What changed in this filing

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Item 1. Financial Statements

2026-05-15 compared with 2025-11-14 · 657 added, 1046 removed, 544 unchanged (76% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30, 2025

December 31, 2024

March 31, 2026 December 31, 2025

(unaudited) (1)

Current Assets:

1 unchanged sentence

Accounts receivable 1,066 888

Related party receivable 29,500 30,000

Unbilled accounts receivable 1,304 1,705

Inventories 717 636

Note receivable 500 —

Crypto assets 57,111 92,222

Deferred offering costs 745 5,500

Prepaid software license, current 8,368 7,759

Prepaid expenses and other current assets 4,752 2,159

2 unchanged sentences

Intangible assets 102,618 94,816

Goodwill 27,285 19,135

Prepaid software license, noncurrent 6,058 6,956

Investments in non-marketable securities 1,766 4,300

Deposit for business combination — 1,000

Other assets 4,919 5,018

Total assets $ 250,113 $ 274,704

Liabilities, Convertible Redeemable Preferred Stock and Stockholders’ Equity

2 unchanged sentences

Accrued liabilities 12,053 11,002

Short-term convertible notes

Due to related party 760 98

Short-term convertible note payable, related party — 3,936

1 unchanged sentence

Total current liabilities 23,024 26,881

Convertible note payable, net, related party, net of current

Convertible notes 3,380 5,917

Other long term note payable

Warrant liabilities 9 9

1 unchanged sentence

Total liabilities 30,085 36,730

Commitments and contingencies (Note 10)

Series B convertible redeemable preferred stock, par value $ 0.0001 ;

375,000 shares authorized;

0 and 0 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively

Stockholders’ Equity:

Common stock, par value $ 0.0001 ;

2,000,000,000 shares authorized;

217,201,387 and 52,034,060 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively

617,813,176 and 573,438,153 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

Additional paid-in capital 650,541 615,360

1 unchanged sentence

Total stockholders’ equity 220,028 237,974

Total liabilities, redeemable convertible preferred stock and stockholders’ equity

Total liabilities and stockholders’ equity $ 250,113 $ 274,704

________________________________________________

(1) The condensed consolidated balance sheet as of December 31, 2025 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-150 reverse stock split effected in April 2024, as discussed in Note 1.

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

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and nine months ended September 30, 2025 and 2024

For the three months ended March 31, 2026 and 2025

(in thousands, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenue

Three Months Ended March 31,

Live event production revenue 2,499 —

Consumer audio products, components, and other revenue, net 917 629

Total net revenue 3,416 629

Cost of revenue, live events 2,795 —

Cost of revenue, consumer audio products, components, and other 510 560

Total cost of net revenue 3,305 560

Gross profit 111 69

Operating Expenses:

3 unchanged sentences

Total operating expenses 31,061 9,500

Loss from operations

Income (loss) from operations ( 30,950 ) ( 9,431 )

Interest expense, net ( 1,121 ) ( 120 )

Change in fair value of 2025 and Q3 2025 notes measured at fair value

Change in fair value of convertible note to related party measured at fair value

Change in fair value of warrant liabilities — 17

Extinguishment of debt ( 1,725 ) —

Other income, net

Impairment of investment in nonmarketable security ( 2,534 ) —

Other expense, net ( 16,801 ) ( 29 )

Loss before provision for income taxes ( 53,131 ) ( 9,563 )

Provision for income taxes — —

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 $ ( 53,131 ) $ ( 9,563 )

1 unchanged sentence

Weighted average number of common shares used in computing net loss per common share 574,220,923 53,681,828

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

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

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three and nine months ended September 30, 2025 and 2024

For the three months ended March 31, 2026 and 2025

(in thousands, except share and per share data)

Convertible Preferred Stock

Common Shares

Common Shares Additional

Paid-in Capital Accumulated

Deficit Total

Stockholders’

Paid-in Capital

Shares Amount

Balance as of December 31, 2025 573,438,153 $ 59 $ 615,360 $ ( 377,445 ) $ 237,974

Stock-based compensation 211,131 — 5,234 5,234

Issuance of common stock in connection with the February Offering

Issuance of common stock in connection with warrant exercise

Conversion of liability warrants to equity warrants

Balance as of March 31, 2025

Stock-based compensation

Issuance of common stock in connection with warrant exercise

Issuance of common stock for conversions of 2025 Notes

Issuance of common stock with NYIAX transaction

Issuance of warrants with the 2025 Notes

Issuance of common stock for the acquisition of CSI

Equity issuance costs — — ( 250 ) ( 250 )

Balance as of June 30, 2025

Stock-based compensation

Issuance of common stock for the 2025 notes and Q3 notes conversions

Issuance of common stock in connection with Scilex investment

Issuance of common stock in connection with EOS conversion

Issuance of common stock for the acquisition of intangible assets

Exchange of warrants for common stock with the 10% notes extinguishment

Shares issued in connection with NYIAX transaction

Equity issuance costs

Balance as of September 30, 2025

Convertible Preferred Stock

Common Shares

Issuance of common stock for intangible asset acquisition 7,500,000 1 5,400 5,401

Issuance of common stock in connection with ATM offering, net of fees 36,663,892 3 24,797 24,800

Net loss — — — ( 53,131 ) ( 53,131 )

Balance as of March 31, 2026 617,813,176 $ 63 $ 650,541 $ ( 430,576 ) $ 220,028

Common Shares Additional

Paid-in Capital Accumulated

Deficit Total

Stockholders’

Paid-in Capital

Equity (Deficit)

Shares Amount

Balance as of December 31, 2024 52,034,060 $ 5 $ 384,172 $ ( 298,451 ) $ 85,726

Stock-based compensation 5,986,893 — 648 — 648

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 the February Offering 4,757,126 1 4,859 — 4,860

Issuance of common stock in connection with warrant exercise 3,246,111 — — — -

Issuance of common stock and warrants, net of offering costs

Issuance of common stock to vendors

Restricted stock awards cancelled

Release of vested restricted common stock

Conversion of liability warrants to equity warrants — — 15 — 15

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

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.

Net loss — — — ( 9,563 ) ( 9,563 )

Balance as of March 31, 2025 66,024,190 6 389,694 ( 308,014 ) 81,686

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2025 and 2024

For the three months ended March 31, 2026 and 2025

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net loss $ ( 53,131 ) $ ( 9,563 )

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

2 unchanged sentences

Amortization of debt discounts and paid-in-kind interest 902 120

Change in fair value of convertible debt

Fair value of equity warrants in interest expense — ( 17 )

Accreted interest on convertible notes

Change in fair value of crypto currency 16,133 —

Change in fair value of warrant liability

Loss on sale of bitcoin 822 —

Debt extinguishment 1,725 —

Impairment of nonmarketable security 2,534 —

Changes in operating assets and liabilities:

Accounts receivable 220 69

Related party receivable 500 —

Unbilled accounts receivable 401 —

Inventories ( 81 ) 276

Prepaid expenses and other current assets ( 2,554 ) 359

Prepaid software 289 —

Other assets 99 54

Accounts payable ( 4,339 ) ( 291 )

Due to related party 18,818 —

Accrued liabilities 780 30

3 unchanged sentences

Issuance of note receivable ( 500 ) —

Deposit for business combination — ( 1,000 )

Cash paid for acquisition of API Media, net ( 12,949 ) —

Purchases of property and equipment ( 264 ) ( 52 )

Acquisition of business, net

Disposals of property and equipment ( 171 ) —

Net cash used in investing activities ( 13,884 ) ( 1,052 )

Cash flows from financing activities:

Proceeds from issuance of convertible notes, net of issuance costs

Proceeds from issuance of common stock, net of issuance costs

Proceeds from issuance of common stock in connection with warrant exercise

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

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

Proceeds from exercise of Series B preferred stock warrants

Repurchase of Series B preferred stock warrants

Repayment of short-term loan

Repayments on notes payable ( 6,963 ) ( 406 )

Proceeds form issuing shares through an At-The-Market (ATM) program 29,985 4,945

Equity issuance costs ( 210 ) —

Repurchase of common stock warrants — ( 622 )

Repayment of notes principal

Net cash provided by financing activities 22,812 3,917

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents 201 ( 3,159 )

Cash and cash equivalents as of beginning of period 2,004 3,330

1 unchanged sentence

Noncash Investing and Financing Activities:

Conversion of liability warrants to equity warrants

Issuance of warrant liability in connection with financing

Repurchase of Series B preferred stock

Repurchase of Series B preferred stock warrants

Cashless exercise of warrants

Issuance of common stock to vendors

Warrant exercise in connection with loan settlement

Issuance of common stock in connection with Series B preferred stock

Capitalized acquisition costs — 117

Convertible notes issued for CSI acquisition

Non cash common shares issued in CSI acquisition

Shares issued for Scilex investment in exchange for Bitcoin

Deposit paid in December 2024 used in CSI acquisition closing

Shares payable to NYIAX in share exchange agreement

Unpaid financing issuances costs — 86

Unpaid deferred offering costs 469 117

Settlement of Related Party Payable with Bitcoin 18,156 —

Intangible assets acquired with issuance of common stock 5,400 —

ATM Non cash offering costs 5,812 —

Reclass liability warrant to equity — 15

Issuance of common stock from non-cash conversion of convertible notes

Common stock issued for intangible asset acquisitions

Issuance of common stock to NYIAX

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

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

For the Three and Three Months Ended March 31, 2026 and 2025

Business and Summary of Significant Accounting Policies

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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.

Datavault stands at the forefront of innovation, delivering cutting-edge Web 3.0 data management and high-performance computing solutions to a global audience.

On May 20, 2025, the Company completed its previously announced asset purchase of technology assets, customer contracts, trademarks, and other intellectual property (collectively, the “CSI Acquired Assets”) from CompuSystems, Inc.

CSI is a provider of registration, data analytics, and lead management services for live events, offering customer support to clients in the trade, association, corporate, and government event markets.

The results of operations of CSI are included in the unaudited condensed consolidated financial statements of the Company for the three and nine months ended September 30, 2025 since the date of acquisition.

Only the results of operations attributable to the CSI Acquired Assets acquired from CompuSystems, Inc.

are included in the Company’s unaudited condensed consolidated financial statements from May 20, 2025, onward.

Following the acquisition, the Company began operating the CSI Acquired Assets under the brand name “Event Citadel."

On January 22, 2026, the Company completed its previously announced acquisition of all of the outstanding shares of API Media Innovations Inc.

(“API Media”).

API Media is a technology provider specializing in on-site media capture, data collection, and digital engagement services for live outdoor events, including sporting events and large-scale experiential activations.

The results of operations of API Media are included in the Company’s unaudited condensed consolidated financial statements from January 22, 2026, onward.

Accordingly, the results of operations of API Media are included in the Company’s unaudited condensed consolidated financial statements for the three months ended March 31, 2026.

Nasdaq Compliance

Stockholders Equity Deficiency

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

The Panel has determined to impose a monitoring period (the “Monitor Period”), pursuant to Nasdaq Listing Rule 5815(d)(4)(B).

If, during the Monitor Period, which lasts until July 3, 2025, the Nasdaq Listing Qualifications staff (“Staff”) finds the Company again out of compliance with the Equity Rule, notwithstanding Nasdaq Listing Rule 5810(c)(2), the Company will not be permitted to provide the Staff with a plan of compliance with respect to such deficiency and Staff will not be permitted to grant additional time for the Company to regain compliance with respect to such deficiency, nor will the Company be afforded an applicable cure or compliance period pursuant to Nasdaq Listing Rule 5810(c)(3).

Instead, Staff will issue a Delist Determination Letter and the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened Hearings Panel if the initial Panel is unavailable.

The Company will have the opportunity to respond and present to the Panel as provided by Nasdaq Listing Rule 5815(d)(4)(C).

The Company’s securities may at that time be delisted from Nasdaq.

The monitoring period expired July 25, 2025 with no further action required by the Company.

First Bid Price Deficiency

On April 29, 2024, the Company received a letter from Nasdaq notifying the Company that it has regained compliance with the Minimum Bid Price Requirement (defined below) pursuant to Listing Rule 5550 (a)(2), as required by the April 2024 Decision.

The Company will be subject to a mandatory panel monitor for a period of one year from the date of the letter pursuant to Nasdaq Listing Rule 5815(d)(4)(B).

If, within that one-year monitoring period, the Staff finds the Company again out of compliance with the Minimum Bid Price Requirement, notwithstanding Nasdaq Listing Rule 5810(c)(2), the Company will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and the Staff will not be permitted to grant additional time for the Company to regain compliance with respect to that deficiency, nor will the Company be afforded an applicable cure or compliance period pursuant to Nasdaq Listing Rule 5810 (c)(3).

Instead, the Staff will issue a delist determination letter and the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened hearings panel if the initial Panel is unavailable.

The one-year monitoring period has concluded with no further action required by the Company

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 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) Minimum Bid Price Requirement, because the closing bid price of the Company’s common stock was below $1.00 per share for the previous thirty (30) consecutive business days (the “Minimum Bid Price Requirement”).

The May 2025 Nasdaq Letter has no immediate effect on the listing of the common stock, which will continue to trade uninterrupted on the Nasdaq Capital Market under the ticker “DVLT.”

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has been granted 180 calendar days from the date of the May 2025 Nasdaq Letter, or until November 3, 2025 (the “Compliance Period”), to regain compliance with the Minimum Bid Price Requirement.

If at any time during the Compliance Period, the bid price of the common stock closes at or above $1.00 per share for a minimum of ten (10) consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Minimum Bid Price Requirement and the matter will be closed.

In the event the Company does not regain compliance with the Minimum Bid Price Requirement by the end of the Compliance Period, the Company may be eligible for an additional 180-calendar day grace period.

To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and will need to provide written notice to Nasdaq of its intent to regain compliance with such requirement during such second compliance period.

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

Nasdaq Compliance Regained October 10, 2025

On October 10, 2025, the Company received a letter (the “Letter”) from Nasdaq confirming that the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share for the Company’s common stock.

As previously disclosed, on May 6, 2025, the Company received notice from Nasdaq that it was not in compliance with the minimum bid price requirement.

The Letter states that for 10 consecutive business days from September 26, 2025 through October 9, 2025, the closing bid price of the Company’s common stock was at least $1.00 per share.

Accordingly, the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2), and this matter is now closed.

Reverse Stock Split

April 2024 Reverse Stock Split

On April 4, 2024, the Board approved a 1-for-150 reverse stock split (the “April 2024 Reverse Stock Split”) of our outstanding shares of common stock and authorized the filing of a certificate of amendment to our certificate of incorporation, as amended, with the Secretary of State of the State of Delaware to effect the April 2024 Reverse Stock Split.

On April 12, 2024, the April 2024 Reverse Stock Split was effected and the condensed consolidated financial statements have been retroactively adjusted.

All common stock share numbers, warrants to purchase common stock, prices and exercise prices have been retroactively adjusted to reflect the April 2024 Reverse Stock Split.

The common stock began trading on a split-adjusted basis at the start of trading on April 15, 2024.

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

On February 24, 2026, the Company received a letter from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”), because the closing bid price of the Company’s common stock had remained below $1.00 per share for 30 consecutive business days.

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has been granted an initial compliance period of 180 calendar days, or until August 24, 2026, to regain compliance with the Minimum Bid Price Requirement.

