What changed in this filing

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Item 1. Financial Statements

2025-05-14 compared with 2024-11-14 · 505 added, 605 removed, 441 unchanged (72% of the section changed)

Financial Statements

WISA TECHNOLOGIES, INC.

DATAVAULT AI INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

September 30, 2024

March 31, 2025

December 31, 2024

5 unchanged sentences

Property and equipment, net

Notes receivable

Liabilities, Convertible Redeemable Preferred Stock and Stockholders’ Equity / (Deficit)

Intangible assets

Deposit for business combination

Liabilities, Convertible Redeemable Preferred Stock and Stockholders’ Deficit

Current Liabilities:

2 unchanged sentences

Total current liabilities

Convertible note payable, net, related party

Warrant liabilities

4 unchanged sentences

375,000 shares authorized;

0 and 38,335 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Stockholders’ Equity / (Deficit):

0 and 0 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Stockholders’ Deficit:

Common stock, par value $ 0.0001 ;

300,000,000 shares authorized;

7,767,828 and 222,380 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

66,024,190 and 52,034,060 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

3 unchanged sentences

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

Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-100 reverse stock split effected in January 2023 as well as a 1-for-150 reverse stock split effected in April 2024, as discussed in Note 1.

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

WISA TECHNOLOGIES, INC.

DATAVAULT AI INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and nine months ended September 30, 2024 and 2023

For the three months ended March 31, 2025 and 2024

(in thousands, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Cost of revenue

6 unchanged sentences

Loss from operations

Interest income (expense), net

Decrease (increase) in fair value of warrant liabilities

Loss on debt extinguishment

Other income (expense), net

Loss before provision for income taxes

Interest expense, net

Change in fair value of warrant liabilities

Other expense, net

Income (loss) before provision for income taxes

Provision for income taxes

Net income (loss)

Deemed dividend on conversion of Series B preferred for common stock and repurchase of Series B preferred stock

Deemed dividend on issuance of common stock and warrants in connection with amendment to warrants to purchase common stock

Net loss attributable to common stockholders

1 unchanged sentence

Weighted average number of common shares used in computing net loss per common share

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.

WISA TECHNOLOGIES, INC.

DATAVAULT AI INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the three and nine months ended September 30, 2024 and 2023

For the three months ended March 31, 2025 and 2024

(in thousands, except share and per share data)

6 unchanged sentences

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

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

Issuance of common stock in connection with the February Offering

Issuance of common stock in connection with alternative cashless warrant exercise

Conversion of liability warrants to equity warrants

Balance as of June 30, 2024

Stock-based compensation

Issuance of common stock in connection with warrant amendment

Issuance of common stock in connection with warrant exercise

Restricted stock awards cancelled

Issuance of common stock to vendors

Balance as of September 30, 2024

Balance as of March 31, 2025

Convertible Preferred Stock

2 unchanged sentences

Paid-in Capital

Equity (Deficit)

Balance as of December 31, 2023

Stock-based compensation

Restricted stock awards cancelled

Issuance of common stock in connection with convertible promissory note

Issuance of common stock in connection with warrant exercise

Issuance of common stock and warrants, net of offering costs

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

Balance as of March 31, 2024

Stock-based compensation

Release of vested restricted common stock

Restricted stock awards cancelled

Issuance of common stock and warrants, net of offering costs

Issuance of common stock in connection with warrant exercise

Balance as of June 30, 2023

Stock-based compensation

Issuance of common stock in connection with warrant exercise

Balance as of September 30, 2023

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.

WISA TECHNOLOGIES, INC.

DATAVAULT AI INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2024 and 2023

For the three months ended March 31, 2025 and 2024

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net loss to net cash used in operating activities:

2 unchanged sentences

Amortization of debt discounts

Increase (decrease) in fair value of warrant liability

Loss on extinguishment of convertible note payable

Change in fair value of warrant liability

Changes in operating assets and liabilities:

6 unchanged sentences

Cash flows from investing activities:

Issuance of notes receivable

Deposits for business combination

Purchases of property and equipment

1 unchanged sentence

Cash flows from financing activities:

Proceeds from issuance of common stock, prefunded warrants and warrants, net of issuance costs

Proceed from issuance of common stock in connection with warrant exercise

Proceed from exercises of Series B preferred stock warrants

Proceeds from issuance of common stock, net of issuance costs

Proceeds from issuance of short-term loan, net of issuance costs

Repurchase of Series B preferred stock warrants

Proceeds from issuance of common stock and prefunded warrants, net of issuance costs

Proceeds from exercise of warrants

Repurchase of common stock warrants

Repurchase of Series B preferred stock and warrants

Repayment of convertible note principal and accrued interest

Repayment of short-term loan

Repayment of convertible note payable, net of issuance costs

Repayment of finance lease

Net cash provided by financing activities

4 unchanged sentences

Cash paid for interest

Cash paid for income taxes

Noncash Investing and Financing Activities:

Conversion of liability warrants to equity warrants

Capitalized acquistion costs

Issuance of warrant liability in connection with financing

Deemed dividend on conversion of Series B preferred stock and repurchase of Series B preferred stock

Repurchase of Series B preferred stock warrants

Issuance of common stock to vendors

Unpaid financings issuance costs

Unpaid deferred offering costs

Reclass liability warrant to equity

Cashless exercise of warrants

1 unchanged sentence

Issuance of common stock in connection with Series B preferred stock

Unpaid financings issuance costs

Issuance of warrant liability in connection with February 2023 offering

Issuance of common stock in connection with convertible promissory note

Record Right-of-Use Assets obtained in exchange for modified operating lease liabilities

Deferred offering costs reclassed from prepaid expenses

Accrual of legal fees for the short-term loan

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.

WISA TECHNOLOGIES, INC.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

For the Three Months Ended March 31, 2025 and 2024

Business and Summary of Significant Accounting Policies

WiSA Technologies, Inc.

formerly known as Summit Wireless Technologies, Inc.

(together with its subsidiaries also referred to herein as “we”, “us”, “our”, or the “Company”), was originally formed as a limited liability company in Delaware on July 23, 2010.

Our business is to deliver the best-in-class immersive wireless sound technology for intelligent devices and next generation home entertainment systems through the sale of module components to audio companies as well as audio products to resellers and consumers.

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.

Nasdaq Compliance

The Company is currently in compliance with the listing rules of The Nasdaq Stock Market LLC (“Nasdaq”), subject to the monitoring described below.

On April 29, 2024, Nasdaq notified the Company in a letter that the Company has regained compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550 (a)(2) (the “Minimum Bid Price Requirement”) as required by a hearing panel’s decision on April 5, 2024.

The Company is subject to monitoring for a period of one year from the date of the letter.

If, within that one-year monitoring period, Nasdaq’s Listing Qualifications staff (the “Staff”) finds the Company again out of compliance with the Minimum Bid Price Requirement, the Company will not be permitted to provide the Staff with a plan of compliance with respect to such deficiency and the 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.

Instead, the Staff will issue a delist determination letter and the Company will have an opportunity to request a new hearing with a hearings panel.

The Company will have the opportunity to respond and present to the panel.

On July 3, 2024, Nasdaq notified the Company in a letter that the Company has regained compliance with the equity requirement under Nasdaq Listing Rule 5550(b)(1) (the “Equity Rule”) as required by the panel’s April 5, 2024 decision.

The Company is subject to monitoring for a period of one year from the date of the letter.

If, within that one-year monitoring period, the Staff finds the Company again out of compliance with the Equity Rule, the Company will not be permitted to provide the Staff with a plan of compliance with respect to such deficiency and the 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.

Instead, the Staff will issue a delist determination letter and the Company will have an opportunity to request a new hearing with a hearings panel.

The Company will have the opportunity to respond and present to the panel.

WISA TECHNOLOGIES, INC.

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.

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 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.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

For the Three Months Ended March 31, 2025 and 2024

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) (the “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 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 Splits

4 unchanged sentences

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.

January 2023 Reverse Stock Split

On January 24, 2023, the Board approved a 1-for-100 reverse stock split (the “January 2023 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 January 2023 Reverse Stock Split.

On January 26, 2023, the January 2023 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 January 2023 Reverse Stock Split.

The common stock began trading on a split-adjusted basis at the start of trading on January 27, 2023.

Unless otherwise indicated, the information presented in this Report gives effect to the January 2023 Reverse Stock Split.

Unless otherwise indicated, the information presented in this Quarterly Report on Form 10-Q for the period ended March 31, 2025 (this “Report”) gives effect to the April 2024 Reverse Stock Split.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

Basis of Presentation

1 unchanged sentence

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 WISA Technologies, Inc.

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.

7 unchanged sentences

These reclassifications did not result in any change in previously reported net income (loss), total assets or stockholders’ deficit.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Business and Summary of Significant Accounting Policies, continued

Concentration of Credit Risk and Other Risks and Uncertainties

5 unchanged sentences

The Company performs credit evaluations of its customers’ financial condition and may, in certain circumstances, require full or partial payment in advance of shipping.

As of September 30, 2024 and December 31, 2023, there was no allowance for credit losses.

As of September 30, 2024, the Company had three customers accounting for 33 %, 25 %, and 22 % of accounts receivable.

As of December 31, 2023, the Company had two customers accounting for 71 % and 20 % of accounts receivable.

The Company had one customer accounting for 56 % of its net revenue for the three months ended September 30, 2024.

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

The Company had three customers accounting for 40 %, 28 %, and 21 % of its net revenue for the three months ended September 30, 2023.

The Company had four customers accounting for 22 %, 17 %, 16 % and 15 % of its net revenue for the nine months ended September 30, 2023.

As of March 31, 2025 and December 31, 2024, there was no allowance for credit losses.

As of March 31, 2025, the Company had three customers accounting for 34 %, 33 % and 12 % of accounts receivable.

As of December 31, 2024, the Company had three customers accounting for 68 %, 12 % and 11 % of accounts receivable.

The Company had three customers accounting for 29 %, 25 % and 18 % of its net revenue for the three months ended March 31, 2025.

The Company had three customers accounting for 35 %, 29 % and 21 % of its net revenue for the three months ended March 31, 2024.

The Company’s future results of operations involve a number of risks and uncertainties.

2 unchanged sentences

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 chip and a single contractor in China for the production of its receive semiconductor chip.

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.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

Accounts Receivable and Allowance for Credit Losses

5 unchanged sentences

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 are the only financial instrument that is adjusted to fair value on a recurring basis.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Business and Summary of Significant Accounting Policies, continued

The Company’s Warrant liabilities and convertible note payable are the only financial instrument that is adjusted to fair value on a recurring basis.

Inventories, principally purchased components, are stated at the lower of cost or net realizable value.

2 unchanged sentences

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 March 31, 2025 and December 31, 2024, the Company had capitalized $ 117,000 and $ 0 , respectively, of deferred offering costs in prepaid expenses and other current assets on the condensed consolidated balance sheets.

Property and Equipment, Net

4 unchanged sentences

Maintenance and repairs are charged to operations as incurred.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

Convertible Financial Instruments

6 unchanged sentences

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.

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) that 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.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Business and Summary of Significant Accounting Policies, continued

Product Warranty

3 unchanged sentences

Revenue Recognition

The Company generates revenue primarily from two product categories which include the sale of Consumer Audio Products as well as the sale of Components.

The Company historically generates revenue primarily from two product categories which include the sale of Consumer Audio Products as well as the sale of Components.

The Company applies the following five steps:

3 unchanged sentences

Expected costs of assurance warranties and claims are recognized as expense.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

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 us from a customer and deposited with the relevant government authority, are excluded from revenue.

4 unchanged sentences

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.

Practical Expedients and Exemptions

In accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, we use the following practical expedients:

(i) not to adjust the promised amount of consideration for the effects of a significant financing component when we expect, 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;

(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, we do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Business and Summary of Significant Accounting Policies, continued

During the three and nine months ended September 30, 2024 and 2023, net revenue consisted of the following:

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

The Company estimates these amounts based on the expected amount to be provided to customers and reduce revenue recognized.

The Company believes 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 the Company transfers 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 months ended March 31, 2025 and 2024, net revenue consisted of the following:

For the Three Months Ended March 31,

(in thousands)

5 unchanged sentences

Accounts receivables are recorded when the right to this consideration becomes unconditional.

The Company does not have any material contract assets as of September 30, 2024 and December 31, 2023.

