Datavault AI Inc.: Form 10-Q for the period ended Jun 30, 2026

Cautionary Notice Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue,” negatives thereof or similar expressions. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of Datavault AI Inc.’s (“Datavault”, the “Company”, “our”, “us” or “we”) operations; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future operations, future cash needs, business plans and future financial results, and any other statements that are not historical facts.

From time to time, forward-looking statements also are included in our other periodic reports on Forms 10-Q and 8-K, in our press releases, in our presentations, on our website and in other materials released to the public. Any or all of the forward-looking statements included in this Report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, including risks related to Datavault’s ability to remain listed on the Nasdaq Capital Market; Datavault’s need for financing in the near term to support its ongoing operations; the volatility of the market price for Datavault’s common stock; market, economic and other conditions; Datavault’s ability to manage costs and execute on its operational and budget plans; risks related to mergers and acquisitions activity, including our ability to close certain acquisitions and realize the anticipated benefits from those acquisitions; our ability to realize the anticipated benefits from the acquisitions of CompuSystems, Inc. (“CSI”), API Media Innovations Inc. and NYIAX, Inc. (“NYIAX”); our ability to complete the acquisition of NYIAX; and Datavault’s ability to achieve its financial goals. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

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

Overview

Datavault AI Inc. (“Datavault,” the “Company,” “us,” “our,” or “we”) is an artificial intelligence platform ("AIP") company focused on transforming data and real-world assets into monetizable digital assets. The Company is developing an integrated licensing and technology ecosystem that combines artificial intelligence, blockchain, data valuation, tokenization, cybersecurity, high-performance computing and exchange infrastructure to support the lifecycle of data and digital assets..

Part of the Datavault platform is an AI-driven inference layer that operates beneath the Company’s user-facing applications, exchanges and monetization technologies. This inference layer is designed to analyze and contextualize data, identify relationships and patterns, generate insights, establish attributes and valuation signals, and support automated decision-making across the platform.

The Company’s proprietary technologies include AI-driven agents and patented technologies designed to enable data ownership, observability, valuation and monetization. These technologies are intended to work together rather than operate as independent products, creating an integrated ecosystem through which enterprises, institutions and other asset owners can identify previously underutilized data, establish its value and ownership, protect it, create digital representations of the underlying rights or assets, and access mechanisms for commercialization. Datavault has two synergistic platforms-Data Sciences and Acoustic Sciences.

Our Data Sciences division is focused on the delivery of cyber-secure AIP, privacy-protected data management and monetization technologies, which include artificial intelligence-driven agents branded as Data Vault®, DataValue®, DataScore®, and Data Vault Bank®. The Company’s cybersecurity capabilities are intended to provide security across this architecture, protecting data and digital assets as they move through the lifecycle from ingestion and inference through valuation, tokenization and exchange. The Company’s exchange technologies are designed to provide the commercialization layer of the platform. These technologies are intended to connect asset and data owners with markets through which digitally represented assets, rights and data may ultimately be transacted, licensed or otherwise monetized.

Datavault also operates an Acoustic Sciences platform that combines the Company’s patented audio and data-over-sound technologies with its events and experiential media business. The Acoustic Sciences platform includes WiSA®, ADIO® and related technologies designed for wireless audio transmission, spatial and immersive audio experiences, data-over-sound applications and digital engagement. The division also includes the Company’s live event capabilities, including CompuSystems, Inc. (“CSI”), operating under the Event Citadel brand, and API Media Innovations Inc. (“API Media”). Event Citadel provides event registration, lead retrieval, data analytics and related services for trade shows, conferences and other live events, while API Media provides media infrastructure, on-site media capture, data collection and digital engagement services for sporting events, entertainment venues and other large-scale experiential activations. The Company believes its events business provides both an established commercial revenue base and a real-world environment in which Datavault technologies can be deployed. By integrating event registration, audience engagement, media infrastructure and experiential data with technologies such as ADIO®, the Company believes it can capture and authenticate interactions occurring at physical events and venues and connect those interactions to its broader Data Sciences platform. This integration is designed to transform event-generated data into potentially monetizable digital assets while creating additional opportunities for audience engagement, credentialing, data analytics and tokenization.

Together, these capabilities form an integrated artificial intelligence platform designed to connect data, intelligence, value and markets. The Company is building infrastructure intended to support the complete lifecycle of digital assets, with its AI inference layer providing the underlying intelligence that connects the Company’s data, valuation, security, tokenization and monetization technologies.