If at any time during the compliance period the closing bid price of the Company’s common stock is at least $1.00 per share for a minimum of ten consecutive business days, Nasdaq will provide written confirmation that the Company has regained compliance.

If the Company does not regain compliance by August 24, 2026, the Company may be eligible for an additional 180-calendar day compliance period, provided it satisfies all other continued listing requirements for the Nasdaq Capital Market, other than the Minimum Bid Price Requirement, and provides written notice to Nasdaq of its intention to regain compliance, including, if necessary, by effecting a reverse stock split.

If the Company does not regain compliance within the applicable compliance period(s), including any extensions that may be granted by Nasdaq, Nasdaq would provide notice that the Company’s common stock would be subject to delisting from the Nasdaq Capital Market.

Previously, on May 6, 2025, the Company received notice from Nasdaq that it was not in compliance with the Minimum Bid Price Requirement.

The Company subsequently regained compliance on October 10, 2025 after the closing bid price of the Company’s common stock remained at or above $1.00 per share for ten consecutive business days, and Nasdaq confirmed the matter had been closed.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

For the Three and Three Months Ended March 31, 2026 and 2025

Basis of Presentation

8 unchanged sentences

Actual results could differ from those estimates.

Reclassification

Certain reclassifications have been made to prior periods’ condensed consolidated financial statements to conform to the current period presentation.

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

During the three months ended September 30, 2025, the Company recorded an out-of-period adjustment to correct misstatements related to the accounting for its investment in NYIAX Inc.

within the financial statements for the period ended June 30, 2025.

In the three months ended September 30, 2025, the Company issued 2,530,000 shares of common stock to NYIAX that was contractually required to be issued on April 9, 2025 at the closing date.

The Company incorrectly omitted $ 4.3 million in assets consisting of $ 1.8 million investment and $ 2.5 million in note receivable, understated additional paid-in capital by $ 4.9 million, and overstated research and development expense by $ 0.5 million resulting in a corresponding decrease in net loss and pre-tax loss for the three months ended June 30, 2025.

The Company recorded a $ 4.3 million investment in NYIAX in the three months ended September 30, 2025 to recognize the fair value of the shares received from NYIAX, $ 1.8 million of which was received in the three months ended June 30, 2025 and properly stated in the three months ended September 30, 2025.

Research and development expense was decreased in the three months ended September 30, 2025 by $ 0.5 million to properly reflect expense associated with recognizing the intellectual property received from NYIAX.

The correction is non-cash in nature and had no impact on revenue, operating cash flows, or compliance with any debt covenants.

Management evaluated the impact of the error both qualitatively and quantitatively and determined that it was not material to the financial statements for the quarter ended June 30, 2025, or the current reporting period.

Concentration of Credit Risk and Other Risks and Uncertainties

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

As of September 30, 2025 and December 31, 2024, there was no allowance for credit losses.

As of September 30, 2025, the Company had two customers accounting for 29 % and 17 % of accounts receivable.

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

The Company had one customer accounting for 19 % of its net revenue for the three months ended September 30, 2025.

The Company had one customer accounting for 12 % of its net revenue for the nine months ended September 30, 2025.

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

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

As of March 31, 2026 and December 31, 2025, there was no allowance for credit losses.

As of March 31, 2026, the Company had two customers accounting for 65 % and 31 % of accounts receivable.

As of December 31, 2025, the Company had two customers accounting for 65 % and 32 % of accounts receivable.

The Company had two customers accounting for 14 % and 11 % of its net revenue for the three months ended March 31, 2026.

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

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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.

The Company also generates revenue through the licensing of its proprietary intellectual property and through the provision of live event and media-related services.

Revenue derived from intellectual property licensing arrangements may be concentrated among a limited number of counterparties and is subject to risks including the licensee’s ability to commercialize the underlying technology, maintain sufficient funding, and comply with contractual payment terms.

Additionally, certain licensing arrangements may include variable consideration or milestone-based payments, which could impact the timing and amount of revenue recognized.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

Revenue from the Company’s live event and media services business is dependent on the successful execution of events, customer demand, and the continuation of relationships with key customers and partners.

This line of business may be subject to seasonality, event timing, and external factors such as economic conditions, venue availability, and potential disruptions to scheduled events.

The Company may also rely on a limited number of significant customers, which could result in revenue concentration and variability in operating results from period to period.

Cash and Cash Equivalents

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The Company exercises judgment when determining the adequacy of these reserves as it evaluates historical bad debt trends and changes to customers’ financial conditions.

No allowance for credit losses was deemed necessary as of September 30, 2025 or December 31, 2024.

No allowance for credit losses was deemed necessary as of March 31, 2026 or December 31, 2025.

Fair Value of Financial Instruments

1 unchanged sentence

The carrying value of the Company’s borrowings and capital lease liabilities approximates fair value based upon borrowing rates currently available to the Company for loans and capital leases with similar terms.

The Company’s warrant liabilities and the convertible notes payable, net to a related party and the 2025 Convertible Notes (defined below) are the only financial instruments that are adjusted to fair value on a recurring basis.

The Company’s Crypto assets, NYIAX Investment, Convertible note payable and Warrant liability, are the only financial instruments that are adjusted to fair value on a recurring basis.

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

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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.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

Deferred Offering Costs

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The deferred offering costs will be offset against public offering proceeds upon the effectiveness of an offering.

The offering costs for the July ATM were offset with proceeds on a pro-rata basis.

In the event that an offering is terminated, deferred offering costs will be expensed.

As of September 30, 2025 and December 31, 2024, the Company had capitalized $ 243,000 and no deferred offering costs, respectively.

As of March 31, 2026 and December 31, 2025, the Company had capitalized $ 0.7 million and $ 5.5 million deferred offering costs, respectively.

Goodwill and Intangible Assets

The Company's intangible assets include goodwill and other intangible assets.

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired.

Other intangible assets include trademarks and trade names, patents and customer-related intangibles.

Indefinite-lived intangible assets consist of goodwill.

All other intangible assets are definite-lived intangible assets and are amortized over their respective estimated lives, ranging from 3 to 10 years.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

The Company is required to perform an impairment review of indefinite-lived intangible assets, including goodwill annually, and more frequently under certain circumstances.

Indefinite-lived intangible assets are subjected to this annual impairment test during the fourth quarter of the Company's fiscal year.

The Company's impairment evaluation consists of a qualitative impairment assessment in which management evaluates whether it is more likely than not that the indefinite-lived intangible assets are impaired.

If it is determined that it is more likely than not, the Company performs a quantitative impairment test, which compares the fair value of the reporting unit or indefinite-lived intangible asset to its carrying value.

If the Company determines through the impairment process that the indefinite-lived intangible asset has been impaired, the Company will record the impairment charge in its results of operation.

Through March 31, 2026, the Company has never recorded a goodwill impairment charge.

In the event that facts and circumstances indicate definite-lived intangible assets may be impaired, the Company evaluates the recoverability and estimated useful lives of such assets.

If such indicators are present, recoverability is evaluated based on whether the sum of the estimated undiscounted cash flows attributable to the asset (group) in question is less than their carrying value.

If less, the Company measures the fair value of the asset (group) and recognizes an impairment loss if the carrying amount of the assets exceeds their respective fair values.

Property and Equipment, Net

12 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.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

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.

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The Company will continue to assess if there should be a warranty accrual going forward.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

Revenue Recognition

The Company historically generates revenue primarily from two product categories which are the sale of consumer audio products (“Consumer Audio Products”) as well as the sale of components (“Components”).

With the closing of the CSI acquisition, the Company also generates revenue from registration, data analytics, and lead management services for live events, such as trade shows and conferences, in both the corporate and government sectors (“Live Events”).

The Company applies the following five steps:

(1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

The Company considers customer purchase orders to be the contracts with a customer for Consumer Audio Products and Components.

The Company also enters into contracts with customers for providing Live Events with terms of three years.

The contract typically terminates after the close of the last event specified in the contract, unless both parties agree in writing to extend it.

There are no termination-for-convenience clauses in the CSI contract.

Contracts can only be terminated for breach or non-performance and in that circumstance, the Company must be compensated for all services up to the date of termination.

Therefore, a standard CSI contract is typically not shorter than its stated term.

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

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

Revenues generated from Live Events contracts have a single performance obligation, event preparation and management.

A standard CSI contract contains fixed fees for services and pass through costs and other expenses that are variable depending on the number of supplies used or personnel costs incurred which are passed through to the client and are recognized on a gross basis in revenue as costs to fulfill the contract.

The contract also includes rebates payable to the client which the Company estimates as variable consideration using the most likely amount method at the outset of the contract.

The entire transaction price relates to the event preparation and management performance obligation.

The Company recognizes revenue as services are rendered using the input method.

The Company uses the input method of labors hours expended as it provides the best depiction of the transfer of services to the client.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company for Consumer Audio Products and Components from a customer and deposited with the relevant government authority, are excluded from revenue.

The Company’s revenue arrangements do not contain significant financing components.

For Consumer Audio and Components, sales to certain distributors are made under arrangements which provide the distributors with price adjustments, price protection, stock rotation and other allowances under certain circumstances.

The Company does not provide its customers with a contractual right of return.

However, the Company accepts limited returns on a case-by-case basis.

These returns, adjustments and other allowances are accounted for as variable consideration.

We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized.

We believe that there will not be significant changes to our estimates of variable consideration.

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

The Company generates revenue from the sale of consumer audio products and components (“Consumer Audio and Components”), registration, data analytics, and lead management services for live events (“Event Citadel Live Events”), and event-based media and broadcasting services (“API Media”).

The Company recognizes revenue in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, using the following five-step model:

Consumer Audio and Components

Customer purchase orders are considered contracts with customers for Consumer Audio and Components.

Revenue, net of expected discounts and allowances, is recognized when control of the promised goods transfers to the customer, which typically occurs upon shipment.

The products have been determined to represent the only distinct performance obligations within these arrangements.

Sales to certain distributors may include price adjustments, price protection, stock rotation, and other allowances under certain circumstances.

These items are accounted for as variable consideration and are estimated at contract inception based on the expected amount to be provided to customers, which reduces the amount of revenue recognized.

Although the Company does not provide customers with a contractual right of return, limited returns may be accepted on a case-by-case basis and are also accounted for as variable consideration.

The Company does not expect significant changes to its estimates of variable consideration.

Expected costs associated with assurance warranties and claims are recognized as expense as incurred.

Taxes assessed by governmental authorities that are both imposed on and concurrent with specific revenue-producing transactions, and that are collected from customers and remitted to governmental authorities, are excluded from revenue.

Event Citadel Live Events

Event Citadel Live Events contracts generally relate to registration, data analytics, lead management, and event preparation and management services provided for trade shows, conferences, and other live events in both the corporate and government sectors.

Contracts are generally multi-year arrangements with terms of approximately three years and typically terminate upon completion of the final event specified within the agreement, unless extended by mutual written consent.

Event Citadel contracts generally do not contain termination-for-convenience provisions.

Contracts may only be terminated for breach or non-performance, in which case the Company is entitled to compensation for services performed through the termination date.

The Company has concluded that Event Citadel contracts generally contain a single performance obligation consisting of integrated event preparation and management services, as the services are highly interrelated and are not separately identifiable within the context of the contract.

The transaction price generally includes fixed service fees, pass-through costs, and other reimbursable expenses, including personnel and supply-related costs incurred on behalf of clients.

The Company has concluded it acts as principal in these arrangements and therefore recognizes pass-through and

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

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

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three and Three Months Ended March 31, 2026 and 2025

reimbursable costs on a gross basis within revenue, with the corresponding expenses recognized within cost of services.

Certain contracts also include rebates payable to customers, which are estimated as variable consideration using the most likely amount method and reduce the transaction price.

Revenue is recognized over time as services are rendered because the customer simultaneously receives and consumes the benefits provided by the Company’s performance.

The Company measures progress toward satisfaction of the performance obligation using an input method based on labor hours incurred, which management believes best depicts the transfer of services to the customer.

API Media provides event-based broadcasting, media, and data services for live sporting events, exhibitions, and other large-scale gatherings.

Customer contracts generally contain a single integrated performance obligation consisting of on-site event services.

Contracts typically require an upfront deposit, with the remaining balance invoiced upon completion of the event.

Amounts billed or collected in advance are recorded as contract liabilities until the related services are performed.

Revenue is recognized at a point in time upon completion of services at the event, which represents the point at which control of the promised services transfers to the customer and the Company’s performance obligation is satisfied.

The Company’s revenue arrangements do not contain significant financing components.

Patent and Intellectual Property Licensing

Revenues generated from patent and intellectual property licensing arrangements are derived from granting customers rights to use the Company’s patented technologies and related intellectual property.

The Company evaluates each arrangement to determine whether the license represents (i) a right-to-use intellectual property at a point in time or (ii) a right-to-access intellectual property over time in accordance with ASC 606-10-55-58 through 55-64.

Licenses that provide customers with a right-to-use functional intellectual property, where the underlying intellectual property is not expected to be significantly modified or enhanced by the Company during the license term, are recognized at a point in time when control of the license transfers to the customer.

Control generally transfers upon execution of the agreement, at which point the customer has the right and ability to use, and obtain substantially all of the remaining benefits from, the licensed intellectual property.

Certain arrangements include fixed upfront license fees, sales-based or usage-based royalties, or a combination of both.

Fixed consideration is recognized in accordance with the timing of the underlying license (point in time or over time).

Sales-based or usage-based royalties promised in exchange for a license of intellectual property are recognized in the period in which the subsequent sales or usage occurs in accordance with the sales- or usage-based royalty exception under ASC 606-10-55-65.

During the three months ended March 31, 2026 and 2025, net revenue consisted of the following:

For the Three Months Ended March 31,

(in thousands) 2026 2025

Components $ 903 $ 492

Consumer Audio Products 14 137

Live Events 2,499 —

Total $ 3,416 $ 629

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

Contract Balances

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

The Company has $ 719,000 and $ 109,000 of contract assets as of September 30, 2025 and December 31, 2024, respectively, which are recorded in the current assets section on the condensed consolidated balance sheets.

The Company expects to collect 100 % of the contract assets as of September 30, 2025 in the next twelve months.

During the nine months ended September 30, 2025, the Company recognized $ 54,000 of revenue from contract liabilities that were included in accrued liabilities on the condensed consolidated balance sheets as of December 31, 2024.

September 30,

(in thousands)

The Company has $ 1.3 million and $ 1.7 million of contract assets as of March 31, 2026 and December 31, 2025, respectively, which are recorded in the current assets section on the condensed consolidated balance sheets.

The Company expects to collect 100 % of the contract assets as of March 31, 2026 in the next twelve months.

During the three months ended March 31, 2026, the Company recognized $ 907,000 of revenue from contract liabilities that were included in accrued liabilities on the condensed consolidated balance sheets as of December 31, 2025.

(in thousands) March 31,

2026 December 31,

Contract Liabilities $ 1,512 $ 1,883

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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:

As part of our adoption of 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;

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

Restricted stock units give an employee an interest in Company stock but they have no tangible value until vesting is complete.

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

Crypto Assets

We hold crypto assets primarily for operational purposes and to support short-term liquidity needs within our normal operating cycle.

These crypto assets are received and used in the ordinary course of business, including to settle vendor payments or facilitate customer-related transactions.

We reasonably expect to convert such assets to cash or utilize them in operations within a short period of time, typically within one year.

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Consistent with this intent and realization pattern, we have classified all crypto assets as current assets in our consolidated balance sheets in accordance with ASC 210-10 and ASC 350-60.