September 30,

The Company has $ 83,000 and $ 109,000 of contract assets as of March 31, 2025 and December 31, 2024, respectively, which are recorded in Prepaids and other current assets on the condensed consolidated balance sheets.

The Company expects to collect 100 % of the contract assets as of March 31, 2025 in the next twelve months.

During the three months ended March 31, 2025, the Company recognized $ 49,000 of revenue that was included in the contract liabilities balance as of December 31, 2024.

(in thousands)

Contract Liabilities

During the nine months ended September 30, 2024, the Company recognized approximately $ 4,000 of revenue that was included in the contract balances as of December 31, 2023.

Revenue by Geographic Area

1 unchanged sentence

Since we operate in one segment, all financial segment and product line information can be found in the condensed consolidated financial statements.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

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

Stock-Based Compensation

5 unchanged sentences

Compensation cost for restricted stock units and restricted stock awards is recognized using the straight-line method over the requisite service period.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Business and Summary of Significant Accounting Policies, continued

Research and Development

2 unchanged sentences

Advertising costs are charged to sales and marketing expenses as incurred.

Advertising costs for the three and nine months ended September 30, 2024 were $ 201,000 and $ 465,000 , respectively.

Advertising costs for the three and nine months ended September 30, 2023 were $ 238,000 and $ 511,000 , respectively.

Advertising costs for the three months ended March 31, 2025 and 2024 were approximately $ 146,000 and $ 147,000 , respectively.

Comprehensive Loss

1 unchanged sentence

Accordingly, comprehensive loss may include certain changes in equity that are excluded from net loss.

For the three and nine months ended September 30, 2024 and 2023, the Company’s comprehensive loss is the same as its net loss.

For the three months ended March 31, 2025 and 2024, the Company’s comprehensive loss is the same as its net loss.

Foreign Currency

5 unchanged sentences

Cumulative gains and losses from the translation of these operations’ financial statements are reported as a separate component of stockholders’ equity, while foreign currency transaction gains or losses, resulting from re-measuring local currency to the U.S.

dollar are recorded in the condensed consolidated statement of operations in other income (expense), net and were not material for the three and nine months ended September 30, 2024 and 2023.

dollar are recorded in the condensed consolidated statement of operations in other income (expense), net and were not material for the three months ended March 31, 2025 and 2024.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

Net Loss per Common Share

6 unchanged sentences

For purposes of the diluted net loss per common share calculation, Series A 8 % Senior Convertible Preferred Stock (“Series A Preferred Stock”), warrants exercisable for common stock, restricted stock units and shares issuable upon the conversion of convertible notes payable are considered to be potentially dilutive securities.

Net loss is adjusted for any deemed dividends to preferred and common stockholders to compute income available to common stockholders.

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

As of September 30, 2023, warrants to purchase 37,569 shares of common stock, 69 shares of restricted stock, 18 shares of restricted stock issued under an inducement grant and 36 shares underlying restricted stock units have been excluded from the calculation of net loss per common share because the inclusion would be antidilutive.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Business and Summary of Significant Accounting Policies, continued

Net loss is adjusted for any deemed dividends to preferred stockholders to compute income available to common stockholders.

For the three months ended March 31, 2025, warrants to purchase 15,204,647 shares of common stock, 12 shares underlying shares of restricted stock units, 1,200,000 shares underlying shares of restricted stock units issued under an inducement grant, 7,014,260 shares underlying restricted stock awards and 64,183 shares under two grants of restricted stock under inducement grants have been excluded from the calculation of net loss per common share because the inclusion would be antidilutive.

For the three months ended March 31, 2024, warrants to purchase 1,985,138 shares of common stock, 5,362 shares of restricted stock, 17 shares of restricted stock issued under an inducement grant and 14 shares underlying restricted stock units have been excluded from the calculation of net loss per common share because the inclusion would be antidilutive.

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.

1 unchanged sentence

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is “more-likely-than-not” that some portion or all of the deferred tax assets will not be realized.

The Company has recognized valuation allowances against its deferred tax assets as of September 30, 2024 and December 31, 2023.

The Company has recognized valuation allowances against its deferred tax assets as of March 31, 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.

4 unchanged sentences

The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense.

As of September 30, 2024 and December 31, 2023, the Company recognized no interest and penalties.

Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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.” This ASU simplifies accounting for convertible instruments by removing major separation models required under current U.S.

The Company adopted this standard on January 1, 2024 using the modified retrospective method by applying the ASU to financial instruments outstanding as of January 1, 2024, with the cumulative effect of adoption recognized at that date through an adjustment to the opening balance of retained earnings.

As such, the Company adopted the standard by eliminating any unamortized discount to the Series B Preferred Stock for the beneficial conversion feature.

The cumulative effect of ASU 2020-06 adoption adjusted against additional paid-in-capital due to the absence of retained earnings on January 1, 2024 amounted to $ 116,000 .

Recently Issued and Not Yet Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09 – Income Taxes (Topic 740):

As of March 31, 2025 and December 31, 2024, the Company recognized no interest and penalties.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

Recently Adopted Accounting Pronouncement

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.

The Company is currently evaluating the impact of the adoption of this standard on our condensed consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” aiming to enhance the transparency and relevance of segment information provided in financial statements.

The amendments in this Update require that a public entity disclose significant segment expenses, profit or loss and assets, etc.

for each reportable segment, on an annual and interim basis.

The Update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently evaluating the impact of the adoption of this standard on our condensed consolidated financial statements.

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

WISA TECHNOLOGIES, INC.

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 standard as of March 31, 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.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

For the Three Months Ended March 31, 2025 and 2024

Going Concern

The condensed consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business.

As of September 30, 2024, the Company had cash and cash equivalents of $ 3.9 million and reported net cash used in operations of $ 13.3 million during the nine months ended September 30, 2024.

As of March 31, 2025, the Company had cash and cash equivalents of $ 0.2 million and reported net cash used in operations of $ 6.0 million during the three months ended March 31, 2025.

The Company expects operating losses to continue in the foreseeable future because of additional costs and expenses related to research and development activities, plans to expand its product portfolio, and increase its market share.

9 unchanged sentences

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.

Asset Purchase

On December 31, 2024, the Company completed its asset purchase of information technology assets, certain patents and trademarks (collectively, the “Acquired Assets”) from EOS Technology Holdings Inc.

(“EOS Holdings”).

At the closing (the “DV Closing”), pursuant to that asset purchase agreement, by and between the Company and EOS Holdings, dated as of September 4, 2024, and as amended on November 14, 2024, and as further amended from time to time (the “Asset Purchase Agreement”), the Company purchased the Acquired Assets for an aggregate purchase price of approximately $ 92,000,000 consisting of (i) $ 10,000,000 paid in the form of a promissory note issued by the Company to EOS Holdings (the “DV Convertible Note”), and (ii) 40,000,000 shares (the “Closing Stock Consideration”) of validly issued, fully paid and nonassessable shares of restricted common stock of the Company, with an aggregate fair value of approximately $ 82,000,000 based on the closing stock price of the Company on December 31, 2024.

EOS Holdings is considered a related party as of the DV Closing.

See Note 11 Related Parties for further details.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Asset Purchase, continued

Second Asset Purchase Agreement Amendment

In connection with but prior to the DV Closing, on December 31, 2024, the Company and EOS entered into a second amendment to the Asset Purchase Agreement (the “Second Asset Purchase Agreement Amendment”).

Pursuant to the Second Asset Purchase Agreement Amendment, among other things, the parties agreed to enter into an earnout agreement (the “Earnout Agreement”) instead of a royalty agreement as set forth in the Asset Purchase Agreement, and the parties agreed that EOS Holdings will only appoint one director at the DV Closing to the board of directors of the Company (the “Board”), and EOS Holdings will have the right to appoint one other director within ninety ( 90 ) days after the DV Closing.

The parties also agreed that EOS Holdings will transfer at least eighty-one percent ( 81 %) of the Closing Stock Consideration to its stockholders, and neither EOS Holdings nor any of its stockholders will own in excess of 19.99 % of the number of shares of the common stock outstanding immediately after giving effect to the issuance of the Closing Stock Consideration.

Pursuant to the Second Asset Purchase Agreement Amendment, EOS Holdings agreed to file a Certificate of Amendment with the Secretary of State of the State of Delaware to change its company name, and the Company agreed to file a registration statement providing for the resale by EOS Holdings of the 3,999,911 shares of common stock issued as part of the Closing Stock Consideration.

Pursuant to the Second Asset Purchase Agreement Amendment, the Company caused such registration statement to become effective prior to April 15, 2025.

The Company and EOS Holdings further agreed that the Company may only amend, supplement or otherwise modify the transaction documents with approval of the disinterested members of the Board.

The parties also updated the schedules describing the transferred assets and transferred liabilities.

Earnout Agreement

In connection with the DV Closing, the Company and EOS Holdings entered into the Earnout Agreement, dated as of December 31, 2024, pursuant to which the Company shall pay an amount equal to three percent ( 3 %) of the gross revenue of the Company generated from or otherwise attributable to any patents and patent applications included in the Acquired Assets, subject to customary deductions calculated in accordance with U.S.

GAAP, and as further set forth in the Earnout Agreement.

The earnout period commenced on the DV Closing Date and will end upon the expiration of the last to expire of the patents included in the Acquired Assets (the “Term”).

The Company shall make the earnout payments to EOS Holdings on a quarterly basis during the Term.

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

The Earnout Agreement was not assigned a fair value at the purchase date as it was not deemed likely that any payments will be made as of December 31, 2024.

There is no change as of March 31, 2025.

The Company accounted for the Asset Purchase Agreement as an asset purchase in accordance with ASC 805, Business Combinations (the “Screen Test”).

As such, the aggregate consideration of approximately $ 92,000,000 plus capitalized fees of $ 575,000 were recorded to the intangible assets acquired of patents and trademarks for $ 2,384,000 and $ 90,191,000 , respectively, with useful weighted average remaining lives of ten years in each case .

For the three months ended March 31, 2025, the amortization expense related to intangible assets was approximately $ 2,309,000 .

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Balance Sheet Components

Inventories (in thousands):

September 30,

Raw materials

2 unchanged sentences

Total inventories

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Balance Sheet Components, continued

Property and equipment, net (in thousands):

September 30,

Machinery and equipment

1 unchanged sentence

Property and equipment, net

Depreciation and amortization expense for the three months ended September 30, 2024 and 2023 were approximately of $ 11,000 and $ 18,000 , respectively.

Depreciation and amortization expense for the nine months ended September 30, 2024 and 2023 were approximately $ 59,000 and $ 82,000 , respectively.

Depreciation expense for the three months ended March 31, 2025 and 2024 was $12,000 and $ 20,000 , respectively.

Notes receivable

On June 13, 2024, the Company entered into a Senior Secured Promissory Note and Security Agreement (“Promissory Note and Security Agreement”) with an unaffiliated third-party company (“the Borrower”).

On June 13, 2024, the Company entered into a Senior Secured Promissory Note and Security Agreement (“Promissory Note and Security Agreement”) with EOS Holdings (“the Borrower”).

Pursuant to the Promissory Note and Security Agreement, the Company agreed to provide the Borrower with a term loan in the principal amount of $ 150,000 (“June 2024 Note”).

2 unchanged sentences

On the maturity date, subject to any extension, the Borrower will be obligated to make a payment equal to all unpaid principal and accrued interest.

As described in Note 11 – Subsequent Events, on October 23, 2024, the Borrower and the Company agreed to amend the June 2024 Note maturity date to January 31, 2025.

On October 23, 2024, the Borrower and the Company agreed to amend the June 2024 Note maturity date to January 31, 2025.

On December 31, 2024, the Borrower and the Company agreed to amend the December 2024 Note maturity date to the latter of the maturity date of the DV Convertible Note of December 31, 2027 or a qualified subsequent financing as determined by the DV Convertible Note agreement.

On August 7, 2024, the Company entered into a second Promissory Note and Security Agreement with the Borrower.

3 unchanged sentences

On the maturity date, subject to any extension, the Borrower will be obligated to make a payment equal to all unpaid principal and accrued interest.

As described in Note 11 – Subsequent Events, on October 23, 2024, the Borrower and the Company agreed to amend the August 2024 Note maturity date to January 31, 2025.

On October 23, 2024, the Borrower and the Company agreed to amend the August 2024 Note maturity date to January 31, 2025.

On September 23, 2024, the Company entered into a third Promissory Note and Security Agreement with the Borrower.