Comparison of the Three and Six Months Ended June 30, 2026 and June 30, 2025

Revenue

Revenue for the three months ended June 30, 2026 was $6.7 million, an increase of $5.0 million or 287% compared to the revenue for the three months ended June 30, 2025 of $1.7 million. The increase was primarily a result of the acquisition of CSI and API Media along with an increase in patent license revenue. The CSI acquisition generated approximately $1.8 million in revenue and the API Media acquisition generated approximately $1.0 million in revenue for the three months ended June 30, 2026.

Revenue for the six months ended June 30, 2026 was $10.1 million, an increase of $7.7 million or 329% compared to the revenue for the six months ended June 30, 2025 of $2.4 million. The increase was primarily a result of the acquisition of CSI and API Media along with an increase in patent license revenue. The CSI acquisition generated approximately $4.1 million in revenue and the API Media acquisition generated approximately $1.2 million in revenue for the six months ended June 30, 2026.

Gross Profit and Operating Expenses

Gross Profit

Gross profit for three months ended June 30, 2026 was $2.9 million compared to a gross profit of $35,000 for the three months ended June 30, 2025. The gross profit as a percent of sales was 43% for the three months ended June 30, 2026, compared to the gross profit of 2% for the three months ended June 30, 2025. The increase in gross profit is due to the inclusion of higher-margin revenue as a result of the acquisition of API Media, an increase in higher margin audio product sales, and an increase in high-margin patent license sales.

Gross profit for the six months ended June 30, 2026 was $3.0 million compared to a gross profit of $0.1 million for the six months ended June 30, 2025. The gross profit as a percent of sales was 30% for the six months ended June 30, 2026, compared to the gross profit of 4% for the six months ended June 30, 2025. The increase in gross profit is due to the inclusion of higher-margin revenue as a result of the acquisition of API Media, an increase in higher margin audio product sales, and an increase in high-margin patent license sales.

Research and Development

Research and development expenses for the three months ended June 30, 2026 were $7.2 million, an increase of $3.0 million, compared to the research and development expenses for the three months ended June 30, 2025 of $4.2 million. The increase in research and development expenses is primarily driven by IBM Watsonx AI and SanQtum AI subscription licenses of $3.1 million and higher legal expenses of $0.2 million.

Research and development expenses for the six months ended June 30, 2026 were $13.0 million, an increase of $6.4 million, compared to the research and development expenses for the six months ended June 30, 2025 of $6.6 million. The increase in research and development expenses is primarily driven by IBM Watsonx AI and SanQtum AI subscription licenses of $6.2 million and higher legal expenses of $0.5 million.

Sales and Marketing

Sales and marketing expenses for the three months ended June 30, 2026 were $7.2 million, an increase of $5.5 million compared to the sales and marketing expenses for the three months ended June 30, 2025 of $1.7 million. The increase in sales and marketing expenses is primarily related to an increase in headcount resulting in increased salaries and wages, benefits and stock-based compensation of $2.1 million, an increase in advertising and sponsorship projects of $2.4 million and legal and consulting expenses of $0.3 million.

Sales and marketing expenses for the six months ended June 30, 2026 were $13.8 million, an increase of $10.6 million compared to the sales and marketing expenses for the six months ended June 30, 2025 of $3.2 million. The increase in sales and marketing expenses is primarily related to an increase in headcount resulting in increased salaries and wages, benefits and stock-based compensation of $3.6 million, an increase in advertising and sponsorship projects of $4.9 million and legal and consulting expenses of $0.8 million.

General and Administrative

General and administrative expenses for the three months ended June 30, 2026 were $14.9 million, an increase of $8.4 million compared to general and administrative expenses for the three months ended June 30, 2025 of $6.5 million. The increase in general and administrative expenses is primarily driven by higher headcount, resulting in additional salaries, wages, commissions, benefits, and stock-based compensation of $3.3 million; legal and consulting expenses of $2.1 million; higher amortization of intangibles assets of $0.7 million related to the CSI acquisition closed on May 20, 2025, the IP acquisitions from Turner Global Media LLC and Web Access LLC closed in July 2025, the IP acquisition closed on January 04, 2026 the API acquisition closed on January 22, 2026, and the Saleri acquisition closed in Q2 2026. The increase also reflects higher acquisition-related expenses of $0.8 million and lease expense of $0.5 million.

General and administrative expenses for the six months ended June 30, 2026 were $33.6 million, an increase of $21.4 million compared to general and administrative expenses for the six months ended June 30, 2025 of $12.2 million. The increase in general and administrative expenses is primarily driven by higher headcount, resulting in additional salaries, wages, commissions, benefits, and stock-based compensation of $7.8 million; legal and consulting expenses of $6.8 million; higher amortization of intangibles assets of $1.5 million related to the CSI acquisition closed on May 20, 2025, the IP acquisitions from Turner Global Media LLC and Web Access LLC closed in July 2025, the IP acquisition closed on January 04, 2026 the API acquisition closed on January 22, 2026, and the Saleri acquisition closed in Q2 2026. The increase also reflects higher acquisition-related expenses, investor relations costs, and lease expense of $1.5 million, $0.6 million and, $0.9 million, respectively.

Interest Expense, net

Interest expense, net for the three months ended June 30, 2026 was $1.0 million, a decrease of $16.2 million compared to the interest expense, net for the three months ended June 30, 2025 of $17.2 million. Interest expense decreased due to an increase in short-term borrowings.

Interest expense, net for the six months ended June 30, 2026 was $2.1 million, a decrease of $15.2 million compared to the interest expense, net for the six months ended June 30, 2025 of $17.3 million. Interest expense decreased due to an overall decrease in borrowings.

Debt Extinguishment

Debt extinguishment expense for the six months ended June 30, 2026 was $1.7 million, representing the difference between the settlement amount due and the carrying value of the First Convertible Note on the settlement date.

Crypto Assets

Loss on crypto assets was $8.1 million for the three months ended June 30, 2026, compared to no loss for the three months ended June 30, 2025. For the six months ended June 30, 2026, loss on crypto assets was $25.1 million, compared to no loss for the six months ended June 30, 2025. The losses during the 2026 periods were primarily attributable to decreases in the fair value of the Company’s crypto asset holdings resulting from fluctuations in market prices. The Company did not hold crypto assets during the comparable 2025 periods.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability for the three months ended June 30, 2026 was $3.9 million compared to $2,000 of income for the three months ended June 30, 2025.

Change in fair value of warrant liability for the six months ended June 30, 2026 was $3.9 million compared to $19,000 of income for the six months ended June 30, 2025.

Impairment of Investments in Non-Marketable Securities

Impairment of investment in marketable security for the three months ended June 30, 2026 was $56.4 million compared to none for the three months ended June 30, 2025. This impairment increase was primarily due to the decline in value of our investment in Vivasor, Inc.

Impairment of investment in marketable security for the six months ended June 30, 2026 was $58.9 million compared to none for the six months ended June 30, 2025. This impairment increase was primarily due to the decline in value of our investment in Vivasor, Inc.

Other Income and Expense, net

Other income, net for the three months ended June 30, 2026 was $31,000 income compared to $3,000 expense for the three months ended June 30, 2025.

Other income, net for the six months ended June 30, 2026 was $186,000 income compared to $32,000 expense for the six months ended June 30, 2025.

Liquidity and Capital Resources

Cash and cash equivalents as of June 30, 2026 were $1.4 million compared to $2.0 million, as of December 31, 2025.

We recorded a net loss of $88.0 million and $141.2 million for the three and six months ended June 30, 2026, respectively and used net cash in operating activities of $80.0 million for the six months ended June 30, 2026 compared to $12.8 million for the six months ended June 30, 2025. Excluding non-cash adjustments, the primary reasons for the increase in the use of net cash from operating activities during the six months ended June 30, 2026, was related to an increase in the net loss.

Cash used in investing activities for the six months ended June 30, 2026 and June 30, 2025 totaled approximately $17.1 million and $6.6 million, respectively. The increase was due to the acquisition of API on January 22, 2026.

Cash provided by financing activities for the six months ended June 30, 2026 and June 30, 2025 totaled approximately $96.5 million and $16.7 million, respectively. The increase of $79.8 million of cash provided by financing activities is primarily attributable to an increase of $32.4 million provided by proceeds from equity offerings at-the-market, and $55.7 million registered direct equity offering, offset by an increase of debt payments of $10.6 million.