We do not hold crypto assets for long-term investment, speculative, or collateral purposes, and we do not engage in trading or financing activities involving crypto assets.

We do not hold crypto assets for long-term investment, speculative, or collateral purposes, and we do not engage in trading activities involving crypto assets.

Our crypto asset holdings are considered less liquid than cash and cash equivalents and may not serve as an equivalent source of liquidity during periods of market stress.

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

Advertising costs for the three and nine months ended September 30, 2025 were $ 72,000 and $ 247,000 respectively.

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

Advertising costs for the three months ended March 31, 2026 and 2025 were $ 1.7 million and $ 0.1 million respectively.

Comprehensive Loss

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

For the three and nine months ended September 30, 2025 and 2024, the Company’s comprehensive loss is the same as its net loss.

For the three months ended March 31, 2026 and 2025, 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, 2025 and 2024.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

dollar are recorded in the condensed consolidated statement of operations in Other expense, net and were not material for the three months ended March 31, 2026 and 2025.

Net Loss per Common Share

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Diluted net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares and potentially dilutive common share equivalents outstanding for the period determined using the treasury-stock and if-converted methods.

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

For purposes of

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

the diluted net loss per common share calculation, warrants exercisable for common stock, restricted stock units and shares issuable upon the conversion of convertible notes payable are considered to be potentially dilutive securities.

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

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

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

For the three months ended March 31, 2026, warrants to purchase 9,683,027 shares of common stock, 6 shares underlying shares of restricted stock units, 1,050,000 shares underlying shares of restricted stock units issued under an inducement grant, 18,159,535 shares underlying restricted stock awards and 437,501 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, 2025, warrants to purchase 15,204,647 shares of common stock, 12 shares of restricted stock, 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 of 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.

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.

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

The Company has recognized valuation allowances against its deferred tax assets as of September 30, 2025 and December 31, 2024.

The Company has recognized valuation allowances against its deferred tax assets as of March 31, 2026 and December 31, 2025.

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

As of March 31, 2026 and December 31, 2025, the Company recognized no interest and penalties.

Costs to Fulfill Contracts

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Amortization of costs to fulfill a contract is recorded in cost of sales in the condensed consolidated statements of operations.

At September 30, 2025, the balance of capitalized costs to fulfill contracts was $ 273,000 , all of which is classified as a current asset.

During the three months ended September 30, 2025, the Company recognized $ 170,000 of amortization related to capitalized contract fulfillment costs.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

At March 31, 2026, the balance of capitalized costs to fulfill contracts was $ 0.4 million, all of which is classified as a current asset.

During the three months ended March 31, 2026, the Company recognized $ 0.6 million of amortization related to capitalized contract fulfillment costs.

No impairment losses were recognized during the period.

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The update is effective for public business entities for annual periods beginning after December 15, 2024, on a prospective basis but does not impact interim financial statements.

The Company has adopted this standard as of January 1, 2025 and does not expect the adoption to have a material impact on its condensed consolidated financial statements.

The Company has adopted this standard as of January 1, 2025 and the adoption did not have a material impact on the condensed consolidated financial statements.

In December 2023, the FASB issued ASU No.

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The adoption did not have an impact on previously reported results.

In March 2025, the FASB issued ASU 2025-02, which amended ASC 450-10-S99-1 to remove the text of SAB Topic 5.FF, “Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for Its Platform Users.” The amendment reflects the Securities and Exchange Commission ("SEC") staff’s issuance of SAB 122, which rescinded SAB 121 in January 2025.

The adoption of ASU 2025-02 did not have a material impact on the Company’s condensed consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets, which simplifies the measurement of expected credit losses for accounts receivable and contract assets arising from transactions accounted for under ASC 606.

The Company adopted the guidance effective January 1, 2026.

The adoption of ASU 2025-05 did not have a material impact on the Company’s condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments, which clarifies the accounting for induced conversions of convertible debt instruments.

The Company adopted the guidance effective January 1, 2026.

The adoption of ASU 2024-04 did not have a material impact on the Company’s condensed consolidated financial statements.

Recently Issued and Not Yet Adopted Accounting Pronouncements

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This change was a priority for stakeholders who found it difficult to differentiate project stages for capitalizing development costs in iterative environments.

ASU 2025-05 Measurement of credit losses published in July 2025, this ASU improves guidance for measuring credit losses on accounts receivable and contract assets.

It offers optional guidance to address challenges entities faced applying Topic 326 to these assets.

This update aims to simplify the process for entities, such as private companies, that found it complex to develop reasonable forecasts for credit loss estimation.

The amendments are effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual periods, with early adoption permitted.

We do not expect the pronouncement to have a material impact on our condensed consolidated financial statements.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business and Summary of Significant Accounting Policies, continued

ASU 2024-04 Debt—Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments:

The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

Early adoption is permitted as of the beginning of the annual reporting period for all entities that have adopted the amendments in Update 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

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

For the Three and Three Months Ended March 31, 2026 and 2025

ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

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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.

Going Concern

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

As of September 30, 2025, the Company had cash and cash equivalents of $ 1.7 million and reported net cash used in operations of $23.0 million during the nine months ended September 30, 2025.

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

The Company’s ability to attain profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure.

Based on current operating levels, the Company will need to raise additional funds in the next 12 months by selling additional equity or incurring debt.

To date, the Company has funded its operations primarily through sales of its securities in public and private markets, proceeds from the exercise of warrants to purchase common stock and the sale of convertible notes.

Additionally, future capital requirements will depend on many factors, including the rate of revenue growth, the selling price of the Company’s products, the expansion of sales and marketing activities, the timing and extent of spending on research and development efforts and the continuing market acceptance of the Company’s products.

These factors raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months from the date of this Report.

Management of the Company intends to raise additional funds through the issuance of equity securities or debt.

There can be no assurance that, in the event the Company requires additional financing, such financing will be available at terms acceptable to the Company, if at all.

Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending could have a material adverse effect on the Company’s ability to achieve its intended business objectives.

As a result, the substantial doubt about the Company’s ability to continue as a going concern has not been alleviated.

The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business Combination and Asset Purchase

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

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

The final purchase price and purchase price allocation of assets acquired and liabilities assumed follows:

Unbilled receivable $ 300

Inventory 163

Other assets 202

Equipment 275

Intangible assets 8,870

Goodwill 19,135

Accrued expenses ( 104 )

2 unchanged sentences

Total purchase consideration $ 27,500

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business Combination and Asset Purchase, continued

The acquired intangible assets values were estimated using the discounted cash flow method and estimated discount rate.

The useful lives are based on estimates of benefits derived from the future cash flows.

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

Useful Life (years)

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

Useful Life (years) Fair Value

Tradename 10 $ 900

Customer relationships 10 5,160

Internal use technology 4 2,810

Total $ 8,870

The results of operations of CSI are included in the unaudited consolidated financial statements of the Company for the three months ended March 31, 2026.

The goodwill recorded in the CSI acquisition is not deductible for tax purposes.

Transaction related expenses were $ 475,000 for the nine months ended September 30, 2025 and are included in general and administrative expenses in the condensed consolidated statements of operations.

Other Intangible Asset Acquisitions

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

The Company recorded amortization expense of $ 73,000 for the three months ended September 30, 2025.

EOS Asset Acquisition

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

(“EOS Holdings”).

At the closing (the “DV Closing”), pursuant to that asset purchase agreement, by and between the Company and EOS Holdings, dated as of September 4, 2024, and as amended on November 14, 2024, and as further amended from time to time (the “Asset Purchase Agreement”), the Company purchased the Acquired Assets for an aggregate purchase price of approximately $ 92.0 million consisting of (i) $ 10.0 million paid in the form of a promissory note issued by the Company to EOS Holdings (the “DV Convertible Note”), and (ii) 40,000,000 shares (the “DV Closing Stock Consideration”) of validly issued, fully paid and nonassessable shares of restricted common stock of the Company, with an aggregate fair value of approximately $ 82.0 million based on the closing stock price of the Company on December 31, 2024.

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

See Note 11 Related Parties for further details.

API Media Innovations

On January 22, 2026, the Company completed its previously announced acquisition of all of the outstanding shares of API Media Innovations Inc.

(“API Media”) pursuant to a Stock Purchase Agreement dated October 28, 2025, by and among the Company, API Media, and its shareholders.

The aggregate purchase price was $ 14 million paid in cash, including a $ 1 million non-refundable deposit paid upon execution of the agreement, which was credited toward the purchase price at closing.

The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations.

The purchase price allocation is preliminary and subject to adjustment during the measurement period (not to exceed one year from the acquisition date).

Any such adjustments will be recorded in the period in which they are identified.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Business Combination and Asset Purchase, continued

Second Asset Purchase Agreement Amendment

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

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

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

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

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

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

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

Earnout Agreement

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

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

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

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

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

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

There is no change as of September 30, 2025.

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

As such, the aggregate consideration of approximately $ 92.0 million plus capitalized fees of $ 575,000 were recorded to the intangible assets acquired of patents and trademarks for $ 2.4 million and $ 90.1 million, respectively, with useful weighted average remaining lives of ten years in each case .

For the three and nine months ended September 30, 2025, the amortization expense related to intangible assets was approximately $ 2.3 million and $ 7.0 million, respectively.

For the Three and Three Months Ended March 31, 2026 and 2025

The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed at the acquisition date:

Accounts receivable 396

Prepaid expenses 39

Other receivable 2

Right of use asset 87

Property and equipment 231

Intangible assets 5,490

Goodwill 8,150

Accrued expenses ( 271 )

Right of use liability ( 87 )

Accounts payable ( 88 )

Total $ 14,000

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

Useful Life (years) Fair Value

Tradename 5 $ 170

Customer relationships 5 4,080

Internal use technology 3 1,240

Total $ 5,490

The Company expects to derive synergy from the acquired intangibles from API with it's own intellectual property.

The goodwill recorded in the CSI acquisition is not deductible for tax purposes.

The Company recorded fees in three months ended March 31, 2026 of $ 84,000 .

Supplemental Pro Forma Information:

The revenue and net loss of API included in consolidated statement of operations since the acquisition date were $ 187,000 and $ 311,000 , respectively.

Had the acquisition occurred on January 1, 2025, consolidated pro forma revenue, net loss and net loss per common share, basic and diluted would have been as follows:

Pro Forma (Unaudited) for the three months ended March 31,

Net revenue $ 3,469 $ 883

Net loss $ ( 52,715 ) $ ( 10,387 )

Other Intangible Asset Acquisitions

For the three months ended March 31, 2026, the Company acquired an additional patent from three inventors for an aggregate fair value of $ 5.4 million and a useful life of 10 years, based on expected future economic benefit, in exchange for the issuance of 7,500,000 shares of common stock.

This transaction was considered a related party

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

For the Three and Three Months Ended March 31, 2026 and 2025

transaction as described in the related party note.

The Company recorded amortization expense of $ 0.1 million and $ 0 for the three months ended March 31, 2026 and 2025, respectively.

Balance Sheet Components

Inventories (in thousands):

September 30,

2026 December 31,

Raw materials $ 165 $ 129

3 unchanged sentences

Property and equipment, net (in thousands):

September 30,

2026 December 31,

Machinery and equipment $ 1,984 $ 1825

Leasehold improvements

Construction in progress 231 —

Furniture and fixtures 259 114

Leasehold improvements 241 280

Accumulated depreciation and amortization ( 1,519 ) ( 1,616 )

Property and equipment, net 1,199 606

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

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

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

2025 remainder

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

Depreciation and amortization expense for property and equipment for the three months ended March 31, 2026 and 2025 were approximately of $ 74,000 and $ 12,000 , respectively.

Intangible assets, net consisted of the following at March 31, 2026.

Gross Carrying

Amount Accumulated

Amortization Net Carrying

Patents $ 99,190 $ ( 11,647 ) $ 87,543

Trade names and trademarks 3,457 ( 383 ) 3,074

1 unchanged sentence

Internal use technology 4,050 ( 686 ) 3,364

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

$ 115,937 $ ( 13,319 ) $ 102,618

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Balance Sheet Components, continued

For the Three and Three Months Ended March 31, 2026 and 2025

As of March 31, 2026, the future amortization of the intangibles acquired is as follows:

2026 remainder $ 9,547

Thereafter 33,276

The Company recognized amortization expense related to intangibles of $ 3.1 million and $ 2.3 million for the three months ended March 31, 2026 and 2025, respectively.

Notes Receivable

On April 9, 2025, the Company advanced $ 450,000 to NYIAX as part of the NYIAX transaction described in Note 10 Commitments and Contingencies.

The Company derecognized the asset due to probability of non-payment and expensed to research and development in the condensed consolidated statement of operations for the nine months ended September 30, 2025.

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

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

The June 2024 Note matures on October 11, 2024.

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

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

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

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

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

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

The August 2024 Note matures on December 5, 2024.

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

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

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

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

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

The September 2024 Note matures on December 5, 2024.

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

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

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

On December 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 were netted on the condensed consolidated balance sheet in “convertible note payable, net related party” as there is a right of offset included in the DV Convertible Note and the four amended note receivable agreements above.

On February 14, 2025, $ 136,000 was paid off as a result of the February 2025 Offering (defined below) in which a portion of proceeds in the 2025 Offering (defined below) were used to satisfy principal on the EOS note receivables.

The proceeds from the financings in April 2025 and May 2025 (See Note 5 for details on the 2025 Offerings) were netted with the note receivable balance in the nine months ended September 30, 2025 and as a result the balance is no longer outstanding as of September 30, 2025.

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

In March 2026, the Company entered into a promissory note agreement with NYIAX, Inc.

(“NYIAX”), pursuant to which the Company advanced $ 0.4 million.

The note bears interest at an annual rate of 5 % and matures on the earlier of (i) June 9, 2026 or (ii) the closing of a merger among NYIAX, the Company, and DVLT Merger Sub Inc.

The note is unsecured and may be prepaid without penalty.

The note contains customary events of default, including nonpayment, covenant breaches, insolvency events, and certain change-in-control transactions.

Upon an event of default, the outstanding balance may become immediately due and payable, and a default penalty of 6 % per month may accrue.

As of March 31, 2026, the outstanding principal balance was $ 0.4 million.

The Company evaluates collectibility of the note and records an allowance for credit losses, if necessary.

As of March 31, 2026, no allowance for credit losses was recorded.

In March 2026, the Company entered into a promissory note agreement with Triton Geothermal LLC (“Triton”), pursuant to which the Company advanced $ 0.1 million.

The note bears interest at a rate of 5 % per annum and matures on or after July 26, 2026, upon written notice by the Company, with payment due within five days of such notice.

The note may be prepaid at any time without penalty.

The note is unsecured and contains customary events of default, including nonpayment, covenant breaches, and insolvency-related events.

Upon the occurrence of an event of default and expiration of applicable cure periods, the outstanding principal and accrued interest may become immediately due and payable.

As of March 31, 2026, the outstanding principal balance was $ 0.1 million.

The Company evaluates collectibility of the note and records an allowance for credit losses, if necessary.

As of March 31, 2026, no allowance for credit losses was recorded.

The Company did not recognize interest income on the notes receivable for the period ended March 31, 2026, as such amounts were immaterial.

Deposits for Business Combination

On October 28, 2025, the Company entered into a Stock Purchase Agreement (the “API Purchase Agreement”) with API Media Innovations Inc.