Pursuant to the Promissory Note and Security Agreement, the Company agreed to provide the Borrower with a term loan in the principal amount of $ 73,485 (“September 2024 Note”).

Pursuant to the Promissory Note and Security Agreement, the Company agreed to provide the Borrower with a term loan in the principal amount of $ 73,485 (the “September 2024 Note”).

The September 2024 Note matures on December 5, 2024.

Borrowings under the June 2024 Note bear interest at a rate per annum equal to 5.12 %.

Borrowings under the September 2024 Note bear interest at a rate per annum equal to 5.12 %.

On the maturity date, subject to any extension, the Borrower will be obligated to make a payment equal to all unpaid principal and accrued interest.

As described in Note 11 – Subsequent Events, on October 23, 2024, the Borrower and the Company agreed to amend the September 2024 Note maturity date to January 31, 2025.

The Company evaluates the collectability of the notes receivable regularly and assesses a need for an allowance for credit losses based on historical experience, current conditions, and reasonable forecasts.

As of September 30, 2024, no allowance for credit losses has been deemed necessary for the outstanding notes receivable.

At September 30, 2024, the Company had recognized approximately $ 3,000 of interest income on the Notes Receivable.

There was no note receivable at December 31, 2023.

WISA TECHNOLOGIES, INC.

On October 23, 2024, the Borrower and the Company agreed to amend the September 2024 Note maturity date to January 31, 2025.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

For the Three Months Ended March 31, 2025 and 2024

Balance Sheet Components, continued

On December 23, 2024, the Company entered into a fourth Promissory Note and Security Agreement with the Borrower.

Pursuant to the Promissory Note and Security Agreement, the Company agreed to provide the Borrower with a term loan in the principal amount of $ 100,000 (“December 2024 Note”).

The December 2024 Note matures on January 31, 2025.

Borrowings under the December 2024 Note bear interest at a rate per annum equal to 5.12 %.

On the maturity date, subject to any extension, the Borrower will be obligated to make a payment equal to all unpaid principal and accrued interest.

The above notes receivable are netted on the condensed consolidated balance sheet in “convertible note payable, net related party” as of March 31, 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, $ 136,000 was paid off as a result of the February 2025 Offering (defined below) in which a portion of proceeds in the 2025 Offering (defined below) were used to satisfy principal on the EOS note receivables.

The balance as of March 31, 2025 is $ 299,000 .

At March 31, 2025, the Company had recognized approximately $ 5,000 of interest income on the Notes Receivable.

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 has agreed to purchase, assume and accept from CSI all of the rights, title and interests used in the acquired business, and products and services solely to the extent they utilize the transferred assets, including CSI’s customer contracts, trademarks and other intellectual property (the “CSI Acquisition”).

Pursuant to the CSI Purchase Agreement, the Company made an exclusivity deposit and a break-up fee deposit totaling $ 2,000,000 which is recorded on the condensed consolidated balance sheet in “deposit on business combination” as of March 31, 2025.

The acquisition has not closed as of March 31, 2025.

Accrued Liabilities

Accrued liabilities (in thousands):

September 30,

Accrued vacation

Customer advance

Accrued audit fees

Accrued legal fees

Accrued rebate

Accrued lease liability, current portion

Accrued compensation

Contract liabilities

Accrued lease liability, current portion

Accrued other

Total accrued liabilities

Convertible Promissory Note

On August 15, 2022, the Company entered into a Securities Purchase Agreement (the “August Purchase Agreement”), by and between the Company and an institutional investor (the “Convertible Note Investor”), pursuant to which the Company agreed to issue to the Investor a senior secured convertible note in the principal amount of $ 3,600,000 (the “Convertible Note”) and a warrant to purchase up to 140 shares of the Company’s common stock, at an initial exercise price of $ 14,955.00 per share, in consideration for $ 3,000,000 .

Pursuant to the August Purchase Agreement, upon the closing of the private placement, pursuant to which Maxim Group LLC (“Maxim”) acted as placement agent (the “Private Placement”), the Company received gross proceeds of $ 3,000,000 .

After the deduction of banker fees, commitment fees and other expenses associated with the transaction, the Company received net proceeds of $ 2,483,000 .

The Company used the net proceeds primarily for working capital and general corporate purposes.

The Convertible Note, with an original maturity date of August 15, 2024, does not bear interest and ranks senior to the Company’s existing and future indebtedness and is secured to the extent and as provided in the Security Agreements.

The Convertible Note is convertible in whole or in part at the option of the Convertible Note Investor into shares of Common stock (the “Conversion Shares”) at the Conversion Price (as defined below) at any time following the date of issuance of the Convertible Note.

The Convertible Note defines “Conversion Price” as equal to the lesser of (a) 90 % of the average of the five lowest daily VWAPs (as defined in the Convertible Note) during the previous twenty trading days prior to delivery to the Company of the Convertible Note Investor’s applicable notice of conversion and (b) $ 13,890.00 (the “Base Conversion Price”).

The Base Conversion Price is subject to full ratchet antidilution protection, subject to a floor conversion price of $ 75.00 per share (the “Floor Price”).

In connection with the Private Placement, the Company issued warrants to the Convertible Note Investor and Maxim to purchase common shares of 140 and 13 , respectively (see Note 5 – Fair Value Measurements).

The sum of the fair value of the warrants, the original issue discount for interest, issuance costs and the derivative liability for the embedded conversion feature for the Convertible Note were recorded as debt discounts totaling $ 2,509,000 to be amortized to interest expense over the respective term using the effective interest method.

During the year ended December 31, 2023, the Company recognized $ 737,000 of interest expense from the amortization of debt discounts and repayment of the convertible note payable in April 2023.

In connection with the Private Placement, the Company entered into a placement agency agreement with Maxim (the “Placement Agency Agreement”), and agreed to issue to Maxim, a warrant to purchase up to an aggregate of 13 shares of common stock (the “Maxim Warrant”) at an initial exercise price of $ 14,955.00 per share, which is exercisable at any time on or after the six-month anniversary of the closing date of the Private Placement and will expire on the fifth ( 5 th ) anniversary of its date of issuance.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Borrowings, continued

Effective August 24, 2022, the Company and the Investor agreed to amend Section 3.1(b) of the Convertible Note to provide that the Conversion Price could not be lower than the Floor Price until stockholder approval has been obtained, after which stockholder approval the Floor Price may be reduced to no lower than $ 37.50 , subject to adjustment pursuant to the terms of the Convertible Note.

The changes were effected by cancellation of the Convertible Note and the issuance of a replacement senior secured convertible note (the “New Convertible Note”) to the Investor.

The New Convertible Note contains identical terms as the Convertible Note, except for the amendment to the Section 3.1(b).

On November 21, 2022, the Company and Maxim entered into an agreement to amend the Maxim Warrant (the “Maxim Warrant Amendment”).

Specifically, the Maxim Warrant Amendment sets forth certain circumstances in which the lock up restrictions to which the Maxim Warrant is subject would not apply.

The Maxim Warrant Amendment also clarifies certain limitations with respect to demand registration rights and provides that Maxim’s piggy-back registration rights expire on the fifth ( 5 th) anniversary of the Maxim Warrant’s date of issuance.

The New Convertible Note contained several embedded conversion features.

The Company concluded that those conversion features require bifurcation from the New Convertible Note and subsequent accounting in the same manner as a freestanding derivative.

The Company recognized a derivative liability of $ 286,000 upon execution of the note agreement and such amount was included in the $ 2,509,000 of debt discounts noted above.

Subsequent changes in the fair value of these conversion features are measured at each reporting period and recognized in the consolidated statement of operations.

On November 28, 2022, the Company entered into a waiver of rights (the “Waiver”) with the New Convertible Note Investor, pursuant to which the New Convertible Note Investor agreed to waive certain prohibitions under the August Purchase Agreement with respect to the offering of units in December 2022 in exchange for the issuance by the Company, on the closing date of such offering, of an additional number of Series A warrants to purchase shares of common stock (“Series A Warrants”) and an additional number of Series B warrants to purchase shares of common stock (“Series B Warrants”) equal to the quotient obtained by dividing $ 750,000 by the public offering price for the units sold in the offering (such Warrants, the “Waiver Warrants”).

In connection with the public offering the Company consummated on December 1, 2022 (the “December 2022 Offering”), the Company issued 357 Series A Warrants and 357 Series B Warrants to the New Convertible Note Investor (See Note 6).

The Company’s obligation to issue shares of common stock underlying the Waiver Warrants is expressly conditioned upon stockholder approval of all of the transactions contemplated by the August Purchase Agreement.

At a Special Meeting of Stockholders held on January 24, 2023, the Company received stockholder approval of the transactions contemplated by the August Purchase Agreement.

Additionally, as a result of the December 2022 Offering, the Base Conversion Price was adjusted to the Floor Price.

On February 1, 2023, the holder of the New Convertible Note converted approximately $ 708,000 , a portion of the outstanding principal amount into 450 shares of the Company’s common stock.

On April 11, 2023, the Company paid $ 1,656,744 to the holder of the New Convertible Note which repaid the entirety of the outstanding balance and included the unpaid principal, interest through the payoff date, and a pre-payment premium of $ 276,000 which was recorded as a component of loss on debt extinguishment.

September 2023 Short-Term Loan Agreement

On September 8, 2023, the Company entered into that certain Loan and Security Agreement with the Meriwether Group Capital Hero Fund LP (“Meriwether Hero Fund”).

Pursuant to the Loan and Security Agreement, the Meriwether Hero Fund agreed to provide the Company with bridge financing in the form of a term loan in the original principal amount of $ 650,000 , which term loan will be senior in priority to the Company’s present and future indebtedness (“Meriwether Loan”).

The Meriwether Loan was to mature on November 7, 2023, subject to further extension.

In addition, the Company had the right to request additional funding under the Loan and Security Agreement.

WISA TECHNOLOGIES, INC.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Borrowings, continued

Borrowings under the Meriwether Loan bore interest at a rate per annum equal to 18 %.

On the maturity date, subject to any extension, the Company was obligated to make a payment equal to all unpaid principal and accrued interest.

Pursuant to Meriwether Loan, the Company was required to pay to the Meriwether Hero Fund a fully earned, non-refundable, origination fee in the amount of$ 50,000 .

The Company was also required to pay to the Meriwether Hero Fund a fully earned, non-refundable, exit fee in the amount of $ 50,000 due and payable on the maturity date.

The Meriwether Loan also provided that all present and future indebtedness and the obligations of the Company to the Meriwether Hero Fund shall be secured by a first priority security interest in all real and personal property collateral of the Company.

The Meriwether Loan contained customary representations, warranties and affirmative and negative covenants.

In addition, the Meriwether Loan contained customary events of default that entitle the Meriwether Hero Fund to cause the Company’s indebtedness under the Meriwether Loan to become immediately due and payable, and to exercise remedies against the Company and the collateral securing the term loan.

On October 10, 2023, the Meriwether Hero Fund, agreed to extend the Meriwether Loan maturity date from November 7, 2023 to December 7, 2023, for a fee of $ 20,000 .

On December 7, 2023, the Company repaid the full amount of the Meriwether Loan, including all fees and accrued interest.

For the Three Months Ended March 31, 2025 and 2024

January 2024 Short-Term Loan Agreement

9 unchanged sentences

The debt discounts were to be amortized to interest expense over the respective term using the effective interest method.

In connection with the full repayment of the January 2024 Promissory Notes, the Company recognized $ 1,260,000 of interest expense in the nine months ended September 30, 2024.

WISA TECHNOLOGIES, INC.

In connection with the full repayment of the January 2024 Promissory Notes, the Company recognized $ 1,260,000 of interest expense in the three months ended March 31, 2024.

DV Convertible Note

In connection with the DV Closing, the Company issued the DV Convertible Note in a principal amount of $ 10,000,000 due on the third anniversary of the DV Closing on December 31, 2027.

The Company agreed to pay interest to EOS Holdings on the aggregate unconverted and then outstanding principal amount of the note at the rate of five and twelve hundredths percent ( 5.12 %) per annum, accruing from the DV Closing.

The DV Convertible Note can be converted at EOS Holding’s option, partially or entirely, into shares of common stock, any time after the maturity date until the DV Convertible Note is fully paid off.