In addition to our ongoing operating requirements, we have significant contractual and other commitments that may require substantial cash resources over the next twelve months. These obligations include approximately $20.0 million of remaining transaction fee commitments related to the Helmex transaction, remaining purchase commitments under our agreements with IBM, potential earnout payments to EOS, and weekly payment obligations under our May 5, 2026 short-term loan. In addition, in August 2026, we entered into a definitive agreement to acquire CyberCatch Holdings, Inc. in an all-cash transaction. Based on approximately 26.8 million CyberCatch common shares outstanding and consideration of $3.22 per share, approximately $86.2 million of cash consideration would be payable to holders of CyberCatch common shares, in addition to amounts that may be payable in respect of outstanding options and warrants, subject to the terms of the arrangement agreement. The CyberCatch acquisition remains subject to shareholder, court, regulatory and other customary closing conditions. We expect to fund our operating requirements and these commitments through existing cash and cash equivalents and other available resources, together with additional capital raised through equity and/or debt financings. Our ability to satisfy these obligations and continue to fund operations will depend, in part, on our ability to obtain additional financing on acceptable terms.

We have financed our operations to date primarily through the issuance of equity securities, proceeds from the exercise of warrants to purchase common stock, the issuance of debt instruments, and the sale of Bitcoin. As of August 15, 2026, we utilized our ATM offering to sell common stock for net proceeds of $32.4 million. In addition, on May 5, 2026, we raised net proceeds of $55.8 million through a registered direct offering. We intend to utilize our existing cash and cash equivalents, Bitcoin, and other available resources to fund our operations; however, these resources are not expected to be sufficient to fund our operations and other cash requirements for the next 12 months. Accordingly, we will need to raise additional capital through the issuance of equity securities and/or debt instruments to fund our operations and satisfy our anticipated cash requirements.

Off-Balance Sheet Arrangements

On July 17, 2026, we entered into a guarantee in connection with a bridge loan facility provided to NYIAX, Inc. Under the guarantee, we may be required to satisfy NYIAX's obligations under the bridge loan facility in the event NYIAX fails to perform its repayment obligations, subject to a maximum guaranteed amount of approximately $0.8 million. Accordingly, the guarantee represents a contingent obligation of the Company. As of the date of this Quarterly Report, no amounts have been paid by the Company pursuant to the guarantee.

Other than the NYIAX guarantee described above, we do not have any material off-balance sheet arrangements.

Critical Accounting Estimates

The preparation of our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. We consider an accounting policy or estimate to be critical when it requires significant judgment or estimation and when changes in the underlying assumptions or estimates could have a material effect on our consolidated financial statements.

Business Combinations

We account for acquisitions that meet the definition of a business using the acquisition method of accounting. The application of acquisition accounting requires significant judgment in determining the fair value of consideration transferred and the identifiable assets acquired and liabilities assumed. The determination of fair value may involve the use of significant estimates and assumptions, including projected revenues and cash flows, expected growth rates, customer attrition rates, royalty rates, discount rates and the estimated useful lives of acquired intangible assets. The excess of the purchase consideration over the fair value of identifiable net assets acquired is recorded as goodwill. Changes in the assumptions and estimates used in determining the fair values of acquired assets and liabilities could materially affect the amounts recognized in connection with a business combination and subsequent periods.

Goodwill and Intangible Assets

Our intangible assets primarily consist of acquired technology, patents and patent rights, customer relationships, trademarks and other acquired intellectual property. Intangible assets with finite useful lives are amortized over their estimated useful lives and are reviewed for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. Determining the useful lives and recoverability of intangible assets requires management to make judgments regarding the expected period over which the assets will generate economic benefits and estimates of future cash flows attributable to those assets.

Goodwill is not amortized but is evaluated for impairment at least annually and whenever events or circumstances indicate that its carrying value may not be recoverable. Our impairment assessments require management to make significant estimates and assumptions regarding future operating performance, revenue growth, cash flows, discount rates and other market and economic factors. Changes in these assumptions or deterioration in expected operating results could result in the recognition of an impairment charge.

Revenue Recognition – Percentage of Completion

For certain arrangements for which revenue is recognized over time, we measure progress toward satisfaction of the performance obligation using an input method based on costs incurred relative to total estimated costs required to complete the performance obligation. Revenue recognized under this method is dependent upon estimates of total expected contract costs and the extent of progress toward completion.

