purchase Agreement includes customary representations and warranties and various customary covenants and closing conditions that are subject to certain limitations. If required by the applicable rules and regulations of the Nasdaq Capital Market, the Company will obtain a written consent of the Company’s stockholders to issue the shares of common stock to the Sellers and inform the stockholders of the Company of the receipt of the stockholder consent by preparing and filing with the U.S. Securities and Exchange Commission an information statement with respect thereto; provided, however, that in the event the Company is unable to obtain such prior written consent, then the Company shall organize a stockholders meeting and obtain such stockholders’ approval in a duly convened stockholders’ meeting.
The API Closing is conditioned on Mr. Reese and Mr. Tomaino entering into and delivering to the Company a consulting agreement, the form of which shall be mutually agreed upon. Additionally, the API Closing is conditioned on the Company completing one or more financings totaling a minimum of $
Pursuant to the Purchase Agreement, the API Purchase Agreement can be terminated by mutual written consent of the parties, and also by either party, since the outside date, August 12, 2025 (the “Outside Date”) has passed, and the closing has not been consummated by the Outside Date. 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 (
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
13. | Subsequent Events, continued |
July 2025 ATM Program, Equity Distribution Agreement and Waiver Agreements
On July 21, 2025, the Company entered into an equity distribution agreement (the “July 2025 EDA”) with Maxim Group LLC, as agent, pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $
Any sales of shares of Common Stock pursuant to the July 2025 EDA will be made pursuant to a shelf registration statement (the “Registration Statement”) on Form S-3 (File No. 333-288538) (the “Registered Offering”), which was initially filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 7, 2025 and declared effective by the SEC on July 9, 2025, the prospectus contained therein and a prospectus supplemental relating to the Registered Offering dated July 22, 2025.
Maxim Group LLC may sell common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, including, without limitation, sales made directly on The Nasdaq Capital Market or sales made into any other existing trading market for the Company’s common stock or to or through a market maker. Subject to the terms and conditions of the July 2025 EDA, Maxim Group LLC will use its commercially reasonable efforts to sell the shares of the Company’s common stock from time to time, based upon its instructions (including any price, time or size limits or other parameters or conditions that we may impose). The Company will pay to Maxim Group LLC a cash commission of up to
The Company is not obligated to make any sales of common stock under the July 2025 EDA and no assurance can be given that it will sell any shares under the July 2025 EDA, or, if it does, as to the price or number of shares that it will sell, or the dates on which any such sales will take place. The July 2025 EDA may be terminated by either party as set forth in the July 2025 EDA.
Also on July 21, 2025, the Company entered into an agreement (the “Waiver Agreement”) with the April 2025 Purchasers party to the April 2025 Purchase Agreement, pursuant to which the April 2025 Purchasers waived the provisions relating to variable rate transactions contained in Section 4.12(b) of the April 2025 Purchase Agreement for a period of
July 2025 Subscription Agreement
On July 25, 2025, the Company entered into a subscription agreement (the “Subscription Agreement”) with a certain investor, pursuant to which the Company sold to the investor an aggregate of
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
13. | Subsequent Events, continued |
Web Access Intellectual Property Purchase Agreement
On July 30, 2025, pursuant to the certain Settlement Agreement and Release of All Claims dated as of July 30, 2025 (the “Settlement Agreement”), the Company” entered an intellectual property purchase agreement (the “Web Access IP Purchase Agreement”) with Web Access, LLC (“Web Access”), pursuant to which the Company agreed to purchase certain intellectual property and other related assets and liabilities from Web Access (the “Web Access IP Assets”).
The Company agreed to acquire the Web Access IP Assets in exchange for the issuance of
The Company has acquired no rights in relation to any intellectual property related to Web Access’s “Weed Wagon” intellectual property. Web Access has no further right to use of the Web Access IP Assets and shall not use any confusingly similar marks or domain names.
The Web Access IP Purchase Agreement includes customary representations and warranties and various customary covenants and closing conditions that are subject to certain limitations, including, without limitation, certain third-party agreements. The Company’s CEO, Nathaniel Bradley, is a member and manager of Web Access.
Intellectual Property Sale and Assignment Agreement
On July 12, 2025, the Company entered into an intellectual property sale and assignment agreement (the “IP Sale and Assignment Agreement”) with Turner Global Media, LLC (“TGM”), pursuant to which the Company agreed to purchase, and TGM has agreed to sell and assign, certain intellectual property related to inaudible audio technology owned by TGM (the “TGM IP Assets”).
The Company agreed to acquire the TGM IP Assets from TGM in exchange for (i) the issuance to TGM of
The Royalty will be
The IP Sale and Assignment Agreement includes customary representations and warranties and various customary covenants and closing conditions that are subject to certain limitations.
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
13. | Subsequent Events, continued |
Purchase Commitment for Programs
On July 7, 2025, the Company entered into a purchase commitment for programs with an effective date of June 30, 2025 (the “Purchase Commitment”) with International Business Machines Corporation (“IBM”), pursuant to which the Company has agreed to purchase, and IBM has agreed to sell, certain subscriptions to IBM program offerings (the “Programs”).
Pursuant to the Purchase Commitment, IBM has agreed to license the Programs to the Company for two payments of $
Under the Purchase Commitment, the Company must send a report to IBM every
The 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.
Cloud Services Subscription Agreement
On July 7, 2025, the Company entered into a cloud services subscription agreement with an effective date of June 30, 2025 (the “Cloud Services Agreement”) with IBM, pursuant to which the Company has agreed to purchase, and IBM has agreed to sell, 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) $
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.
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
13. | Subsequent Events, continued |
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, senior secured convertible notes having an aggregate principal amount of $
The closing of August Initial Notes (the “August Initial Closing”) will take place upon satisfaction of certain customary closing conditions set forth in the August Purchase Agreement and occurred on August 6, 2025. The closing of the August Additional Notes (the “August Additional Closing,” and together with the August Initial Closing, the “August Closings”), subject to the satisfaction of certain additional closing conditions, will take place on or after the date that is
Obligations Under the Purchase Agreement
Pursuant to the August 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 shares of common stock or securities convertible into shares of common stock until
Pursuant to the August Purchase Agreement, until the date that is
Notes
The August Notes carry a
The conversion price of the August Notes is subject to a floor price of $
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
13. | Subsequent Events, continued |
In the event the August Alternate Conversion Price would be lower than the August Floor Price, the Company is required to compensate the holders of the August Notes by paying the holders in cash an amount (the “August 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 August 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 August Alternate Conversion, by (y) the applicable August Alternate Conversion Price without being limited by the August Floor Price.
Under the August Notes, the Company is required to use up to
The August Notes contain
Security Agreement and Guarantee
In connection with the registered direct offering (the “August Offering”), the Company agreed to forms of documents to be executed at or prior to the August Initial Closing, consisting of (i) a security agreement (the “August Security Agreement”), which will grant to the holders of the August Notes a security interest in all of the assets of the Company, and (ii) a subsidiary guarantee (the “Subsidiary Guarantee”), pursuant to which certain subsidiaries of the Company will guarantee the Company’s obligations under the Notes.
Exchange Agreements
Pursuant to the August Purchase Agreement, on August 4, 2025, the Company entered into exchange agreements (each, an “August Exchange Agreement”) with certain August Holders of the Company’s common stock purchase warrants. Pursuant to the August Exchange Agreements, the August Holders agreed to exchange (a) their common stock purchase warrants (the “Original Warrants”) exercisable for an aggregate of approximately
The August Exchange Shares, once the stockholder approval is obtained, will be issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), contained in Section 3(a)(9) thereof.
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DATAVAULT AI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(unaudited)
13. | Subsequent Events, continued |
Amendment of Prior Notes
At the August Initial Closing, the Company is expected to enter into agreements with the August Purchasers to amend those certain senior secured convertible notes issued on April 3, 2025 and May 21, 2025, the 2025 Notes between the Company and the August Purchasers in accordance with a certain Senior Secured Convertible Note Amendment (the “Note Amendment”). Once the Note Amendment is entered into, the conversion price under an “Alternate Conversion will be revised from (a) the greater of (x) the floor price set forth in the 2025 Notes and (y)
Placement Agency Agreement
In connection with the August Offering, on August 4, 2025, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with Maxim Group LLC (the “Placement Agent”), pursuant to which the Placement Agent agreed to act as placement agent on a “reasonable best efforts” basis in connection with the Offering. Pursuant to the Placement Agency Agreement, the Company agreed to pay the Placement Agent an aggregate fee equal to 8.0% of the gross proceeds raised in the Offering and reimburse the Placement Agent an amount up to $
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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.
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.
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Comparison of the Three and Six Months Ended June 30, 2025 and 2024
Revenue
Revenue for the three months ended June 30, 2025 was $1.7 million, an increase of $1.4 million or 403% compared to the revenue for the three months ended June 30, 2024 of $0.3 million. The increase was a result of the acquisition of CSI.
Revenue for the six months ended June 30, 2025 was $2.4 million, an increase of $1.8 million or 294% compared to the revenue for the six months ended June 30, 2024 of $0.6 million. The increase was a result of the acquisition of CSI.
Gross Profit and Operating Expenses
Gross Profit (Deficit)
Gross profit for the three months ended June 30, 2025 was $35,000 compared to a gross profit of $11,000 for the three months ended June 30, 2024. The gross margin as a percent of sales was 2% for the three months ended June 30, 2025, compared to 3% for the three months ended June 30, 2024.
Gross profit for the six months ended June 30, 2025 was 0.1 million compared to a gross deficit of ($72,000) for the six months ended June 30, 2024.
Research and Development
Research and development expenses for the three months ended June 30, 2025 were $4.2 million, an increase of $2.4 million, compared to the research and development expenses for the three months ended June 30, 2024 of $1.8 million. The increase in research and development expenses is primarily driven by the acquisition of NYIAX assets for $1.5 million in exchange for 1,500,000 shares of common stock and a payment of $450,000 to NYIAX, higher headcount resulting in increased salaries, wages, benefits, and stock-based compensation of $0.4 million, and legal expenses related to intellectual property of $0.3 million.
Research and development expenses for the six months ended June 30, 2025 were $6.6 million, an increase of $3.1 million compared to the research and development expenses for the six months ended June 30, 2024 of $3.5 million. The increase in research and development expenses is primarily driven by the acquisition of NYIAX assets for $1.5 million in exchange for 1,500,000 shares of common stock and a payment to NYIAX of $450,000, higher headcount resulting in increased salaries, wages, benefits, and stock-based compensation of $0.8 million and facility expenses of $0.1 million, legal expenses related to intellectual property of $0.4 million and other research and development costs of $0.1 million.
Sales and Marketing
Sales and marketing expenses for the three months ended June 30, 2025 were $1.7 million, an increase of $0.9 million compared to the sales and marketing expenses for the three months ended June 30, 2024 of $0.9 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 $0.6 million and consulting expenses of $0.2 million.
Sales and marketing expenses for the six months ended June 30, 2025 were $3.2 million, an increase of $1.4 million compared to the sales and marketing expenses for the six months ended June 30, 2024 of $1.8 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 $0.8 million, and increased consulting and investor relations expenses of $0.5 million and $45,000, respectively.
General and Administrative
General and administrative expenses for the three months ended June 30, 2025 were $6.5 million, an increase of $3.7 million compared to general and administrative expenses for the three months ended June 30, 2024 of $2.8 million. The increase in general and administrative expenses is primarily driven by higher amortization of intangibles assets of $2.3 million related to the Data Vault asset acquisition that closed on December 31, 2024, an increase in headcount resulting in increased salaries and wages, benefits and stock-based compensation of $1.2 million, increased consulting expense of $0.4 million, increased legal and accounting fees of $0.2 million and $0.2 million, respectively, offset partially by decreases in investor relations and shareholder expenses of $0.8 million and $82,000, respectively.
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General and administrative expenses for the six months ended June 30, 2025 were $12.2 million, an increase of $8.0 million, compared to the general and administrative expenses for the three months ended June 30, 2024 of $4.2 million. The increase in general and administrative expenses is primarily driven by higher amortization of intangibles assets of $4.6 million related to the Data Vault asset acquisition that closed on December 31, 2024, an increase in headcount resulting in increased salaries and wages, benefits and stock-based compensation of $1.8 million, increased consulting expense of $0.8 million, increased legal and accounting fees of $0.4 million and $0.1 million, respectively, offset partially by decreases in investor relations and shareholder expenses of $0.1 million and $0.2 million, respectively.
Interest expense, net for the three months ended June 30, 2025 was $17.2 million, an increase of $17.2 million compared to the interest expense for the three months ended June 30, 2024 of $4,000. Interest expense increased due to the issuance of the Additional Warrants with the 2025 Notes fair value at issuance of $16.7 million.
Interest expense, net for the six months ended June 30, 2025 was $17.3 million, an increase of $16.1 million compared to the interest expense for the six months ended June 30, 2024 of $1.3 million. The increase in interest expense, net for the six months ended June 30, 2025, is due to the issuance of the Additional Warrants with the 2025 Notes fair value at issuance of $16.7 million.
Change in fair value of convertible notes measured at fair value increased to $8.8 million for the three and six months ended June 30, 2025 compared to none for the three and six months ended June 30, 2024 due to the issuance of the 2025 Notes and recording the issuance fair value of $8.8 million, including $3.0 million of fees and original issue discount.
Change in fair value of convertible note to related party measured at fair value increased to a gain of $1.4 million in the three and six months ended June 30, 2025 compared to none in the three and six months ended June 30, 2024 due to a decrease in the DV Note fair value of $1.4 million.
Change in Fair Value of Warrant Liability
Change in fair value of warrant liability for the three months ended June 30, 2025 was a gain of $2,000 compared to a loss of $37,255,000 for the three months ended June 30, 2024. The change in fair value of the warrant liability for the three months ended June 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 three months ended June 30, 2025.
Change in fair value of warrant liability for the six months ended June 30, 2025 was a gain of $19,000 compared to a loss of $29,126,000 for the six months ended June 30, 2024. The change in fair value of the warrant liability for the six months ended June 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 six months ended June 30, 2025.
Liquidity and Capital Resources
Cash and cash equivalents as of June 30, 2025 were $0.7 million compared to $3.3 million, as of December 31, 2024.
We recorded a net loss of $37.1 million and $46.7 million for the three and six months ended June 30, 2025 and used net cash in operating activities of $12.8 million for the six months ended June 30, 2025 vs $9.0 million for the six months ended June 30, 2024. Excluding non-cash adjustments, the primary reasons for the increase in the use of net cash from operating activities during the six months ended June 30, 2025, was related to an increase in the net loss.
Cash provided by financing activities for the six months ended June 30, 2025 and 2024 totaled approximately $16.7 million and $14.9 million, respectively.
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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 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.
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 June 30, 2025 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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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
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Item 6. Exhibits
Exhibit |
| 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). |
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). |
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). |
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). |
4.1 | | Form of Common Stock Purchase Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 19, 2024). |
4.2 | | Form of Common Stock Purchase Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 23, 2024). |
4.3 | | Form of Common Stock Purchase Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 30, 2024). |
4.4 | | Form of Common Stock Purchase Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 15, 2024). |
4.5 | | Form of Common Stock Purchase Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2024). |
4.6 | | Form of Common Stock Purchase Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 31, 2025). |
4.7 | | Form of Senior Secured Convertible Promissory Note (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 31, 2025). |
4.8 | | Form of Common Stock Purchase Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2025). |
4.9 | | Form of Senior Secured Convertible Promissory Note (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2025). |
4.10 | | Form of Initial Convertible Promissory Note (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 20, 2025). |
4.11 | | Form of First Convertible Promissory Note (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 20, 2025). |
4.12 | | Form of Second Convertible Promissory Note (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 20, 2025). |
4.13 | | Form of Senior Secured Convertible Promissory Note (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 31, 2025). |
10.1 | | Placement Agency Agreement, dated as of April 17, 2024, by and between the Company and Maxim Group LLC, as placement agent (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 18, 2024). |
10.2 | | Form of Securities Purchase Agreement, by and among the Company and certain purchasers, dated April 17, 2024 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 18, 2024). |
10.3 | | Placement Agency Agreement, dated as of April 19, 2024, by and between the Company and Maxim Group LLC, as placement agent (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 23, 2024). |
10.4 | | Form of Securities Purchase Agreement, by and among the Company and certain purchasers, dated April 19, 2024 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 23, 2024). |
10.5 | | Placement Agency Agreement, dated as of April 26, 2024, by and between the Company and Maxim Group LLC, as placement agent (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 30, 2024). |
10.6 | | Form of Securities Purchase Agreement, by and among the Company and certain purchasers, dated April 26, 2024 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 30, 2024). |
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10.7 | | Placement Agency Agreement, dated as of May 13, 2024, by and between the Company and Maxim Group LLC, as placement agent (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 15, 2024). |
10.8 | | Form of Securities Purchase Agreement, by and among the Company and certain purchasers, dated May 13, 2024 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 15, 2024). |
10.9 | | Placement Agency Agreement, dated as of May 15, 2024, by and between the Company and Maxim Group LLC, as placement agent (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2024). |
10.10 | | Form of Securities Purchase Agreement, by and among the Company and certain purchasers, dated May 15, 2024 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2024). |
10.11 | | Form of Securities Purchase Agreement, by and among the Company and certain purchasers, dated March 31, 2025 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 31, 2025). |
10.12 | | Placement Agency Agreement, dated as of March 31, 2025, by and between the Company and Maxim Group LLC, as placement agent (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 31, 2025). |
10.13 | | Form of Security Agreement, by and among the Company and certain note holders, dated March 31, 2025 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 31, 2025). |
10.14 | | Form of Subsidiary Guarantee, by and among the Company and certain note holders, dated March 31, 2025 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 31, 2025). |
10.15 | | Datavault Lock-Up Agreement, dated April 9, 2025, by and between the Company and NYIAX, Inc. (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 9, 2025). |
10.16 | | Additional Lock-Up Agreement, dated April 9, 2025, by and between the Company and NYIAX, Inc. (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 9, 2025). |
10.17 | | Consideration Lock-Up Agreement, dated April 9, 2025, by and between the Company and NYIAX, Inc. (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 9, 2025). |
10.18 | | Closing Lock-Up Agreement, dated April 9, 2025, by and between the Company and NYIAX, Inc. (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 9, 2025). |
10.19 | | Purchase Commitment for Programs, effective as of June 30, 2025 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on July 11, 2025). |
10.20 | | Cloud Services Subscription Transaction Document, effective as of June 30, 2025 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on July 11, 2025). |
10.21 | | Stock Purchase Agreement, by and among 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). |
10.22 | | 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). |
10.23 | | 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). |
10.24 | | Subscription Agreement, dated as of July 25, 2025, by and between the Company and the Subscriber thereto. |
10.25 | | 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 31, 2025). |
10.26 | | 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 31, 2025). |
10.27 | | Form of Securities Purchase Agreement, by and among the Company and certain purchasers, 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). |
10.28 | | Placement Agency Agreement, dated as of August 4, 2025, by and between the Company and Maxim Group LLC, as placement agent (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 4, 2025). |
10.29 | | Form of Security Agreement, by and among the Company and certain note holders, (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 4, 2025). |
10.30 | | Form of Subsidiary Guarantee, by and among the Company and certain note holders (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 4, 2025). |
10.31 | | Form of Exchange Agreement, by and among the Company and certain warrant holders, 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). |
10.32 | | 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). |
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31.1 | | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). |
31.2 | | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). |
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). |
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). |
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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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.
| Datavault AI Inc. | |
| | |
Date: August 19, 2025 | By: | /s/ Nathaniel Bradley |
| | Name: Nathaniel Bradley |
| | Chief Executive Officer |
| | (Duly Authorized Officer and Principal Executive Officer) |
| | |
Date: August 19, 2025 | By: | /s/ Brett Moyer |
| | Name: Brett Moyer |
| | Title: Chief Financial Officer |
| | (Principal Financial Officer) |
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FAQ
What major acquisitions did WISA disclose in the 10-Q?
How did the company account for warrants in this period?
Are there any related-party balances or governance arrangements?
What dilution or equity issuance should investors note?
What intangibles and related amortization were recorded?