The DV Convertible Note uses a conversion price equaling to seventy-five percent ( 75 %) of the average VWAP (as defined in the DV Convertible Note) during the ten (10) consecutive trading days ending on the trading day that is immediately prior to the conversion date subject to a floor price of $ 1.116 per share.

At EOS Holding’s sole discretion, upon a change of control (as defined in the DV Convertible Note), the Company shall (i) cause any successor entity to assume in writing all of the obligations of the Company under the DV Convertible Note, (ii) pay or cause to be paid to EOS Holdings the Note Balance (defined below) in cash, or (iii) pay, at the closing of such change of control, in full satisfaction of the Company’s obligations under the DV Convertible Note, an amount in cash or equivalent common stock to the amount EOS Holdings would have been paid if it had converted its Note Balance into shares of common stock immediately prior to such closing, at the conversion price.

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

The Note Balance on the maturity date will be automatically reduced by the amount of the DV Holdings Note Balance.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

For the Three Months Ended March 31, 2025 and 2024

Borrowings, continued

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

If the aggregate gross proceeds of Subsequent Financings reach or exceed $ 50,000,000 , then the Company shall repay the DV Convertible Note in full, including accrued but unpaid interest, liquidated damages, if any, and any other amounts, then owing to EOS Holdings.

The DV Convertible Note includes customary event of default provisions.

Upon the occurrence of an event of default, the DV Convertible Note and all amounts due thereunder shall become, upon demand by EOS Holdings, immediately due and payable in cash.

Additionally, upon the occurrence of an event of default, interest shall accrue daily at the rate of ten percent ( 10 %) per annum on the aggregate outstanding principal balance and any other amounts then owing by Company to EOS Holdings.

The Company elected the fair value method for the DV Convertible Note outstanding of $ 10,000,000 as of December 31, 2024 due to the embedded derivatives identified within the agreement requiring recurring fair value measurements.

The carrying value of the DV Convertible Note is the same as the fair value as of March 31, 2025 due to the note’s issuance occurring on December 31, 2024 and no changes in the fair value have occurred as of the three months ended March 31, 2025.

The note is valued using level 3 inputs.

On February 14, 2025, the Company paid a portion of principal and interest of $ 406,000 , net, as a result of the February 2025 Public Offering (defined below in Note 7) and the balance as of March 31, 2025 was $ 9,582,000 .

The DV Convertible Note is netted with the notes receivable from EOS Holdings in “convertible note payable, net, related party” on the condensed consolidated balance sheets as of March 31, 2025 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.

Fair Value Measurements

8 unchanged sentences

The determination of fair value for Level 3 instruments involves the most management judgment and subjectivity.

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 by level within the fair value hierarchy, are as follows:

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Fair Value Measurements, continued

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 by level within the fair value hierarchy, are as follows:

(in thousands)

September 30, 2024

March 31, 2025

Quoted prices

Convertible note payable

Warrant liabilities

2 unchanged sentences

Quoted prices

Convertible note payable

Warrant liabilities

There were no transfers between Level 1, 2 or 3 during the three and nine months ended September 30, 2024 or 2023.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Fair Value Measurements, continued

There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2025 or 2024.

Warrant Liabilities

The following table includes a summary of changes in fair value of the Company’s warrant liabilities measured at fair value using significant unobservable inputs (Level 3) as of September 30, 2024 and 2023.

For September 30, 2024, the fair value of the common warrants was determined using the Black-Scholes Model based on the following key inputs and assumptions:

common stock price of $ 1.77 ;

exercise prices between $ 3.196 and $ 1,574.00 ;

expected yield of 0.0 %;

expected volatility of 162 %;

risk-free interest rate of 3.58 % and expected life between 2.9 and 3.3 years.

During the three months ended June 30, 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.

On March 26, 2024, the Company amended the terms of certain warrant agreements to remove certain exercise price reset, right to reprice and/or share adjustment provisions (“Reset Provisions”) following a reverse split, in addition to other revisions to the warrants.

In April 2024, the Company effected the April 2024 Reverse Stock Split thereby removing the Reset Provisions (“Reset Amendment Effective Date”) and in accordance with provisions in certain of the warrants issued warrants to purchase an additional 5,602,693 shares of common stock.

2 unchanged sentences

In connection with this reclassification the Company reclassed approximately $ 41.9 million from warrant liabilities to additional paid in capital.

For the nine months ended September 30,

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Fair Value Measurements, continued

For March 31, 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 $ 0.85 ;

exercise price of $ 3.20 to $ 1,574 ;

expected yield of 0.0 %;

expected volatility of 163.2 %;

risk-free interest rate of 3.89 % and expected life of 2.7 to 2.8 years.

For the three month ended March 31,

(in thousands)

5 unchanged sentences

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.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

DV Convertible Note

As described in Note 5, the Company elected the fair value option on the DV Convertible Note issued on December 31, 2024.

The fair value of the note was deemed to equal the principal plus accrued interest at March 31, 2025.

The Company uses level 3 inputs to measure the fair value in subsequent periods.

No gain or loss was recorded on the DV Convertible Note for the three month ended March 31, 2025.

Convertible Redeemable Preferred Stock and Stockholders’ Equity

Series B Preferred Stock, Series B Preferred Stock Warrants

On October 16, 2023, the Company consummated a public offering for an aggregate of 87,000 Series B Units (“Series B Units”).

Each Series B Unit consists of one share of the Company’s Series B Preferred Stock and two warrants, each to purchase one share of Series B Preferred Stock (“Series B Preferred Stock Warrant”).

Each share of Series B Preferred Stock is convertible at the holder’s option at any time, through a two-year period, into the number of shares of the Company’s common stock determined by dividing the $ 100 stated value per share of the Series B Preferred Stock by a conversion price of $ 62.205 per share.

Each share of Series B Preferred Stock is convertible into 1 share of common stock, and each Series B Preferred Stock Warrant entitles the holder to purchase one share of Series B Preferred Stock at an initial exercise price of $ 55 per share.

Dividends are paid in additional fully paid and nonassessable Series B Preferred Stock, at a 20 % dividend rate, non-cumulative.

If any shares of Series B Preferred Stock are outstanding at the end of the two-year period, the holder would be entitled to a cash redemption value equal to the $ 100 stated value per share.

The gross proceeds from the sale of Series B Units were $ 4,785,000 , before broker fees and related expenses of approximately $ 830,000 .

Exercise of Series B Preferred Stock Warrants

On December 6, 2023, the Company executed an Inducement Agreement (the “Inducement Agreement”) with the holders of Series B Preferred Stock Warrants, reducing the exercise price to $ 35.72 per share of Series B Preferred Stock.

Any holder that exercised Series B Preferred Stock Warrants under the Inducement Agreement received a new Common Stock Warrant (“New Common Stock Warrants”) for each Series B Preferred Stock Warrant exercised.

Each New Common Stock Warrant entitles the holder to purchase 2 shares of common stock at an initial exercise price of $ 22.23 per share.

Due to certain price protections included with the New Common Stock Warrants, the warrants did not meet the criteria for equity classification and thus are subject to liability treatment.

Total proceeds from the exercise of 61,613 Series B Preferred Stock Warrants of $ 2,264,000 through December 31, 2023, and the remaining fair value of the Series B Preferred Stock Warrant liability immediately prior to the exercise of $ 1,628,000 resulted in a total of $ 3,892,000 recorded for the new 61,613 shares of Series B Preferred Stock, of which $ 3,322,000 was allocated to the Common Stock Warrants liability based on their fair value and $ 569,000 was allocated to the Series B Preferred Stock using the residual method of allocation.

In connection with this new issuance, the Company has recorded additional discounts to the Series B Preferred Stock for a beneficial conversion feature of $ 196,000 , the Common Stock Warrants of $ 3,322,000 and issuance costs of $ 146,000 .

The Company also accretes to Series B Preferred Stock, against additional paid in capital as a deemed dividend, for the difference between the total proceeds of $ 35.72 per share of Series B Preferred Stock and the full redemption price of $ 100 per share.

The Company uses the effective interest method to calculate the accretion amount for each period.

All 61,613 New Common Stock Warrants issued as a result of the exercise of Series B Preferred Stock Warrants were outstanding as of December 31, 2023.

Issuance costs of $ 429,000 and $ 125,000 were expensed on the date of issuance of the Series B Preferred Stock Warrants and the New Common Stock Warrants, respectively as such warrants were recorded at fair value.

Total issuance costs expensed from the issuances were charged to Change in fair value of warrant liabilities and amounted to $ 554,000 .

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

Through various dates from issuance to December 31, 2023, the holders of 110,278 shares of Series B Preferred Stock converted their shares into 177,282 shares of common stock.

Unamortized discounts to the Series B Preferred Stock of $ 6,063,000 were immediately recorded as a deemed dividend as of conversion date.

Amortization and accretion of discounts from issuance date through December 31, 2023 amounted to $ 297,000 , which were also recorded as a deemed dividend to the holders of Series B Preferred Stock.

The total such deemed dividends amounted to $ 6,360,000 for the year ended December 31, 2023 and was recorded as a net loss available to common stockholders on the Company’s consolidated statement of operations.

The 38,335 shares of Series B Preferred Stock outstanding as of December 31, 2023, were to become mandatorily redeemable on October 15, 2025 in the amount of $ 3,833,500 .

Through various dates during the nine months ended September 30, 2024, holders of Series B Preferred Stock Warrants exercised their warrants into 29,332 shares of Series B Preferred Stock at an exercise price of $ 35.72 per share.

For each exercised Series B Preferred Stock Warrant, the holder received one share of Series B Preferred Stock and one New Common Stock Warrant.

Each New Common Stock Warrant entitles the holder to purchase 2 shares of common stock at an initial exercise price of $ 22.23 per share.

Due to certain price protections included with the New Common Stock Warrants, the warrants did not meet the criteria for equity classification and thus are subject to liability treatment.

Total proceeds from the exercise of the 29,332 Series B Preferred Stock Warrants amounted to $ 1,047,000 , and the remaining fair value of the Series B Preferred Stock Warrant Liability immediately prior to the exercise of $ 587,000 resulted in a total of $ 1,634,000 recorded for the new 29,332 shares of Series B Preferred Stock, of which $ 1,188,000 was allocated to the New Common Stock Warrants liability based on their fair value and $ 446,000 was allocated to the Series B Preferred Stock using the residual method of allocation.

In connection with this new issuance, the Company recorded additional discounts to the Series B Preferred Stock for the New Common Stock Warrants of $ 1,188,000 and issuance costs of $ 61,000 .

The Company also accretes to Series B Preferred Stock, against additional paid-in-capital as a deemed dividend, for the difference between the total proceeds of $ 35.72 per share of Series B Preferred Stock and the full redemption price of $ 100 per share.

The Company uses the effective interest method to calculate the accretion amount for each period.

Issuance costs of $ 44,000 were expensed on the date of issuance of the New Common Stock Warrants, as such warrants were recorded at fair value.

Conversion of Series B Preferred Stock

Through various dates during the nine months ended September 30, 2024, the holders of 5,000 shares of Series B Preferred Stock converted their shares into 8,038 shares of common stock.

Unamortized discounts to the Series B Preferred Stock of $ 269,000 were immediately recorded as a deemed dividend as of conversion date.

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

3 unchanged sentences

Other Deemed Dividends

Amortization and accretion of discounts for all Series B Preferred Stock during the nine months ended September 30, 2024 amounted to $ 192,000 , which were also recorded as a deemed dividend to the holders of Series B Preferred Stock.

The total of deemed dividends (as discussed in this section, the Conversion of Series B Preferred Stock and February 2024 Series B Preferred Stock and Series B Preferred Stock Warrants Repurchase sections above) amounted to $ 5,842,000 for the nine months ended September 30, 2024 and was recorded as an adjustment to net loss available to common stockholders on the Company’s condensed consolidated statement of operations.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

2018 Long Term Stock Incentive Plan

On January 30, 2018, the Company’s board of directors approved the establishment of the Company’s 2018 Long-Term Stock Incentive Plan (the “LTIP”) and termination of its Carve-Out Plan.

Under the LTIP, the aggregate maximum number of shares of common stock (including shares underlying options) that may be issued under the LTIP pursuant to awards of Restricted Shares or Options will be limited to 15 % of the outstanding shares of common stock, which calculation shall be made on the first trading day of each new fiscal year;

provided that, in any year no more than 8 % of the common stock or derivative securitization with common stock underlying 8 % of the common stock may be issued in any fiscal year.