(“API Media”) and its shareholders, pursuant to which the Company agreed to acquire all of the issued and outstanding shares of API Media (the “API Acquisition”) for total consideration of $ 14.0 million, subject to the terms and conditions of the agreement.

Pursuant to the API Purchase Agreement, the Company paid a non-refundable deposit of $ 1.0 million.

The acquisition was completed on January 22, 2026 and thus the deposit was credited as part of purchase consideration.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Balance Sheet Components, continued

Deposits for Business Combination

On December 19, 2024 the Company entered into an asset purchase agreement with CompuSystems Inc (“CSI”) as amended on December 30, 2024, February 25, 2025 and March 31, 2025 (the “CSI Purchase Agreement”) where the Company agreed to purchase, assume and accept from CSI all of the rights, title and interests used in the acquired business, and products and services solely to the extent they utilize the transferred assets, including CSI’s customer contracts, trademarks and other intellectual property (the “CSI Acquisition”).

Pursuant to the CSI Purchase Agreement, the Company made an exclusivity deposit and a break-up fee deposit totaling $ 2.0 million.

The acquisition was completed on May 20, 2025 and thus the acquisition deposits are recorded as part of purchase consideration in note 3.

For the Three and Three Months Ended March 31, 2026 and 2025

Accrued liabilities (in thousands):

September 30,

Contract liability

2026 December 31,

Accrued vacation $ 713 $ 459

Accrued audit fees 332 332

Accrued compensation 3,583 3,448

Customer advances 1,512 1,883

Accrued other 1,362 670

Accrued royalty payable to related party — 810

Accrued escrow liability 2,550 2,550

Accrued interest — 210

Accrued legal fees 1,136 —

Accrued vacation

Accrued audit fees

Accrued interest payable

Accrued lease liability, current portion 865 640

Accrued other

Total accrued liabilities $ 12,053 $ 11,002

January 2024 Short-Term Loan Agreement

On January 19, 2024, the Company issued promissory notes in the aggregate principal amount of $ 1.0 million (the “January 2024 Promissory Notes”) and common stock purchase warrants to purchase up to an aggregate of 66,665 shares (the “January 2024 Warrant Shares”) of the Company’s common stock, at an initial exercise price of $ 22.23 per share with four accredited investors (each an “Investor” and together the “Investors”).

In connection with the January 2024 Promissory Notes, the Company received gross proceeds of $ 600,000 , before fees and other expenses associated with the transaction.

The January 2024 Promissory Note was to mature on the earlier to occur of:

(i) July 17, 2024 and (ii) the full or partial exercise of certain Series B Preferred Stock purchase warrants currently held by the Investor, issuable for at least 9,322 shares of the Company’s Series B Convertible Preferred Stock, par value $ 0.0001 per share (“Series B Preferred Stock”), upon such full or partial exercise.

The January 2024 Promissory Notes did not bear interest except upon the occurrence of an Event of Default (as defined in the January 2024 Promissory Notes).

The January 2024 Promissory Notes were not convertible into shares of common stock or Series B Preferred Stock.

Between the dates of January 26, 2024 and February 2, 2024, the January 2024 Promissory Notes were repaid in full following the exercise of certain of the Company’s Series B Preferred Stock purchase warrants for a total of 29,322 shares of Series B Preferred Stock.

The 2024 Promissory Notes were settled via the payment of $ 667,000 in cash and a $ 333,000 offset to the amount due by one of the investors from the exercise of 9,322 Series B Preferred Stock purchase warrants.

DV Convertible Note

In connection with the acquisition of certain assets (the "EOS Acquired Assets") from EOS Technologies Holdings Inc (f/k/a Data Vault Holdings Inc.) ("EOS Holdings"), which closed on December 31, 2024 (the "EOS" Asset Acquisition"), the Company issued a convertible note to EOS Holdings in the principal amount of $ 10.0 million due on the third anniversary of the closing on December 31, 2027 (the "EOS Convertible Note").

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 closing.

The EOS Convertible Note could be converted at EOS Holdings' option, partially or entirely, into shares of common stock, any time after the maturity date until the EOS Convertible Note is fully paid off.

The EOS Convertible Note uses a conversion price equaling to seventy-five percent ( 75 %) of the average VWAP (as defined in the EOS 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 EOS Convertible Note), the Company shall (i) cause any successor entity to assume in writing all of the obligations of the Company under the EOS Convertible Note, (ii) pay or cause to be paid to EOS Holdings the outstanding balance under the EOS Convertible Note in cash, or (iii) pay, at the closing of such change of control, in full satisfaction of the Company’s obligations under the EOS Convertible Note, an amount in cash or equivalent common stock to the amount EOS Holdings would have been paid if it had converted the outstanding balance under the EOS Convertible Note into shares of common stock immediately prior to such closing, at the conversion price.

When the Company entered into capital raising or financing transactions, including the issuance by the Company of shares of common stock or common stock equivalents (as defined in the EOS Convertible Note) for cash consideration, indebtedness or a combination of units thereof (each, a “Subsequent Financing”), then the Company was required first to pay to EOS Holdings at least 10 % of the gross proceeds of such Subsequent Financing to redeem all or a portion of the EOS Convertible Note, plus accrued but unpaid interest, plus liquidated damages, if any, and any other amounts then owing to EOS Holdings.

On February 14, 2025, the Company paid a portion of principal and interest of $ 0.4 million, net, as a result of the February 2025 Public Offering (defined below in Note 6).

For the three months ended March 31, 2026, the Company

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Borrowings, continued

In connection with the issuance of the January 2024 Warrant Shares (see Note 6 – Fair Value Measurements), the fair value of the warrants and the original issue discount for interest were recorded as debt discounts totaling $ 1.3 million.

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

In connection with the full repayment of the January 2024 Promissory Notes, the Company recognized $ 1.3 million of interest expense in the nine months ended September 30, 2024.

DV Convertible Note

In connection with the DV Closing, the Company issued the DV Convertible Note in a principal amount of $ 10.0 million due on the third anniversary of the DV Closing on December 31, 2027.

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

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

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

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

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

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

If the aggregate gross proceeds of Subsequent Financings reach or exceed $ 50.0 million, then the Company shall repay the DV Convertible Note in full, including accrued but unpaid interest, liquidated damages, if any, and any other amounts, then owing to EOS Holdings.

The DV Convertible Note includes customary event of default provisions.

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

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

The Company elected the fair value method for the DV Convertible Note outstanding of $ 10.0 million as of December 31, 2024 due to the embedded derivatives identified within the agreement requiring recurring fair value measurements.

For the Three and Three Months Ended March 31, 2026 and 2025

paid an aggregate of $ 3.9 million in cash resulting in the EOS Convertible Note being paid in full.

The ending balance and fair value as of December 31, 2025 was $ 3.9 million.

In January 2026, the Company fully repaid the outstanding balance of the EOS Convertible Note.

The repayment satisfied the remaining principal and any accrued interest outstanding under the note as of the repayment date.

Following the payoff, the EOS Convertible Note was extinguished and no further amounts remain outstanding under the agreement.

The Company elected the fair value method for the EOS Convertible Note at issuance of $ 10.0 million as of December 31, 2025 due to the embedded derivatives identified within the agreement requiring recurring fair value measurements.

The note is valued using level 3 inputs.

See Note 5, Fair Value Measurements for further information on inputs.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Borrowings, continued

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

On April 2, 2025 and May 20, 2025 in connection with the 2025 Notes financing, the Company paid an aggregate of $ 675,000 in principal balance.

On August 6, 2025, in connection with the Q3 2025 financing, the Company paid $ 250,000 and on September 26, 2025 the Company paid $ 725,000 .

For the nine months ended September 30, 2025, the Company paid an aggregate of $ 2.5 million in cash payments of $ 2.1 million and through offsetting against the note receivable of $ 0.4 million.

See Note 6 fair value measurements for further disclosures.

On September 7, 2025 the Company extinguished a portion of the principal and interest of $ 3.2 million in an Amendment and Conversion Agreement with the EOS for 10,000,000 shares.

The balance as of September 30, 2025 and December 31, 2024 was $ 4.5 million and $ 10.0 million.

The fair value was $ 4.5 million as of September 30, 2025.

The DV Convertible Note was netted with the notes receivable from EOS Holdings in “convertible note payable, net, related party” on the condensed consolidated balance sheets as of December 31, 2024 as EOS Holdings agreed to offset the outstanding balance on the DV Convertible Note with the notes receivable at maturity or at a qualifying capital raising or financing transaction noted above.

The notes receivable from EOS Holdings was fully paid off in the nine months ended September 30, 2025 due to the financing activity noted above.

April Securities Purchase Agreement

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

The warrants meet the equity classification guidance.

See note 7 for additional information.

The closing of the Additional Notes and Additional Warrants (the “Additional Closing,” and together with the initial closing, the “2025 Closings”) took place on May 20, 2025.

The Company received stockholders approval of the issuance of the shares of common stock issuable upon conversion of the 2025 Notes and exercise of the 2025 Warrants and a one-time reset, at the Company’s option, of the exercise price of outstanding common stock purchase warrants held by the April 2025 Purchasers that do not contain “alternative cashless exercise” features ( “Stockholder Approval”).

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Borrowings, continued

2025 Convertible Notes

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

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

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

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

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

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

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

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

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

The Company elected the fair value option to account for the 2025 Notes.

The fair value on issuance of the 2025 Notes was $ 23.2 million which exceeded the proceeds of $ 13.7 million by $ 9.5 million for which the Company recorded a day one loss.

The financing terms were deemed reasonable due to the Company’s liquidity position.

Accordingly, the Company recorded in interest expense a charge of $ 6.5 million to mark the 2025 Notes to fair value in the condensed consolidated statement of operations.

The original issue discount of $ 1.7 million and fees of $ 1.3 million were expensed in interest expense in the condensed consolidated statement of operations for the three and nine months ended September 30, 2025.

In the three months ended September 30, 2025, the remaining balance of the 2025 Notes were fully converted for $ 15.6 million principal and 64,442,462 shares of common stock in cashless conversions.

For the nine months ended September 30, 2025, the 2025 Notes were fully converted for $ 16.7 million principal and 66,288,407 shares of common stock in cashless conversions.

The fair value of the 2025 Notes converted in the three and nine months ended September 30, 2025 was $ 20.9 million and $ 22.5 million, respectively, and was recorded to additional paid in capital on the condensed consolidated balance sheets and was estimated used inputs of the level 3 hierarchy.

The 2025 Notes were fully converted at September 30, 2025.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Borrowings, continued

Security Agreement and Guarantee

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

Placement Agency Agreement

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

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

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

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

August Securities Purchase Agreement

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

The closing of August Initial Notes (the “August Initial Closing”) occurred on August 6, 2025.

Additional Closing

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

Obligations Under the Purchase Agreement

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Borrowings, continued

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

Q3 2025 Notes

The Q3 2025 Notes carry a 10 % original issue discount, and mature 18 months from the date of issuance.

No interest accrues during the term of the Q3 2025 Notes, unless an event of default occurs, in which case interest will accrue at a rate of 12 % per annum.

The obligations under these Q3 2025 Notes rank senior to all other existing indebtedness and equity of the Company.

The Q3 2025 Notes are convertible at any time at the option of the holders thereof, in whole or in part, into such number of shares of common stock (the “Q3 2025 Conversion Shares”) at an initial conversion price equal to $ 1.00 per share (the “Q3 2025 Conversion Price”).

Alternatively, the Q3 2025 Notes are convertible at the holder’s election, at a price (the “Q3 2025 Alternate Conversion Price”) equal to the greater of (x) the floor price (as defined below) and (y) 80 % of the lowest volume weighted adjusted price of the shares of Common Stock (the “VWAP”) in the twenty (20) trading days prior to the applicable conversion date (“Alternate Conversions”).

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

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

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

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

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

The Company elected the fair value option to account for the Q3 2025 Notes.

The fair value on issuance of the Q3 2025 Notes was $ 21.6 million which exceeded the proceeds of $ 11.5 million by $ 10.1 million for which the Company recorded a day one loss.

The financing terms were deemed reasonable due to the Company’s liquidity position.

Accordingly, the Company recorded in interest expense a charge of $ 7.8 million to mark the Q3 2025 Notes to fair value in the condensed consolidated statement of operations.

The original issue discount of $ 1.3 million and fees of $ 1.0 million were expensed in interest expense in the condensed consolidated statement of operations for the three and nine months ended September 30, 2025.

In the three months ended September 30, 2025, the Q3 2025 Notes were partially converted for $ 6.7 million principal and 31,064,393 shares of common stock in cashless conversions.

The fair value of the Q3 2025 Notes converted was $ 12.3 million and was recorded to additional paid in capital on the condensed consolidated balance sheets and was estimated used inputs of the level 3 hierarchy.

The fair value of the Q3 2025 Notes at September 30, 2025 was $ 12.2 million also estimated using inputs from the level 3 hierarchy.

See Note 6 fair value measurements for further disclosures.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Borrowings, continued

In connection with the Q3 2025 Notes, the Company agreed to exchange outstanding warrants of 30,738,449 million in exchange for the issuance of 30,738,449 shares of common stock.

The incremental change in fair value of $ 3.7 million, representing losses recognized in connection with the modification and exchange of the convertible notes, is included in extinguishment expense on the condensed consolidated statement of operations.

In addition, in connection with the Q3 2025 Notes, the Company agreed to modify the 2025 Notes to a lower Alternate Conversion Price.

This resulted in an incremental fair value loss of $ 2.1 million, representing losses recognized in connection with the modification and exchange of the convertible notes, which is included in extinguishment expense on the condensed consolidated statement of operations.

Bridge Financing

For the three months ended September 30, 2025, the Company entered into two financing arrangements in September 2025 and received proceeds of $ 0.9 million.

We incurred origination fees of $ 65,000 and interest fees of $ 146,000 .

Both financings were paid in full in October 2025.

The Company was in non-compliance with the Q3 2025 Notes for permitted indebtedness in excess of $ 200,000 as of September 30, 2025 as a result of the above financing arrangements.

The non-compliance was cured as of October 1, 2025.

For further details, see Note 13 Subsequent Events.

No further covenant violations are on-going.

CSI Convertible Notes

In connection with the CSI Asset Purchase Agreement, the Company issued the CSI Convertible Notes in an aggregate principal amount of $ 15.0 million, each due on the second anniversary of the closing (the “Maturity Date”).

The Company agreed to pay interest to CSI on the aggregate unconverted and then outstanding principal amount of the First Convertible Note and Second Convertible Note at the rate of five percent (5%) per annum, and on the aggregate unconverted and then outstanding principal amount of the Initial Convertible Note at the rate of ten percent (10%) per annum.

The Company agreed to pay interest accruing from the six-month anniversary of the closing on the First Convertible Note and from the nine-month anniversary of the closing on the Second Convertible Note on the unpaid balance of such principal amount no less frequently than quarterly per calendar quarter.

As of December 31, 2025, the Company's outstanding debt included two convertible notes issued in connection with the acquisition of CSI which closed on May 20, 2025.

Interest on the First Convertible Note and principal on the Second Convertible Note was accrued at the rate of five percent ( 5 %) per annum.

Interest began accruing from the six-month anniversary of the closing on the First Convertible Note and from the nine-month anniversary of the closing on the Second Convertible Note on the principal balance no less frequently than quarterly per calendar quarter.

The payment of the accrued interest shall occur on the last business day of each calendar quarter.