The estimation of total contract costs requires significant management judgment and is affected by a variety of factors, including the nature and complexity of the work to be performed, labor and other resource requirements, project timelines, changes in scope and other contractual or operational factors. We review our estimates of contract performance and total expected costs on an ongoing basis and recognize changes in estimates in the period in which they become known. Accordingly, revisions to estimated costs to complete or the estimated measure of progress could result in increases or decreases to revenue and earnings recognized in a particular period.

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

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission (“SEC”) rules and forms and to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures. Based on the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting that occurred during the six months ended June 30, 2026 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

In addition to the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, the following risk factors reflect material developments during the quarter ended June 30, 2026 and through the date of this filing that have changed the nature or magnitude of certain previously disclosed risks or that present new material risks to an investment in our securities. These risk factors should be read in conjunction with, and supplement, the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect the Company’s business, financial condition or future results. The risks described in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025 are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

We have a history of operating losses and may not be profitable in the future.

We have incurred net losses since inception and had an accumulated deficit of approximately $377.4 million as of December 31, 2025. For the six months ended June 30, 2026, we incurred a net loss of $145.0 million and used $80.0 million of cash in operating activities. As of June 30, 2026, we had $1.4 million in cash and cash equivalents, compared to $2.0 million at December 31, 2025.

While we have experienced revenue growth in recent periods, we are not certain whether or when we will obtain a high enough volume of sales to sustain or increase our growth or to achieve profitability in the future. We also expect our costs and expenses to increase in future periods, which could negatively affect our future results of operations if our revenue does not increase. In particular, we intend to continue to expend significant funds to further develop our platform, including by introducing new products and functionality, and to expand our inside and field sales teams and customer success team to drive new customer adoption, expand use cases and integrations, and support international expansion. We will also face increased compliance costs associated with growth and the expansion of our customer base. Our efforts to grow our business may be costlier than we expect, or the rate of our growth in revenue may be slower than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses. We may incur significant losses in the future for a number of reasons, including the other risks described herein, and unforeseen expenses, difficulties, complications or delays, and other unknown events. If we are unsuccessful in implementing any initiatives to improve our revenues to achieve profitability, it will have a material adverse impact on our business, prospects, operating results and financial condition. There can be no assurance that the revenue that we generate will be able to support our operations or meet our working capital needs.

On May 5, 2026, we entered into a short-term loan agreement in the amount of $2.0 million with an effective interest rate of approximately 183.5% per annum. The loan is guaranteed by both our Chief Executive Officer and our Chief Financial Officer in their personal capacities. The terms of this borrowing, including the extremely high effective interest rate and the requirement of personal officer guarantees, reflect our limited ability to access conventional credit markets and capital on commercially reasonable terms. Our reliance on such high-cost, short-term borrowings may accelerate cash depletion, reduce funds available for operations, and signal financial distress to investors, business partners and potential counterparties. In addition, the personal guarantees by our Chief Executive Officer and Chief Financial Officer create potential conflicts of interest, as these officers may have personal financial incentives related to the Company’s ability to service or repay this debt that differ from or compete with the interests of our stockholders. While we believe the loan was entered into on the best terms available to the Company at the time, there can be no assurance that the existence of such guarantees will not influence management decision-making in ways that are not aligned with stockholder interests.

We may continue to need to rely on similar high-cost financing arrangements in the future if our cash resources are insufficient to fund operations and we are unable to access the capital markets on more favorable terms. Any future borrowings on similar or more onerous terms would further increase our cost of capital and reduce the resources available for our business.

We are subject to a securities class action lawsuit that could result in substantial costs and divert management’s attention from our business.

On August 5, 2026, a class action lawsuit was filed against the Company and certain of its current officers in the Eastern District of Pennsylvania, by plaintiff Carla Aramouni seeking to represent a class of all persons who purchased the Company’s securities between September 4, 2024 and October 30, 2025, alleging violations of Sections 10(b) and 20(a) of the Exchange Act. The matter is styled Aramouni v. Datavault AI Inc., et al., Case No. 2:26-cv-05548-JS (E.D. Pa Aug. 5, 2026). The complaint alleges that the Company made false and/or misleading statements and/or failed to disclose material information about the Company’s business, customer contracts, operations, and commercialization prospects in its public statements and SEC filings. The plaintiff seeks unspecified monetary damages on behalf of a purported class of stockholders plus attorneys’ fees and costs. The Company believes the claims asserted in the complaint are without merit and intends to vigorously defend against them. The matter is in its early stages, and the Company is unable to predict the outcome of the litigation or to reasonably estimate the range of possible loss, if any, that may result from the matter. However, securities class action litigation is often expensive and time-consuming, regardless of the outcome. We may be required to expend significant resources to defend ourselves, which could divert management’s attention from our business operations. Any adverse determination could result in substantial monetary damages that are not covered, or not fully covered, by our directors’ and officers’ liability insurance. In addition, the pendency of the litigation may adversely affect the market price of our common stock and our ability to raise capital.

Additionally, similar lawsuits could be filed against us and our officers and directors, which would increase costs and management distraction. The outcome of this litigation is inherently uncertain, and we are unable to predict the outcome or reasonably estimate the range of possible losses, if any, that may result from this matter.

We have committed to pay $25.0 million in non-refundable transaction fees in connection with a proposed financing that may not be consummated, and amounts paid to date are subject to significant risk of total loss.

On May 30, 2026, we entered into a term sheet with Helmex Global LLP and certain affiliated parties in connection with a proposed financing transaction for an aggregate investment of up to $2.0 billion. In connection with the proposed initial tranche, we agreed to fund $25.0 million of administrative, operational, and structuring costs associated with establishing the investment fund and facilitating the proposed financing. As of June 30, 2026, we had paid $5.0 million toward this commitment.

The proposed financing remains subject to significant conditions, including: (i) completion of due diligence satisfactory to both parties; (ii) negotiation and execution of definitive agreements; (iii) receipt of required regulatory and stockholder approvals, including antitrust clearance and any required clearance from the Committee on Foreign Investment in the United States (CFIUS); (iv) completion and acceptance of an independent valuation of the preferred units; and (v) our determination that we will be able to monetize the preferred units received in the transaction. There can be no assurance that these conditions will be satisfied or that the proposed financing will be completed on the contemplated terms or at all.

All amounts paid toward the transaction fee are non-refundable regardless of whether the proposed financing is consummated. Accordingly, if the proposed financing is not completed, we will lose the entirety of any amounts paid toward the $25.0 million fee, which would have a material adverse effect on our already limited cash resources and financial condition. The commitment to pay additional amounts under the fee obligation may further strain our liquidity at a time when our cash resources are severely limited.

We have entered into several term sheets and a letter of intent relating to proposed strategic transactions, but we may not execute definitive agreements with respect to one or more of such transactions, and any such transaction may not be completed on the terms contemplated by such term sheets or at all.

Since March 31, 2026, we have entered into several term sheets relating to proposed strategic transactions, including (i) a binding term sheet with Scilex Holding Company (“Scilex”), a significant stockholder of the Company and a related party, dated April 26, 2026, regarding a proposed $120.0 million cash contribution by Scilex to us and a revenue participation arrangement pursuant to which Scilex would be entitled to a specified percentage of the gross revenues we recognize attributable exclusively to our Quantum-Edge Network, (ii) a binding term sheet with Scilex, dated June 24, 2026, regarding our proposed sale to Scilex of 837 Bitcoin for an aggregate purchase price of $50.0 million, payable to us in multiple tranches through December 31, 2028, and (iii) a term sheet with Helmex, dated May 30, 2026, regarding a proposed financing transaction for an aggregate investment in the Company of up to $2.0 billion through four successive tranches of $500.0 million each (the term sheets referenced in the preceding clauses (i) through (iii), collectively, the “Term Sheets” and the transactions contemplated thereby, the “Proposed Transactions”). See Note 8, Commitments and Contingencies, to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding the Helmex term sheet, and the risk factor above for a description of the non-refundable transaction fee we have committed to pay in connection with the proposed Helmex financing.

The Term Sheets contemplate the execution of definitive agreements with respect to the applicable transactions, which are expected to include customary representations, warranties, covenants, indemnification provisions and closing conditions for transactions of their type. The Proposed Transactions remain subject to further negotiation, the completion of due diligence, receipt of required regulatory, corporate and, in certain cases, stockholder approvals, market conditions and other customary conditions outside our control. As of the date of this Quarterly Report on Form 10-Q, no definitive agreement for any of the Proposed Transactions has been entered into, and there can be no assurance that definitive agreements for such transactions will be executed or that the Proposed Transactions will be consummated on the terms set forth in the applicable Term Sheet or at all.