At a Special Meeting of Stockholders on January 24, 2023, the Company’s stockholders approved certain amendments to the LTIP to:

(i) increase the annual share limit of common stock that may be issued in any single fiscal year only for the 2023 fiscal year under the LTIP from 8 % of the shares of common stock outstanding to 15 % of the shares of common stock outstanding (which amount equates to the maximum amount that may be issued in the aggregate under the LTIP), and (ii) permit immediately quarterly calculations based on the number of shares of common stock outstanding as of the first trading day of each fiscal quarter, rather than solely as of the first trading day of the fiscal year.

At a Special Meeting of Stockholders on March 15, 2024, the Company’s stockholders further approved an amendment to the LTIP to increase the annual share limit of common stock that may be issued only for the 2024 fiscal year under the LTIP from 8 % of the shares of common stock outstanding to 15 % of the shares of common stock outstanding (which amount equates to the maximum amount that may be issued in the aggregate under the LTIP).

As of September 30, 2024, up to 466,000 shares of common stock are available for grants to participants under the LTIP.

A summary of activity related to restricted stock awards for the nine months ended September 30, 2024 is presented below:

Weighted-Average

Grant Date Fair Value

Non-vested as of January 1, 2024

Non-vested as of September 30, 2024

As of September 30, 2024, the unamortized compensation costs related to the unvested restricted stock awards was approximately $ 2,442,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 2.2 years.

For the nine months ended September 30, 2024, 22,050 shares of common stock were issued upon vesting of outstanding restricted stock, pursuant to the LTIP with an intrinsic value of approximately $ 38,000 .

For the nine months ended September 30, 2023, 24 shares of common stock were issued upon vesting of outstanding restricted stock, pursuant to the LTIP with an intrinsic value of less than $ 5,000 .

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

2020 Stock Incentive Plan

A summary September 30, 2024 is presented below:

Weighted-Average

Grant Date Fair Value

Non-vested as of January 1, 2024

Non-vested as of September 30, 2024

As of September 30, 2024, there was no unamortized compensation costs.

For the nine months ended September 30, 2024, 1 share of common stock was issued upon vesting of outstanding restricted stock units pursuant to the 2020 Stock Incentive Plan with an intrinsic value of less than $ 1,000 .

For the three and nine months ended September 30, 2023, 71 shares of common stock, issued under the 2020 Stock Incentive Plan, were released with an intrinsic value of $ 92.00 .

Inducement Grants

On September 13, 2021, the Company issued 21 shares of restricted common stock to Eric Almgren, the Company’s Chief Strategist, as an inducement grant (“September 2021 Inducement Grant”).

As of September 30, 2024, all compensation cost related to the September 2021 Inducement Grant was expensed.

The Company recorded stock-based compensation of $ 40,000 and $ 168,000 related to this grant for three and nine months ended September 30, 2024.

As of September 30, 2024, 16 shares are unvested.

For the nine months ended September 30, 2024, no shares of restricted stock were released under the September 2021 Inducement Grant.

On September 30, 2024, the Company issued 70,000 shares of restricted common stock at a fair value per share of $ 1.77 , to Stanley Mbugua, the Company’s Vice President of Finance, as an inducement grant (“September 2024 Inducement Grant”).

As of September 30, 2024, the unamortized compensation cost related to the unvested September 2024 Inducement Grant was approximately $ 124,000 which is being amortized on a straight-line basis over a period of approximately 3.0 years.

The Company did not record any stock-based compensation related to this grant for three and nine months ended September 30, 2024.

As of September 30, 2024, 70,000 shares are unvested.

A summary of activity related to restricted stock units under the Company’s Technical Team Retention Plan of 2022 (the “2022 Plan”) for the nine months ended September 30, 2024 is presented below:

Weighted-Average

Grant Date Fair Value

Non-vested as of January 1, 2024

Non-vested as of September 30, 2024

As of September 30, 2024, the unamortized compensation cost related to the unvested restricted stock units was approximately $ 82,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.7 years.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

For the nine months ended September 30, 2024, 3 shares of common stock were issued upon vesting of outstanding restricted stock units pursuant to the 2022 Plan with an intrinsic value of less than $ 1,000 .

For the nine months ended September 30, 2023, no shares of common stock, issued under the 2022 Plan, were released.

February 2023 Offering

On January 31, 2023, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 1,344 shares of common stock and pre-funded warrants (the “February 2023 Pre-Funded Warrants”) to purchase up to 2,545 shares of common stock, at an exercise price of $ 0.015 per share of common stock, and (ii) in a concurrent private placement, common stock purchase warrants, exercisable for an aggregate of up to 5,833 shares of common stock, at an initial exercise price of $ 1,573.50 per share of common stock (the “February 2023 Offering”).

In February and March of 2023, all the February 2023 Pre-Funded Warrants were exercised for cash.

On February 3, 2023, the Company closed the February 2023 Offering, and received net proceeds of approximately $ 5.3 million after deducting placement agent fees and other offering expenses payable by the Company.

Also, in connection with the February 2023 Offering, on January 31, 2023, the Company entered into a placement agency agreement with Maxim, pursuant to which Maxim agreed to act as placement agent on a “best efforts” basis in connection with the offering and (ii) the Company agreed to pay Maxim an aggregate fee equal to 8.0 % of the gross proceeds raised in the offering.

March 2023 Offering

On March 27, 2023, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 5,581 shares of common stock of the Company and (ii) in a concurrent private placement, common stock purchase warrants, exercisable for an aggregate of up to 11,163 shares of common stock, at an initial exercise price of $ 286.50 per share (the “March 2023 Offering”).

On March 29, 2023, the Company closed the March 2023 Offering and received net proceeds of approximately $ 1.6 million, after deducting fees payable to the financial advisor and other offering expenses.

April 2023 Offering

On April 7, 2023, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company issued and sold to such investors (i) in a registered direct offering, 4,954 shares of common stock of the Company and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 9,908 shares of common stock, at an initial exercise price of $ 211.50 per share (the “April 2023 Offering”).

On April 12, 2023, the Company closed the April 2023 Offering and received net proceeds of approximately $ 1.0 million, after deducting fees payable to the financial advisor and other offering expenses.

October 2023 Warrant Repurchase

On October 16, 2023, the Company and certain of its common stock warrants holders entered into an arrangement where the Company agreed to repurchase outstanding common stock purchase warrants exercisable for an aggregate of up to 30,978 shares of common stock, at an exercise prices ranging from $ 193.50 to $ 286.50 per share for a total of $ 2,323,000 .

The repurchased warrants were previously classified as equity warrants and at the date of repurchase a charge was recorded to additional paid-in capital.

WISA TECHNOLOGIES, INC.

The total of deemed dividends (as discussed in this section, the Conversion of Series B Preferred Stock and February 2024 Series B Preferred Stock and Series B Preferred Stock Warrants Repurchase sections above) amounted to $ 5,842,000 for the year ended December 31, 2024 and was recorded as an adjustment to net loss available to common stockholders on the Company’s consolidated statement of operations.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

For the Three Months Ended March 31, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

15 unchanged sentences

The remaining issuance cost of $ 207,000 was allocated to the March Common Warrants and was expensed on the date of issuance as such warrants were recorded at fair value.

April 2024 Issuances of Common Stock and Common Stock Warrants

On April 17, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 225,834 shares of common stock at $ 3.321 per share, and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 225,834 shares of common stock, at an initial exercise price of $ 3.196 per share (the “Initial April 2024 Registered Direct Offering and Concurrent Private Placement”).

The Initial 2024 Registered Direct Offering and Concurrent Private Placement closed on April 19, 2024 and the Company received gross proceeds of approximately $ 750,000 before deducting placement agent fees and other offering expenses of approximately $ 159,000 .

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

On April 19, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 361,904 shares of common stock at $ 5.25 per share, and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 542,856 shares of common stock, at an initial exercise price of $ 5.06 per share (the “Second April 2024 Registered Direct Offering and Concurrent Private Placement”).

The Second 2024 Registered Direct Offering and Concurrent Private Placement closed on April 23, 2024 and the Company received gross proceeds of approximately $ 1.9 million before deducting placement agent fees and other offering expenses of approximately $ 268,000 .

On April 26, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 418,845 shares of common stock at $ 5.73 per share, and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 418,845 shares of common stock, at an initial exercise price of $ 5.60 per share (the “Third April 2024 Registered Direct Offering and Concurrent Private Placement”).

The Third 2024 Registered Direct Offering and Concurrent Private Placement closed on April 30, 2024 and the Company received gross proceeds of approximately $ 2.4 million before deducting placement agent fees and other offering expenses of approximately $ 298,000 .

May 2024 Issuances of Common Stock and Common Stock Warrants

On May 13, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 785,000 shares of common stock at $ 3.31 per share, and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 785,000 shares of common stock, at an initial exercise price of $ 3.18 per share (the “Initial May 2024 Registered Direct Offering and Concurrent Private Placement”).

The Initial May 2024 Registered Direct Offering and Concurrent Private Placement closed on May 15, 2024 and the Company received gross proceeds of approximately $ 2.6 million before deducting placement agent fees and other offering expenses of approximately $ 314,000 .

On May 15, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 675,000 shares of common stock at $ 3.61 per share, and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 675,000 shares of common stock, at an initial exercise price of $ 3.48 per share (the “Second May 2024 Registered Direct Offering and Concurrent Private Placement”).

The Second May 2024 Registered Direct Offering and Concurrent Private Placement closed on May 17, 2024 and the Company received gross proceeds of approximately $ 2.4 million before deducting placement agent fees and other offering expenses of approximately $ 290,000 .

For the three months ended June 30, 2024, the Company’s board of directors approved the issuance of a total of 136,203 shares of common stock to two vendors for investor relations services.

The fair value of such common shares was calculated to be $ 360,000 and was recorded to other assets and additional paid in capital.

The fair value of such shares will be amortized over the service period of each agreement which ranged from 6 months to 12 months .

The shares of common stock were issued in July 2024.

Exchange Agreements

On September 10, 2024, the Company entered into exchange agreements (each, an “Exchange Agreement”) with certain holders (the “Holders”) of common stock purchase warrants exercisable for an aggregate of up to 5,135,182 shares of common stock, originally issued on February 13, 2024 and having a then-current exercise price of $ 1.83 (such warrants, the “February 2024 Warrants”).

Pursuant to the Exchange Agreements, the Holders agreed to exchange their February 2024 Warrants for newly issued common stock purchase warrants exercisable for an aggregate of up to 5,135,182 shares of common stock, at an exercise price of $ 2.21 per share (such warrants, the “Exchange Warrants”, and such shares of common stock issuable upon exercise thereof, the “Exchange Warrant Shares”).

The Exchange Warrants are immediately exercisable.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

Warrant Side Letter Agreements

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

Pursuant to the Side Letter Agreements, (a) the Holders agreed to (i) amend the “Fundamental Transaction” provisions in the Original Warrants, so that the “Black Scholes Value” clauses in such provisions will be removed in their entirety, effective immediately following receipt of stockholder approval of (a) the issuance of the New Warrant Shares (as defined below) and (b) the issuance of shares of common stock pursuant to the alternative cashless exercise provisions of the 1st April 2024 Warrants, the 2nd April 2024 Warrants, the 3rd April 2024 Warrants, the 1st May 2024 Warrants, and the 2nd May 2024 Warrants, (ii) remove the “Stockholder Meeting” provisions in the March 2024 Purchase Agreement, effective immediately, (iii) amend the “Stockholder Meeting” provisions in the remaining Original Purchase Agreements such that the Company is first obligated to call a stockholder meeting to approve the issuance of the shares of common stock issuable upon exercise of the Original Warrants no later than December 31, 2024, and thereafter, to re-call a stockholder meeting, if necessary, every six months until such stockholder approval is obtained, and (iv) remove the “Subsequent Equity Sales” and “Registration Statement” provisions in the March 2024 Purchase Agreement;

and (b) as inducements to and in consideration for each Holder’s agreement to amend the Original Warrants and the Original Purchase Agreements in accordance with the applicable Side Letter Agreement, the Company agreed to issue to the Holders an aggregate of 887,356 shares of common stock (the “New Shares”) and common stock purchase warrants (each, a “New Warrant”, and collectively, the “New Warrants”) exercisable for up to an aggregate of 5,391,747 shares of common stock (the “New Warrant Shares”), such New Shares to be issued upon execution of the Side letter Agreements, and such New Warrants to be issued upon the receipt of stockholder approval referred to in (a)(i) above.