If the Initial Convertible Note has not been satisfied in full within three (3) months after the Closing Date, then at CSI’s option, it shall be convertible to shares of common stock, in increments of $ 500,000 , at a price of $ 1.14 per share.

The Company shall also repay the principal amount and all accrued interest under the Initial Convertible Note in full, without a penalty, within three (3) business days after the Company raises an additional amount of capital totaling at least $ 15.0 million.

The First Convertible Note can be converted, partially or entirely, into shares of common stock, any time after the six-month anniversary of the closing until the First Convertible Note is fully paid off.

On March 18, 2026, the Company entered into the settlement agreement with the holders of the First Convertible Note to settle the debt including accrued interest in the aggregate amount of $ 5.2 million.

As of March 31, 2026, the Company has paid $ 2.0 million of the principal in payments scheduled in the settlement agreement to occur in March 2026 and is required per the settlement agreement to pay the remaining $ 3.2 million in principal and accrued interest in scheduled payments to occur in April 2026 and May 2026.

The balance is included in Short-term promissory notes on the condensed consolidated balance sheet as of March 31, 2026.

The Company recorded a debt extinguishment expense of $ 1.7 million for the three months ended March 31, 2026 equal to the difference of the settlement amount due and the carrying value of the First Convertible Note at the settlement date.

The extinguishment expense is recorded on the condensed consolidated statement of operations for the three months ended March 31, 2026.

The Second Convertible Note can be converted, partially or entirely, into shares of common stock, any time after the nine-month anniversary of the closing until the Second Convertible Note is fully paid off.

The First Convertible Note and Second Convertible Note use a conversion price equaling to the average VWAP during the thirty (30) consecutive trading days ending on the trading day that is immediately prior to the conversion date subject to a floor price of $ 1.40 per share and ceiling price of $ 2.50 per share (the “Conversion Price”).

The Second Convertible Note use a conversion price equaling to the average VWAP during the thirty (30) consecutive trading days ending on the trading day that is immediately prior to the conversion date subject to a floor price of $ 1.40 per share and ceiling price of $ 2.50 per share (the “Conversion Price”).

The entire outstanding principal and accrued interest shall automatically be converted into shares of common stock on the maturity date at the Conversion Price.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Borrowings, continued

The Company evaluated the agreement under ASC 815 Derivatives and Hedging (“ASC 815”).

ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract.

None of the embedded terms required bifurcation and liability classification.

The CSI Convertible Notes were measured at fair value at issuance of aggregate of $ 9.7 million.

Refer to Note 3 for more details.

The CSI Convertible Notes carrying value at September 30, 2025 was $ 10.5 million, net of a discount of $ 4.6 million.

Discount accretion expense was $ 0.5 million and $ 0.7 million for the three and nine months ended September 30, 2025, respectively.

The CSI Convertible Notes carrying value at March 31, 2026 was $ 6.5 million, net of a discount of $ 1.7 million.

Discount accretion expense was $ 0.6 million for the three months ended March 31, 2026.

Fair Value Measurements

3 unchanged sentences

Therefore, determining fair value for Level 1 investments generally does not require significant judgment, and the estimation is not difficult.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

• Level 2 – Pricing is provided by third-party sources of market information obtained through investment advisors.

3 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, 2025 and December 31, 2024 by level within the fair value hierarchy, are as follows:

(in thousands)

September 30, 2025

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 by level within the fair value hierarchy, are as follows:

(in thousands) March 31, 2026

Quoted prices

markets Significant

inputs Significant

(Level 1) (Level 2) (Level 3)

Equity investment - NYIAX $ — $ — $ 1,766

Bitcoin $ 57,111 $ — $ —

Convertible note payable $ — $ — $ —

Warrant liabilities $ — $ — $ 9

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Fair Value Measurements, continued

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

September 30, 2025

Conversion price

Conversion discount

Volatility (annual)

Risk-free rate

Dividend rate

Years to maturity

Estimated future financing amount

$ 150 million

Discount rate

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

September 30, 2025

Conversion price

Volatility (annual)

Risk-free rate

Dividend rate

Years to maturity

Estimated future financing amount

$ 150 million

Discount rate

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Fair Value Measurements, continued

(in thousands)

December 31, 2024

NYIAX Investment

The Company's investment in NYIAX consists of 2,150,000 shares of NYIAX common stock accounted for at cost less impairments.

See Note 9 for further details.

During the three months ended March 31, 2026, the Company recorded an impairment of the NYIAX investment of $ 2.5 million which is recorded in the Impairment of investment in nonmarketable security line on the condensed consolidated statement of operations for the three months ended March 31, 2026.

The impairment was primarily driven by a decrease in NYIAX stock price.

(in thousands) December 31, 2025

Quoted prices

markets Significant

inputs Significant

(Level 1) (Level 2) (Level 3)

Equity investment - NYIAX

$ — $ — $ 4,300

$ 92,222 $ — $ —

Convertible note payable $ — $ — $ 3,936

Warrant liabilities $ — $ — $ 9

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

Warrant Liabilities

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

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

Accordingly, the Company remeasured the warrant liability for each of the amended warrants following the Reset Amendment Effective Date and recorded that amount to change in fair value of warrant liabilities with a corresponding increase to warrant liabilities.

Following the Reset Amendment Effective Date, such warrants were no longer deemed to be liability warrants but were now classified as equity warrants.

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

The following table includes a summary of changes in fair value of the Company’s warrant liabilities measured at fair value using significant unobservable inputs (Level 3) as of September 30, 2025 and 2024.

For September 30, 2025, the fair value of the common warrants was determined using the Black-Scholes Model based on the following key inputs and assumptions:

common stock price of $ 1.09 ;

exercise price of $ 3.20 to $ 1,574 ;

expected yield of 0.0 %;

expected volatility of 162.8 %;

risk-free interest rate of 3.68 % and expected life of 2.2 to 2.3 years.

For the nine months ended September 30,

(in thousands)

Beginning balance

Change in fair value

Exercise of warrant liabilities

Conversion of liability warrants to equity warrants

Ending balance

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

Convertible Notes

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

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

The Company recorded a $ 1.1 million loss and a $ 0.2 million gain on the DV Convertible Note for the three and nine months ended September 30, 2025, respectively.

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

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

There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2026 or 2025.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Fair Value Measurements, continued

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

For the nine months ended September 30,

For the Three and Three Months Ended March 31, 2026 and 2025

Convertible Notes

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

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

The Company paid off the EOS Convertible Note during the three months ended March 31, 2026.

See Note 4, Borrowings, for more details.

The following table includes a summary of changes in fair value of the EOS Convertible Notes.

For the three months ended March 31,

(in thousands) 2026 2025

Beginning balance $ 3,936 $ 10,000

Change in fair value recorded in interest expense

Amounts settled on DV note

Debt extinguishment

Partial conversion on DV note

Conversion of 10% notes

Accrued interest on DV note 3 —

Payoff on DV note ( 3,939 ) —

Ending balance $ — $ 10,000

1 unchanged sentence

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

September 30, 2025

March 31, 2026

Units Cost Basis Fair Value

Bitcoin 837 $ 73,108 $ 57,111

December 31, 2025

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

Convertible Redeemable Preferred Stock and Stockholders’ Equity

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

On February 13, 2024, the Company and its Series B Preferred Stock and Series B Preferred Stock Warrants holders entered into an arrangement where the Company agreed to repurchase 62,657 Series B Preferred Stock shares and 81,315 Series B Preferred Stock warrants for a total of $ 6.3 million.

Unamortized discounts to the Series B Preferred Stock of $ 5.4 million were immediately recorded as a deemed dividend as of repurchase date.

The remaining fair value of the Series B Preferred Stock Warrant Liability of $ 824,000 was adjusted against additional paid-in-capital on repurchase date.

Other Deemed Dividends

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

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

On February 13, 2024, the Company consummated a public offering (the “February 2024 Public Offering”) of 158,227 units (the “February Units”) and 867,373 pre-funded units (the “February Pre-Funded Units”).

Each February Unit was issued at $ 9.75 per unit and included one share of common stock and one common stock warrant (the “February Common Warrants”) exercisable for one share of common stock at a $ 9.75 exercise price.

Each February Pre-Funded Unit was issued at $ 9.735 per unit and included one pre-funded common stock warrant (the “February Pre-Funded Warrants”), exercisable for one share of common stock at an initial exercise price of $ 0.015 and one February Common Warrant.

The gross proceeds from the issuance of the February Units and the February Pre-Funded Units were $ 1.5 million and $ 8.4 million, respectively, for total aggregate proceeds of $ 10.0 million before broker fees and related expenses of approximately $ 998,000 .

As a result of certain price protection clauses, the February Common Warrants did not meet the criteria for equity classification and thus are subject to liability treatment.

Accordingly, of the $ 10 million gross proceeds from the February 2024 Public Offering, an amount of $ 6.3 million, representing the fair value of the February Common Warrants as of the issuance date was allocated to the February Common Warrants liability, with the residual proceeds of $ 3.7 million allocated to the common stock and February Pre-Funded Warrants, which met the criteria for equity classification.

Of the gross broker fees and related expenses of approximately $ 998,000 , the Company allocated $ 368,000 to the issued common stock and February Pre-Funded Warrants, which were recorded as a reduction of additional paid-in-capital.

The remaining issuance cost of $ 630,000 was allocated to the February Common Warrants and was expensed on the date of issuance as such warrants were recorded at fair value.

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

On March 26, 2024, the Company entered into a Securities Purchase Agreement with certain purchasers where the Company issued 417,833 shares of common stock, 93,342 pre-funded common stock warrants (the “March Pre-Funded Warrants”) and common stock warrants (the “March Common Warrants”) to purchase up to 511,175 shares of common stock at an initial exercise price of $ 6.00 per share (known in aggregate as the “March 2024 Offering”).

Total proceeds per the Securities Purchase Agreement amounted to $ 2.3 million before broker fees and other related expenses of approximately $ 388,000 .

As a result of certain price protection clauses, the March Common Warrants did not meet the criteria for equity classification and thus are subject to liability treatment.

Accordingly, of the $ 2.3 million gross proceeds from the March public offering, an amount of $ 1.2 million, representing the fair value of the March Common Warrants as of the issuance date was allocated to the March Common Warrants liability, with the residual proceeds of $ 1.1 million allocated to the common stock and March Pre-Funded Warrants, which met the criteria for equity classification.

Of the gross broker fees and related expenses of approximately $ 388,000 , the Company allocated $ 181,000 to the issued common stock and the March Pre-Funded Warrants, which were recorded as a reduction of additional paid-in-capital.

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

April 2024 Issuances of Common Stock and Common Stock Warrants

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

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

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

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

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

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

May 2024 Issuances of Common Stock and Common Stock Warrants

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

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

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

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

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

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

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

The shares of common stock will be issued in July 2024.

Exchange Agreements

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

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

The Exchange Warrants are immediately exercisable.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

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 .

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

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

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

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

expected yield of 0.0 % ;

expected volatility of 143 % ;

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

The fair value of approximately $ 2.3 million, which is the combination of the issuance of 887,356 common shares and the Exchange Warrants were treated as equity instruments.

The approximately $ 2.3 million is considered a deemed dividend for the three and nine months ended September 30, 2024 and was recorded as an adjustment to net loss available to common stockholders on the Company’s condensed consolidated statement of operations.

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

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

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

The shares of common stock were issued in July 2024.

Warrants for Common Shares

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

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

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

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

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

expected yield of 0.0 %;

expected volatility of 119 %;

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

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

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

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

common stock price on the date of grant of $ 7.62 ;

expected yield of 0.0 %;

expected volatility of 119 %;

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

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

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

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

common stock price on the date of grant of $ 3.18 ;

expected yield of 0.0 %;

expected volatility of 119 %;

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

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

The grant date fair value of such warrant was $ 1.3 million, which was recorded as equity.

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

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

expected yield of 0.0 %;

expected volatility of 135 %;

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

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

The grant date fair value of such warrant was $ 2.6 million, which was recorded as equity.

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

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

expected yield of 0.0 %;

expected volatility of 135 %;

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

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

The grant date fair value of such warrant was $ 2.0 million, which was recorded as equity.

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

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

expected yield of 0.0 %;

expected volatility of 135 %;

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

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

The grant date fair value of such warrant was $ 2.5 million, which was recorded as equity.

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

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

expected yield of 0.0 %;

expected volatility of 137 %;

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

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

The grant date fair value of such warrant was $ 1.9 million, which was recorded as equity.

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

common stock price on the date of grant of $ 3.26 ;

expected yield of 0 %;

expected volatility of 137 %;

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

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

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

Units Cost Basis Fair Value

Bitcoin 1,054 $ 92,051 $ 92,222

March 31, 2026

Units Cost Basis Fair Value

Beginning balance 1,054 $ 92,051 $ 92,222

Additions — — —

Disposals ( 217 ) ( 18,943 ) ( 18,978 )

Fair value remeasurement — — ( 16,133 )

Ending balance 837 $ 73,108 $ 57,111

During the three months ended March 31, 2026, the Company sold 217 Bitcoin to Scilex Holding Company ("Scilex") for aggregate proceeds of $ 18.2 million.

The Bitcoin sold had a cost basis of $ 18.9 million, resulting in a realized loss of $ 0.7 million.

The sales were executed to fund the Company’s operations.

Scilex is a related party.

For the three months ended March 31, 2026, the Company recognized a fair value remeasurement loss of $ 16.1 million related to changes in the fair value of its Bitcoin holdings.

Realized gains and losses and fair value remeasurement gains and losses from crypto assets are recorded in Other expense, net in the consolidated statements of operations.

The Company accounts for disposals of Bitcoin using the first-in, first-out (“FIFO”) method.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

For the Three and Three Months Ended March 31, 2026 and 2025

Convertible Redeemable Preferred Stock and Stockholders’ Equity

A summary of the common stock and warrant activity and related information for the three months ended March 31, 2026 and 2025 is provided as follows.

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.

On December 31, 2024 on the closing of the EOS 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 EOS 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.

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

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

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

July 2023 Warrant Inducement

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

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

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

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

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

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

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

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

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

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

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

expected yield of 0.0 %;

expected volatility of 119 %;

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

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

The grant date fair value of such warrant was $ 6.3 million, which was recorded as a liability with the offset recorded to additional paid-in capital on the condensed consolidated balance sheets.

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

common stock price on the date of grant of $ 7.62 ;

expected yield of 0.0 %;

expected volatility of 119 %;

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

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

The grant date fair value of such warrant was $ 1.2 million, which was recorded as a liability with the offset recorded to additional paid-in capital on the condensed consolidated balance sheets.

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

common stock price on the date of grant of $ 3.18 ;

expected yield of 0.0 %;

expected volatility of 119 %;

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

The grant date fair value of such warrant was $ 1.3 million, which was recorded as equity.

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

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

expected yield of 0.0 %;

expected volatility of 135 %;

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

The grant date fair value of such warrant was $ 2.6 million, which was recorded as equity.

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

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

expected yield of 0.0 %;

expected volatility of 135 %;

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

The grant date fair value of such warrant was $ 2.1 million, which was recorded as equity.

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

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

expected yield of 0.0 %;

expected volatility of 135 %;

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

The grant date fair value of such warrant was $ 2.5 million, which was recorded as equity.

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

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

expected yield of 0.0 %;

expected volatility of 137 %;

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

The grant date fair value of such warrant was $ 1.9 million, which was recorded as equity.

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

common stock price on the date of grant of $ 3.26 ;

expected yield of 0 %;

expected volatility of 137 %;

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 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.

February 2025 Registered Direct Transaction

11 unchanged sentences

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

Placement Agency Agreement

For the Three and Three Months Ended March 31, 2026 and 2025

“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.

1 unchanged sentence

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

April 2025 Cashless Warrant Exercises

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

April and May 2025 Warrants

In connection with the April 2025 Offerings, the Company issued 6,448,700 warrants to purchase common stock on April 3, 2025 and 12,897,401 warrants to purchase common stock on May 19, 2025.

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

The Initial Warrants are exercisable and expire five ( 5 ) years from the date of such effectiveness.

The Additional Warrants are exercisable immediately upon issuance and expire five ( 5 ) years from the date of issuance.

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

The Warrants contain 4.99 / 9.99 % beneficial ownership limitations.

The warrants met the requirements for equity classification and the fair value upon issuance was recorded to interest expense on the condensed consolidated statement of operations for $ 16.7 million due to the fair value of the 2025 Convertible Notes exceeding proceeds on issuance.

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

During the three months ended March 31, 2025, three 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.

No warrants were exercised in the three months ended March 31, 2026.

Securities Purchase Agreement

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

The BTC to be paid to the Company in both Closings (as defined below) will be valued at the spot exchange rate for BTC as published by Coinbase.com at 8:00 p.m.

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

The BTC paid to the Company in both Closings (as defined below) is valued at the spot exchange rate for BTC as published by Coinbase.com at 8:00 p.m.

(New York City time) on the trading day immediately prior to the September Initial Closing Date (as defined below).

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

The closing with respect to the September Shares (the “September Initial Closing”) took place on September 26, 2025 (the date of the Initial Closing, the “September Initial Closing Date”).

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

The closing with respect to the Pre-Funded Warrant (the “Pre-Funded Warrant Additional Closing,” and together with the September Initial Closing, the “BTC Closings”), took place on November 25, 2025 (the date after the Company received the approval of its stockholders (i) as required by Nasdaq rules with respect to the transactions contemplated by the September Purchase Agreement including with respect to issuance of all of the Pre-Funded Warrant Shares and (ii) with respect to an amendment to the Company’s certificate of incorporation to increase the number of shares of common stock authorized for issuance to up to 2,000,000,000 .

On the September Initial Closing, the Company received approximately 71 BTC with an aggregate fair value of $ 7.8 million at the date of receipt.

As of September 30, 2025, the fair value of the BTC was $ 8.1 million and is recorded in Crypto assets on the condensed consolidated balance sheets.

The gain of $ 0.3 million is recorded in Other income, net on the condensed consolidated statement of operations.

The Pre-Funded Warrant will be issued in the Pre-Funded Warrant Additional Closing, will be immediately exercisable upon issuance without any beneficial ownership limitation at an exercise price of $ 0.0001 per share, and will remain exercisable until exercised in full.

As a result, no amounts were recorded for the Pre-Funded Warrants as of September 30, 2025.

As a condition to the September Initial Closing, the Company was required to obtain stockholder support agreements (the “Voting Agreements”) from stockholders holding an aggregate of 38,000,000 shares of common stock, pursuant to which each such stockholder will agree to vote their shares of common stock in favor of the proposals for the stockholder approval at any stockholder meeting held for that purpose.

On the Pre-Funded Warrant Additional Closing date the Company received 1,257 BTC with an aggregate fair value of $ 109.8 million.

As of March 31, 2026, the fair value of the BTC was $ 57.1 million and is recorded in Crypto assets on the condensed consolidated balance sheets.

See Note 5 for fair value disclosures.

The loss of $ 16.9 million is recorded in Other expense, net on the condensed consolidated statement of operations.

The Pre-Funded Warrant issued in the Pre-Funded Warrant Additional Closing, is immediately exercisable upon issuance without any beneficial ownership limitation at an exercise price of $ 0.0001 per share, and will remain exercisable until exercised in full and the Company has treated the shares as though they are outstanding as in-substance common shares.

The fair value of the Pre-Funded Warrants of $ 109.8 million based on the aggregate fair value of the BTC received was recorded to additional paid-in capital as of December 31, 2025.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

stockholder approval at any stockholder meeting held for that purpose.

Additionally, each of the directors and executive officers of the Company, pursuant to lock-up agreements, agreed not to sell or transfer any of the Company securities which they hold, subject to certain exceptions, until the Pre-Funded Warrant Additional Closing Date.

Obligations Under the September Purchase Agreement

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

Within 25 days of the September Initial Closing Date, the Company is required to file with the SEC a preliminary proxy statement for the purpose of obtaining the stockholder approval, and obtain such approval within 75 days of the September Initial Closing Date at a meeting of stockholders.

In the event that the stockholder approval is not obtained on or prior to such deadline, the Company is required to hold another stockholder meeting within 45 days , and continue to hold an additional stockholder meeting every fourth month thereafter until the Stockholder Approval is obtained.

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

Purchaser Rights

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

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

The Company sold 36,663,892 in shares of common stock under the Maxim ATM for net proceeds of $ 24.8 million for the three months ended March 31, 2026.

Maxim receives a fee of 3 % of gross proceeds or $ 0.9 million.

Gross proceeds net of fees is recorded in additional paid-in capital on the statement of stockholders' equity for three months ended March 31, 2026 for $ 24.8 million net of non cash deferred offering costs of $ 5.2 million.

Consultant Equity Awards

In the three months ended March 31, 2026, the Company recognized $ 1.0 million of compensation expense for equity awards granted to consultants outside of the 2018 LTIP plan in the aggregate of 909,427 shares of common stock.

The shares vest immediately or after six months.

Meme Coin II Dividend

On December 29, 2025, the board of directors of the Company declared a conditional dividend of Dream Bowl Meme Coin II digital collectibles (the “Meme Coins”) to eligible holders of the Company’s common stock and certain other equity securities.

The Meme Coins were payable to holders of record as of January 7, 2026 and were distributed beginning on February 27, 2026.

The distribution was made on the basis of one Meme Coin for every sixty shares of common stock held, or, with respect to eligible equity securities other than common stock, for every sixty shares of common stock underlying such securities, in each case held as of the record date, with fractional entitlements rounded down.

Holders with fewer than sixty shares of common stock or common stock equivalents were not be entitled to receive any Meme Coins.

The Meme Coins are digital collectibles intended solely for personal, non-commercial use in connection with the Dream Bowl XIV event and do not represent or confer any equity, voting, dividend, profit-sharing, or ownership rights in the Company or any other entity, nor do they provide any right to receive cash or other monetary consideration.

The Meme Coins are not designed or intended to function as an investment, currency, or financial product.

Warrant Dividend

On December 29, 2025, the Company’s board of directors also declared a conditional dividend of warrants to purchase shares of the Company’s common stock to eligible holders of the Company’s common stock and certain other equity securities.

The warrants were payable to holders of record as of January 7, 2026 and were distributed on February 27, 2026.

The number of warrants distributed was 9,665,079 .

The distribution was made on the basis of one warrant for every sixty shares of common stock held, or, with respect to eligible equity securities other than common stock, for every sixty shares of common stock underlying such securities, in each case held as of the record date, with fractional entitlements rounded down.

Holders with fewer than sixty shares of common stock or common stock equivalents were not be entitled to receive any warrants.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

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

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

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

Weighted Average

For the Three and Three Months Ended March 31, 2026 and 2025

Each warrant entitles the holder to purchase one share of the Company’s common stock at an exercise price of $ 5.00 per share (subject to adjustment for recapitalizations, stock splits, stock dividends and similar types of transactions) and will expire on the first anniversary of the distribution date.

The exercise of each warrant is subject to certain conditions, including a requirement that the applicable beneficial owner possess a corresponding Meme Coin at the time of exercise.

The warrants were recorded as an in and out to additional paid in capital for their aggregate fair value of $ 4.0 million as of the record date of January 7, 2026.

The fair value of the common stock warrants uses significant unobservable inputs (Level 3).

The fair value of the common warrants was determined using the Black-Scholes Model based on the following key inputs and assumptions:

stock price on January 7, 2026 of $ 1.16 , exercise price of $ 5.00 , term of 1 year, volatility of 179.0 % and risk-free rate of 3.48 %.

On the distribution date of February 27, 2026 the Company adjusted the fair value to it's distribution date fair value of $ 1.9 million for which the adjustment was and in and out to additional paid in capital for three months ended March 31, 2026.

The fair value of the common warrants was determined using the Black-Scholes Model based on the following key inputs and assumptions:

stock price on January 7, 2026 of $ 0.71 , exercise price of $ 5.00 , term of 1 year, volatility of 183.7 % and risk-free rate of 3.48 %

Warrants exercisable as of March 31, 2026 exclude warrants to purchase 12,068 shares of common stock issued to investors that participated in the February 2024 Public Offering that requires shareholder approval prior to the warrants being exercisable.

Information regarding warrants for common stock outstanding and exercisable as of March 31, 2026 is as follows:

Price Warrants

Outstanding as of

March 31, 2026 Weighted Average

Life (years) Warrants

Exercisable as of

September 30, 2025

March 31, 2026

$ 1.83 - $ 5.00

2 unchanged sentences

5,401 1.8 5,401

9,683,027 0.9 9,670,959

________________________________________

* Weighted average

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

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

Weighted Average

Price Warrants

Outstanding as of

December 31, 2025 Weighted Average

Life (years) Warrants

Exercisable as of

December 31, 2025

December 31, 2024

$ 1.83 - $ 3.20

3 unchanged sentences

$ 38,250.00 - $ 66,900.00

18,011 2.9 5,942

________________________________________

* Weighted average

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

Warrants exercisable as of December 31, 2025 exclude warrants to purchase 1 share of common stock issued to a marketing firm, which vest upon the achievement of certain milestones 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, 2025 and 2024

For the Three and Three Months Ended March 31, 2026 and 2025

Stock-Based Compensation

1 unchanged sentence

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

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

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

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

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

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

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

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

As of September 30, 2025, up to 24,045,590 shares of common stock are available for grants to participants under the LTIP.

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

Weighted-Average

As of March 31, 2026, up to 61,080,567 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, 2026 is presented below:

Stock Awards Shares Weighted-Average

Grant Date Fair Value

Non-vested as of January 1, 2026 20,180,686 $ 1.81

( 2,476,129 )

Non-vested as of September 30, 2025

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

Weighted-Average

Granted — $ —

Vested ( 1,767,855 ) $ 1.76

Forfeited ( 498,296 ) $ 1.39

Non-vested as of March 31, 2026 17,914,535 $ 1.83

A summary of activity related to restricted stock awards with performance-based vesting conditions for the three months ended March 31, 2026 is presented below:

Stock Awards Shares Weighted-Average

Grant Date Fair Value

Non-vested as of January 1, 2026 1,925,000 $ 0.99

Non-vested as of September 30, 2025

Granted — $ —

Vested ( 1,480,000 ) $ 1.04

Forfeited ( 200,000 ) $ 0.96

Non-vested as of March 31, 2026 245,000 $ 0.70

As of March 31, 2026, the unamortized compensation costs related to the unvested restricted stock awards with service based vesting conditions was approximately $ 32.2 million which is to be amortized on a straight-line basis over a weighted-average period of approximately 2.63 years.

In the three months ended March 31, 2026, 1,480,000 performance awards granted in February 2025 met their vesting criteria and the Company recognized $ 0.6 million in compensation cost.

These performance awards vested upon the achievement of the Company’s aggregate revenue equaling or exceeding $ 40.0 million over a trailing 12 calendar month period ending on or prior to the date that is 5 years from the grant date.

As of March 31, 2026, the unamortized compensation costs related to the unvested restricted stock awards with performance based vesting criteria was $ 0.1 million which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.75 years.

These performance awards vest upon the achievement of revenue equaling or exceeding certain a threshold 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.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Stock-Based Compensation, continued

As of September 30, 2025, the unamortized compensation costs related to the unvested restricted stock awards with service based vesting conditions was approximately $ 6.0 million which is to be amortized on a straight-line basis over a weighted-average period of approximately 2.12 years.

As of September 30, 2025, the unamortized compensation costs related to the unvested restricted stock awards with performance based vesting criteria was $ 1.4 million which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.39 years.

These performance awards vest upon the achievement of the Company’s aggregate revenue equaling or exceeding $ 40.0 million over a trailing 12 calendar month period ending on or prior to the date that is 5 years from the grant date.

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

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

Acceleration of Grants

In the three months ended September 30, 2025, certain employees terminated and received accelerated vesting for all unvested awards.

The Company recorded $ 1.4 million in additional stock-based compensation expense in the three and nine months ended September 30, 2025.

For the Three and Three Months Ended March 31, 2026 and 2025

For the three months ended March 31, 2026, 1,788,688 shares of restricted stock awards were released under the LTIP with an intrinsic value of $ 1.2 million.

Inducement Grants

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

As of September 30, 2025, all compensation cost related to the September 2021 Inducement Grant was expensed.

As of September 30, 2025, 16 shares are unvested.

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

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

As of September 30, 2025, there is no unamortized compensation cost related to the September 2024 Inducement Grant.

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

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

As of September 30, 2025, the unamortized compensation cost related to the Bradley Inducement Grant was approximately $ 1.7 million which is being amortized on a straight-line basis over a period of 1.92 years.

The performance-based vesting criteria was met in the three months ended March 31, 2026 and the Company recognized $ 0.5 million in compensation cost.

As of March 31, 2026, the unamortized compensation cost for the time-based award related to the Bradley Inducement Grant was approximately $ 0.7 million which is being amortized on a straight-line basis over a period of 1.72 years.

On May 20, 2025, the Company issued 500,000 units of restricted stock at a fair value per share of $ 0.97 , to Mark LoGuirato, as an inducement grant (“LoGuirato Inducement Grant”) pursuant to an inducement award agreement dated May 20, 2025.

Of this grant, 250,000 awards have service-based conditions and vest in 3 -month equal installments over a 36 -month period, while the other 250,000 awards have performance-based condition and vest upon the Company’s CSI revenue equaling or exceeding $ 25,000,000 over trailing 12 calendar month period ending on or prior to the date that is 5 years from the grant date.

As of September 30, 2025, the unamortized compensation cost related to the LoGuirato Inducement Grant was approximately $ 401,000 which is being amortized on a straight-line basis over a period of 2.50 years.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Stock-Based Compensation, continued

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

Weighted-Average

Grant Date Fair Value

Non-vested as of January 1, 2025

Non-vested as of September 30, 2025

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

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

For the nine months ended September 30, 2024, 3 shares of restricted stock units were released under the 2022 Plan.

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

As of March 31, 2026, the unamortized compensation cost related to the LoGuirato Inducement Grant was approximately $ 0.3 million which is being amortized on a straight-line basis over a period of 1.66 years.

The Company recorded no provision for income taxes for the three months ended March 31, 2026 and 2025.

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, 2025 and December 31, 2024, the Company retains a full valuation allowance on its deferred tax assets.

As of March 31, 2026 and December 31, 2025, the Company retains a full valuation allowance on its deferred tax assets.

The realization of the Company’s deferred tax assets depends primarily on its ability to generate taxable income in future periods.

The amount of deferred tax assets considered realizable in future periods may change as management continues to reassess the underlying factors it uses in estimating future taxable income.

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

The provision for income taxes for the three months ended March 31, 2026 and 2025 was calculated on a jurisdiction basis.

Commitments and Contingencies

Operating Leases

The Company leases office space under a non-cancellable operating lease that expired in January 2024 and had an option to renew this lease, with renewal rates to be negotiated.

Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date we take possession of the property.

At lease inception, we determine the lease term by assuming the exercise of those renewal options that are reasonably assured.

The exercise of lease renewal options is at our sole discretion.

The lease term is used to determine whether a lease is financing or operating and is used to calculate straight-line rent expense.

Additionally, the depreciable leasehold improvements is limited by the expected lease term.

Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet;

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

The Company leases office and warehouse facilities under noncancelable operating lease agreements used to support its corporate headquarters, administrative offices, and operational activities.

Lease terms range from approximately two to five years .

Certain leases include renewal options that may extend the lease term;

however, such options are not included in the lease term unless it is reasonably certain that the option will be exercised.

Lease agreements generally

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Commitments and Contingencies, continued

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

September 30,

For the Three and Three Months Ended March 31, 2026 and 2025

require the Company to pay fixed base rent and may also include variable payments related to common area maintenance, property taxes, insurance, or other operating costs, which are expensed as incurred.

The Company’s leases do not contain residual value guarantees, and the Company does not currently sublease any of its leased facilities.

At lease commencement, the Company recognizes a right-of-use (“ROU”) asset and a corresponding lease liability based on the present value of lease payments over the lease term.

The Company uses its incremental borrowing rate to determine the present value of lease payments when the implicit rate is not readily determinable.

Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheet, and lease expense for these leases is recognized on a straight-line basis over the lease term.

The following table reflects our lease assets and our lease liabilities at March 31, 2026 and December 31, 2025 (in thousands):

2026 December 31,

Operating lease right-of-use assets $ 4,518 $ 4,657

5 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating lease cost $ 374 $ 47

1 unchanged sentence

Total lease cost $ 389 $ 55

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

As of March 31, 2026, the maturity of operating lease liabilities was as follows (in thousands):

Payments due in:

7 unchanged sentences

Present value of operating lease obligations $ 4,433

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

Lease Term and Discount Rate:

September 30, 2025

March 31, 2026

Weighted-average remaining lease term (in years) 4

1 unchanged sentence

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Commitments and Contingencies, continued

Other Information:

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30, 2025

March 31, 2026 Three Months Ended

March 31, 2025

Operating cash outflows from operating leases $ 271 $ 45

16 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Commitments and Contingencies, continued

For the Three and Three Months Ended March 31, 2026 and 2025

Intellectual Property Cross-License Agreement

3 unchanged sentences

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”).

The NYIAX Convertible Note was 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.

6 unchanged sentences

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.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Commitments and Contingencies, continued

Lock-up Agreements

1 unchanged sentence

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”).

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

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

The Company accounted for the NYIAX transactions as a collaborative arrangement and allocated fair values of exchanged assets on their relative fair value.

1 unchanged sentence

The NYIAX common shares received in the aggregate of 2,150,000 were valued at $ 4.3 million and are recorded as an investment at fair value under the measurement alternative of ASC 321 at the close date fair value of $ 2 per share on the condensed consolidated balance sheet.

The Company recognized an impairment on the investment of $ 2.5 million in the three months ended March 31, 2026.

See Note 5 for details.

The fair value method was determined due to the Company not having significant influence over NYIAX.

6 unchanged sentences

Due to the probable achievement of the performance condition on the grant date, the shares are initially recorded at the grant date fair value of $ 1.3 million with no subsequent remeasurement.

NYIAX Agreement and Plan of Merger

On March 18, 2026, the Company, DVLT Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), and NYIAX entered into an Agreement and Plan of Merger (the “NYIAX Merger Agreement”), dated March 18, 2026.

Pursuant to the provisions of the NYIAX Merger Agreement, on the closing date (the “Closing Date”), (i) Merger Sub will merge with and into NYIAX (the “Merger”), the separate corporate existence of Merger Sub will cease and NYIAX will continue as the surviving company and a wholly owned subsidiary of the Company, and (ii) the Company will pay to NYIAX equity holders aggregate consideration (“Merger Consideration”) of 78,947,368 shares of the Company’s common stock.

The Company estimates the Merger Consideration to be $ 61.6 million based on an aggregate fair value using the closing stock price on March 17, 2026 of $ 0.78 per share.

See note 5 for discussion of impairment of the NYIAX investment.

Pursuant to the terms of the NYIAX Merger Agreement, at the effective time of the Merger (the “Effective Time”), by virtue of the Merger and without any action on the part of the stockholders of NYIAX (the “Merger Partner Stockholders”), (i) each outstanding share of NYIAX’s common stock, par value $ 0.0001 per share (the “NYIAX Common Stock”), other than any shares of NYIAX Common Stock held in the treasury of NYIAX will be converted into the right to receive (i) a number of shares of common stock equal to the Exchange Ratio (as defined in ther Merger Agreement), or (ii) each share of NYIAX Common Stock held immediately prior to the Effective Time by a

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

Merger Partner Stockholder that is an Unaccredited Investor (as defined in the Merger Agreement) will be converted into the right to receive the unaccredited investor cash consideration, which will be the higher of (i) price per share equal to the VWAP (as defined in the NYIAX Merger Agreement) of the common stock for the five ( 5 ) consecutive trading days ending on the trading day immediately preceding the date of the NYIAX Merger Agreement, or (ii) price per share equal to the VWAP of the common stock for the five ( 5 ) consecutive trading days ending on the trading day immediately preceding the Closing Date.

Pursuant to the NYIAX Merger Agreement, if the Company effects or announces an intent to effect a reverse stock split of the common stock at any time within one hundred twenty ( 120 ) days following the date of the NYIAX Merger Agreement, then the Company will issue to the Merger Partner Stockholders, on a pro rata basis in accordance with their respective entitlements to the Merger Consideration, an aggregate of 10,000,000 duly authorized, validly issued, fully paid and nonassessable additional shares of common stock.

Pursuant to the terms of the NYIAX Merger Agreement, the Company has also agreed to appoint two new members to the board of directors of the board of directors of the Company, nominated by NYIAX and subject to such nominees being acceptable to the Company, effective as of the Closing Date.

The NYIAX Merger Agreement contains representations and warranties from both the Company and Merger Sub, on the one hand, and NYIAX, on the other hand, customary for a transaction of this nature.

The NYIAX Merger Agreement also contains customary covenants and agreements, including with respect to the operations of the business of NYIAX and the Company between the date of the NYIAX Merger Agreement and Effective Time.

The completion of the Merger will also be subject to closing conditions, customary for a transaction of this nature.

NYIAX will be subject to customary “no-shop” restrictions on its ability to solicit alternative acquisition proposals from third parties and to provide information to, and continue or participate in discussions and engage in negotiations with, third parties regarding any alternative acquisition proposals, subject to a customary “fiduciary out” provision that allows the Company, under certain specified circumstances and subject to other terms and conditions in the NYIAX Merger Agreement, to provide information to, and continue or participate in discussions and engage in negotiations with, third parties with respect to an alternative acquisition proposal if the board of directors of NYIAX (the “NYIAX Board”) (or a committee thereof) determines in good faith (after consultation with its financial advisor and outside legal counsel) that such alternative acquisition proposal either constitutes a superior proposal or is reasonably likely to lead to a superior proposal, and the NYIAX Board (or a committee thereof) has determined in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to take such actions could reasonably be expected to be inconsistent with its fiduciary duties pursuant to applicable law.

Pursuant to the NYIAX Merger Agreement if, at any time during the period beginning on the Closing Date and ending on the date that is twelve (12) months following the Closing Date, the surviving corporation (as defined in the NYIAX Merger Agreement), or the Company, executed and announced a definitive commercial, strategic, joint venture, licensing, partnership, or other bona fide revenue generating or value enhancing agreement with a trading market (a “Trading Market Transaction”), approved by the the board of directors of the Company, then the Company shall issue to the Merger Partner Stockholders, on a pro rata basis in accordance with their respective ownership immediately prior to the Effective Time, an aggregate of 13,000,000 duly authorized, validly issued, fully paid and nonassessable restricted shares of common stock (the “Earn-Out Shares”).

In lieu thereof, each unaccredited investor shall be entitled to receive, with respect to each share of NYIAX Common Stock held immediately prior to the Effective Time, a cash payment equal to the higher of (i) price per share equal to the VWAP of the common stock for the five ( 5 ) consecutive trading days ending on the trading day immediately preceding the Closing Date, or (ii) price per share equal to the VWAP of the common stock for the five ( 5 ) consecutive trading days ending on the trading day immediately preceding the execution and announcement of Trading Market Transaction, without interest and subject to applicable tax withholding.

From the closing, NYIAX and for a period of twelve ( 12 ) months thereafter has agreed to a special indemnity, pursuant to which NYIAX will indemnify, defend and hold harmless the Company, the surviving corporation from and against any and all losses (as defined in the NYIAX Merger Agreement) arising out of, relating to, or resulting from certain specific, enumerated claims, actions, suits, proceedings, investigations or demands against NYIAX set forth in

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

the NYIAX Merger Agreement, including any continuation, amendment, extension or escalation thereof.

Any and all losses for which indemnification is required under the NYIAX Merger Agreement will be satisfied solely by a reduction in the number of Trading Market Transaction earn-out shares otherwise issuable to the Merger Partner Stockholders pursuant to NYIAX Merger Agreement.

In no event shall the aggregate number of Trading Market Transaction earn-out shares subject to reduction pursuant to the NYIAX Merger Agreement exceed 5,000,000 shares of common stock.

Pursuant to the Merger Agreement, the Company has agreed to file with the Securities and Exchange Commission a registration statement on Form S-3 (or, if the Company is not then eligible to use Form S-3, on Form S-1), within thirty (30) calendar days following the Closing Date, covering the resale of all shares of common stock issued to Merger Partner Stockholders as Merger Consideration pursuant to Merger Agreement.

The Earn-Out Shares will have similar registration rights upon issuance of such shares.

The NYIAX Merger Agreement contains customary termination rights for both the Company and Merger Sub, on the one hand, and NYIAX, on the other hand, including, among others, for failure to consummate the Merger within 90 days from the signing of the NYIAX Merger Agreement.

IBM Purchase Commitment for Programs

5 unchanged sentences

The Company having paid $ 2.5 million on August 8, 2025, the total payments are $ 25.9 million.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Commitments and Contingencies, continued

Under the IBM Purchase Commitment, the Company must send a report to IBM every 90 days summarizing the use of each Program.

3 unchanged sentences

Payments under the IBM Purchase Commitment are capitalized to prepaid expenses and are amortized on a straight-line basis over the contractual term, which ends on June 29, 2028, with amortization recorded to research and development expense in the same manner as the related hosting fees.

As of September 30, 2025, the Company had approximately $ 23.3 million of remaining purchase commitments payable under the agreement.

As of March 31, 2026, the Company had approximately $ 15.3 million of remaining purchase commitments payable under the agreement.

Cloud Services Subscription Agreement

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

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

The Company has selected their Cloud Services, with the minimum value of the Cloud Services actually purchased within each annual period being (i) $ 0.1 in the first year, (ii) $ 2.1 in the second year, and (iii) $ 4.1 in the third year.

5 unchanged sentences

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

SanQtum AI Enterprise Unit Agreement

On November 30, 2025, the Company entered into a three-year subscription agreement with IBM for the SanQtum AI Enterprise Unit Installation (the “SanQtum Agreement”).

The agreement has a contractual term beginning November 30, 2025 and ending November 29, 2028.

Pursuant to the SanQtum Agreement, the Company committed to purchase a minimum contract value of $ 10.0 million over the three-year term.

In connection with the agreement, the Company made an initial payment of $ 10.0 million upon execution.

If the Company does not place purchase orders sufficient to meet the committed contract value during the term, IBM may invoice the Company for the remaining balance of the commitment.

The Company accounts for the arrangement as a prepaid software and amortizes the related expense on a straight line basis within research and development expense over the contractual term.

As of March 31, 2026, the unamortized portion of the initial payment is recorded under prepaid software license on the consolidated balance sheet.

Master Purchase Order Agreement - SanQtum

On January 4, 2026, the Company entered into a Master Purchase Order Agreement with AP Global Holdings LLC (d/b/a Available Infrastructure) pursuant to which the Company agreed to purchase SanQtum™ infrastructure and cybersecurity services under a services-based delivery model.

The agreement provides for an upfront payment of $ 250,000 and has an initial term of twelve months , subject to earlier termination in accordance with its terms.

Earnout Agreement

In connection with the closing of the EOS Asset Acquisition, 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 EOS 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 closing date of the EOS Asset Acquisition and will end upon the expiration of the last to expire of the patents included in the EOS 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.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

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.

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 EOS Asset Acquisition on December 31, 2024.

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

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

As described in Note 5 Borrowings, the Company owes $ 4.6 million of principal balance under the DV Convertible Note to EOS Holdings as of September 30, 2025.

In the third quarter of 2025, EOS Holdings exercised its conversion right under the DV Convertible Note, converting approximately $ 3.2 million of the principal balance into shares of the Company’s common stock.

The Company has recorded $ 5,000 in interest income on the notes receivable for the nine months ended September 30, 2025.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Related Parties, continued

In addition to the DV Convertible Note and the Data Vault Note Balance, on January 16, 2025, the Company entered into a Transition Services Agreement (“Transition Services Agreement”) to receive from EOS Holdings, employees to provide transition services in connection with the Acquired Assets for a period of up to three months.

For the three and nine months ended September 30, 2025, the Company has paid $ 160,000 and $ 661,000 to EOS Holdings and has a balance due to EOS as of September 30, 2025 of $ 160,000 .

No fees were paid to EOS Holdings during the quarter ended September 30, 2024 in connection with the Transition Services Agreement.

As described in Note 5 Borrowings, the Company fully paid the EOS Convertible Note to EOS Holdings during the first quarter of 2026.

In the third quarter of 2025, EOS Holdings exercised its conversion right under the EOS Convertible Note, converting approximately $ 3.2 million of the principal balance into shares of the Company’s common stock.

In addition to the EOS Convertible Note, 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 EOS Acquired Assets for a period of up to three months.

For the three months ended March 31, 2026, the Company has paid $ 11,431 to EOS Holdings and has a balance due to EOS as of March 31, 2026 of $ 0.5 million.

$ 0.4 million was paid to EOS Holdings during the quarter ended March 31, 2025 in connection with the Transition Services Agreement.

Pursuant to the asset acquisition agreement with EOS Holdings, the Company is obligated to pay an earnout equal to 3 % of Net Revenue (as defined in the agreement) generated from products and/or services utilizing the acquired Patent Rights.

For the three months ended March 31, 2026, the Company recorded no earnout expense.

There was no earnout expense or associated revenue during the quarter ended March 31, 2025.

As of March 31, 2026, the Company had accrued approximately $ 0.8 million in earnout payable to EOS Holdings which is included in the accrued liabilities section of the balance sheet.

As of December 31, 2025, the Company had accrued approximately $ 0.8 million in earnout payable.

This transaction is expected to be settled with the issuance of stock.

No payments or stock issuances were made during the three months ended March 31, 2026.

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, 2025 and 2024, Hansong Technology purchased modules from the Company of approximately $ 14,000 and $ 3,000 , respectively, and made payments to the Company of approximately $ 681,000 and $ 38,000 , respectively.

At September 30, 2025, there was a Hansong deposit liability of $ 605,000 .

For the three months ended March 31, 2026 and 2025, Hansong Technology purchased modules from the Company and was assessed fees of approximately $ 141,000 and $ 11,000 , respectively, and made no payments to the Company for the three months ended March 31, 2026.

No payments were made for the three months ended March 31, 2025.

At March 31, 2026, there was a Hansong deposit liability of $ 0.3 million.

See Note 1 for further details regarding contract liabilities.

At September 30, 2025 and 2024, Hansong Technology owed the Company approximately $ 0 and $ 4,000 , respectively.

For the three months ended September 30, 2025 and 2024, Hansong Technology sold speaker products to the Company of approximately $ 5,000 and $ 0 , respectively, and the Company made payments to Hansong Technology of approximately $ 48,000 and $ 96,000 respectively.

At September 30, 2025 and 2024, the Company owed Hansong Technology approximately $ 0 and $ 67,000 , respectively.

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

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

As of September 30, 2025 and December 31, 2024, Mr.

At March 31, 2026 and 2025, Hansong Technology owed the Company zero and $ 35,000 , respectively.

For the three months ended March 31, 2026 and 2025, Hansong Technology sold speaker products to the Company of approximately $ 4,000 and $ 0 , respectively, and the Company made no payments to the Hansong Technology for the three months ended March 31, 2026 and 2025.

At March 31, 2026 and 2025, the Company owed Hansong approximately $ 4,000 and $ 43,000 , respectively.

As of March 31, 2026 and December 31, 2025, Mr.

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

Scilex Advances and Bitcoin Transactions

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

During the three months ended March 31, 2026, Scilex, a related party and significant shareholder of the Company, provided short-term cash advances to the Company to support working capital and operating needs.

The advances bore interest at an annual rate of 15.42 %.

During the three months ended March 31, 2026, the Company received aggregate cash advances from Scilex of approximately $ 18.7 million and repaid approximately $ 18.1 million of principal and $ 0.1 million of accrued interest through transfers of Bitcoin.

As of March 31, 2026, amounts outstanding under the advances totaled approximately $ 0.7 million of principal and $ 19,000 of accrued interest.

The Company accounts for transfers of Bitcoin used to settle related party obligations as noncash financing activities and derecognizes the digital assets at their carrying value on the date of transfer.

Any resulting realized gains or losses are recognized in Other expense, net.

There were no Scilex advances for the three months ended March 31, 2025.

Other Intangible Asset Acquisitions

For the three months ended March 31, 2026, the Company acquired an additional patent from three inventors, including Dr.

Henry Ji and Stephen Ma, both related parties, for an aggregate fair value of approximately $ 5.4 million.

Ji is a related party of the Company, and Mr.

Ma serves as Chief Financial Officer of Scilex, Inc., a significant shareholder and related party of the Company.

The patent was assigned a useful life of 10 years based on the estimated period of expected future economic benefit.

As consideration for the acquisition, the Company agreed to issue an aggregate of 7,500,000 shares of common stock, consisting of 2,500,000 initial closing shares and 5,000,000 contingent shares issuable upon achievement of specified milestones.

The Company recorded amortization expense related to the acquired patent of approximately $ 0.1 million and $ 0 for the three months ended March 31, 2026 and 2025, respectively.

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.

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

3 unchanged sentences

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 and Nine Months Ended September 30, 2025 and 2024

Segment Information continued

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

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

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Net revenue 3,416 629

Cost of net revenue 3,305 560

5 unchanged sentences

Income tax expense — —

Net loss $ ( 53,131 ) $ ( 9,563 )

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Three Months Ended March 31, 2026 and 2025

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

Net revenue by geographic region for the three and nine months ended September 30, 2025 and 2024 was as follows:

For the Three Months Ended

For the Nine Months Ended

September 30,

Net revenue by geographic region for the three months ended March 31, 2026 and 2025 was as follows:

For the Three Months Ended March 31,

(in thousands) 2026 2025

Asia Pacific $ 424 $ 365

North America 2,515 137

Europe 477 127

Total $ 3,416 $ 629

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

Subsequent Events

Bridge Financing

On October 10, 2025, the Company entered into a financing agreement for $ 1.4 million in proceeds net of fees of $ 60,000 .

The Company agreed to pay $ 87,000 weekly financing charges and the estimated term is 183 calendar days from the time of funding.

Q3 2025 Notes Conversion

On October 1, 2025, the Q3 2025 Notes were fully converted.

The Company issued 31,064,393 shares of common stock and the Q3 2025 Notes are no longer outstanding.

For further details on the Q3 2025 Notes, see Note 5 Borrowings.

Warrant Exchange

On October 2, 2025, the Company closed the Warrant Exchange Agreement entered into on August 4, 2025 entered into in connection with the Q3 2025 Notes to exchange 30,738,005 common stock warrants into shares of common stock.

The stock was issued on October 2, 2025 and the warrants are no longer outstanding.

For further details, see Note 5 Borrowings.

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Subsequent Events (continued)

October Purchase Agreement

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

The closing with respect to the October Initial Shares took place on October 29, 2025.

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

Acquisition of API Media

On October 28, 2025, the Company announced that it had entered into a definitive agreement to acquire API Media, a privately held technology provider headquartered in New Jersey (the “API Purchase Agreement”), for consideration of cash of $ 14.0 million.

API Media delivers audio-visual and IT services for large-scale sporting events and enterprise clients.

On October 28, 2025, the Company paid a deposit of $ 1.0 million to API.

Under the terms of the agreement, the Company will acquire 100 % of the equity interests of API Media in an all-cash transaction, which is expected to close in December 2025, subject to customary closing conditions and regulatory approvals.

The API Purchase Agreement can be terminated by mutual written consent of the parties, and also by either party after December 5, 2025 (the “Outside Date”), if the closing has not occurred by the Outside Date;

provided , however , that the right to terminate shall not be available to a party whose material breach of the API Purchase Agreement has been the principal cause of, or primarily resulted in, the failure of the closing to occur.

Additionally the API Purchase Agreement can be terminated by either party if a final, non-appealable order, decree or ruling enjoining or otherwise prohibiting consummation of the purchase has been issued by any governmental authority or if the other party is in breach of the API Purchase Agreement which has not been cured within ten ( 10 ) days of written notice of such breach (provided that such terminating party has not committed a material breach which is the principal cause of the failure to close).

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

The Company expects to account for the transaction as a business combination in accordance with ASC 805, Business Combinations.

The Company is currently evaluating the preliminary purchase price allocation, including the fair values of the assets to be acquired, liabilities to be assumed, and any resulting goodwill or intangible assets.

Because the transaction had not closed as of September 30, 2025, no amounts related to this acquisition are included in the accompanying consolidated financial statements.

Letter of Intent to Acquire NYIAX Inc.

On October 13, 2025, the Company entered into a letter of intent (“LOI”) to acquire NYIAX Inc., a technology and services company with operations in the United States, Europe, and Dubai.

NYIAX operates a proprietary blockchain-enabled advertising and data-exchange platform jointly developed with Nasdaq and owns an associated portfolio of intellectual-property rights.

The proposed transaction is subject to the negotiation and execution of a definitive acquisition agreement, approval by the Company’s stockholders and Nasdaq, and other customary closing conditions.

If consummated, the transaction is expected to close in the first quarter of 2026.

Vivasor Subscription Agreement

On April 23, 2026, the Company filed a prospectus supplement to the registration statement of which this prospectus supplement forms a part (Registration No.

333-294502), for the purpose of registering the sale and issuance by us of 75,942,666 shares of our Common Stock to Vivasor, Inc.

(“Vivasor”), a related party, in consideration for our purchase of 8,163,265 shares of Vivasor’s Series A common stock, at a purchase price of $ 6.125 per share for aggregate consideration of $ 50 million, pursuant to a Subscription Agreement by and between the Company and Vivasor, dated as of April 16, 2026.

Scilex Binding Term Sheet

On April 26, 2026, the Company entered into a binding term sheet (the “Scilex Term Sheet”) with Scilex, which sets forth the principal terms and conditions of a proposed cash contribution and revenue participation arrangement between the Company and Scilex (the "Scilex Transaction").

Pursuant to the Scilex Term Sheet, and subject to the finalization of mutually agreeable definitive transaction documents and, ultimately, the satisfaction of certain customary closing conditions, to be contained therein, it is expected that Scilex will make an upfront cash contribution to the Company in the amount $ 120.0 million, to be paid in multiple closings, with the final closing to occur no later than December 31, 2026 (the “Upfront Payment”).

The Company will use the proceeds from the Upfront Payment exclusively to fund the deployment of our quantum-ready graphics processing units (“GPUs”) infrastructure across an estimated 100 cities in the United States (the “Quantum-Ready Edge Network”), including build-out, equipment, related working capital, and reasonable overhead expenses directly attributable thereto.

In consideration of the Upfront Payment, the Company would become obligated to pay Scilex an amount equal to (i) 30 % of gross revenues recognized by the Company attributable exclusively to the Quantum-Edge Nextwork (the "Network Revenues") until the aggregate amount of such payments to Scilex equals $ 250.0 million (the "Interim Cap"), (ii) from and after the time that the Interim Cap has been reached, 15 % of Network Revenues until aggregate amount of such payments to Scilex (when combined with amounts applied to the Interim Cap) equals $ 1.2 billion (the "Additional Cap"), and (iii) from and after the time that the Additional Cap has been reached, 5 % of Network Revenues during the remaining lifetime of the GPU's purchased using the Upfront Payment.

The Term Sheet contemplates the execution of definitive agreements containing customary representations, warranties, covenants, indemnification provisions, and closing conditions.

There can be no assurance that definitive agreements will be executed or that the proposed transaction will be consummated on the terms currently contemplated, or at all.

The proposed transaction remains subject to further negotiation, regulatory and corporate approvals, market conditions, and other customary conditions outside the Company’s control.

CyberCatch Binding Letter of Intent

DATAVAULT AI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

Subsequent Events (continued)

The Company anticipates accounting for any completed transaction as a business combination under ASC 805, Business Combinations.

Because only a non-binding LOI had been executed as of September 30, 2025, no amounts related to this potential acquisition have been reflected in the accompanying consolidated financial statements.

Scilex Licensing Agreement

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

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

The Scilex License Agreement expires upon the expiry of the patents underlying the proprietary materials, at which point the license shall become perpetual, irrevocable, non-exclusive and royalty-free.

The Scilex License Agreement is subject to earlier termination if, among other things:

(i) either party ceases to exist or becomes insolvent, (ii) either party commits a material breach of the Scilex License Agreement, (iii) Scilex fails to make any required payment to the Company that is not cured within 15 days, or (iv) Scilex does not achieve and maintain annual royalty payments to the Company of a minimum of $ 1.0 million after 24 months following the date of the Scilex License Agreement.

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

Dream Bowl Tokens

Subsequent to September 30, 2025, the Board of Directors approved the creation of the Dream Bowl 2026 Meme Coin digital tokens (“Dream Bowl Tokens”) and authorized the engagement of Teknos Associates to perform an independent valuation of the tokens.

The Board also declared a dividend of one Dream Bowl Token per share of Company Common Stock (including securities entitled to participate on an as-converted basis), payable to stockholders of record as of November 28, 2025, subject to certain conditions, including receipt of the valuation report and confirmation of adequate statutory surplus.

The dividend is expected to be paid within 60 days after the record date unless modified or revoked by the Board.

This subsequent event did not require adjustment to the Company’s September 30, 2025 consolidated financial statements.

For the Three and Three Months Ended March 31, 2026 and 2025

On April 26, 2026, the Company entered into a binding letter of intent (the “CyberCatch LOI”) with CyberCatch Holdings, Inc.

(“CyberCatch”), under which the Company and CyberCatch will enter into a definitive agreement for the Company to acquire 100 % of CyberCatch in an all-stock transaction structured as a court-approved plan of arrangement under the Business Corporations Act (British Columbia) (the “CyberCatch Acquisition”).

Under the CyberCatch LOI and subject to a definitive agreement, the Company will acquire 100 % of CyberCatch’s issued and outstanding common shares (being approximately 26.8 million shares) in exchange for approximately 49.9 million newly issued shares of the Company's common stock at CAD $ 5.11 per CyberCatch share, which implies an aggregate value to CyberCatch’s issued and outstanding common shares of CAD $ 136.8 million.

All issued and outstanding CyberCatch securities convertible into or exercisable for CyberCatch common shares will be exchanged for shares of the Company's common stock on a cashless exercise basis at a deemed value of USD $ 2.00 per share of common stock.

Upon closing of the transaction, subject to customary board, stock exchange and any necessary regulatory and shareholder approvals, it is anticipated that the Company's stockholders will hold approximately 92.48 % and CyberCatch shareholders approximately 7.52 % of the Company's outstanding equity.

It is anticipated that CyberCatch will operate as a wholly-owned subsidiary of the Company from San Diego, California, and CyberCatch founder, Chairman, and Chief Executive Officer Sai Huda will serve as President of the subsidiary, reporting to Nathaniel T.

Bradley, the Company's Chief Executive Officer.

Registered Direct Offering

On May 3, 2026, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain institutional investors, pursuant to which the Company agreed to sell and issue in a registered direct offering (the "Offering") an aggregate of 109,090,910 shares of common stock at an offering price of $ 0.55 per share for aggregate gross proceeds to the Company from the Offering of approximately $ 60.0 million, before deducting the Placement Agent’s (as defined below) fees and offering expenses payable by the Company.

The Company intends to use the net proceeds from the Offering for the deployment of its quantum-ready graphics processing unit edge network, including build-out and equipment, as well as working capital and general corporate purposes.

The Offering closed on May 5, 2026.

Pursuant to the Purchase Agreement, the Company has agreed that, subject to certain exceptions, from the date of the prospectus supplement until forty-five (45) days after the closing of the Offering, (i) neither it nor any of its subsidiaries shall (a) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any Common Stock or Common Stock Equivalents (as defined in the Purchase Agreement) or (b) file any registration statement or any amendment or supplement thereto, and (ii) it shall not enter into a Variable Rate Transaction (as defined in the Purchase Agreement) .

In connection with the Offering, the Company entered into a Placement Agency Agreement, dated as of May 3, 2026, with Titan Partners Group LLC, a division of American Capital Partners, LLC (the “Placement Agent”), pursuant to which the Placement Agent agreed to serve as the sole placement agent for the issuance and sale of securities of the Company pursuant to the Purchase Agreement.

As compensation for such services, the Company agreed to pay the Placement Agent a cash fee of $ 4.2 million and issue to the Placement Agent, or its designees, warrants to purchase up to 5,454,545 shares of Common Stock (the “Placement Agent Warrants”) at the closing of the Offering.

The Placement Agent Warrants have a term of five years from the date of the prospectus supplement and have an exercise price of $ 0.6325 per share.

The Company also agreed to reimburse the Placement Agent for legal and other expenses incurred by it in connection with the offering in an aggregate amount up to $ 60,000 .

The warrants have a five-year term.

The Shares, the Placement Agent Warrants and the shares of Common Stock issuable upon exercise of the Placement Agent Warrants (the “Placement Agent Warrant Shares”) were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3 (File No.

333-294502), which was originally filed with the SEC on March 20, 2026, and was declared effective on March 25, 2026, a base prospectus forming a part of the effective registration statement dated March 25, 2026 and a prospectus supplement dated May 3, 2026.

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