The New Warrants will have a per share exercise price equal to $ 2.21 , will contain 4.99 / 9.99 % beneficial ownership limitations, will be exercisable at any time on or after the Stockholder Approval Date (as defined in the New Warrants) and will expire five years thereafter.

Once exercisable, the New Warrants may be exercised, in certain circumstances, on a cashless basis pursuant to the formula contained in the New Warrants.

The holder of a New Warrant may also effect an “alternative cashless exercise” commencing on the Stockholder Approval Date.

In such event, the aggregate number of shares of common stock issuable in such alternative cashless exercise pursuant to any given notice of exercise electing to effect an alternative cashless exercise shall equal the product of (x) the aggregate number of shares of common stock that would be issuable upon exercise of the New Warrant in accordance with the terms of the New Warrant if such exercise were by means of a cash exercise rather than a cashless exercise and (y) 1.0 .

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

The fair value of the 887,356 shares of common stock was calculated to be approximately $ 2.1 million, based on the common stock price of the date of issuance of $ 2.40 .

The incremental fair value of the Exchange Warrants was calculated to be approximately $ 123,000 and was determined using the Black-Scholes Model based on the following weighted average assumption:

common stock price on the date of the exchange of $ 2.40 ;

expected yield of 0.0 %;

expected volatility of 143 %;

risk-free interest rate of 3.43 % and expected life of 5 years.

The fair value of approximately $ 2,253,000 , which is the combination of the issuance of 887,356 common shares and the Exchange Warrants were treated as equity instruments.

The approximately $ 2,253,000 is considered a deemed dividend for the three and nine months ended September 30, 2024 and was recorded as an adjustment to net loss available to common stockholders on the Company’s condensed consolidated statement of operations.

For the three months ended September 30, 2024, the Company’s board of directors approved the issuance of a total of 100,000 shares of common stock to one vendor for financial advisory services.

The fair value of such common shares was calculated to be $ 240,000 and was recorded to other assets and additional paid in capital.

The fair value of such shares will be amortized over the service period of 12 months .

The shares of common stock were issued in July 2024.

Warrants for Shares of Common Stock

A summary of the warrant activity and related information for the nine months ended September 30, 2024 and the year ended 2023 is provided as follows.

In connection with February 2023 Offering, the Company issued common stock purchase warrants to investors to purchase up to 5,833 shares of the Company’s common stock, at an initial exercise price of $ 1,573.50 per share.

The grant date fair value of such warrants was $ 5,600,000 , which was recorded as a liability with the offset recorded to additional paid-in capital on the condensed consolidated balance sheets.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption:

common stock price on the date of grant of $ 1,335.00 ;

expected yield of 0.0 %;

expected volatility of 96 %;

risk-free interest rate of 3.67 % and expected life of 5 years.

In connection with March 2023 Offering, the Company issued common stock purchase warrants to investors to purchase up to 11,163 shares of the Company’s common stock, at an initial exercise price of $ 286.50 per share.

The grant date fair value of such warrant was $ 2,113,000 , which was recorded as equity.

Warrants for Common Shares

A summary of the warrant activity and related information for the three months ended March 31, 2025 and 2024 is provided as follows.

In connection with the January 2024 Promissory Notes, the Company issued common stock purchase warrants to investors to purchase up to 66,665 shares of the Company’s common stock, at an initial exercise price of $ 22.23 per share.

The grant date fair value of such warrant was $ 860,000 , which was recorded as a liability with the offset recorded to additional paid-in capital on the consolidated balance sheets.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption:

3 unchanged sentences

risk-free interest rate of 4.31 % and expected life of 5 years.

May 2023 Warrant Inducement

On May 15, 2023, the Company entered into warrant exercise inducement offer letters with the holders of common stock purchase warrants exercisable for an aggregate of up to 9,907 shares of common stock at an initial exercise price of $ 211.50 per share issued on April 12, 2023 (the “April Warrants”).

The April Warrant holders agreed to exercise for cash April Warrants to purchase up to 9,907 shares of common stock in exchange for the Company’s agreement to issue 19,815 new warrants (the “May Inducement Warrants”) on substantially the same terms as the April Warrants.

The Company received net proceeds of approximately $ 1.9 million from the exercise of the April Warrants.

Each May Inducement Warrant is exercisable at a price per share of common stock of $ 199.50 , which was equal to the Minimum Price (as defined by the Nasdaq Listing Rules).

Each May Inducement Warrant is immediately exercisable upon issuance and will expire on the fifth anniversary of its issuance.

The exercise price of the May Inducement Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock.

The May Inducement Warrants are callable by the Company at a redemption price of $ 75.00 per May Inducement Warrant, provided that the resale of the shares of common stock underlying the May Inducement Warrants are then registered or may be resold under Rule 144 under the Securities Act.

WISA TECHNOLOGIES, INC.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

For the Three Months Ended March 31, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

July 2023 Warrant Inducement

On July 26, 2023, the Company entered into warrant exercise inducement offer letters (the “July Inducement Letters”) with holders of the May Inducement Warrants pursuant to which the Company agreed to issue new inducement warrants (the “July Inducement Warrants”) to purchase a number of shares of common stock equal to 100 % of the number of shares of common stock received upon exercise of the May Inducement Warrants during the period provided for in the July Inducement Letters, with such July Inducement Warrants to be issued on substantially the same terms as the May Inducement Warrants.

The holders exercised 3,400 May Inducement Warrants pursuant to certain of the July Inducement Letters, and the Company received aggregate gross proceeds of approximately $ 678,000 from such exercises.

In exchange for the exercises of the May Inducement Warrants, the Company issued July Inducement Warrants exercisable for an aggregate of up to 3,400 shares of common stock at an initial exercise price of $ 193.50 per share.

Each July Inducement Warrant was immediately exercisable upon issuance and will expire on the fifth anniversary of its issuance.

The exercise price of the July Inducement Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock.

The July Inducement Warrants are callable by the Company at a redemption price of $ 75.00 per July Inducement Warrant, provided that the resale of the shares of common stock underlying the July Inducement Warrants are then registered or may be resold under Rule 144 under the Securities Act.

During the three months ended March 31, 2023, 18 warrants to purchase common stock were exercised for cash, resulting in proceeds of approximately $ 32,000 .

In addition, during the three months ended March 31, 2023, 7,454 warrants were exercised using an alternative cashless exercise provision, resulting in the issuance 5,705 shares of common stock.

The grant date fair value of such warrant was $ 860,000 , which was recorded as a liability with the offset recorded to additional paid-in capital on the condensed consolidated balance sheets.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption:

common stock price on the date of grant of $ 15.99 ;

expected yield of 0.0 %;

expected volatility of 119 %;

risk-free interest rate of 4.31 % and expected life of 5 years.

In connection with February 2024 Public Offering, the Company issued common stock purchase warrants to investors to purchase up to 1,025,600 shares of the Company’s common stock, at an initial exercise price of $ 9.75 per share.

The grant date fair value of such warrant was $ 6,308,000 , which was recorded as a liability with the offset recorded to additional paid-in capital on the condensed consolidated balance sheets.

In connection with the February 2024 Public Offering, the Company issued common stock purchase warrants to investors to purchase up to 1,025,600 shares of the Company’s common stock, at an initial exercise price of $ 9.75 per share.

The grant date fair value of such warrant was $ 6,308,000 , which was recorded as a liability with the offset recorded to additional paid-in capital on the consolidated balance sheets.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption:

3 unchanged sentences

risk-free interest rate of 4.31 % and expected life of 5 years.

In connection with March 2024 Offering, the Company issued common stock purchase warrants to investors to purchase up to 511,175 shares of the Company’s common stock, at an initial exercise price of $ 6.00 per share.

The grant date fair value of such warrant was $ 1,227,000 , which was recorded as a liability with the offset recorded to additional paid-in capital on the condensed consolidated balance sheets.

In connection with the March 2024 Offering, the Company issued common stock purchase warrants to investors to purchase up to 511,175 shares of the Company’s common stock, at an initial exercise price of $ 6.00 per share.

The grant date fair value of such warrant was $ 1,227,000 , which was recorded as a liability with the offset recorded to additional paid-in capital on the consolidated balance sheets.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption:

3 unchanged sentences

risk-free interest rate of 4.21 % and expected life of 5 years.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

On March 26, 2024, the Company entered into a warrant amendment agreement (the “Warrant Amendment Agreement”) with certain holders of (i) the New Common Stock Warrants, (ii) the common stock purchase warrants dated January 23, 2024 (the “January 2024 Warrants”), and (iii) the February Common Warrants (together with the New Common Stock Warrants and the January 2024 Warrants, the “Original Warrants”), whereby the holders agreed to (i) amend the New Common Stock Warrants and the January 2024 Warrants so such warrants shall not be exercisable until one or more certificates of amendment to the Company’s certificate of incorporation, as amended, are filed with the Secretary of State of the State of Delaware to effectuate an increase in authorized shares of capital stock of the Company and a reverse stock split of the Company’s outstanding shares of common stock;

and (ii) remove certain exercise price reset, right to reprice and/or share adjustment provisions in the Original Warrants, to be effective following the first adjustments following the April 2024 Reverse Stock Split.

In connection with the Initial April 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 225,834 shares of the Company’s common stock, at an initial exercise price of $ 3.196 per share.

The grant date fair value of such warrant was $ 1,255,000 , which was recorded as equity.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption:

common stock price on the date of grant of $ 6.06 ;

expected yield of 0.0 %;

expected volatility of 135 %;

risk-free interest rate of 4.63 % and expected life of 5 years.

In connection with the Second April 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 542,856 shares of the Company’s common stock, at an initial exercise price of $ 5.06 per share.

The grant date fair value of such warrant was $ 2,595,000 , which was recorded as equity.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption:

common stock price on the date of grant of $ 5.39 ;

expected yield of 0.0 %;

expected volatility of 135 %;

risk-free interest rate of 4.63 % and expected life of 5 years.

In connection with the Third April 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 418,845 shares of the Company’s common stock, at an initial exercise price of $ 5.60 per share.

The grant date fair value of such warrant was $ 2,048,000 , which was recorded as equity.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption:

common stock price on the date of grant of $ 5.54 ;

expected yield of 0.0 %;

expected volatility of 135 %;

risk-free interest rate of 4.63 % and expected life of 5 years.

In connection with the Initial May 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 785,000 shares of the Company’s common stock, at an initial exercise price of $ 3.18 per share.

The grant date fair value of such warrant was $ 2,453,000 , which was recorded as equity.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption:

common stock price on the date of grant of $ 3.50 ;

expected yield of 0.0 %;

expected volatility of 137 %;

risk-free interest rate of 4.35 % and expected life of 5 years.

In connection with the Second May 2024 Registered Direct Offering and Concurrent Private Placement, the Company issued Common Stock Purchase Warrants to investors to purchase up to 675,000 shares of the Company’s common stock, at an initial exercise price of $ 3.48 per share.

The grant date fair value of such warrant was $ 1,944,000 , which was recorded as equity.

February 2024 Warrants Black Scholes Value Payout

On December 31, 2024 on the closing of the DV Asset Acquisition, a provision requiring a Black Scholes Value payout was triggered in the remaining outstanding February 2024 Warrants.

This provision was triggered because the DV Asset Acquisition met the criteria for a fundamental change as described in the warrant agreement.

The Black Scholes Value payout was valued at $ 1.96 per share and there was an aggregate number of warrants outstanding of 328,483 .

In order to receive the payout, holders must elect within 30 days of the fundamental change otherwise the warrants convert to warrants in the Company.

The warrants were equity classified prior to the close of the DV Asset Acquisition and were reclassified to liability treatment as a result of the payout liability on December 31, 2024.

In the three months ended March 31, 2025, 316,415 warrants received requests from the holders to receive the Black Scholes Value payout and thus were paid in cash $ 622,000 with the remaining unrequested warrants being reclassified to equity treatment as the January 30, 2025 deadline passed and they reverted to equity warrants.

The Company recognized a gain of $ 8,000 as a result of reclassifying the warrants to equity.

February 2025 Registered Direct Transaction

On February 14, 2025, the Company closed an offering (the “February 2025 Offering”) pursuant to a securities purchase agreement (the “February 2025 Purchase Agreement”) with certain investors (the “February 2025 Investors”).

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

The February 2025 Warrants are immediately exercisable upon issuance and will expire on the fifth anniversary of the issuance date of the February 2025 Warrants.

The February 2025 Warrants may be exercised, in certain circumstances, on a cashless basis pursuant to the formula contained in the February 2025 Warrants.

The grant date fair value of the 4,757,126 warrants was approximately $ 5,257,000 , which were treated as equity instruments.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption:

3 unchanged sentences

risk-free interest rate of 4.3 % and expected life of 5 years.

WISA TECHNOLOGIES, INC.

Obligations Under the Purchase Agreement

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

Placement Agency Agreement

In connection with the February 2025 Offering, on February 13, 2025, the Company entered into a placement agency agreement (the “February 2025 Placement Agency Agreement”) with Maxim Group LLC (the “February 2025 Placement Agent”), pursuant to which the February 2025 Placement Agent agreed to act as placement agent on a “reasonable best efforts” basis in connection with the February 2025 Offering.

Pursuant to the February 2025 Placement Agency Agreement, the Company agreed to pay the February 2025 Placement Agent an aggregate fee equal to 7.0 % of the gross proceeds raised in the February 2025 Offering and reimburse the February 2025 Placement Agent an amount up to $ 75,000 for expenses in connection with the February 2025 Offering.

The Company also issued the February 2025 Placement Agent a private warrant (the “February 2025 Placement Agent Warrant”) to purchase up to 5.0 % of the aggregate number of February 2025 Securities sold in the February 2025 Offering, or warrants to purchase up to 475,713 shares of common stock (such shares, the “February 2025 Placement Agent Warrant Shares”), at an exercise price equal to 125.0 % of the offering price per share of common stock and accompanying February 2025 Warrant, or $ 1.425 per share.

The February 2025 Placement Agent Warrants will be exercisable 6 months after the commencement of sales in the February 2025 Offering and will expire on the five year anniversary of the initial exercise date.

During the three months ended March 31, 2025, two holders of warrants executed their right under the “alternative cashless exercise” provision to effect a cashless exercise of a total of 3,246,111 shares of common stock.

Warrants exercisable as of March 31, 2025 exclude warrants to purchase 1 shares of common stock issued to a marketing firm, which vest upon the achievement of certain milestones, warrants to purchase 2,513,703 shares of common stock issued to investors that participated in the December Inducement Agreement and warrants to purchase 607,689 shares of common stock issued to investors that participated in the September Inducement Agreement that requires shareholder approval prior to the warrants being exercisable, warrants to purchase 475,713 shares of common stock issued to the Placement Agents (defined below in Note 13) and warrants to purchase 12,068 shares of common stock issued to investors that participated in the February 2024 Public Offering that requires shareholder approval prior to the warrants being exercisable.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

For the Three Months Ended March 31, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

September 2024 Warrant Inducement

On September 10, 2024, the Company entered into warrant exercise inducement offer letters (the “September 2024 Inducement Letters”) with holders of the Exchange Warrants pursuant to which the Company agreed to issue new inducement warrants (the “September 2024 Inducement Warrants”) to purchase a number of shares of common stock equal to 65 % of the number of shares of common stock received upon exercise of the Exchange Warrants during the period provided for in the September 2024 Inducement Letters, with such September 2024 Inducement Warrants to be issued on substantially the same terms as the Exchange Warrants.

The holders exercised 1,193,721 Exchange Warrants pursuant to the September 2024 Inducement Letters, and the Company received aggregate gross proceeds of approximately $ 2.6 million from such exercises.

In exchange for the exercises of the Exchange Warrants, the Company issued September 2024 Inducement Warrants exercisable for an aggregate of up to 775,920 shares of common stock at an exercise price of $ 2.21 per share.

Each September 2024 Inducement Warrant is subject to shareholder approval and will expire on the fifth anniversary of such approval.

As amended, the inducement offering period is set to close at 5:00 p.m.

ET on November 30, 2024.

The grant date fair value of the 775,920 warrants was approximately $ 1,574,000 , which were treated as equity instruments.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumption:

common stock price on the date of grant of between $ 1.71 and $ 2.40 ;

expected yield of 0 %;

expected volatility of 143 %;

risk-free interest rate of between 3.43 % and 3.52 % and expected life of 5 years.

During the three months ended September 30, 2024, 1,193,721 warrants to purchase common stock were exercised for cash, resulting in net proceeds of approximately $ 2.4 million.

During the nine months ended September 30, 2024, 1,632,332 warrants, including pre-funded warrants, to purchase common stock were exercised for cash, resulting in net proceeds of approximately $ 2.9 million.

In addition, during the nine months ended September 30, 2024, 3,225 warrants were exercised using an alternative cashless exercise provision, resulting in the issuance 3,211 shares of common stock.

During the three months ended September 30, 2023, 3,400 warrants to purchase common stock were exercised for cash, resulting in net proceeds of approximately $ 617,000 .

During the nine months ended September 30, 2023, 19,031 warrants to purchase common stock were exercised for cash, resulting in net proceeds of approximately $ 9.8 million.

Information regarding warrants for common stock outstanding and exercisable as of September 30, 2024 is as follows:

Information regarding warrants for common stock outstanding and exercisable as of March 31, 2025 is as follows:

Weighted Average

1 unchanged sentence

Exercisable as of

September 30, 2024

March 31, 2025

$ 1.14 - $ 2.21

4 unchanged sentences

* Weighted average

Warrants exercisable as of September 30, 2024 exclude warrants to purchase 2,780,207 shares of common stock issued to investors that participated in the March 2024 Offering that require shareholder approval prior to the warrants being exercisable.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

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

5 unchanged sentences

$ 1.83 - $ 2.21

$ 3.18 - $ 3.48

$ 5.06 - $ 6.00

$ 1,574.00 - $ 30,000.00

$ 38,250.00 - $ 262,500.00

* Weighted average

Warrants exercisable as of December 31, 2023 exclude warrants to purchase 1 shares of common stock issued to a marketing firm, which vest upon the achievement of certain milestones and warrants to purchase 187,557 shares of common stock issued to investors that participated in the Inducement Agreement that requires shareholder approval prior to the warrants being exercisable.

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

The Company recorded a provision for income taxes of $ 0 and $ 2,000 for the three and nine months ended September 30, 2023, respectively.

The Company’s effective tax rate was 0.0 % for the three and nine months ended September 30, 2024.

The Company’s effective tax rate was ( 0.02 )% for the nine months ended September 30, 2023.

The difference between the effective tax rate and the federal statutory tax rate for the three and nine months ended September 2023 primarily relates to the valuation allowance on the Company’s deferred tax assets.

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

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.

provided that, in any year no more than 8 % of the common stock or derivative securitization with common stock underlying 8 % of the common stock may be issued in any fiscal year.

At a Special Meeting of Stockholders on January 24, 2023, the Company’s stockholders approved certain amendments to the LTIP to:

At the annual meeting of stockholders held on December 20, 2024 stockholders voted to remove the annual share limit of common stock that may be issued for a certain fiscal year under the LTIP.

As a result of this change, the maximum number of shares of common stock that may be subject to equity awards is limited to 15 % of the shares of common stock outstanding, which calculation is made using the number of common stock outstanding as of the first trading day of each fiscal quarter.

As of March 31, 2025, up to 3,303,983 shares of common stock are available for grants to participants under the LTIP.

A summary of activity related to restricted stock awards with service-based vesting conditions for the three months ended March 31, 2025 is presented below:

Weighted-Average

Grant Date Fair Value

Non-vested as of January 1, 2025

Non-vested as of March 31, 2025

A summary of activity related to restricted stock awards with performance-based vesting conditions for the three months ended March 31, 2025 is presented below:

Weighted-Average

Grant Date Fair Value

Non-vested as of January 1, 2025

Non-vested as of March 31, 2025

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Stock-Based Compensation, continued

As of March 31, 2025, the unamortized compensation costs related to the unvested restricted stock awards with service based vesting conditions was approximately $ 5,609,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 2.8 years.

As of March 31, 2025, the unamortized compensation costs related to the unvested restricted stock awards with performance based vesting criteria was $ 1,930,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.7 years.

These performance awards vest upon the achievement of the Company’s aggregate revenue equaling or exceeding $ 40,000,000 over a trailing 12 calendar month period ending on or prior to the date that is 5 years from the grant date.

The performance awards are assigned a 100% probability to achieve the performance conditions.

For the three months ended March 31, 2025, no shares of restricted stock units were released under the LTIP.

For the three months ended March 31, 2024, 20 shares of restricted stock issued under the LTIP, were released.

Inducement Grants

On September 13, 2021, Eric Almgren joined the Company as Chief Strategist and was issued 21 shares of restricted common stock as an inducement grant (“September 2021 Inducement Grant”).

As of March 31, 2025, all compensation cost related to the September 2021 Inducement Grant was expensed.

As of March 31, 2025, 16 shares are unvested.

On September 30, 2024, the Company issued 70,000 shares of restricted common stock at a fair value per share of $ 1.77 , to Stanley Mbugua, the Company’s Chief Accounting Officer, as an inducement grant (“September 2024 Inducement Grant”) pursuant to an inducement award agreement dated as of the same date.

Due to the Company closing the acquisition of Data Vault on December 31, 2024, the September 2024 Inducement Grant vesting was fully accelerated due to the change in control that occurred.

As of March 31, 2025, there is no unamortized compensation cost related to the September 2024 Inducement Grant.

On January 2, 2025, the Company issued 1,200,000 units of restricted stock at a fair value per share of $ 2.04 , to Nathaniel Bradley, Chief Executive Officer, as an inducement grant (the “Bradley Inducement Grant”) pursuant to an inducement award agreement dated December 31, 2024.

Of this grant, 600,000 units have service-based conditions and vest in 3 -month equal installments over a 36 -month period, while the other 600,000 units have performance based condition and vest upon the Company’s aggregate revenue equaling or exceeding $ 40,000,000 over trailing 12 calendar month period ending on or prior to the date that is 5 years from the grant date.

As of March 31, 2025, the unamortized compensation cost related to the Bradley Inducement Grant was approximately $ 2,255,000 which is being amortized on a straight-line basis over a period of 2.25 years.

A summary of activity related to restricted stock units under the Company’s Technical Team Retention Plan of 2022 (the “2022 Plan”) for the three months ended March 31, 2025 is presented below:

Weighted-Average

Grant Date Fair Value

Non-vested as of January 1, 2025

Non-vested as of March 31, 2025

As of March 31, 2025, the unamortized compensation cost related to the unvested restricted stock units was approximately $ 58,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.2 years.

For the three months ended March 31, 2025, no shares of restricted stock units were released under the 2022 Plan.

For the three months ended March 31, 2024, 3 shares of restricted stock units were released under the 2022 Plan.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

The Company recorded no provision for income taxes for the three months ended March 31, 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.

1 unchanged sentence

The Company also recognizes the effect of changes in enacted tax laws or rates in the interim periods in which the changes occur.

As of September 30, 2024 and December 31, 2023, the Company retains a full valuation allowance on its deferred tax assets.

As of March 31, 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 three and nine months ended September 30, 2024 and 2023 was calculated on a jurisdiction basis.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

The provision for income taxes for the three months ended March 31, 2025 and 2024 was calculated on a jurisdiction basis.

Commitments and Contingencies

8 unchanged sentences

we recognize lease expense for these leases on a straight-line basis over the lease term.

The following table reflects our lease assets and our lease liabilities at September 30, 2024 and December 31, 2023 (in thousands):

September 30,

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

Operating lease right-of-use assets

3 unchanged sentences

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.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Commitments and Contingencies, continued

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

Three Months Ended

Nine Months Ended

September 30, 2024

March 31, 2025

March 31, 2024

Operating lease cost

1 unchanged sentence

Total lease cost

As of September 30, 2024, the maturity of operating lease liabilities was as follows (in thousands):

As of March 31, 2025, the maturity of operating lease liabilities was as follows (in thousands):

Payments due in:

7 unchanged sentences

Present value of capital lease obligations

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Commitments and Contingencies, continued

Lease Term and Discount Rate:

September 30, 2024

March 31, 2025

Weighted-average remaining lease term (in years)

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30, 2024

March 31, 2025

Operating cash outflows from operating leases

6 unchanged sentences

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.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Related Parties

Nathaniel Bradley and EOS Holdings

Nathaniel Bradley, the Chief Executive Officer (“CEO”) of the Company, is a control person of EOS Holdings which became a related party of the Company at the close of the DV Asset Acquisition on December 31, 2024.

In addition, Sonia Choi, the Company’s Chief Marketing Officer is the spouse of the Company’s CEO and holds the position of Chief Marketing Officer of EOS Holdings, a related party of the Company.

EOS Holdings received 3,999,911 shares of common stock of the Company at the close of the transaction.

As described in Note 5 Borrowings, the Company owes $ 9.7 million of principal balance under the DV Convertible Note to EOS Holdings, and EOS Holdings owes $ 299,000 in notes receivable to the Company, as of March 31, 2025.

The Company has recorded $ 5,000 in interest income on the notes receivable for the year ended March 31, 2025.

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 period from January 16, 2025 through March 31, 2025, the Company has paid $ 428,000 to EOS Holdings.

Helge Kristensen

1 unchanged sentence

Kristensen serves as vice president of Hansong Technology, an original device manufacturer of audio products based in China, president of Platin Gate Aps, a company with focus on service-branding in lifestyle products as well as pro line products based in Denmark and co-founder and director of Inizio Capital, an investment company based in the Cayman Islands.

For the three months ended September 30, 2024 and 2023, Hansong Technology purchased modules from the Company of approximately $ 3,000 and $ 20,000 , respectively, and made payments to the Company of approximately $ 38,000 and $ 0 , respectively.

At September 30, 2024 and 2023, Hansong Technology owed the Company approximately $ 4,000 and $ 49,000 , respectively.

For the three months ended September 30, 2024 and 2023, Hansong Technology sold speaker products to the Company of approximately $ 0 and $ 24,000 , respectively, and the Company made payments to Hansong Technology of approximately $ 96,000 and $ 50,000 , respectively.

At September 30, 2024 and 2023, the Company owed Hansong Technology approximately $ 67,000 and $ 324,000 , respectively.

For the nine months ended September 30, 2024 and 2023, Hansong Technology purchased modules from the Company of approximately $ 38,000 and $ 69,000 , respectively, and made payments to the Company of approximately $ 38,000 and $ 189,000 , respectively.

For the nine months ended September 30, 2024 and 2023, Hansong Technology sold speaker products to the Company of approximately $ 1,000 and $ 83,000 , respectively, and the Company made payments to Hansong Technology of approximately $ 184,000 and $ 1,103,000 , respectively.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2024 and 2023

Related Parties, continued

As of September 30, 2024 and December 31, 2023, Mr.

For the three months ended March 31, 2025 and 2024, Hansong Technology purchased modules from the Company of approximately $ 11,000 and $ 25,000 , respectively, and made no payments to the Company during those same periods.

At March 31, 2025 and 2024, Hansong Technology owed the Company approximately $ 35,000 and $ 29,000 , respectively.

For the three months ended March 31, 2025 and 2024, Hansong Technology sold no speaker products to the Company, and the Company made no payments to Hansong Technology for the three months ended March 31, 2025 and approximately $ 25,000 for the three months ended March 31, 2024.

At March 31, 2025 and 2024, the Company owed Hansong Technology approximately $ 43,000 and $ 225,000 , respectively.

As of March 31, 2025 and December 31, 2024, Mr.

Kristensen owned less than 1.0 % of the outstanding shares of the Company’s common stock.

Howitt has served as a member of the Company’s board of directors since December 2021.

Howitt is founder and CEO of Meriwether Group LLC, (“Meriwether”), a strategic consulting firm that works with disruptive consumer brands by integrating their visions, developing growth strategies, scaling their brands, and increasing revenue in order to build enterprise value.

Meriwether is the manager of Meriwether Accelerators LLC.

Meriwether which is also majority-owned by Mr.

Howitt, owns a 25 % general partner interest in Meriwether Hero Fund.

On September 8, 2023, the Company entered into a Loan and Security Agreement with Meriwether Hero Fund.

Pursuant to the Loan and Security Agreement, Meriwether Hero Fund provided the Company with a term loan in the principal amount of $ 650,000 that was scheduled to mature on November 7, 2023, subject to further extension.

The Company repaid the loan in full on December 7, 2023.

See Note 4 Short-Term Loan for additional information.

As of September 30, 2024 and December 31, 2023, Mr.

Howitt owned less than 1.0 % of the outstanding shares of the Company’s common stock.

Segment Information

The Company has adopted ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures and has revised prior year disclosures to conform with the current year presentation.

The Company operates in one business segment.

Our chief decision-maker, the President and Chief Executive Officer, evaluates our performance based on company-wide consolidated results.

Operating segments have been identified based on the financial information utilized by the Company’s Chief Executive Officer, the chief operating decision maker (“CODM”).

The CODM uses net income as a measure of profitability to assess segment performance and deciding on how to allocate resources such as capital investments, share repurchases, and acquisitions.

The CODM does not use or receive total assets by segment to make decisions regarding resources;

therefore, the total asset disclosure by segment has not been included.

The Company operates in one business segment.

Our chief decision-maker, the Chief Executive Officer, evaluates our performance based on company-wide consolidated results.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Segment Information continued

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

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) income

Net revenue from customers is designated based on the geographic region to which the product is delivered.

Net revenue by geographic region for the three and nine months ended September 30, 2024 and 2023 was as follows:

Net revenue by geographic region for the three months ended March 31, 2025 and 2024 was as follows:

For the Three Months Ended

For the Nine Months Ended

September 30,

(in thousands)

1 unchanged sentence

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Subsequent Events

Notes Receivable - Maturity Date

On October 23, 2024, the Company and the Borrower agreed to extend the maturity dates of the June 2024 Note, August 2024 Note and September 2024 Note to January 31, 2025.

Securities Purchase Agreement

On April 3, 2025, the Company completed the initial closing of its previously announced transaction (the “April 2025 Offerings”) in which, pursuant to a securities purchase agreement (the “April 2025 Purchase Agreement”) between the Company and certain institutional investors (the “April 2025 Purchasers”), dated March 31, 2025, the April 2025 Purchasers agreed to purchase from the Company (a) in a registered direct offering, senior secured convertible notes having an aggregate principal amount of $ 5,555,555 (the “Initial Notes”) for an aggregate purchase price of $ 5,000,000 and senior secured convertible notes having an aggregate principal amount of $ 11,111,111 (the “Additional Notes”, and together with the Initial Notes, the (“2025 Notes”) for an aggregate purchase price of $ 10,000,000 upon satisfaction of certain closing conditions applicable to the Initial Notes and Additional Notes, respectively and (b) in a concurrent private placement, common stock purchase warrants (“2025 Warrants”) to purchase up to 19,346,101 shares of common stock of the Company, of which warrants to purchase up to 6,448,700 shares of common stock were issued in connection with the issuance of the Initial Notes (the “April 2025 Initial Warrants”) and warrants to purchase up to 12,897,401 shares of common stock will be issued in connection with the issuance of the Additional Notes (the “Additional Warrants”).

The closing of the Additional Notes and Additional Warrants (the “Additional Closing,” and together with the initial closing, the “2025 Closings”) will take place on or after the date that is 20 days after the mailing by the Company of a definitive information statement on Schedule 14(c) with respect to the approval, by written consent of the Company’s stockholders, of the issuance of the shares of common stock issuable upon conversion of the 2025 Notes and exercise of the 2025 Warrants and a one-time reset, at the Company’s option, of the exercise price of outstanding common stock purchase warrants held by the April 2025 Purchasers that do not contain “alternative cashless exercise” features ( “Stockholder Approval”).

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

The 2025 Notes carry a 10 % original issue discount, and mature 18 months from the date of issuance.

No interest accrues during the term of the 2025 Notes, unless an event of default occurs, in which case interest will accrue at a rate of 12 % per annum.

The obligations under these 2025 Notes rank senior to all other existing indebtedness and equity of the Company.

The 2025 Notes are convertible into shares of the Company’s common stock at any time beginning on the date of Stockholder Approval at the option of the holders thereof, in whole or in part, into such number of shares of common stock (the “Conversion Shares”) at an initial conversion price equal to $ 1.00 per share (the “Conversion Price”).

Alternatively, the Notes are convertible at a price (the “Alternate Conversion Price”) equal to the greater of (x) the Floor Price (as defined below) and (y) 90 % of the lowest volume weighted adjusted price of the shares of Common Stock (the “VWAP”) in the ten (10) trading days prior to the applicable conversion date (“Alternate Conversions”).

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

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Subsequent Events, continued

Under the 2025 Notes, the Company is required to use up to 30 % of the proceeds from future financings to redeem the 2025 Notes in an amount equal to the aggregate principal amount of the 2025 Notes being redeemed from such proceeds multiplied by 105 %.

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

The 2025 Warrants have an initial exercise price of $ 0.8615 per share.

The Initial Warrants will be exercisable upon effectiveness of Stockholder Approval and expire five (5) years from the date of such effectiveness.

The Additional Warrants will be issued in the Additional Closing, exercisable immediately upon issuance and expire five (5) years from the date of issuance.

The exercise price of the 2025 Warrants is subject to (a) downward adjustment in the event the Company issues shares of common stock or common stock equivalents having an effective price lower than the then current exercise price of the 2025 Warrants, subject to certain exceptions and (b) standard, proportional adjustments in the event of certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate changes.

The Warrants contain 4.99 / 9.99 % beneficial ownership limitations.

Security Agreement and Guarantee

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

Placement Agency Agreement

As previously announced, in connection with the April 2025 Offerings, the Company entered into a placement agency agreement (the “April 2025 Placement Agency Agreement”) with Maxim Group LLC (the “Placement Agent”) on March 31, 2025, pursuant to which the Placement Agent agreed to act as placement agent on a “reasonable best efforts” basis in connection with the April 2025 Offerings.

Pursuant to the April 2025 Placement Agency Agreement and in connection with initial closing, the Company paid the Placement Agent an aggregate fee equal to 8.0 % of the gross proceeds raised at the initial closing and reimbursed the Placement Agent an amount up to $ 15,000 for expenses in connection with the Offerings.

In addition to similar rights previously granted to the Placement Agent, pursuant to the Placement Agency Agreement, the Company granted the Placement Agent a right of first refusal for a period of 30 days from August 22, 2025 to provide investment banking services to the Company on an exclusive basis, exercisable in the Placement Agent’s discretion.

Under the Placement Agency Agreement, for a period of nine (9) months from the Initial Closing, the Company will pay the Placement Agent a cash fee equal to 7.0 % of the gross proceeds of any capital raising activity received by the Company from the Purchasers in the Offerings.

NYIAX Agreements

Exchange Agreement

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

The Exchange Agreement was not closed as of March 31, 2025.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Subsequent Events, continued

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) 3,000,000 shares of common stock (such shares of common stock, the “Closing Shares”), and (ii) 2,000,000 shares of common stock (such shares of common stock, the “Additional Shares”), upon the terms and subject to the conditions set forth in the Exchange Agreement.

The Closing Shares will be issued in four equal quarterly tranches starting from the closing.

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 ( 30 ) days from the completion of the integration.

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

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 2,530,000 shares (such shares, the “Consideration Shares”) of common stock.

Pursuant to the License Agreement, in consideration of the rights granted to NYIAX under the License Agreement, NYIAX agreed to pay to the Company a license fee in the form of a convertible promissory note in the aggregate amount $ 2,500,000 (the “NYIAX Convertible Note”).

The NYIAX Convertible Note is due on the first anniversary of the closing (the “Maturity Date”).

NYIAX agreed to pay interest to the Company on the aggregate unconverted and then outstanding principal amount of the NYIAX Convertible Note at the rate of four percent ( 4 %) per annum, accruing from the closing.

The NYIAX Convertible Note may be prepaid in full at NYIAX’s election.

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

The 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.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

Subsequent Events, continued

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.

Lock-up Agreements

On April 9, 2025, the Company and NYIAX entered into the Lock-Up Agreements (defined below).

In connection with the Exchange Agreement, the Company agreed to enter into a lock-up agreement in respect of the NYIAX Shares, pursuant to which the NYIAX Shares shall be subject to lock-up restrictions for four ( 4 ) years from the issuance (the “Datavault Lock-Up Agreement).

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

Nasdaq Compliance

On May 6, 2025, the Company received the May 2025 Nasdaq Letter.

For discussion of the May 2025 Nasdaq Letter, please see Note 1 to Item 1 of this Report under the heading “Nasdaq Compliance”.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements