UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14C

(RULE 14c-101)

INFORMATION REQUIRED IN Information STATEMENT

SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934

Filed by Registrant x

Filed by a Party other than the Registrant ¨

Check the appropriate box:

Datavault AI Inc.

(Name of Registrant as Specified in its Charter)

Payment of Filing Fee (Check the appropriate box):

DATAVAULT AI INC.

15268 NW GREENBRIER PKWY

BEAVERTON, OR 97006

NOTICE OF ACTION TAKEN PURSUANT TO WRITTEN CONSENT OF MAJORITY STOCKHOLDERS

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY

You are not being asked to take or approve any action.

This Information Statement is being provided to you solely for your information.

To Our Stockholders:

This information statement (the “Information Statement”) is first being furnished by Datavault AI Inc., a Delaware corporation (the “Company”, “we”, “us”, “our”, or “Datavault”) on or about April 25, 2025 to the holders of record of the outstanding common stock of the Company, $0.0001 par value per share (the “Common Stock”), on March 31, 2025, pursuant to Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This Information Statement relates to actions taken by written consent in lieu of a meeting, on March 31, 2025 (the “Written Consent”) by the stockholders of a majority of shares of Common Stock issued and outstanding (the “Majority Stockholders”) of the Company.

The Written Consent constitutes the consent of the Majority Stockholders and is sufficient under the General Corporation Law of the State of Delaware and our bylaws, as amended (the “Bylaws”) to approve the actions described herein. Accordingly, they are not presently being submitted to our other stockholders for a vote. Pursuant to Rule 14c-2 under the Exchange Act, the actions described herein will not be implemented until a date at least 20 days after the date on which this Information Statement has been first mailed to the stockholders.

The Written Consent:

1. authorized the Company’s board of directors (“the Board”) to amend the Company’s certificate of incorporation, as amended (the “Certificate of Incorporation”) to effect a reverse stock split of all outstanding shares of Common Stock, by a ratio in the range of one-for-five to one-for-twenty, to be determined in the Board’s sole discretion;

2. approved, for purposes of Marketplace Rule (collectively, the “Nasdaq Rules”) 5635(d) of the Nasdaq Stock Market LLC (“Nasdaq”), the issuance of 20% or more of our outstanding shares of Common Stock, issuable upon exercise of certain common stock purchase warrants issued pursuant to certain inducement agreements by and between the Company and certain purchasers, entered into as of December 20, 2024;

3. approved an amendment to the Company’s Certificate of Incorporation to permit the Board to amend the Company’s Bylaws;

4. approved the transactions contemplated by the asset purchase agreement, entered into as of December 19, 2024, as amended by that certain amendment to the asset purchase agreement, dated as of December 30, 2024, as further amended by that certain second amendment to the asset purchase agreement, dated as of February 25, 2025, and as further amended by that certain third amendment to the asset purchase agreement, dated as of March 31, 2025, by and between the Company and CompuSystems, Inc., a Texas corporation, including, for purposes of Nasdaq Rule 5635(a) and 5635(b), the issuance of 20% or more of our outstanding shares of Common Stock upon consummation of the asset purchase; and

5. approved, for purposes of Nasdaq Rules 5635(d), the issuance of 20% or more of our outstanding shares of Common Stock, issuable upon conversion of certain senior secured convertible notes and exercise of certain common stock purchase warrants issued pursuant to a certain securities purchase agreement by and between the Company and certain purchasers, entered into as of March 31, 2025.

As described in this Information Statement, the foregoing actions were approved unanimously by the Board and subsequently by the Majority Stockholders by Written Consent.

The entire cost of furnishing this Information Statement will be borne by the Company. The Company may request brokerage houses, nominees, custodians, fiduciaries and other like parties to forward this Information Statement to the beneficial owners of Common Stock held of record by them and will reimburse such persons for their reasonable charges and expenses in connection therewith. This Information Statement will be first distributed to you on or about April 25, 2025.

PLEASE NOTE THAT THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS MEETING WILL BE HELD TO CONSIDER THE MATTERS DESCRIBED HEREIN. THIS INFORMATION STATEMENT IS BEING FURNISHED TO YOU SOLELY FOR THE PURPOSE OF INFORMING STOCKHOLDERS OF THE MATTERS DESCRIBED HEREIN PURSUANT TO SECTION 14(C) OF THE EXCHANGE ACT AND THE REGULATIONS PROMULGATED THEREUNDER, INCLUDING REGULATION 14C.

TABLE OF CONTENTS

INFORMATION STATEMENT FOR STOCKHOLDERS

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY

General Information

This information statement (the “Information Statement”) is being mailed or otherwise furnished by Datavault AI Inc., a Delaware corporation (the “Company”, “we”, “us”, “our”, or “Datavault”) on or about April 25, 2025 to the holders of record of the outstanding common stock of the Company, $0.0001 par value per share (the “Common Stock”) pursuant to Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This Information Statement relates to actions taken by written consent in lieu of a meeting, on March 31, 2025 (the “Written Consent”) by the stockholders of a majority of shares of Common Stock issued and outstanding (the “Majority Stockholders”) of the Company.

The Written Consent constitutes the consent of the Majority Stockholders and is sufficient under the General Corporation Law of the State of Delaware (“DGCL”) and our bylaws, as amended (the “Bylaws”) to approve the actions described herein. Accordingly, they are not presently being submitted to our other stockholders for a vote. Pursuant to Rule 14c-2 under the Exchange Act, the actions described herein will not be implemented until a date at least 20 days after the date on which this Information Statement has been first mailed to the stockholders.

Copies of this Information Statement are first being sent on or about April 25, 2025 to the holders of record on March 31, 2025 (the “Record Date”) of the outstanding shares of Common Stock.

This Information Statement is being furnished by us to our stockholders of Record Date, to inform our stockholders that the Bbard of directors of the Company (the “Board”) and the Majority Stockholders, have taken and approved the following actions:

1. authorized the Board to amend the Company’s certificate of incorporation, as amended (the “Certificate of Incorporation”) to effect a reverse stock split of all outstanding shares of Common Stock, by a ratio in the range of one-for-five to one-for-twenty, to be determined in the Board’s sole discretion;

2. approved, for purposes of Marketplace Rule (collectively, the “Nasdaq Rules”) 5635(d) of the Nasdaq Stock Market LLC (“Nasdaq”), the issuance of 20% or more of our outstanding shares of Common Stock, issuable upon exercise of certain common stock purchase warrants issued pursuant to certain inducement agreements by and between the Company and certain purchasers, entered into as of December 20, 2024;

3. approved an amendment to the Company’s Certificate of Incorporation to permit the Board to amend the Company’s Bylaws;

4. approved the transactions contemplated by the asset purchase agreement, entered into as of December 19, 2024, as amended by that certain amendment to the asset purchase agreement, dated as of December 30, 2024, as further amended by that certain second amendment to the asset purchase agreement, dated as of February 25, 2025, and as further amended by that certain third amendment to the asset purchase agreement, dated as of March 31, 2025, by and between the Company and CompuSystems, Inc., a Texas corporation (“CSI”), including, for purposes of Nasdaq Rule 5635(a) and 5635(b), the issuance of 20% or more of our outstanding shares of Common Stock upon consummation of the asset purchase (the “CSI Acquisition”);

5. approved, for purposes of Nasdaq Rules 5635(d), the issuance of 20% or more of our outstanding shares of Common Stock, issuable upon conversion of certain senior secured convertible notes and exercise of certain common stock purchase warrants issued pursuant to certain securities purchase agreement by and between the Company and certain purchasers, entered into as of March 31, 2025.

No dissenters’ or appraisal rights under the DGCL are afforded to the Company’s stockholders as a result of the approval of the actions set forth above.

Vote Required

To be approved, the above actions must receive the affirmative vote of a majority of the issued and outstanding shares of our capital stock entitled to vote, voting together as a single class, which has already occurred by virtue of the Written Consent signed by the Majority Stockholders. Each stockholder is entitled to one vote for each share of Common Stock held by such stockholder. As of the Record Date, the Company had 64,202,635 shares of Common Stock outstanding.

Delivery of Documents to Stockholders Sharing an Address

We will send only one copy of the Information Statement and other corporate mailings to stockholders who share a single address unless we received contrary instructions from any stockholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs. However, the Company will deliver promptly upon written or oral request a separate copy of the Information Statement or other corporate materials to a stockholder at a shared address to which a single copy of the Information Statement was delivered. Additionally, if current stockholders with a shared address received multiple copies of the Information Statement or other corporate mailings and would prefer the Company to mail one copy of future mailings to stockholders at the shared address, notification of such request may also be made by mail or by calling the Company’s principal executive offices. You may make such a written or oral request by sending a written notification stating (i) your name, (ii) your shared address and (iii) the address to which the Company should direct the additional copy of the Information Statement to the Company at Corporate Secretary, 15268 NW Greenbrier Pkwy, Beaverton, Oregon 97006, telephone: (408) 627-4716.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of April 14, 2025, information regarding beneficial ownership of our capital stock by:

The percentage ownership information shown in the table is based upon 67,192,522 shares of Common Stock outstanding as of April 14, 2025. The percentage ownership information shown in the table excludes (i) 18,334,913 shares of Common Stock to be issued upon exercise of warrants, (ii) 1,200,012 restricted stock units (“RSUs”) that have been issued but have not vested and (iii) up to an aggregate of 2,813 shares of Common Stock issuable upon conversion of all outstanding shares of Company’s Series B Convertible Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”) (which shares of Series B Preferred Stock assume the exercise of all 1,750 Series B Preferred Stock purchase warrants).

Beneficial ownership is determined according to the rules of the U.S. Securities and Exchange Commission (“SEC”) and generally means that a holder has beneficial ownership of a security if such holder possesses sole or shared voting or investment power of that security, including securities that are exercisable for shares of Common Stock within sixty (60) days of April 14, 2025. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the holders named in the table below have sole voting and investment power with respect to all shares of Common Stock shown that they beneficially own, subject to community property laws where applicable.

For purposes of computing the percentage of outstanding shares of our Common Stock held by each holder or group of holders named above, any shares of Common Stock that such holder or holders has the right to acquire within sixty (60) days of April 14, 2025 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other holder. The inclusion herein of any shares of Common Stock listed as beneficially owned does not constitute an admission of beneficial ownership. Unless otherwise identified, the address of each beneficial owner listed in the table is c/o Datavault AI Inc., 15268 NW Greenbrier Pkwy, Beaverton, Oregon 97006.

* Less than 1.0%

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Information Statement contains “forward-looking statements” within the meaning of Section 21I of the Exchange Act and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). These forward-looking statements, including as they relate to the potential CSI Acquisition, include, without limitation: statements regarding new products or services; statements concerning litigation or other matters; statements concerning projections, predictions, expectations, estimates or forecasts for our business, financial and operating results and future economic performance; statements of our management’s goals and objectives; statements concerning our competitive environment, availability of resources and regulation; trends affecting our financial condition, results of operations or future prospects; our financing plans or growth strategies; statements of the timing of the CSI Acquisition; statements of the potential consummation of the CSI Acquisition; and other similar expressions concerning matters that are not historical facts. Words such as “may”, “will”, “should”, “could”, “would”, “predicts”, “potential”, “continue”, “expects”, “anticipates”, “future”, “intends”, “plans”, “believes” and “estimates,” and variations of such terms or similar expressions, are intended to identify such forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or our management’s good faith belief as of that time with respect to future events. Our actual results may differ materially from those expressed in, or implied by, the forward-looking statements due to a number of factors, including risks discussed in documents that we file with the SEC.

Forward-looking statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. You should review our subsequent reports filed with the SEC described in the sections of this Information Statement entitled “Additional Information,” all of which are accessible on the SEC’s website at www.sec.gov.

SUMMARY TERM SHEET

This Summary Term Sheet provides an overview of material information regarding the proposed CSI Acquisition and may not contain all of the information that is important to you. You should carefully read this entire Information Statement, including the Asset Purchase Agreement attached as Appendix C, for a more complete understanding of the CSI Acquisition and related matters.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

CSI Acquisition

The Company entered into the Asset Purchase Agreement pursuant to which, the Company has agreed to purchase, assume and accept from CSI all of the rights, title and interests used in, to and under certain assets, including CSI’s customer contracts, trademarks, and other intellectual property.

The Company has agreed to acquire the transferred assets for an aggregate purchase price consisting of  (i) an exclusivity payment fee of $1,000,000, (ii) a breakup fee of $1,000,000, (iii) an amount in cash equal to $5,000,000, (iv) 10,600,000 validly issued, fully paid and nonassessable shares of restricted Common Stock, with an estimated fair value based on the average closing stock price from April 2, 2025 to April 8, 2025 of $0.70 per share, (v) $5,000,000 million payable in the form of the Third Convertible Note (as defined below) which is due on the second anniversary after closing and pays interest to CSI on the aggregate unconverted and then outstanding principal amount of the Third Convertible Note at the rate of ten percent (10%) per annum, and if the Third 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 Common Stock of the Company, in increments of $500,000, at a price of $1.14 per share, (vi) $5,000,000 payable in the form of the First Convertible Note (as defined below) issued by the Company to CSI, due the second anniversary after closing, (vii) $5,000,000 payable in the form of the Second Convertible Note issued by the Company to CSI, due the second anniversary after closing, (viii) $500,000 for the reimbursement of fees incurred by CSI due to the CSI Acquisition, and (ix) the assumption of the transferred liabilities as they relate to the transferred assets. The Company will only assume the transferred liabilities, if any. The exclusivity payment fee is non-refundable and was paid to CSI within six business days after the date of the Asset Purchase Agreement. The breakup fee was released from the escrow account on February 27, 2025 and is refundable under certain circumstances as set forth in the Asset Purchase Agreement.

The Asset Purchase Agreement includes customary representations and warranties and various customary covenants and closing conditions that are subject to certain limitations, including, without limitation, certain third-party consents and agreements.

The securities to be issued in the CSI Acquisition will be issued in reliance upon exemptions from registration under Section 4(a)(2) of the Securities Act, and Rule 506 promulgated under Regulation D of the Securities Act.

The foregoing summary of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such document, which is included as exhibit 2.1 to our current report on Form 8-K filed with the SEC on December 26, 2024 (the amendment to which is included as exhibit 2.1 to our current report on Form 8-K filed with the SEC on January 6, 2025, the second amendment to which is included as exhibit 2.1 to our current report on Form 8-K filed with the SEC on February 28, 2025, and the third amendment to which is included as exhibit 2.1 to our current report on Form 8-K filed with the SEC on April 2, 2025).

April 2025 Financing

On March 31, 2025, the Company, entered into the Securities Purchase Agreement (as defined below) with the April Investors (as defined below), pursuant to which the April Investors agreed to purchase from the Company (a) in a registered direct offering the Initial April Notes (as defined below) for an aggregate purchase price of $5,000,000, and the Additional April Notes (as defined below) for an aggregate purchase price of $10,000,000 upon satisfaction of certain closing conditions applicable to the Initial April Notes and Additional April Notes, respectively and (b) in a concurrent private placement, the April Warrants (as defined below) to purchase up to 19,346,101 shares of Common Stock, of which Initial April Warrants to purchase up to 6,448,700 shares of Common Stock will be issued in connection with the issuance of the Initial April Notes and Additional April Warrants to purchase up to 12,897,401 shares of Common Stock will be issued in connection with the issuance of the Additional April Notes (collectively, the April 2025 Financing”).

The Initial April Closing (as defined below) of Initial April Notes and Initial April Warrants took place on April 2, 2025. The Additional April Closing of the Additional April Notes and Additional April Warrants will take place on or after the date that is 20 days after the mailing by the Company of a definitive information statement on Schedule 14(c) with respect to the approval, by written consent of the Majority Stockholders, of the issuance of the shares of Common Stock issuable upon conversion of the April Notes (as defined below) and exercise of the April Warrants (as defined below) and a one-time reset, at the Company’s option, of the exercise price of outstanding common stock purchase warrants held by the April Investors that do not contain “alternative cashless exercise” features.

Pro forma information

The following unaudited pro forma consolidated financial statements are based on the Company’s audited historical consolidated financial statements. The unaudited pro forma consolidated balance sheet as of December 31, 2024 gives effect to these transactions as of that date. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2024 give effect to these transactions as if it occurred at the beginning of such period.

The unaudited pro forma consolidated financial statements should be read together with the Company’s audited historical financial statements, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on March 31, 2025.

The unaudited pro forma consolidated financial information is provided for informational purposes only and is not intended to represent or be indicative of the consolidated results of operations or financial position that the Company would have reported had the CSI Acquisition closed on the dates indicated and should not be taken as representative of our future consolidated results of operations or financial position.

The pro forma adjustments related to the Asset Purchase Agreement, the closed asset purchase pursuant to that certain asset purchase agreement by and between the Company and Data Vault Holdings Inc., a Delaware corporation, dated as of September 4, 2024 (the “DV Asset Purchase”), and the April 2025 Financing are described in the notes to the unaudited pro forma condensed consolidated financial information and principally include the following:

The adjustments to fair value and the other estimates reflected in the accompanying unaudited pro forma condensed consolidated financial statements may be materially different from those reflected in the Company’s consolidated financial statements subsequent to the closing of the CSI Acquisition. In addition, the unaudited pro forma condensed consolidated financial statements do not purport to project the future financial position or results of operations.

These unaudited pro forma condensed consolidated financial statements also do not include any integration costs the Company may incur related to the CSI Acquisition.

DATAVAULT AI, INC.

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2024

(in thousands, except share and per share data)  

DATAVAULT AI, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS PROFORMA

For the Year Ended December 31, 2024 (in thousands, except share and per share data)

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED

FINANCIAL INFORMATION

Note 1 — Basis of Presentation

The audited annual historical consolidated financial statements have been adjusted in the pro forma consolidated financial statements in accordance with Article 11 of the SEC’s Regulation S-X to give effect to pro forma events that are (1) directly attributable to the CSI Acquisition and the Initial April Notes and (2) factually supportable and (3) with respect to the pro forma consolidated statements of operations, expected to have a continuing impact on the consolidated results following the closing of the CSI Acquisition and the April 2025 Financing.

The unaudited pro forma consolidated financial statements are based on the Company’s audited historical consolidated financial statements as adjusted to give effect to the CSI Acquisition and the Initial April Notes. The unaudited pro forma consolidated balance sheet as of December 31, 2024, gives effect to the CSI Acquisition as of that date. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2024, give effect to the CSI Acquisition as if it occurred on the beginning of such period.

The allocation of the consideration transferred used in the unaudited pro forma consolidated financial statements is based upon a preliminary valuation by management of the consideration transferred and does not represent a preliminary allocation of all of the assets and liabilities to be acquired in the CSI Acquisition due to the Company not having sufficient time from the date of the announcement of the pending acquisition and the pro forma. The final estimate of the fair value of the assets will be determined with the assistance of a third-party valuation firm. The Company’s preliminary estimates and assumptions are subject to material change upon the finalization of internal studies and third-party valuations of assets, which may include intangible assets, and certain liabilities.

The unaudited pro forma consolidated financial statements are provided for informational purposes only and is not necessarily indicative of what the consolidated Company’s financial position and results of operations would have actually been had the CSI Acquisition been completed on the dates used to prepare these pro forma financial statements. The adjustments to fair value and the other estimates reflected in the accompanying unaudited pro forma consolidated financial statements may be materially different from those reflected in the Company’s consolidated financial statements subsequent to the CSI Acquisition. In addition, the unaudited pro forma consolidated financial statements do not purport to project the future financial position or results of operations of the Company.

The unaudited pro forma combined financial information herein has been adjusted to depict the accounting of a business combination for the CSI Acquisition (“Transaction Accounting Adjustments”), which reflect the application of the purchase accounting required by U.S. GAAP and SEC rules and regulations. The unaudited pro forma combined financial information does not present any synergies that are expected to occur.

The CSI Acquisition is expected to be accounted for using the acquisition method of accounting, pursuant to ASC 805, Business Combinations, with the Company considered the accounting and legal acquirer. The unaudited pro forma combined financial information reflects the preliminary assessment of fair values and useful lives assigned to the assets acquired and liabilities assumed. Fair value estimates will be determined based on discussions between us and CSI and through due diligence efforts. The detailed valuation studies necessary to arrive at the required estimates of the fair values for the CSI assets acquired and liabilities assumed have not been completed. Significant assets and liabilities that are subject to preparation of valuation studies to determine appropriate fair value adjustments include intangible assets and deferred income tax liability. Changes to the fair values of these assets and liabilities will also result in goodwill recorded from the acquisition, which could be material.

These financial statements also do not include any integration costs the Company may incur related to the CSI Acquisition.

Note 2 — Summary of Significant Accounting Policies

The unaudited pro forma consolidated financial statements have been prepared in a manner consistent with the accounting policies adopted by the Company. The accounting policies followed for financial reporting on a pro forma basis are the same as those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Note 3 — Preliminary Purchase Consideration

On December 19, 2024, the Company entered into the Asset Purchase Agreement with CSI, pursuant to which the Company has agreed to purchase, assume and accept from CSI all of the rights, title and interests in, to and under the transferred assets, including CSI’s customer contracts, trademarks, and other intellectual property. On December 30, 2024, the Company and CSI entered into an amendment to the Asset Purchase Agreement, on February 25, 2025, the Company and CSI entered into a second amendment to the Asset Purchase Agreement, and on March 31, 2025, the Company and CSI entered into a third amendment to the Asset Purchase Agreement. The transaction is expected to close in 2025.

Pursuant to the CSI Asset Purchase Agreement, as amended, the Company has agreed to acquire the transferred assets for an aggregate purchase price which shall consist of (i) the exclusivity payment fee of $1,000,000, (ii) the breakup fee of $1,000,000, (iii) an amount in cash equal to $5,000,000, (iv) 10,600,000 validly issued, fully paid and nonassessable shares of restricted Common Stock, (v) $5,000,000 payable in the form of the Third Convertible Note, (vi) $5,000,000 payable in the form of the First Convertible Note, (vii) $5,000,000 payable in the form of the Second Convertible Note, (viii) $500,000 for the reimbursement of fees incurred by CSI due to the CSI Acquisition, and (ix) the assumption of the transferred liabilities as they relate to transferred assets. The exclusivity payment fee is non-refundable and was paid to CSI within six business days after the date of the Asset Purchase Agreement. The breakup fee was released from the escrow account on February 27, 2025 and is refundable under certain circumstances as set forth in the Asset Purchase Agreement.

The Company shall also repay the principal amount and all accrued interest under the Third Convertible Note in full, without a penalty, within three (3) business days after the Company raises an additional amount of capital totaling at least $15,000,000, after the Company closed an initial offering or financings resulting in aggregate gross proceeds to the Company of at least $15,000,000, from one or more investors and/or financial institutions.

The following table highlights the components of the preliminary purchase consideration:

This preliminary fair value has been used to prepare pro forma adjustments in the pro forma consolidated balance sheet and statements of operations. The preliminary allocation of purchase price has not been performed yet due to the Company not having sufficient time from the announcement of the pending acquisition and will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation will differ materially from the amounts used in the pro forma adjustments. The final allocation may include (1) changes in allocations to intangible assets such as customer lists, trade names, technology and goodwill, and (2) other changes to the estimated lives of the assets (3) assumptions used for financing, and (4) the assumption of any liabilities.

In accordance with the Asset Purchase Agreement the purchase price includes $7.4 million in Common Stock based on the average closing price of the Company’s Common Stock from April 2, 2025 through April 8, 2025, which was $0.70.

Note 4 — Pro Forma Transaction Accounting Adjustments

The pro forma Transaction Accounting Adjustments are based on our preliminary estimates and assumptions that are subject to change. The following Transaction Accounting Adjustments have been reflected in the unaudited pro forma consolidated financial statements:

A. To adjust the cash balance for (i) the closing of the Company’s Initial April Notes for which the Company received net proceeds of $4.5 million after the original issue discount of 10% and fees.

B. To record consideration of (i) $5.0 million cash consideration to be transferred at the closing of the CSI Acquisition, (ii) $1 million exclusivity fee paid in cash on entering into the Asset Purchase Agreement, (iii) $1 million break up fee paid in cash on entering into the Asset Purchase Agreement, (iv) to adjust the issuance of the Notes in the aggregate of $15.0 million and (v) to adjust additional paid in capital for Common Stock consideration to be issued of 10,600,000 shares using an average closing stock price from April 2, 2025 through April 8, 2025, which was $0.70 for an estimated aggregate fair value of the Common Stock of $7.4 million. The resulting combined intangible assets to be recorded is $29.9 million. This pro forma adjustment does not allocate any of the transaction price to goodwill due to the Company not having sufficient time to perform detailed valuation studies of the intangibles acquired. When the detailed valuation studies are performed, we expect the recording of goodwill and therefore the amount allocated to intangible assets will be less.

C. To record the payoff of indebtedness using proceeds from the purchase consideration as outlined in the Asset Purchase Agreement in the current portion of long-term debt for estimated amounts based on December 31, 2024 balances of (i) the term loan of $1.2 million and (ii) a line of credit of $1.8 million in loan payable, net of current for a shareholder loan of $1.0 million.

D. To record (i) the pro forma adjustment to eliminate CSI equity.

E. To record amortization of acquired intangibles estimated to be $3.0 million for acquired intangibles in the CSI Acquisition for the year ended December 31, 2024. For acquired intangibles in the CSI Acquisition an estimated combined useful life of ten years was used.

F. To record interest on the Notes issued to CSI of $689 thousand on the issuance of the Third Convertible Note at 10%, the First Convertible Note and Second Convertible Note at 5% to begin accruing 6 months and 9 months, in the case of the First Convertible Note and the Second Convertible Note, respectively, after the closing date of the transaction, and $638 thousand interest on the Initial April Notes for the year ended December 31, 2024, assuming the transaction took place at the beginning of such period.

G. To record the issuance of 10,600,000 shares of Common Stock to be issued at closing of the CSI Acquisition.

DESCRIPTION OF CSI BUSINESS

Executive Summary

CSI is a leading provider of event registration, lead retrieval, ticketing, and data analytics solutions for the global exhibitions and conferences industry. With nearly five decades of experience, CSI has built a reputation for delivering innovative, reliable, and scalable technology that enhances attendee and exhibitor experiences while driving value for event organizers. By leveraging advanced technology and a customer-first approach, CSI streamlines event operations, optimizes engagement, and provides actionable insights for event success.

Registration and Lead Retrieval Division

CSI's Registration and Lead Retrieval Division offers a robust and customizable platform designed for trade shows of all sizes. It provides seamless online and onsite registration, automated badge printing, and advanced access control. Attendees enjoy an intuitive registration process, while exhibitors utilize CSI’s lead retrieval tools to capture, qualify, and engage with potential buyers. The CompuLEAD app and M3 Expo Wallet streamline lead management, allowing exhibitors to collect and follow up with contacts effectively. The TrafficMax system enhances exhibitor ROI by enabling targeted messages to drive booth traffic.

Detailed Business Description

CSI’s technology-driven approach to event registration and lead retrieval is built on innovation, security, and seamless integration. The registration platform handles high-volume events efficiently, offering customizable registration flows, multi-tier pricing, and real-time reporting. Secure payment processing, multilingual support, and tailored registration paths create a frictionless experience for attendees and organizers. QR code-enabled badge printing ensures smooth check-in, attendance tracking, and security.

The lead retrieval system, centered around the CompuLEAD app and M3 Expo Wallet, allows exhibitors to capture attendee contact details through badge scanning and QR codes. These solutions help exhibitors personalize follow-ups with notes, tags, and automated emails, maximizing conversion opportunities. Real-time analytics and data export capabilities provide deeper engagement insights and measure exhibitor success.

Now integrated with AdioⓇ, M3 Expo Wallet leverages advanced proximity-based technology to identify nearby leads and notify them via their phones, recommending a visit based on their interests. AdioⓇ relies on inaudible tone transmission to detect and engage attendees within a defined range. This opt-in technology also facilitates content delivery and initiates a digital handshake, providing the exhibitor with the attendee’s contact information for personalized follow-up.

CSI provides advanced data analytics and reporting tools that help event organizers track registration trends, session attendance, exhibitor ROI, and attendee engagement. Powerful dashboards provide actionable insights to optimize event strategies and enhance attendee satisfaction. CRM and marketing automation integrations further enhance data accessibility and usability.

CSI’s commitment to customer success is reinforced by its expert support team, ensuring smooth event execution. The company's dedication to innovation continues to drive advancements in event registration, lead management, and ticketing, making it a trusted partner for event organizers worldwide.

DATAVAULT’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion contains forward-looking statements and information relating to our business that reflect our current views and assumptions with respect to future events and are subject to risks and uncertainties that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

These forward-looking statements speak only as of the date of this information statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements. Except as required by applicable law, including the securities laws of the United States, we expressly disclaim any obligation or undertaking to disseminate any update or revisions of any of the forward-looking statements to reflect any change in our expectations with regard thereto or to conform these statements to actual results.

Overview

The Company is a pioneering technology licensing company that owns a portfolio of patented, secure platforms designed to redefine how data is managed, valued, and monetized in the modern era. Leveraging our proprietary HPC capabilities and advanced software, we aim to empower customers worldwide with revolutionary data solutions. At the heart of our offerings are our artificial intelligence (AI)-driven agents—branded as Data Vault®, DataValue®, DataScore®, and Data Vault Bank®. These tools harness generative AI to deliver enterprise-grade data management solutions tailored for the HPC landscape and the Web 3.0 paradigm. Our technology ensures data ownership immutability, experiential data observability, precise data asset valuation, and secure monetization—which we believe will unlock unprecedented opportunities for businesses in an increasingly data-driven world on which our executive leadership, with our engineering and software development teams, can capitalize. The Company operates through two synergistic platforms (Data Science and Acoustic Science) to optimize our revenue generation.

The operating results presented in our historical financial statements represent the audio business and may not be indicative of our results following the asset purchase from EOS Technology Holdings Inc. We expect to derive a higher portion of revenues from the assets purchased from EOS Technology Holdings Inc. as compared to the revenue generated by the legacy Company. We have incurred, and expect to continue to incur, increased salaries and benefits expense due to hiring the additional employees it will take to monetize the economic benefit of the assets purchased in the DV Asset Purchase (as defined below). Other corporate costs are expected to increase such as legal and research and development expenses due to increased patent activity as well as sales and marketing expenses.

Critical Accounting Policies

The following discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. Certain accounting policies and estimates are particularly important to the understanding of our financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period to period in economic factors or conditions that are outside of our control. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical operations, our future business plans and projected financial results, our observance of trends in the industry and information available from other outside sources, as appropriate.

Comparison of the Years Ended December 31, 2024 and 2023

Revenue

Revenue for the year ended December 31, 2024 was $2,674,000, an increase of $591,000 or 28%, compared to the revenue of $2,083,000 for the year ended December 31, 2023. The increase in overall sales is primarily related to an increase in engineering revenue to one customer.

Gross Profit (Deficit) and Operating Expenses

Gross Profit (Deficit)

Gross profit for the year ended December 31, 2024 was $376,000, an increase of $3,833,000 compared to a gross deficit of $3,457,000 for the year ended December 31, 2023. The gross margin as a percent of sales was 14% for the year ended December 31, 2024, compared to (166%) for the year ended December 31, 2023. The increase in gross profit and gross margin as a percent of sales is mainly attributable to the year ended December 31, 2023 having a $2,875,000 increase in inventory reserves as a result of certain excess raw materials, primarily attributable to the out of balance inventory associated with longer lead time semiconductor chips.

Research and Development

Research and development expenses for the year ended December 31, 2024 were $7,818,000, an increase of $362,000 compared to expenses of $7,456,000 for the year ended December 31, 2023. The increase in research and development expenses is primarily related to increased salaries and benefits expense of $556,000 and recruitment fees expense of $84,000 offset by decreases in outside consultants of $164,000 and legal of $95,000.

Sales and Marketing

Sales and marketing expenses for the year ended December 31, 2024 were $3,974,000, a decrease of $1,203,000 compared to expenses of $5,177,000 for the year ended December 31, 2023. The decrease in sales and marketing expenses is primarily related to decreased salary and benefit expense of $515,000 and decreased website expenses, advertising, trade shows, consulting expenses, stock-based compensation, and public relations expenses of $204,000, $155,000, $60,000, $117,000, $94,000 and $93,000, respectively.

General and Administrative

General and administrative expenses for the year ended December 31, 2024 were $9,722,000, an increase of $4,355,000 compared to expenses of $5,367,000 for the year ended December 31, 2023. The increase in general and administrative expenses is primarily related to increased investor relations expenses of $2,607,000, which includes stock-based compensation charges of $334,000, increased legal fees of $458,000, increased stock-based compensation expense of $648,000, increased salaries and benefits of $133,000, an increase in consultants expense of $147,000, an increase in shareholder expense of $197,000 and an increase in bonus of $85,000.

Interest Expense, net

Interest expense, net for the year ended December 31, 2024 was $1,272,000 compared to $932,000 for the year ended December 31, 2023.

Interest expense for the year ended December 31, 2024 was primarily due to the amortization of debt discounts associated with the January 2024 Promissory Note in the principal amount of $1,000,000 that the Company incurred in January 2024 and repaid in full in the three months ended March 31, 2024.

Interest expense for the year ended December 31, 2023 was primarily due to the amortization of debt discounts associated with the senior secured convertible note that the Company issued in August 2022 and repaid in full on April 11, 2023 and the amortization of debt discounts associated the short-term loan that the Company issued in September 2023 that was repaid in full on December 7, 2023.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability for the year ended December 31, 2024 was a loss of $29,120,000 compared to a gain of $4,510,000 for the year ended December 31, 2023. The change in fair value of the warrant liability for the year ended December 31, 2024 was due to the issuance of additional warrants to purchase 5,602,693 shares of common stock and the subsequent valuing of such warrants which were impacted by the Company’s higher stock price throughout the year. The additional warrants were issued as a result of provision in certain of the warrant agreements that was triggered following the Company’s reverse stock split that occurred in April 2024. The change in fair value of the warrant liability for the year ended December 31, 2023 was due to the issuance of warrants during the year ended December 2023 associated with our common stock and Series B Preferred Stock offerings and the subsequent decrease in our common stock price at year end compared to the price of our stock on the date of the warrants were issued.

Loss on Debt Extinguishment

During the year ended December 31, 2024, the Company recorded a loss on debt extinguishment of $0. During the year ended December 31, 2023, the Company recorded a loss on debt extinguishment of $837,000. The loss is directly related to the Company’s April 2023 repayment of the Convertible Note in the amount of $1,656,744. The repayment of the entirety of the outstanding balance of such note, included the unpaid principal, interest through the payoff date, and a pre-payment premium of $276,000. The loss also includes the expensing of the related unamortized debt discounts totaling $894,000, offset partially by a $333,000 gain on termination of a derivative liability that was established in connection with the Convertible Note.

Deemed Dividend on Exchange of Convertible Preferred Stock for Common Stock

During the year ended December 31, 2024, the Company recorded a deemed dividend of $5,842,000 which was primarily related to the accretion upon the repurchase of 62,657 Series B Preferred Stock shares and extinguishment of 81,315 Series B Preferred Stock warrants.

During the year ended December 31, 2023, the Company recorded a deemed dividend of $6,360,000, which was primarily related to the accretion upon the conversion of 110,278 shares of Series B Preferred Stock to 177,282 shares of common stock.

Deemed Dividend on Issuance of Common Stock and Warrants Issued in Connection with Amendments to Warrants to Purchase Common Stock

During the year ended December 31, 2024, the Company recorded a deemed dividend of $10,475,000 primarily related to excess fair value of equity instruments transferred to warrant holders in connection with modifications and exchanges to equity classified common stock warrants. No such deemed dividend was recorded during the year ended December 31, 2023.

Liquidity and Capital Resources

Cash and cash equivalents as of December 31, 2024 were $3,330,000, compared to $411,000 as of December 31, 2023.

We used net cash in operating activities of $17,526,000 for the year ended December 31, 2024. For the year ended December 31, 2023, we used net cash in operating activities of $14,826,000. Excluding the net loss and non-cash adjustments, the increase in the use of net cash from operating activities during the year ended December 31, 2024, was primarily related to the increase in prepaid expenses and other current assets and a decrease in accounts payable offset by a decrease in inventories.

We have financed our operations to date primarily through the issuance of equity securities, proceeds from the exercise of warrants to purchase common stock and sale of debt instruments. Cash provided by financing activities for the year ended December 31, 2024 was $22,002,000. In January 2024, we received gross proceeds of $600,000 from the issuance of promissory notes and common stock purchase warrants to certain accredited investors. In February 2024, we received gross proceeds of approximately $10.0 million from the public offering of 1,025,600 units, with each unit consisting of one share of common stock (or pre-funded warrant in lieu thereof) and one warrant, each to purchase one (1) share of common stock. In March 2024 we received gross proceeds of approximately $2.3 million from the issuance of 417,833 shares of common stock, 93,342 pre-funded common stock warrants and the issuance of 511,175 warrants to purchase common stock. On April 19, 2024, we received net proceeds of approximately $591,000 from the issuance of 225,834 shares of common stock and the issuance of 225,834 warrants to purchase common stock. On April 23, 2024, we received net proceeds of approximately $1.6 million from the issuance of 361,904 shares of common stock and the issuance of 542,856 warrants to purchase common stock. On April 30, 2024, we received net proceeds of approximately $2.1 million from the issuance of 418,845 shares of common stock and the issuance of 418,845 warrants to purchase common stock. On May 15, 2024, we received net proceeds of approximately $2.3 million from the issuance of 785,000 shares of common stock and the issuance of 785,000 warrants to purchase common stock. On May 17, 2024, we received net proceeds of approximately $2.1 million from the issuance of 675,000 shares of common stock and the issuance of 675,000 warrants to purchase common stock. In September 2024, we received net proceeds of approximately $2.4 million from the exercise of 1,193,721 warrants to purchase common stock. In November and December 2024, we received net proceeds of $4.9 million from the exercise of 3,821,442 warrants to purchase common stock.

Going Concern

Our consolidated financial statements 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. We have incurred net operating losses each year since inception. As of December 31, 2024, we had cash and cash equivalents of $3.3 million and reported net cash used in operations of $17.5 million during the year ended December 31, 2024. 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, we will need to raise additional funds during the next 12 months by selling additional equity or incurring debt. To date, the Company has funded its operations primarily through issuance of equity securities and proceeds from the exercise of warrants to purchase common stock and the sale of debt instruments. 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 prospectus.

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

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

CSI’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of CSI’s financial condition and results of operation contains forward-looking statements and information relating to CSI’s business that reflect its current views and assumptions with respect to future events and are subject to risks and uncertainties that may cause CSI’s or CSI’s industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

These forward-looking statements speak only as of the date of this Report. Although CSI believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, or achievements. Except as required by applicable law, including the securities laws of the United States, CSI expressly disclaims any obligation or undertaking to disseminate any update or revisions of any of the forward-looking statements to reflect any change in its expectations with regard thereto or to conform these statements to actual results.

Overview

CSI is a leading provider of event registration, lead retrieval, ticketing and data analytic solutions for the global exhibitions and conference industry. With nearly five decades of experience, CSI has built a reputation for delivering innovative, reliable and scalable technology that enhances attendee and exhibitor experiences which drives value for organizers.

CSI’s registration and lead retrieval divisions offer a robust and customizable platform designed for trade shows of all sizes. It provides seamless online and onsite registration, automated badge printing and advanced access controls. Attendees enjoy an intuitive registration process, while exhibitors utilize CSI’s lead retrieval tools to capture, qualify, and engage with potential customers. The CompuLEAD app and M3 Expo Wallet streamline lead retrieval management, allowing exhibitors to collect and follow up with contacts effectively. The TrafficMax system enhances exhibitor ROI by enabling targeted messaging to drive booth traffic.

CSI’s success is predicated on bringing the best technology, people and processes to ensure its clients (organizers, exhibitors and attendees) receive a good return on their investment. To that end CSI continues to invest in technology that it believes will provide enhanced benefits in the future. CSI has, in recent years, introduced M3 Expo Wallet, new analytic reports, and an integration with Adio®. CSI believes that these added products will position it for growth in the global exhibition and conference industry as well as serve clients in various entertainment venues (museums, parks and major attractions).

CSI’s operations are significantly impacted by economic environment for the global exhibitions and conference industry. Anything severely impacting this industry (e.g. a pandemic) will have a negative impact on CSI’s results. Additionally, should CSI’s technology not be accepted into the marketplace or should its competition come out with competing technology, CSI may experience a diminution in revenue.

Critical Accounting Policies

The following discussion and analysis of financial condition and results of operations is based upon CSI’s consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. Certain accounting policies and estimates are particularly important to the understanding of CSI’s financial position and results of operations and require the application of significant judgment by its management or can be materially affected by changes from period to period in economic factors or conditions that are outside CSI’s control. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, CSI’s management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on CSI’s historical operations, its future business plans and projected financial results, its observance of trends in the industry and information available from other outside sources as appropriate. Please see Note 1 of the Notes to CSI’s Consolidated Financial Statements for a more complete description of its significant accounting policies.

Comparison of Years Ended December 31, 2023 and 2022

Revenue

Revenue for the year ended December 31, 2023 was $12,302,000, a decrease of $1,489,000, or 11%, compared to the revenue for the year ended December 31, 2022 of $13,791,000. The decrease in revenue was a result of a decrease in Registration sales of $801,000 and a decrease in Exhibitor software sales of $688,000.

Gross Profit and Operating Expenses

Gross Profit

Gross margin for the year ended December 31, 2023 was $3,360,000, a decrease of $1,144,000 compared to the gross margin for the year ended December 31, 2022 of $4,504,000. The gross margin decreased primarily as a result of decreased sales of $1,489,000 and a decrease in governmental credits of $1,927,000 offset partially by a decrease in contract labor of $1,357,000 and in salary and benefit expenses of $948,000. The gross margin as a percent of sales was 27% for the year ended December 31, 2023, compared to 33% for the year ended December 31, 2022.

Sales and Marketing

Sales and marketing expenses for the year ended December 31, 2023 were $1,442,000, an increase of $383,000 compared to the sales and marketing expenses for the year ended December 31, 2022 of $1,059,000. The increase in sales and marketing expenses is primarily related to increased salary, commission and benefit expense of $146,000 from an increased number of salespeople, increased marketing expenses of $37,000, and a decrease in governmental credits of $227,000 partially offset by decreased contractor expenses of $52,000.

General and Administrative

General and administrative expenses for the year ended December 31, 2023 were $1,613,000, an increase of $113,000, compared to the general and administrative expenses for the year ended December 31, 2022 of $1,520,000. The increase in general and administrative expenses is primarily related to decreased governmental credits of $346,000 offset partially by decreased legal and professional fees of $157,000 and decreased rental expense of $76,000 resulting from the downsizing of the size of the company’s office space.

Depreciation and Amortization

Depreciation and amortization expenses for the year ended December 31, 2023 were $2,181,000, an increase of $1,040,000 compared to the depreciation and amortization expenses for the year ended December 31, 2022 of $1,141,000. The decrease in depreciation and amortization expenses is primarily related to a large amount of fixed assets being fully depreciated in 2023.

Interest Income (Expense), net

Interest expense, net for the year ended December 31, 2023 was $243,000, an increase of $140,000 compared to the interest expense for the year ended December 31, 2022 of $103,000. The increase in interest expense, net for the year ended December 31, 2023, was primarily due a higher bank debt balance, a higher prime interest rate and lower interest income.

Loss on impairment of capitalized software

For the year ended December 31, 2023, CSI determined certain software development costs were impaired, recorded a charge and reduced fixed assets by $1,614,000

Litigation and other

Litigation and other expenses for the year ended December 31, 2023 was $428,000, an increase of $157,000 compared to the litigation and other expense for the year ended December 31, 2022 of $271,000. The increase in litigation and other expenses for the year ended December 31, 2023, was primarily due to an increase of legal fees related to a claim filed by the company and favorably settled in 2023.

Liquidity and Capital Resources

Cash and cash equivalents as of December 31, 2023 were $268,000 compared to $355,000, as of December 31, 2022. We generated net cash in operating activities for the year ended December 31, 2023 of $506,000. We decreased net cash in operating activities for the year ended December 31, 2022 by $771,000.

The increase of $506,000 in net cash in operating activities was a result of an increase in cash from changes in working capital accounts of $873,000 offset by a net loss excluding depreciation and amortization and loss on impairment of $367,000.

Net Cash from financing activities during the year ended December 31, 2023 was $1,001,000 which is a result an increase in bank debt of $1,227,000 offset partially by a repayment to a shareholder for convertible debt of $225,000.

Off-Balance Sheet Arrangements

CSI had no off-balance sheet arrangements during the indicated period.

Comparison of the Nine Months ended September 30, 2024 and 2023

Revenue

Revenue for the nine months ended September 30, 2024 was $8,931,000, a decrease of $280,000, or 3%, compared to the revenue for the nine months ended September 30, 2023 of $9,211,000. The decrease in revenue was a result of a decrease in Exhibitor software sales of $406,000, partially offset by an increase in Registration sales of $126,000.

Gross Profit and Operating Expenses

Gross Profit

Gross margin for the nine months ended September 30, 2024 was $2,461,000, compared to a gross margin of $2,553,000 for the nine months ended September 30, 2023. The gross margin amount decrease is attributable to the decrease in sales. The gross margin as a percent of sales was 27.6% for the nine months ended September 30, 2024, compared to 27.7% for the nine months ended September 30, 2023.

Sales and Marketing

Sales and marketing expenses for the nine months ended September 30, 2024 were $790,000, a decrease of $323,000 compared to the sales and marketing expenses for the nine months ended September 30, 2023 of $1,113,000. The decrease in sales and marketing expenses is primarily related to decreased salary, commission and benefit expense of $337,000 and decreased contractor expenses of $41,000 partially offset by higher travel and entertainment expense of $56,000.

General and Administrative

General and administrative expenses for the nine months ended September 30, 2024 were $1,238,000, a decrease of $33,000, compared to the general and administrative expenses for the nine months ended September 30, 2023 of $1,271,000. The decrease in general and administrative expenses is primarily related to decreased legal fees and professional fees of $112,000 and $28,000 respectively, offset partially by increased salary and benefit expense of $67,000 and the introduction of a 401k match program of $39,000.

Depreciation and Amortization

Depreciation and amortization expenses for the nine months ended September 30, 2024 were $708,000, a decrease of $823,000 compared to the depreciation and amortization expenses for the nine months ended September 30, 2023 of $1,531,000. The decrease in depreciation and amortization expenses is primarily related to a large amount of fixed assets being fully depreciated in 2023.

Interest Income (Expense), net

Interest expense, net for the nine months ended September 30, 2024 was $275,000, an increase of $108,000 compared to the interest expense for the nine months ended September 30, 2023 of $167,000. The increase in interest expense, net for the nine months ended September 30, 2024, was primarily due to a higher debt balance and a higher prime interest rate.

Litigation and other

Litigation and other expenses for the nine months ended September 30, 2024 was $73,000, a decrease of $299,000 compared to the litigation and other expense for the nine months ended September 30, 2023 of 372,000. The decrease in litigation and other expense for the nine months ended September 30, 2024, was primarily due to a reduction of legal fees due to a favorable settlement of a lawsuit the company in 2023.

Liquidity and Capital Resources

Cash and cash equivalents as of September 30, 2024 were $65,000 compared to $355,000, as of December 31, 2023. CSI generated net cash in operating activities for the nine months ended September 30, 2024 of $703,000. CSI generated net cash in operating activities for the nine months ended September 30, 2023 of $1,068,000.

The decrease of $365,000 in net cash in operating activities was a result of a decrease in adjustments to net cash from operating activities of $1,636,000 offset partially by an increase in net income of $1,271,000.

Net Cash from financing activities during the nine months ended September 30, 2024 was $145,000 which is a result receiving a loan of $1,545,000 from a shareholder which was used to reduce bank debt by $1,400,000 and to invest in new products.

Off-Balance Sheet Arrangements

CSI has no off-balance sheet arrangements.

ACTION ONE

APPROVAL OF THE REVERSE STOCK SPLIT OF THE COMMON STOCK

Summary

The Majority Stockholders granted the Board authority to amend the Certificate of Incorporation to effect a reverse stock split (the “Reverse Stock Split”) of all outstanding shares of Common Stock by a ratio in the range of one-for-five to one-for-twenty, to be determined in the Board’s sole discretion, at any time after the Majority Stockholders’ approval of the Reverse Stock Split and no later than the Company’s 2025 annual meeting of stockholders.

The exact ratio of the Reverse Stock Split will be set at a whole number within the range of one-for-five and one-for-twenty as determined by the Board in its sole discretion. The Board believes that the availability of alternative reverse stock split ratios will provide it with the flexibility to implement the Reverse Stock Split in a manner designed to maximize the anticipated benefits for the Company and its stockholders. In determining how to implement the Reverse Stock Split, the Board may consider, among other things, factors such as:

The Reverse Stock Split will become effective upon filing of an amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware. The amendment filed thereby will set forth the number of shares of Common Stock immediately prior to the Reverse Stock Split to be combined into one share of Common Stock, within the limits set forth above. Except for adjustments that may result from the treatment of fractional shares as described below, each holder of our shares of Common Stock will hold the same percentage of outstanding shares of Common Stock immediately following the Reverse Stock Split as such stockholder holds immediately prior to the Reverse Stock Split.

The form of the certificate of amendment to the Certificate of Incorporation, pursuant to which the Reverse Stock Split would be effected, is attached to this Information Statement as Appendix A. The text of the form of amendment accompanying this Information Statement is, however, subject to amendment to reflect the exact ratio for the Reverse Stock Split and any changes that may be required by the office of the Secretary of State of the State of Delaware or that the Board may determine to be necessary or advisable ultimately to comply with applicable law and to effect the Reverse Stock Split.

The Board will retain the authority not to effect the Reverse Stock Split even though it has already obtained the approval of the Majority Stockholders.

Effective Date

Unless the Board determines otherwise, the Reverse Stock Split will become effective, as of 5:00 p.m. Eastern Time on the date of filing of such certificate of amendment (the “Effective Date”). Except as explained below with respect to fractional shares, the issued and outstanding shares of Common Stock immediately prior to the Effective Date will automatically be converted, as of the Effective Date, into a lesser number of shares of Common Stock calculated in accordance with a split ratio of between 1-for five and 1-for-twenty, as selected by the Board and set forth in the certificate of amendment.

Purposes of the Reverse Stock Split

The primary purpose for the Reverse Stock Split is based on the Board’s belief that the Reverse Stock Split will be necessary to obtain an initial listing of shares of Common Stock on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5110(a), which requires a listed company to apply for an initial listing application whereby the company combines with a non-Nasdaq entity, resulting in a change of control of the company. The Board believes that the Reverse Stock Split could also improve the marketability and liquidity of the Common Stock.

Obtain initial listing on the Nasdaq Capital Market. Our Common Stock is traded on the Nasdaq Capital Market. As described in this Information Statement, the Company has entered into an Asset Purchase Agreement with CSI, which will result in a change of control of the Company under the Nasdaq Rules once the CSI Acquisition is consummated. Pursuant to Nasdaq Listing Rule 5110(a), the Reverse Stock Split is needed in order to allow the Company to pursue a listing of its Common Stock on the Nasdaq Capital Market. We believe that the Reverse Stock Split is the Company’s best option to meet the criteria generally required to obtain an initial listing, as Nasdaq requires, among other criteria, an initial bid price of at least $4.00 per share or a closing price of $3.00 per share (or, if certain other conditions are met, which may not apply to us, an initial bid price of $2.00 per share). Following an initial listing, Nasdaq also requires that a listed company maintain a bid price of at least $1.00 per share. A decrease in the number of outstanding shares of the Common Stock resulting from the Reverse Stock Split should, absent other factors, increase the per share market price of the Common Stock, although the Company cannot provide any assurance that the minimum bid price of the Common Stock would remain over the minimum bid price requirement following the Reverse Stock Split and until such time that the Company submits its initial listing application.

Improve the marketability and liquidity of the Common Stock. We also believe that the increased market price of our Common Stock expected as a result of implementing the Reverse Stock Split will improve the marketability and liquidity of our Common Stock and will encourage interest and trading in our Common Stock. The Reverse Stock Split could allow a broader range of institutions to invest in our Common Stock (namely, funds that are prohibited from buying stocks whose price is below a certain threshold), potentially increasing the liquidity of our Common Stock. The Reverse Stock Split could also help increase analyst and broker interest in our stock as their policies can discourage them from following or recommending companies with low stock prices. Because of the trading volatility often associated with low-priced stocks, many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Additionally, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of our Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher. It should be noted, however, that the liquidity of our Common Stock may in fact be adversely affected by the Reverse Stock Split given the reduced number of shares of Common Stock that would be outstanding after the Reverse Stock Split.

Risks of the Reverse Stock Split

We cannot assure you that the Reverse Stock Split will increase our stock price and have the desired effect of compliance with the Minimum Bid Price Requirement. The Board expects that the Reverse Stock Split, if the Board deems it necessary, will increase the market price of our Common Stock so that we are able to comply with the Minimum Bid Price Requirement. However, the effect of the Reverse Stock Split upon the market price of our Common Stock cannot be predicted with any certainty, and the history of similar reverse stock splits for companies in like circumstances is varied.

It is possible that the per share price of our Common Stock after the Reverse Stock Split will not rise in proportion to the reduction in the number of shares of our Common Stock outstanding resulting from the Reverse Stock Split, and the market price per post- Reverse Stock Split share may not exceed or remain in excess of the $1.00 minimum bid price for a sustained period of time, and the Reverse Stock Split may not result in a per share price that would attract brokers and investors who do not trade in lower priced stocks. Even if we effect the Reverse Stock Split, the market price of our Common Stock may decrease due to factors unrelated to the Reverse Stock Split. In any case, the market price of our Common Stock may also be based on other factors which may be unrelated to the number of shares outstanding, including our future performance. If the Reverse Stock Split is consummated and the trading price of the Common Stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of the Reverse Stock Split. Even if the market price per post- Reverse Stock Split share of our Common Stock remains in excess of $1.00 per share, we may be delisted due to a failure to meet other continued listing requirements, including Nasdaq requirements related to the minimum stockholders’ equity, the minimum number of shares that must be in the public float, the minimum market value of the public float and the minimum number of round lot holders.

The Reverse Stock Split may decrease the liquidity of our Common Stock. The liquidity of our Common Stock may be harmed by the Reverse Stock Split given the reduced number of shares of Common Stock that would be outstanding after the Reverse Stock Split, particularly if the stock price does not increase as a result of the Reverse Stock Split. In addition, investors might consider the increased proportion of unissued authorized shares of Common Stock to issued shares to have an anti-takeover effect under certain circumstances, because the proportion allows for dilutive issuances which could prevent certain stockholders from changing the composition of the Board or render tender offers for a combination with another entity more difficult to successfully complete. The Board does not intend for the Reverse Stock Split to have any anti-takeover effects.

Principal Effects of the Reverse Stock Split

Common Stock. If the Reverse Stock Split is implemented, subject to the conditions set out in this Information Statement, the Company will file a certificate of amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware. Except for adjustments that may result from the treatment of fractional shares as described below, the issued and outstanding shares of Common Stock immediately prior to the Effective Date will automatically be converted, as of the Effective Date, into a lesser number of shares of Common Stock based on the exchange ratio within the approved range determined by the Board. In addition, proportional adjustments will be made to the maximum number of shares of Common Stock issuable under, and other terms of, (i) our equity incentive plans, and (ii) the number of shares of Common Stock issuable under, and the exercise prices of, our outstanding convertible and exercisable securities.

Except for adjustments that may result from the treatment of fractional shares of Common Stock as described below, because the Reverse Stock Split would apply to all issued shares of our Common Stock, Reverse Stock Split would not alter the relative rights and preferences of our existing stockholders nor affect any stockholder’s proportionate equity interest in the Company. For example, a holder of two percent (2%) of the voting power of our outstanding securities immediately prior to the effectiveness of the Reverse Stock Split will generally continue to hold two percent (2%) of the voting power of our outstanding securities immediately after the Reverse Stock Split. Moreover, the number of stockholders of record of shares of Common Stock will not be affected by the Reverse Stock Split. The amendment to the Certificate of Incorporation itself to solely effect the Reverse Stock Split would not change the number of authorized shares of Common Stock or the par value of the Common Stock. The Reverse Stock Split will have the effect of creating additional unreserved shares of our authorized Common Stock. Although at present we have no current arrangements or understandings providing for the issuance of the additional shares of Common Stock that would be made available for issuance upon effectiveness of the Reverse Stock Split (other than pursuant to the terms of anti-dilution features in outstanding securities), these additional shares of Common Stock may be used by us for various purposes in the future without further stockholder approval, including, among other things:

While the Reverse Stock Split will make additional shares of Common Stock available for the Company to use in connection with the foregoing, the primary purpose of the Reverse Stock Split is to increase our stock price in order to comply with the Minimum Bid Price Requirement in the event such requirement is not satisfied.

Effect on Employee Plans, RSAs, RSUs and Convertible or Exchangeable Securities. Our equity incentive plans consist of (a) the 2018 Long-Term Stock Incentive Plan (the “LTIP”), (b) the 2020 Stock Incentive Plan (the “2020 Plan”), and (c) the Technical Team Retention Plan of 2022 (the “2022 Plan,” and collectively with the LTIP and the 2020 Plan, the “Plans”). Pursuant to the terms of the Plans, the Board or a committee thereof, as applicable, will adjust the number of shares of Common Stock available for future grant under the Plans, the number of shares of Common Stock underlying outstanding awards (including RSAs and RSUs), and other terms of outstanding awards issued pursuant to the Plans to equitably reflect the effects of the Reverse Stock Split. Based upon the Reverse Stock Split ratio determined by the Board, proportionate adjustments are also generally required to be made to the per share exercise or conversion prices, as applicable, and the number of shares of Common Stock issuable upon the exercise or conversion, as applicable, of outstanding convertible or exchangeable securities that may entitle the holders thereof to purchase, exchange for, or convert into, shares of Common Stock. This would result in approximately the same aggregate price being required to be paid under such outstanding convertible or exchangeable securities upon exercise or conversion, as applicable, and approximately the same value of shares of Common Stock being delivered upon such exercise, exchange or conversion, immediately following the Reverse Stock Split as was the case immediately preceding the Reverse Stock Split. The number of shares of Common Stock subject to RSAs and RSUs will be similarly adjusted, subject to our treatment of fractional shares of Common Stock. The number of shares of Common Stock reserved for issuance pursuant to these securities and our Plans will be adjusted proportionately based upon the Reverse Stock Split ratio determined by the Board, subject to our treatment of fractional shares of Common Stock.

Effect on Certain Warrants. With respect to our outstanding common stock purchase warrants, dated February 13, 2024 (the “February 2024 Warrants”), the exercise price of such warrants may be adjusted upon the occurrence of any reverse stock split involving the shares of the Common Stock (including the Reverse Stock Split). If the lowest daily volume weighted average price during the period commencing five consecutive trading days immediately preceding and the five consecutive trading days immediately following the reverse stock split is less than the per share exercise price of such warrants then in effect, then such per share exercise price will be reduced to the lowest daily volume weighted average price during such ten-day period and the number of shares of Common Stock issuable upon exercise of such warrants will be increased such that the aggregate exercise price, after taking into account the reduction of per share exercise price, shall be equal to the aggregate exercise price on the issuance date of such warrants. The issuance of shares of Common Stock underlying the February 2024 Warrants is subject to stockholder approval, and we have not received such approval.

Listing. Our shares of Common Stock currently trade on the Nasdaq Capital Market. The Reverse Stock Split will directly affect the listing of our Common Stock on the Nasdaq Capital Market, and we believe that the Reverse Stock Split could potentially increase our stock price, facilitating compliance with the Minimum Bid Price Requirement. Following the Reverse Stock Split, we intend for our Common Stock to continue to be listed on the Nasdaq Capital Market under the symbol “DVLT,” subject to our ability to continue to comply with Nasdaq rules, although our Common Stock will have a new committee on uniform securities identification procedures (“CUSIP”) number, a number used to identify our Common Stock.

“Public Company” Status. Our Common Stock is currently registered under Sections 12(b) and 12(g) of the Exchange Act, and we are subject to the “public company” periodic reporting and other requirements of the Exchange Act. The proposed Reverse Stock Split will not affect our status as a public company or this registration under the Exchange Act. The Reverse Stock Split is not intended as, and will not have the effect of, a “going private transaction” covered by Rule 13e-3 under the Exchange Act.

Odd Lot Transactions. It is likely that some of our stockholders will own “odd-lots” of less than 100 shares of Common Stock following the Reverse Stock Split. A purchase or sale of less than 100 shares of Common Stock (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers, and generally may be more difficult than a “round lot” sale. Therefore, those stockholders who own less than 100 shares of Common Stock following the Reverse Stock Split may be required to pay somewhat higher transaction costs and may experience some difficulties or delays should they then determine to sell their shares of Common Stock.

Authorized but Unissued Shares; Potential Anti-Takeover Effects. The Certificate of Incorporation presently authorizes 300,000,000 shares of Common Stock and 20,000,000 shares of “blank check” preferred stock, par value $0.0001 per share. The Reverse Stock Split would not change the number of authorized shares of Common Stock or the par value per share of the Common Stock, although the Reverse Stock Split would decrease the number of issued and outstanding shares of Common Stock. Therefore, because the number of issued and outstanding shares of Common Stock would decrease, the number of shares of Common Stock remaining available for issuance by us in the future would increase.

Such additional shares of Common Stock would be available for issuance from time to time for corporate purposes such as issuances of Common Stock in connection with capital-raising transactions and acquisitions of companies or other assets, as well as for issuance upon conversion or exercise of securities such as convertible preferred stock, convertible debt, warrants or options convertible into or exercisable for Common Stock. We believe that the availability of the additional shares of Common Stock will provide us with the flexibility to meet business needs as they arise, to take advantage of favorable opportunities and to respond effectively in a changing corporate environment. For example, we may elect to issue shares of Common Stock to raise equity capital, to make acquisitions through the use of stock, to establish strategic relationships with other companies, to adopt additional employee benefit plans or reserve additional shares of Common Stock for issuance under such plans, where the Board determines it advisable to do so, without the necessity of soliciting further stockholder approval, subject to applicable stockholder vote requirements under Delaware law and Nasdaq rules. If we issue additional shares of Common Stock for any of these purposes, the aggregate ownership interest of our current stockholders, and the interest of each such existing stockholder, would be diluted, possibly substantially.

The additional shares of our Common Stock that would become available for issuance upon an effective Reverse Stock Split could also be used by us to oppose a hostile takeover attempt or delay or prevent a change of control or changes in or removal of our management, including any transaction that may be favored by a majority of our stockholders or in which our stockholders might otherwise receive a premium for their shares of Common Stock over then-current market prices or benefit in some other manner. Although the increased proportion of authorized but unissued shares of Common Stock to issued shares of Common Stock could, under certain circumstances, have an anti-takeover effect, the Reverse Stock Split is not being proposed in order to respond to a hostile takeover attempt or to an attempt to obtain control of the Company.

Fractional Shares

We will not issue fractional shares as a result of the Reverse Stock Split. Instead, in the event that a holder of pre-Reverse Stock Split shares of Common Stock would have been entitled to receive fractional shares of Common Stock as a result of the Reverse Stock Split, the Company will issue an additional share in lieu thereof to such holder.

No Dissenters’ Rights

Under Delaware law, our stockholders would not be entitled to dissenters’ rights or rights of appraisal in connection with the implementation of the Reverse Stock Split, and we will not independently provide our stockholders with any such rights.

Certain United States Federal Income Tax Consequences

The following is a summary of certain United States federal income tax consequences of the Reverse Stock Split. It does not address any state, local or foreign income or other tax consequences, which, depending upon the jurisdiction and the status of the stockholder/taxpayer, may vary from the United States federal income tax consequences. It applies to you only if you held pre-Reverse Stock Split shares of Common Stock as capital assets for United States federal income tax purposes. This discussion does not apply to you if you are a member of a class of our stockholders subject to special rules, such as (a) a dealer in securities or currencies, (b) a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings, (c) a bank, (d) a life insurance company, (e) a tax-exempt organization, (f) a person that owns shares of Common Stock that are a hedge, or that are hedged, against interest rate risks, (g) a person who owns shares of Common Stock as part of a straddle or conversion transaction for tax purposes, or (h) a person whose functional currency for tax purposes is not the U.S. dollar. The discussion is based on the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), its legislative history, existing, temporary and proposed regulations under the Internal Revenue Code, published rulings and court decisions, all as of the date hereof. These laws, regulations and other guidance are subject to change, possibly on a retroactive basis. We have not sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service regarding the United States federal income tax consequences of the Reverse Stock Split.

PLEASE CONSULT YOUR OWN TAX ADVISOR CONCERNING THE CONSEQUENCES OF THE REVERSE STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION.

Tax Consequences to United States Holders of Common Stock. A United States holder, as used herein, is a stockholder who or that is, for United States federal income tax purposes: (a) a citizen or individual resident of the United States, (b) a domestic corporation, (c) an estate whose income is subject to United States federal income tax regardless of its source, or (d) a trust, if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust. This discussion applies only to United States holders.

If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our Common Stock, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners of a partnership holding our Common Stock are urged to consult their tax advisors regarding the U.S. tax consequences of the Reverse Stock Split.

The Company intends for the transaction to qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes, and the remainder of the disclosure assumes it will so qualify. However, the Company has not sought and will not seek any ruling from the IRS regarding any matters relating to the transaction, and as a result, there can be no assurance that the IRS will not assert, or that a court would not sustain, a contrary position, in which case the consequences of the transaction could be materially different from those described herein.

Provided that the Reverse Stock Split qualifies as a “reorganization,” and except for adjustments that may result from the treatment of fractional shares of Common Stock as described above, no gain or loss should be recognized by a stockholder upon such stockholder’s exchange of pre-Reverse Stock Split shares of Common Stock for post-Reverse Stock Split shares of Common Stock pursuant to the Reverse Stock Split. The aggregate adjusted basis of the post- Reverse Stock Split shares of Common Stock received will be the same as the aggregate adjusted basis of the Common Stock exchanged for such new shares. The stockholder’s holding period for the post-Reverse Stock Split shares of Common Stock will include the period during which the stockholder held the pre-Reverse Stock Split shares of Common Stock surrendered.

Accounting Consequences

Following the Effective Date, if any, the net income or loss and net book value per share of Common Stock will be increased because there will be fewer shares of Common Stock outstanding. We do not anticipate that any other accounting consequences would arise as a result of the Reverse Stock Split.

Exchange of Stock Certificates

As of the Effective Date, each certificate representing shares of Common Stock outstanding before the Reverse Stock Split will be deemed, for all corporate purposes, to evidence ownership of the reduced number of shares of Common Stock resulting from the Reverse Stock Split. All shares of Common Stock underlying options, warrants, preferred stock and other securities exchangeable or exercisable for or convertible into Common Stock also automatically will be adjusted on the Effective Date.

Our transfer agent, VStock Transfer, LLC, will act as the exchange agent for purposes of exchanging stock certificates subsequent to the Reverse Stock Split. Shortly after the Effective Date, stockholders of record will receive written instructions requesting them to complete and return a letter of transmittal and surrender their old stock certificates for new stock certificates reflecting the adjusted number of shares as a result of the Reverse Stock Split. Certificates representing shares of Common Stock issued in connection with the Reverse Stock Split will continue to bear the same restrictive legends, if any, that were borne by the surrendered certificates representing the shares of Common Stock outstanding prior to the Reverse Stock Split. No new certificates will be issued until such stockholder has surrendered any outstanding certificates, together with the properly completed and executed letter of transmittal, to the exchange agent. Until surrendered, each certificate representing shares of Common Stock outstanding before the Reverse Stock Split would continue to be valid and would represent the adjusted number of shares of Common Stock, based on the ratio of the Reverse Stock Split.

Any stockholder whose stock certificates are lost, destroyed or stolen will be entitled to a new certificate or certificates representing post-Reverse Stock Split shares of Common Stock upon compliance with the requirements that we and our transfer agent customarily apply in connection with lost, destroyed or stolen certificates. Instructions as to lost, destroyed or stolen certificates will be included in the letter of instructions from the exchange agent.

Upon the Reverse Stock Split, we intend to treat stockholders holding our Common Stock in “street name,” through a bank, broker or other nominee, in the same manner as registered stockholders whose shares of Common Stock are registered in their names. Banks, brokers and other nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding our Common Stock in “street name.” However, such banks, brokers and other nominees may have different procedures than registered stockholders for processing the Reverse Stock Split. If you hold your shares in “street name” with a bank, broker or other nominee, and if you have any questions in this regard, we encourage you to contact your bank, broker or nominee.

YOU SHOULD NOT DESTROY YOUR STOCK CERTIFICATES AND YOU SHOULD NOT SEND THEM NOW. YOU SHOULD SEND YOUR STOCK CERTIFICATES ONLY AFTER YOU HAVE RECEIVED INSTRUCTIONS FROM THE EXCHANGE AGENT AND IN ACCORDANCE WITH THOSE INSTRUCTIONS.

If any certificates for shares of Common Stock are to be issued in a name other than that in which the certificates for shares of Common Stock surrendered are registered, the stockholder requesting the reissuance will be required to pay to us any transfer taxes or establish to our satisfaction that such taxes have been paid or are not payable and, in addition, (a) the transfer must comply with all applicable federal and state securities laws, and (b) the surrendered certificate must be properly endorsed and otherwise be in proper form for transfer.

Book-Entry

The Company’s registered stockholders may hold some or all of their shares of Common Stock electronically in book-entry form with our transfer agent. These stockholders do not have stock certificates evidencing their ownership of Common Stock. They are, however, provided with a statement reflecting the number of shares of Common Stock registered in their accounts.

Interests of Directors and Executive Officers

Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares of our Common Stock and equity awards granted to them under our equity incentive plans.

Vote Required

Under Delaware law, the affirmative vote of a majority of the issued and outstanding shares of our capital stock entitled to vote is required. Accordingly, this action was approved by the affirmative vote through the Written Consent by the Majority Stockholders.  

ACTION TWO

APPROVAL OF THE ISSUANCE OF SHARES OF COMMON STOCK UPON EXERCISE OF THE December INDUCEMENT WARRANTS

Summary

The Board and Majority Stockholders approved the issuance of shares of Common Stock upon exercise of the December Inducement Warrants issued to the Warrant Holders pursuant to the December Inducement Agreements.

Background

On March 26, 2024, the Company entered into a securities purchase agreement with certain purchasers (the “Warrant Holders”), and issued to such Warrant Holders common stock purchase warrants (the “Existing Warrants”) to purchase up to an aggregate of 1,675,803 shares of Common Stock.

On December 20, 2024, the Company entered into inducement agreements with each of the Warrant Holders (collectively, the “December Inducement Agreements”), pursuant to which the Company agreed to issue to each Warrant Holder, in consideration for such Warrant Holder exercising its Existing Warrants at a per share exercise price of $1.70 on or prior to December 31, 2024, new common stock purchase warrants (the “December Inducement Warrants”) to purchase up to a number of shares of Common Stock equal to 150% of the number of shares of Common Stock issued to such Warrant Holder in connection with its exercise of its Existing Warrants at a per share exercise price of $1.70. The December Inducement Warrants exercisable for up to an aggregate of 2,513,703 shares of Common Stock (the “December Inducement Warrant Shares”) were issued pursuant to the December Inducement Agreements.

The exercise of the December Inducement Warrants is subject to beneficial ownership limitations such that each Warrant Holder may not exercise the December Inducement Warrants to the extent that such exercise would result in the Warrant Holder being the beneficial owner in excess of 4.99% (or, upon election of the Warrant Holder, 9.99%) of the outstanding shares of Common Stock, which beneficial ownership limitation may be increased up to 9.99% upon notice to the Company, provided that any increase in such limitation will not be effective until sixty-one (61) days following notice to the Company.

The offer and sale of the securities pursuant to the December Inducement Agreements were made pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder.

Effect of Issuance of Additional Securities

The issuance of the securities described above would result in the issuance of over 20% of the Company’s outstanding shares of Common Stock on a pre-transaction basis. As such, for so long as the Warrant Holders beneficially own a significant amount of shares of our Common Stock, it could significantly influence future Company decisions. Our stockholders will incur dilution of their percentage ownership to the extent that the Warrant Holders exercise the December Inducement Warrants.

Nasdaq Marketplace Requirements and the Necessity of Stockholder Approval

The Common Stock is currently listed on the Nasdaq Capital Market and, as such, the Company is subject to the Nasdaq rules. Nasdaq Rule 5635(d) requires the Company to obtain stockholder approval prior to the issuance of shares of Common Stock in connection with certain non-public offerings involving the sale, issuance or potential issuance by the Company of shares of Common Stock (and/or securities convertible into or exercisable for shares of Common Stock) equal to 20% or more of the shares of Common Stock outstanding prior to such issuance where the price of the Common Stock to be issued is below the “Minimum Price.” “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement. Shares of common stock issuable upon the exercise or conversion of warrants, options, debt instruments, preferred stock or other equity securities issued or granted in such non-public offerings will be considered shares issued in such a transaction in determining whether the 20% limit has been reached, except in certain circumstances such as issuing warrants that are not exercisable for a minimum of six months and have an exercise price that exceeds market value. 

The issuance of the December Inducement Warrant Shares was therefore approved by the Board and Majority Stockholders pursuant to Nasdaq Rule 5635(d).

Additional Information

This summary is intended to provide you with basic information concerning the December Inducement Agreements and the December Inducement Warrants. The full text of each of the form of the December Inducement Agreement and the December Inducement Warrant were filed as exhibits to our Current Report on Form 8-K filed with the SEC on December 20, 2024.

Vote Required

The Company’s Bylaws provide that all matters (other than the election of directors and except to the extent otherwise required by applicable Delaware law) shall be determined by a majority of the issued and outstanding shares of our capital stock entitled to vote cast affirmatively or negatively. Accordingly, this action was approved by the affirmative vote through the Written Consent by the Majority Stockholders.  

ACTION THREE

APPROVAL TO AMEND THE CERTIFICATE OF INCORPORATION

Summary

The Board and Majority Stockholders approved an amendment to the Certificate of Incorporation to permit the Board to amend the Bylaws without stockholder approval (the “Charter Amendment”).

Reasons for the Charter Amendment

We believe that almost all publicly traded corporations incorporated in Delaware grant the right to amend bylaws to directors. Our Board believes that having such authority to amend the Bylaws without stockholder approval provides it with important flexibility to make amendments to the Bylaws that the Board believes is in the best interests of the Company and its stockholders.

In addition, in approving the Charter Amendment, the Board also considered the following:

Current Bylaw Amendment Requirement

Article IX of the Bylaws provides that the Bylaws may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the Company may, in its Certificate of Incorporation, confer the power to adopt, amend or repeal Bylaws upon our directors. Article IX further provides that the fact that such power has been so conferred upon our directors shall not divest our stockholders of the power, nor limit their power to adopt, amend or repeal Bylaws.

Description of the Charter Amendment

The Charter Amendment is set forth in Appendix B. The description of the Charter Amendment in this Information Statement is qualified in its entirety by reference thereto.

The Charter Amendment will become effective upon the filing of a certificate of amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware, which we plan to do promptly after the Annual Meeting.

Once the Charter Amendment becomes effective, the intention of the Board is to revise the first sentence of Section 2.6 of the Bylaws to read in its entirety as follows:

“The holders of shares of stock having one-third of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation.”

Currently, the presence, in person or by proxy, of a majority of the issued and outstanding shares of Common Stock entitled to vote at the meeting of stockholders is necessary to establish a quorum for the transaction of business, pursuant to the first sentence of Section 2.6 of our current Bylaws. Because we have a large number of shares of Common Stock widely distributed among a large number of small stockholders at the moment, recently, we have experienced extreme difficulties reaching a quorum for our stockholder meetings, which have been postponed a number of times due to failure to meet a quorum. The amendment to the Bylaws would allow the Company to address the changes of stockholder base of the Company or otherwise to react timely under the circumstances in order to amend the quorum requirement. The amendment to the Bylaws does not allow a decrease of the quorum requirement below the minimum quorum requirement permitted by applicable law or Nasdaq rules.

Vote Required

Under Delaware law, the affirmative vote of a majority of the issued and outstanding shares of our capital stock entitled to vote on the Record Date is required. Accordingly, this action was approved by the affirmative vote through the Written Consent by the Majority Stockholders.

ACTION FOUR

APPROVAL OF THE ISSUANCE OF SHARES OF COMMON STOCK UPON CONSUMMATION OF THE CSI ACQUISITION

Summary

The Board and Majority Stockholders approved the full issuance of the Closing Stock Consideration issued to CSI pursuant to the Asset Purchase Agreement set forth in Appendix C. The offer and sale of the securities pursuant to the Asset Purchase Agreement will be made pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder.

Background

On December 19, 2024, the Company entered into the Asset Purchase Agreement with CSI, pursuant to which, among other things and subject to the terms and conditions contained therein, the Company has agreed to purchase, assume and accept from CSI all of the rights, title and interests in, to and under the assets and interests, including CSI’s customer contracts, trademarks, and other intellectual property.

Pursuant to the Asset Purchase Agreement, the Company has agreed to acquire the transferred assets for an aggregate purchase price consisting of (i) an exclusivity payment fee of $1,000,000, (ii) a breakup fee of $1,000,000, (iii) an amount in cash equal to $5,000,000, (iv) 10,600,000 validly issued, fully paid and nonassessable shares of restricted Common Stock, (v) $5,000,000 payable in the form of a convertible promissory note, convertible into 3,571,429 shares of Common Stock with a floor price of $1.40 per share, by the Company to CSI (the “First Convertible Note”), (vi) $5,000,000 payable in the form of a convertible promissory note, convertible into 3,571,429 shares of Common Stock with a floor price of $1.40 per share, by the Company to CSI (the “Second Convertible Note”), (vii) $5,000,000 payable in the form of a convertible promissory note, convertible into 4,385,965 shares of Common Stock with a floor price of $1.14 per share, by the Company to CSI (the “Third Convertible Note”, and together with the First Convertible Note and the Second Convertible Note, the “Notes”), (viii) $500,000 for the reimbursement of fees incurred by CSI due to the CSI Acquisition, and (ix) the assumption of the transferred liabilities, which clauses (i) through (viii) above, collectively, shall comprise the total consideration to be paid for the transferred assets. The Company will only assume the transferred liabilities, if any.

The Asset Purchase Agreement includes customary representations and warranties and various customary covenants and closing conditions under the circumstances that are subject to certain limitations, including, without limitation, certain third-party consents and agreements.

Convertible Notes

Pursuant to the Asset Purchase Agreement, in connection with the closing, the Company will issue the Notes in an aggregate principal amount of $15,000,000, each due on the second anniversary of the closing (the “Maturity Date”). The Company agreed to pay interest on the aggregate unconverted and then outstanding principal amount of the First Convertible Note and the Second Convertible Note at the rate of five percent (5%) per annum, the Third Convertible Note at the rate of ten percent (10%). The Company agreed to pay interest accruing from the six-month anniversary of the closing on the First Convertible Note, from the nine-month anniversary of the closing on the Second Convertible Note, and from the closing on the Third Convertible Note, on the unpaid balance of such principal amount no less frequently than quarterly per calendar quarter. The payment of the accrued interest shall occur on the last business day of each calendar quarter.

The First Convertible Note can be converted, partially or entirely, into shares of Common Stock, any time after the six-month anniversary of the closing until the First Convertible Note is fully paid off. The Second Convertible Note can be converted, partially or entirely, into shares of Common Stock, any time after the nine-month anniversary of the closing until the Second Convertible Note is fully paid off. Both, the First Convertible Note and 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.

If the Third 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 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 Third Convertible Note in full, without a penalty, within three (3) business days after the Company raises an additional amount of capital totaling at least $15,000,000, after the Company closed an initial offering or financings resulting in aggregate gross proceeds to the Company of at least $15,000,000, from one or more investors and/or financial institutions.

The Notes include customary event of default provisions. Upon the occurrence of an event of default, the Notes and all amounts due thereunder shall become immediately due and payable in cash without notice. Additionally, upon the occurrence of an event of default, CSI is entitled to increase the rate of interest on the aggregate outstanding principal balance and any other amounts then owing by Company to CSI to ten percent (10%) per annum.

Voting Agreement

The Company agreed to cause the Supporting Persons to execute a Voting Agreement by January 10, 2024, pursuant to which each Supporting Person has agreed, among other things, to vote its shares of Common Stock in favor of the CSI Acquisition at meetings of the Company’s shareholders convened to approve the Asset Purchase Agreement. The Voting Agreement will terminate upon the earliest to occur of (a) the date that the shareholder resolutions are approved, (b) the termination of the Asset Purchase Agreement in accordance with its terms, and (c) the termination of the Voting Agreement in accordance with its terms.

The offer and sale of the securities pursuant to the Asset Purchase Agreement were made pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder.

Effect of Issuance of Additional Securities

The issuance of the securities described in this Information Statement would result in the issuance of over 20% of the Company’s outstanding shares of Common Stock on a pre-transaction basis. As such, for so long as a holder of such securities beneficially owns a significant amount of shares of our Common Stock, such holder could significantly influence future Company decisions. Our stockholders will incur dilution of their percentage ownership upon the issuance of shares to CSI.

Nasdaq Marketplace Requirements and the Necessity of Stockholder Approval

The Common Stock is currently listed on the Nasdaq Capital Market and, as such, the Company is subject to the Nasdaq rules. Under Nasdaq Listing Rule 5635(a), a company listed on Nasdaq is required to obtain stockholder approval prior to the issuance of common stock, among other things, in connection with the acquisition of another company’s assets, if the number of shares of common stock to be issued is in excess of 20% of the number of shares of common stock then outstanding. Issuance of the Common Stock will result in the issuance of more than 20% of our issued and outstanding shares of Common Stock immediately prior to closing in connection with the CSI Acquisition. Under Nasdaq Listing Rule 5635(b), a listed company is required to obtain stockholder approval prior to the issuance of common stock that will result in a “change of control” of the company (which may be deemed to occur if, as a result of the issuance, an investor or affiliated investor group acquires, or has the right to acquire, at least 20% of the outstanding shares of common stock (or securities convertible into or exercisable for common stock) or voting power of an issuer and such ownership or voting power would be the largest ownership position of the issuer).

The issuance of the Closing Stock Consideration of the CSI Acquisition was therefore approved by the Board and Majority Stockholders pursuant to Nasdaq Rule 5635(a) and 5635(b).

Additional Information

This summary is intended to provide you with basic information concerning the Asset Purchase Agreement. The full text of the form of the Asset Purchase Agreement was filed as exhibit to our Current Report on Form 8-K filed with the SEC on December 26, 2024. The full text of the form of the amendment to the Asset Purchase Agreement was filed as exhibit to our Current Report on Form 8-K filed with the SEC on January 6, 2024.

Vote Required

The Company’s Bylaws provide that all matters (other than the election of directors and except to the extent otherwise required by applicable Delaware law) shall be determined by a majority of the issued and outstanding shares of our capital stock entitled to vote cast affirmatively or negatively. Accordingly, this action was approved by the affirmative vote through the Written Consent by the Majority Stockholders.

CSI ACQUISITION

Overview

On December 19, 2024, the Company entered into the Asset Purchase Agreement with CSI, pursuant to which, among other things and subject to the terms and conditions contained therein, the Company has agreed to purchase, assume and accept from CSI all of the rights, title and interests in, to and under the assets and interests, including CSI’s customer contracts, trademarks, and other intellectual property. In exchange, the Company has agreed to acquire the transferred assets for an aggregate purchase price consisting of (i) the exclusivity payment fee of $1,000,000, (ii) the breakup fee of $1,000,000, (iii) an amount in cash equal to $10,000,000, (iv) 10,600,000 validly issued, fully paid and nonassessable shares of restricted Common Stock, (v) $5,000,000 payable in the form of a convertible note by the Company to CSI, (vi) $5,000,000 payable in the form of a convertible note by the Company to CSI, (viii) $500,000 for the reimbursement of fees incurred by CSI due to the CSI Acquisition, and (ix) the assumption of the transferred liabilities, which clauses (i) through (ix) above, collectively, shall comprise the total consideration to be paid for the transferred assets. See below for more detailed discussion of the terms of the Asset Purchase Agreement.

Reasons for the CSI Acquisition

In evaluating the CSI Acquisition and the approval of the issuance the Closing Stock Consideration of the CSI Acquisition, the Board, in consultation with the Company’s senior management, outside legal counsel and financial advisors, considered numerous positive factors relating to the Asset Purchase Agreement, the CSI Acquisition and the other transactions contemplated thereby including the following material factors:

In the course of reaching the determinations and decisions and making the recommendation described above, the Board, in consultation with the Company’s senior management, outside legal counsel and financial advisors, considered the risks and potentially negative factors relating to the Asset Purchase Agreement, the CSI Acquisition and the other transactions contemplated thereby, including the following material factors:

The foregoing discussion of factors considered by the Board is not intended to be exhaustive but is a summary only of the material factors considered by the Board. In light of the variety of factors considered in connection with its evaluation of the CSI Acquisition, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations. Moreover, each member of the Board applied his or her own personal business judgment to the process and may have given different weight to different factors. The Board did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Board based its recommendation on the totality of the information presented.

Background of the CSI Acquisition

At the beginning of 2024, management recognized that with deteriorating capital markets, the Company’s ability to raise funds to continue its product development path had become and would continue to be increasingly difficult. To address these external market conditions, the Company’s management and Board commenced an assessment of our business, financial condition, results of operations and prospects. We began to identify opportunities to expand our business, and reviewed other opportunities including inorganic options. On March 7, 2024, management of the Company introduced Nathaniel Bradley and Bob Bubeck of EOS Technology Holdings Inc. (f/k/a Data Vault Holdings Inc.) (“DVH”). to Michael Fazio and Mark LoGiurato of CSI for the purpose of exploring a potential business partnership.

The following chronology summarizes key meetings and events that led to the signing of the Asset Purchase Agreement. This chronology does not purport to catalogue every conversation of, by, with or among members of the Board, the Company’s management, the Company’s financial advisors, legal advisors or other representatives or any other person.

On August 6, 2024, the Company’s management organized a breakfast meeting with Mr. Fazio to stimulate engagement between CSI and DVH. Mr. Fazio recognized synergies between the parties and wanted to pursue them even further.

On September 3, 2024, DVH started integrating its Adio software into CSI’s product for testing at a trade show, with positive technical feedback coming back on September 11, 2024. 

On September 15, 2024, Brett Bradley from DVH performed a demo of Adio for CSI at the AI event in New York city.

On September 19, 2024, Mr. Fazio emailed the Company indicating his interest to sell the CSI’s business to the Company.

On October 4, 2024, the Company’s management organized a tele-conference with Mr. Bradley, Mr. LoGiurato, and Mr. Fazio, to discuss potential transaction opportunities.

On October 6, 2024, the Company approached CSI’s management with a due diligence information request and an outline of questions to be able to build a business combination model.

On October 7, 2024, the Company organized a meeting in New York with CSI’s management to discuss CSI’s financial model and projections.

On October 14, 2024, the Company’s management and the Board exchanged several emails defining the Company’s shares outstanding and balance sheet, and acceptable terms for the Board. On October 14, 2024, the Company also received a proposal from CSI on terms for the CSI Acquisition.

On October 18, 2024, the Company received a formal Letter of Intent (the “LOI”) from CSI.

On October 26, 2024, the Company responded to CSI’s proposal with revised terms.

On October 31, 2024, Mr. LoGiurato provided a business update to the Company during a tele-conference.

On November 1, 2024, Sullivan & Worcester LLP, counsel to the Company (“Sullivan”) sent a revised draft of the LOI to CSI and Tomlinson & Shapiro, P.C., counsel to CSI (“TS”). The LOI was executed by the parties on November 4, 2024. Regular meetings by phone call and video conference took place during this period, some of which included the parties’ respective legal counsels.

On November 3, 2024, the Company’s management provided an update to the Board on the CSI Acquisition.

On November 22, 2024, Sullivan sent the initial draft Asset Purchase Agreement to TS. Between November 22, 2024 and December 19, 2024, Sullivan and TS exchanged drafts and negotiated the terms of the definitive transaction agreements, including the Asset Purchase Agreement. Regular meetings by phone call and video conference took place during this period, some of which included the parties’ respective legal counsel and financial advisors. The terms negotiated between the parties, among others, included the representations and warranties of both the Company and CSI to be contained in the Asset Purchase Agreement, including with respect to the financial statements to be delivered at the closing of the CSI Acquisition and intellectual property, the interim covenants to be contained in the Asset Purchase Agreement, including regarding the solicitation of alternative transactions.

On December 12, 2024, the Board approved the CSI Acquisition.

On December 19, 2024, the parties executed the Asset Purchase Agreement and the applicable ancillary documents, and on December 26, 2024, the Company issued a press release announcing the transaction. The Company’s, DVS’, and CSI’s managements co-hosted a special investor conference call on December 30, 2024.

On December 26, 2024, the parties agreed on CSI’s Chief Executive Officer’s stock inducement grant terms.

On December 30, 2024, the parties signed that certain amendment to the Asset Purchase Agreement to give the Company more time to collect signatures to the voting agreements.

On February 25, 2024, the parties signed that certain second amendment to the Asset Purchase Agreement to reduce cash required at closing to $5,000,000.

On March 6, 2024, the Company engaged Lake Street to issue a fairness opinion.

On March 31, 2024, the parties signed that certain third amendment to the Asset Purchase Agreement to align the closing date with the requirements in connection with the April Financing.

The parties have continued and expect to continue regular discussions and weekly calls regarding the timing to consummate the Business Combination and necessary preparation in connection therewith.

Closing and Effective Time of the CSI Acquisition

We are working to complete the Asset Purchase as quickly as possible, and we expect to complete the CSI Acquisition in May 2025. However, the Company cannot assure you when or if the CSI Acquisition will occur. The CSI Acquisition is subject to other conditions, and it is possible that factors outside the control of both the Company and CSI could result in the CSI Acquisition being completed at a later time, or not at all.

Dissenters’ and Appraisal Rights

The Company stockholders do not have dissenters’ or appraisal rights under the Delaware General Corporation Law (the “DGCL”) in connection with the CSI Acquisition and will not be afforded such rights.

Accounting Treatment

Both the Company and CSI prepare their financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company will account for the transaction as an asset purchase under the guidance provided in ASC 805-10-55-5 through ASC 805-10-55-9. The Company concluded that the consideration transferred under the Asset Purchase Agreement would be allocated primarily to a single group of similar identifiable assets comprised of the acquired assets. See “Audited Financial Information.”

Interests of the Company’s Directors and Officers in the CSI Acquisition

The beneficial ownership of the Company’s Common Stock is as set forth in the section titled “Security Ownership of Certain Beneficial Owners and Management.”

Regulatory Approvals Required for the CSI Acquisition

Under Nasdaq Listing Rule 5635(a), a company listed on Nasdaq is required to obtain stockholder approval prior to the issuance of common stock, among other things, in connection with the acquisition of another company’s assets, if the number of shares of common stock to be issued is in excess of 20% of the number of shares of common stock then outstanding. Issuance of the shares of Common Stock upon the consummation of the CSI Acquisition will result in the issuance of more than 20% of our issued and outstanding shares of Common Stock immediately prior to closing in connection with the CSI Acquisition.

Under Nasdaq Listing Rule 5635(b), a listed company is required to obtain stockholder approval prior to the issuance of common stock that will result in a “change of control” of the company (which may be deemed to occur if, as a result of the issuance, an investor or affiliated investor group acquires, or has the right to acquire, at least 20% of the outstanding shares of common stock (or securities convertible into or exercisable for common stock) or voting power of an issuer and such ownership or voting power would be the largest ownership position of the issuer). You should note that a “change of control” as described under Nasdaq Listing Rule 5635(b) applies only with respect to the application of such rule.

Accordingly, in order to ensure compliance with Nasdaq Listing Rule 5635(a) and Rule 5635(b), we have obtained the approval of our stockholders for the issuance of the shares of Common Stock in connection with the CSI Acquisition.

Except as set forth above, the CSI Acquisition and the transactions contemplated by the Asset Purchase Agreement are not subject to any additional federal or state regulatory requirement or approval, except for the Nasdaq’s approval of listing of the Closing Stock Consideration.

Asset Purchase Agreement

General

On December 19, 2024, we entered into the Asset Purchase Agreement with CSI, pursuant to which, among other things and subject to the terms and conditions contained therein, we will acquire the transferred assets in exchange for the purchase price, including the issuance of shares of Common Stock.

Representations and Warranties

The Asset Purchase Agreement contains customary representations and warranties made by the Company. Specifically, the representations and warranties of the Company in the Asset Purchase Agreement (many of which are qualified by concepts of knowledge, materiality and/or dollar thresholds and are further modified and limited by confidential disclosure schedules delivered by the Company, as may or may not be specifically indicated in the text of the Asset Purchase Agreement) relate to the following subject matters, among other things:

The Asset Purchase Agreement also contains customary representations and warranties made by CSI. Specifically, the representations and warranties of CSI in the Asset Purchase Agreement (many of which are qualified by concepts of knowledge, materiality and/or dollar thresholds and are further modified and limited by confidential disclosure schedules delivered by CSI, as may or may not be specifically indicated in the text of the Asset Purchase Agreement) relate to the following subject matters, among other things:

The representations and warranties contained in the Asset Purchase Agreement (as well as the covenants described herein and set forth in the Asset Purchase Agreement) were made solely for purposes of the Asset Purchase Agreement and solely for the benefit of the parties to the Asset Purchase Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by references to the Company’s filings with the SEC and confidential disclosures, made for the purposes of allocating contractual risk among the parties to the agreements instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to stockholders. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Asset Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. The Company will provide additional disclosure in its public reports to the extent that it is aware of the existence of any material facts that are required to be disclosed under federal securities laws that might otherwise contradict the terms and information contained in the Asset Purchase Agreement and will update such disclosures as required by federal securities laws.

Covenants and Agreements

CSI has agreed to carry on its business in the ordinary course and in substantially in the manner as currently conducted, and has further agreed to, among other things, use commercially reasonable efforts to:

CSI has further agreed to, among other things, without the prior written approval of the Company, not take any of the following actions with respect to the transferred assets:

The Company has agreed to, among other things, obtain the prior written consent of the requisite stockholders, and inform the stockholders of the Company of the receipt of such consent by preparing and filing with the SEC an information statement with respect thereto. Within 30 days after the closing, the Company has agreed to file a registration statement on Form S-3, providing for the resale by CSI of 50% of the Closing Stock Consideration, or shall include such 50% of Closing Stock Consideration in any other registration statement on Form S-3 or Form S-1 filed by the Company, and the Company will use its commercially reasonable efforts to cause such registration statement to become effective within 90 calendar days following the closing. The Company has also agreed to use commercially reasonable efforts to cause the majority of the stockholders of the Company to execute a voting agreement by January 10, 2024.

The parties to the Asset Purchase Agreement have also, among other things, agreed on the following covenants:

Post-Closing Covenants

The parties each agree that they will take any further action (including the execution and delivery of such further instruments and documents) as any other party reasonably may request in the event necessary to carry out the purposes of the Asset Purchase Agreement, including, within two business days after the closing, CSI agrees to file a Certificate of Amendment with the Secretary of State of the State of Illinois to change its company name.

Closing

The Asset Purchase Agreement requires the closing of the CSI Acquisition to take place on the second business day following the satisfaction or waiver by the party entitled to the benefit thereof of the conditions set forth in Article VII of the Asset Purchase Agreement (other than conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of such conditions).

Conditions to Closing of the CSI Acquisition

The obligations of the parties to complete the CSI Acquisition are subject to the fulfillment or written waiver of certain closing conditions, including without limitation:

Further, the obligations of CSI to close are subject to the satisfaction on or before the closing date of the following conditions:

Further, the obligations of the Company to close are subject to the satisfaction or waiver on or before the closing date of the following conditions:

Termination

The Asset Purchase Agreement may be terminated prior to the closing by:

Expenses

Except as otherwise expressly provided herein, whether or not the closing occurs, CSI and the Company shall each pay their respective expenses incurred in connection with the negotiation and execution of the Asset Purchase Agreement and the other transaction documents and the consummation of the transactions contemplated hereby and thereby.

Governing Law

All matters arising out of or relating to the Asset Purchase Agreement (including its interpretation, construction, performance and enforcement) shall be governed by and construed in accordance with the law of the State of Delaware without giving effect to any choice or conflict of law provision or rule that would cause the application of laws of any jurisdictions other than those of the State of Delaware.

Summary of Lake Street’s Financial Analysis

Pursuant to an engagement letter dated March 6, 2025, Datavault retained Lake Street Capital Markets, LLC (“Lake Street”) to, at Datavault’s request, render an opinion to Datavault as to the fairness, from a financial point of view, to Datavault of the Purchase Price (as defined below) to be paid by Datavault to CSI for the transferred assets. In selecting Lake Street, Datavault considered, among other things, Lake Street’s qualifications, expertise, reputation, and knowledge of Datavault’s and CSI’s businesses and the industry in which they operate.

The purchase price for the transferred assets consists of: (i) an exclusivity payment fee of $1,000,000, (ii) a breakup fee of $1,000,000, (iii) an amount in cash equal to $5,000,000, (iv) 10,600,000 validly issued, fully paid and nonassessable shares of restricted Common Stock, (v) $5,000,000 payable in the form of the First Convertible Note, (vi) $5,000,000 payable in the form of the Second Convertible Note, (vii) $5,000,000 payable in the form of the Third Convertible Note, (viii) $500,000 for the reimbursement of fees incurred by CSI due to the CSI Acquisition, and (ix) the assumption of transferred liabilities. The terms and conditions of the transactions set forth in the Asset Purchase Agreement (the “Transactions”) are more fully set forth in the Asset Purchase Agreement. Capitalized terms used herein have the respective meanings ascribed thereto in the Asset Purchase Agreement unless otherwise defined herein. At Datavault’s direction, Lake Street’s analysis did not include an evaluation of the transferred liabilities to be assumed by Datavault, and therefore Lake Street disclaimed any opinion with respect thereto. Accordingly, as used herein, the term “Purchase Price” refers only to the consideration specified in clauses (i) through (viii) of this paragraph.

On April 14, 2025, Lake Street rendered its oral opinion, subsequently confirmed in writing, to the Board that, as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations set forth in the opinion, the Purchase Price is fair, from a financial point of view, to Datavault.

The full text of Lake Street’s written opinion, dated April 14, 2025, is attached to this Information Statement as Appendix D and is incorporated by reference herein. Stockholders of Datavault are urged to read the entire opinion carefully and in its entirety to learn about the assumptions made, procedures followed, matters considered and limits on the scope of the review undertaken by Lake Street in rendering its opinion. The analysis performed by Lake Street should be viewed in its entirety; none of the methods of analysis should be viewed in isolation when reaching a conclusion on whether the consideration was fair. The opinion addresses only the fairness of the Purchase Price, from a financial point of view, to Datavault, as of the date of the opinion, and does not address Datavault’s underlying business decision to proceed with or effect the CSI Acquisition or the likelihood of consummation of the CSI Acquisition. Lake Street’s opinion was directed to the Board in connection with its consideration of the CSI Acquisition and was not intended to be, and does not constitute, a recommendation to any stockholder as to how such stockholder should vote with respect to the CSI Acquisition or any other matter.

In arriving at its opinion, Lake Street conducted such analyses, examinations, and inquiries and considered such other financial, economic and market criteria as it deemed necessary. Lake Street, among other things: 

In preparing Lake Street’s opinion, with Datavault’s consent, Lake Street assumed and relied, without independent verification, upon the accuracy and completeness of all information that was publicly available or was furnished, or otherwise made available, to them or discussed with or reviewed by or for them by Datavault and/or CSI. Lake Street further assumed that management of neither Datavault nor CSI was aware of any information or facts that would make any information provided to Lake Street incomplete or misleading. Without limiting the generality of the foregoing, for the purpose of Lake Street’s opinion, Lake Street assumed that with respect to financial forecasts, estimates and other forward-looking information discussed with and reviewed by Lake Street, that such information was reasonably prepared based on assumptions reflecting the best currently available estimates and judgments of the management of Datavault and CSO as to the expected future results of operations and financial condition of the Acquired Business and did not evaluate or otherwise test such financial forecasts, estimates and other forward-looking information or the underlying assumptions. Lake Street expressed no opinion as to any such financial forecasts, estimates or forward-looking information or the assumptions on which they were based. Lake Street also express no opinion as to whether the Transferred Assets and Transferred Liabilities were sufficient to conduct the Acquired Business.

In connection with Lake Street’s opinion, Lake Street assumed and relied upon, without independent verification, the accuracy and completeness of all the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by Lake Street. Lake Street’s opinion did not address any legal, regulatory, tax or accounting issues.

In arriving at its opinion, Lake Street assumed that the Asset Purhcase Agreement would be in all material respects identical to the last draft of each such Asset Purchase Agreement reviewed by them. Lake Street relied upon and assumed, without independent verification, that (i) the representations and warranties of all parties set forth in the Asset Purchase Agreement and all related documents and instruments that are referred to therein were true and correct, (ii) each party to the Asset Purchase Agreement would fully and timely perform all of the covenants and agreements required to be performed by such party thereunder, (iii) the CSI Acquisition would be consummated pursuant to the terms of the Asset Purchase Agreement without amendment of any term or condition thereof the effect of which would be in any way meaningful to Lake Street’s analysis, and (iv) all conditions to the consummation of the CSI Acquisition would be satisfied without waiver by any party of any conditions or obligations thereunder the effect of which would be in any way meaningful to Lake Street’s analysis. Additionally, Lake Street assumed that all the necessary regulatory approvals and third-party consents required for the CSI Acquisition would be obtained in a manner that would not adversely affect Datavault or the contemplated benefits of the CSI Acquisition to Datavault.

In arriving at its opinion, Lake Street did not perform any appraisals or valuations of the Transferred Assets or Transferred Liabilities (fixed, contingent, or other) of Datavault or CSI, and was not furnished or provided with any such appraisals or valuations, nor did Lake Street evaluate the solvency of Datavault or CSI under any state or federal law relating to bankruptcy, insolvency, or similar matters. The analyses performed by Lake Street in connection with its opinion was a going concern analysis. Lake Street was not requested to opine, and no opinion was rendered, as to whether any analyses of Datavault or CSI, other than as a going concern, was appropriate in the circumstances and, accordingly, Lake Street performed no such analysis. Without limiting the generality of the foregoing, Lake Street did not undertake any independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which Datavault, CSI, or any of their respective affiliates is a party or may be subject, and at the direction of Datavault and with its consent, Lake Street’s opinion made no assumption concerning, and therefore did not consider, the possible assertion of claims, outcomes or damages arising out of any such matters.

Lake Street’s opinion was necessarily based upon the information available to them and facts and circumstances as they existed and were subject to evaluation on the date of the opinion; events occurring after the date of the opinion could materially affect the assumptions used in preparing Lake Street’s opinion. Lake Street did not express any opinion as to any change in the price at which shares of Common Stock may trade following announcement of the CSI Acquisition or at any future time after the date of the opinion. Lake Street did not undertake to reaffirm or revise its opinion or otherwise comment upon any events occurring after the date of the opinion and did not have any obligation to update, revise or reaffirm its opinion.

Consistent with applicable legal and regulatory requirements, Lake Street has adopted policies and procedures to establish and maintain the independence of its research departments and personnel. As a result, Lake Street’s research analysts may hold views, make statements or investment recommendations and/or publish research reports with respect to Datavault and the CSI Acquisition that differ from the views of its investment banking personnel.

Lake Street, as a customary part of its investment banking business, engages in the valuation of businesses and their securities in connection with mergers and acquisitions, underwriting and secondary distributions of securities, private placements and other valuations for estate, corporate, and other purposes. Lake Street will receive a fee from Datavault for providing its opinion which is not contingent upon the consummation of the Transactions. Further, Datavault has agreed to reimburse Lake Street’s expenses and indemnify them against certain liabilities that may arise in relation to its engagement. In the ordinary course of Lake Street’s business, they and their affiliates may actively trade securities of Datavault for their own account or the account of their customers and, accordingly, Lake Street and its affiliates may at any time hold a long or short position in such securities. Lake Street was engaged by Datavault in 2024 to provide a fairness opinion with respect to Datavault’s acquisition of certain assets and liabilities of Data Vault Holdings Inc. for which Lake Street received a cash fee of $250,000 and $20,000 in expense reimbursement. Except as described above, Lake Street did not have a material relationship or receive any payments from Datavault, CSI or their respective affiliates during the past two years. In the future, Lake Street may seek to provide financial advisory and other investment banking services to Datavault for which Lake Street would expect to receive compensation.

Lake Street’s opinion was furnished pursuant to an engagement letter dated March 6, 2025. Lake Street’s opinion was directed to the Board for its use in connection with its consideration of the CSI Acquisition and was not intended to be and did not constitute a recommendation to the stockholders of Datavault. Lake Street’s opinion was approved for issuance by the Lake Street’s Fairness Opinion Committee.

Lake Street’s opinion addressed only the fairness, from a financial point of view, to Datavault of the Purchase Price and Lake Street expressed no opinion as to the fairness of any consideration paid in connection with the CSI Acquisition to the holders of any class of securities, creditors or other constituencies of Datavault. Furthermore, Lake Street expressed no opinion as to any other aspect or implication (financial or otherwise) of the CSI Acquisition, or any other agreement, arrangement or understanding entered into in connection with the CSI Acquisition or otherwise, including, without limitation, the fairness of the amount or nature of, or any other aspect relating to, any compensation or consideration to be received by or otherwise payable to any officers, directors or employees of any party to the Transaction, or class of such persons, relative to the Purchase Price or otherwise. Lake Street’s opinion did not constitute a recommendation that Datavault should complete the CSI Acquisition. Lake Street was not requested to opine as to, and its opinion did not in any manner address the relative merits of the CSI Acquisition in comparison to any alternatives to the CSI Acquisition, Datavault’s underlying decision to proceed with the CSI Acquisition, or any other aspect of the CSI Acquisition, or alternatives to the CSI Acquisition available to Datavault.

Summary of Material Financial Analysis

The following is a summary of the material financial analyses performed by Lake Street and reviewed by the Board in connection with Lake Street’s opinion relating to the CSI Acquisition and does not purport to be a complete description of the financial analyses performed by Lake Street. The rendering of an opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, this summary does not purport to be a complete description of the analyses performed by Lake Street or of its presentation to the Board on April 14, 2025. The order of analyses described below does not represent the relative importance or weight given to those analyses by Lake Street. Some of the summaries of the financial analyses include information presented in tabular format. In order to fully understand Lake Street’s financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Lake Street’s financial analyses.

In performing its analyses, Lake Street made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Datavault or any other parties to the Asset Purchase Agreement. Lake Street does not assume any responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below.

Selected Publicly Traded Comparable Companies

To assess how the public market values shares of publicly traded companies similar to CSI, Lake Street reviewed and selected comparable companies that, in the exercise of its professional judgment, were deemed to be relevant to its analysis after meeting the following criteria: (i) the company operates in the Event Technology, Digital Engagement, and Customer Experience Software industries, and (ii) the market capitalization of the company was under $1.5 million as of April 14, 2025. Although none of the selected companies is identical to CSI, Lake Street selected these companies because they had publicly traded equity securities and were deemed to be similar to CSI in one or more respects, including the nature of their business, size, and financial performance. The selected comparable companies were:

Lake Street obtained financial metrics and projections for the selected companies from SEC EDGAR and S&P Capital IQ (“Capital IQ”). In its analysis, Lake Street derived and compared multiples for CSI and the selected companies, calculated as follows:

● Enterprise value (“EV”) as a multiple of estimated revenue for calendar year 2025 (“CY 2025E”)

● EV as a multiple of estimated revenue for calendar year 2026 (“CY 2026E”)

● EV as a multiple of estimated revenue for calendar year 2027 (“CY 2027E”)

● EV as a multiple of estimated EBITDA for CY 2025E

● EV as a multiple of estimated EBITDA for CY 2026E

● EV as a multiple of estimated EBITDA for CY 2027E

This analysis indicated the following:

No company used in the comparable company analysis is identical to CSI. In reviewing this analysis, Lake Street also considered, among other things, the relative comparability of the selected companies to CSI. Based upon the foregoing and applying its professional judgment, Lake Street selected the representative ranges of the 25th to 75th percentile for each metric. Lake Street then applied the respective representative ranges to CY 2025E revenue and EBITDA, CY 2026E revenue and EBITDA and CY 2027E revenue and EBITDA for CSI resulting in ranges of implied total enterprise values. A summary of these enterprise value ranges is shown in the table below:

* Dollars in millions

Lake Street noted that the median value of the median implied enterprise values for the valuations above equaled $44 million (the “Comparable Companies Median Implied EV”). In evaluating the financial multiples for the selected companies, Lake Street made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters. Accordingly, Lake Street’s comparison of selected companies to CSI and analysis of the results of such comparisons was not purely quantitative, but instead necessarily involved qualitative considerations and professional judgments concerning differences in financial and operating characteristics and other factors that could affect the relative value of CSI.

Selected Precedent Transaction Analysis

Lake Street performed a selected precedent transactions analysis, which is designed to imply a value for a company based on publicly available financial terms of the selected transactions that share some characteristics with the CSI Acquisition. Lake Street reviewed and selected precedent transactions that, in the exercise of its professional judgment, were deemed to be relevant to its analysis after meeting the following criteria: (i) the target company operated in the Event Technology, Digital Engagement, and Customer Experience Software industries, (ii) transactions that closed since April 14, 2021 with publicly available financial terms (iii) the total implied enterprise value of the transaction was under $5 billion, and (iv) the acquisition was not of a minority interest. In its analysis, Lake Street reviewed the following precedent transactions:

For each precedent transaction listed above, using publicly available company filings, Capital IQ, and press releases, Lake Street calculated EV multiples based on the target company’s LTM revenue as of the closing date. From this analysis, Lake Street derived the 25th and 75th percentile multiple range for the selected precedent transactions. These multiples were then applied to CSI’s estimated revenue for CY 2025E, CY 2026E and CY 2027E. The resulting precedent transaction enterprise value ranges were then discounted to present value using an estimate of CSI’s weighted average cost of capital as the discount rate. This discount rate was determined by considering market-based and company-specific risks, relying on Lake Street’s professional judgment and experience. The resulting multiple range and respective implied enterprise value range is set forth in the following table:

* Dollars in millions

Lake Street noted that the median value of the median implied enterprise values for the valuations above equaled $129 million (the “Precedent Transactions Median Implied EV”). Lake Street also noted that, although the selected transactions were used for comparison purposes, no business of any selected company was either identical or directly comparable to CSI’s business. Accordingly, Lake Street’s comparison of selected companies to CSI and analyses of the results of such comparisons was not purely mathematical, but instead necessarily involved complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the relative values of the selected companies and CSI.

Discounted Cash Flow Analysis

Lake Street conducted a discounted cash flow analysis for CSI on a stand-alone basis, which is designed to estimate the implied value of a company by calculating the present value of the estimated future unlevered free cash flows and terminal value of the company. Lake Street calculated a range of implied enterprise values of CSI based on forecasts of future unlevered free cash flows for the remainder of calendar year 2025 as of April 14, 2025, through calendar year 2027 provided by the management of CSI. Lake Street first calculated unlevered free cash flows (calculated as earnings before interest and taxes, less taxes, plus depreciation and amortization, less the amount of any increase or plus the amount of any decrease in net working capital, less capital expenditures and less any acquisition costs) of CSI for calendar years 2025 to 2027.

Lake Street then calculated terminal values for CSI using the terminal value method based on exit Revenue and EBITDA multiples as well as perpetual growth. The terminal value based on Revenue multiples was calculated by applying terminal LTM Revenue multiples of 1.3x to 2.5x (selected based on Lake Street’s professional judgement after consideration of the public comparable companies 2027E EV / Revenue Multiples), and the terminal value based on EBITDA multiples was calculated by applying terminal LTM EBITDA multiples of 4.5x to 9.9x (selected based on Lake Street’s professional judgment after consideration of the public comparable companies 2027E EV / EBITDA Multiples) to Company management’s Revenue and EBITDA forecast for calendar year 2027. Lake Street also calculated a terminal value for CSI using the perpetual growth rate method. The terminal value based on the perpetual growth rates was calculated by applying perpetual growth rates of 1.0% to 2.0% to the 2027 free cash flow.

These unlevered free cash flows and terminal values were then discounted to their respective present values as of April 14, 2025, using a range of discount rates of 13.7% to 19.7% (selected based on Lake Street’s professional judgment and derived from an analysis of the estimated weighted average cost of capital using CSI’s comparable company data) to calculate a range of implied total enterprise values for CSI. From this analysis, Lake Street derived the values produced from the discounted cash flow analysis set forth in the following table:

* Dollars in millions

Lake Street noted that the median value of the median implied enterprise values for each of the discounted cash flow methods above equaled $61 million (the “Discounted Cash Flow Implied EV”). Lake Street also noted that the median value of all the valuation methods above equaled $77 million (the “Median Implied EV”).

Summary. 

Lake Street noted that the $29.5 million Purchase Price was less than the Comparable Companies Median Implied EV of $44 million, the Precedent Transactions Median Implied EV of $129 million, the Discounted Cash Flow Implied EV of $61 million, and the Median Implied EV of $77 million.

General. 

The summary set forth above does not contain a complete description of the analyses performed by Lake Street, but does summarize the material analyses performed by Lake Street in rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Lake Street believes that its analyses and the summary set forth above must be considered as a whole and that selecting portions of its analyses or of the summary, without considering the analyses as a whole or all of the factors included in its analyses, would create an incomplete view of the processes underlying the analyses set forth in the Lake Street opinion. In arriving at its opinion, Lake Street considered the results of all its analyses and did not attribute any particular weight to any factor or analysis. Instead, Lake Street made its determination as to fairness on the basis of its experience and financial judgment after considering the results of all of its analyses. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that this analysis was given greater weight than any other analysis. In addition, the ranges of valuations resulting from any particular analysis described above should not be taken to be Lake Street’s view of the actual value of Datavault or CSI.

As described above, Lake Street’s opinion was only one of many factors considered by the Board in making its determination to approve the CSI Acquisition. Lake Street was not requested to and did not solicit any expressions of interest from any other parties with respect to any business combination with Datavault.

Lake Street is a full-service securities firm engaged in securities trading and brokerage activities, as well as providing investment banking and other financial services. In the ordinary course of business, Lake Street and its affiliates may acquire, hold or sell, for it and its affiliates’ own accounts and for the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of Datavault and the other parties to the CSI Acquisition, and, accordingly, may at any time hold a long or a short position in such securities. Lake Street and its affiliates may in the future provide investment banking and other financial services to the parties of the CSI Acquisition for which Lake Street would expect to receive compensation.

Lake Street is acting as financial advisor to the Board in connection with the CSI Acquisition. Pursuant to its engagement letter with Lake Street, Datavault has agreed to pay Lake Street a fixed fee upon the delivery of its fairness opinion to the Board. The fairness opinion fee is not contingent upon the CSI Acquisition closing. These fees were determined by Lake Street and proposed to Datavault. In addition, Datavault has agreed to indemnify Lake Street for certain liabilities that may arise out of its engagement and the rendering of Lake Street’s opinion.

ACTION FIVE

APPROVAL OF THE ISSUANCE OF SHARES OF COMOMN STOCK UPON CONVERSION OF THE APRIL NOTES AND EXERCISE OF THE APRIL WARRANTS

Summary

The Board and Majority Stockholders approved the issuance of shares of Common Stock upon the conversion of the April Notes (as defined below) and upon exercise of the April Warrants (as defined below) both of which were issued to the investors (“April Investors”) who entered into the securities purchase agreement with the Company on March 31, 2025.

Background

On March 31, 2025, the Company, entered into a securities purchase agreement (the “Securities Purchase Agreement”) with the April Investors, pursuant to which the April Investors agreed to purchase from the Company (a) in a registered direct offering, senior secured convertible notes having an aggregate principal amount of $5,555,555 (the “Initial April Notes”) for an aggregate purchase price of $5,000,000 and senior secured convertible notes having an aggregate principal amount of $11,111,111 (the “Additional April Notes”, and together with the Initial April Notes, the “April Notes”) for an aggregate purchase price of $10,000,000 upon satisfaction of certain closing conditions applicable to the Initial April Notes and Additional April Notes, respectively and (b) in a concurrent private placement, common stock purchase warrants (“April Warrants”) to purchase up to 19,346,101 shares of Common Stock (the “April Warrant Shares”), of which April Warrants to purchase up to 6,448,700 shares of Common Stock will be issued in connection with the issuance of the Initial April Notes (the “Initial April Warrants”) and April 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 April Warrants”).

The closing of Initial April Notes and Initial April Warrants (the “Initial April Closing”) took place on April 3, 2025. The closing of the Additional April Notes and Additional April Warrants (the “Additional April Closing,” and together with the Initial April Closing, the “April Closings”) will take place on or after the date that is 20 days after the mailing by the Company of a definitive information statement on Schedule 14(c) with respect to the approval, by written consent of the Company’s stockholders, of the issuance of the shares of Common Stock issuable upon conversion of the April Notes and exercise of the April Warrants and a one-time reset, at the Company’s option, of the exercise price of outstanding common stock purchase warrants held by the Purchasers that do not contain “alternative cashless exercise” features (the “Stockholder Approval”).

The April Notes carry a 10% original issue discount, and mature 18 months from the date of issuance. No interest accrues during the term of the April Notes, unless an event of default occurs, in which case interest will accrue at a rate of 12% per annum. The obligations under these April Notes rank senior to all other existing indebtedness and equity of the Company. The April Notes are convertible into shares of the Company’s common stock at any time beginning on the date of Stockholder Approval at the option of the holders thereof, in whole or in part, into such number of shares of Common Stock (the “Conversion Shares”) at an initial conversion price equal to $1.00 per share (the “Conversion Price”). Alternatively, the April 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 April 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. The April Notes contain 4.99/9.99% beneficial ownership limitations and customary provisions regarding events of defaults and negative covenants.

The Warrants have an initial exercise price of $0.8615 per share. The Initial April Warrants will be exercisable upon effectiveness of Stockholder Approval and expire five (5) years from the date of such effectiveness. The Additional April Warrants will be issued in the Additional April Closing, exercisable immediately upon issuance and expire five (5) years from the date of issuance. The exercise price of the April 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 April 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 April Warrants contain 4.99/9.99% beneficial ownership limitations.

Effect of Issuance of Additional Securities

The issuance of the securities described above would result in the issuance of over 20% of the Company’s outstanding shares of Common Stock on a pre-transaction basis. As such, for so long as holders of the April Notes and April Warrants beneficially own a significant amount of shares of our Common Stock, it could significantly influence future Company decisions. Our stockholders will incur dilution of their percentage ownership to the extent that the April Investors exercise the April Warrants or convert the April Notes.

Nasdaq Marketplace Requirements and the Necessity of Stockholder Approval

The Common Stock is currently listed on the Nasdaq Capital Market and, as such, the Company is subject to the Nasdaq rules. Nasdaq Rule 5635(d) requires the Company to obtain stockholder approval prior to the issuance of shares of Common Stock in connection with certain non-public offerings involving the sale, issuance or potential issuance by the Company of shares of Common Stock (and/or securities convertible into or exercisable for shares of Common Stock) equal to 20% or more of the shares of Common Stock outstanding prior to such issuance where the price of the Common Stock to be issued is below the “Minimum Price.” “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement. Shares of common stock issuable upon the exercise or conversion of warrants, options, debt instruments, preferred stock or other equity securities issued or granted in such non-public offerings will be considered shares issued in such a transaction in determining whether the 20% limit has been reached, except in certain circumstances such as issuing warrants that are not exercisable for a minimum of six months and have an exercise price that exceeds market value.

The issuance of the April Warrant Shares and Common Stock issuable upon conversion of the April Notes was therefore approved by the Board and Majority Stockholders pursuant to Nasdaq Rule 5635(d).

Additional Information

This summary is intended to provide you with basic information concerning the Securities Purchase Agreement, the April Warrants, and the April Notes. The full text of each of the form of the Securities Purchase Agreement, the April Warrants, and the April Notes were filed as exhibits to our Current Report on Form 8-K filed with the SEC on April 4, 2025.

Vote Required

The Company’s Bylaws provide that all matters (other than the election of directors and except to the extent otherwise required by applicable Delaware law) shall be determined by a majority of the issued and outstanding shares of our capital stock entitled to vote cast affirmatively or negatively. Accordingly, this action was approved by the affirmative vote through the Written Consent by the Majority Stockholders.

ADDITIONAL INFORMATION

Please read all sections of this Information Statement carefully. The Company is subject to the informational requirements of the Exchange Act, and in accordance therewith files reports, proxy statements and other information including annual and quarterly reports on Form 10-K and 10-Q with the SEC. You are encouraged to review our Annual Report on Form 10-K, together with any subsequent information we filed or will file with the SEC and other publicly available information. A copy of any public filing is also available, at no charge, by contacting our legal counsel, Sullivan & Worcester LLP, Attn: David E. Danovitch, Esq. at (212) 660-3060.

Costs of the Information Statement

The Company is mailing this Information Statement and will bear the costs associated therewith. The Company is not making any solicitations. The Company will request brokerage houses, nominees, custodians, fiduciaries, and other like parties to forward this Information Statement to the beneficial owners of our Common Stock held of record by them and will reimburse such persons for their reasonable charges and expenses in connection therewith.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. THE ATTACHED MATERIAL IS FOR INFORMATIONAL PURPOSES ONLY.

CSI INDEX TO FINANCIAL STATEMENTS

INDEPENDENT AUDITOR'S REPORT

To the Stockholders 

CompuSystems, Inc. 

Lisle, Illinois

Opinion

We have audited the accompanying financial statements of CompuSystems, Inc. (CSI), which comprise the balance sheets as of December 31, 2024 and 2023, and the related statements of operations, changes in stockholders' equity and cash flows for the years then ended, and the related notes to the financial statements.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CompuSystems, Inc. as of December 31, 2024 and 2023, and the results of operations and its cash flows for the years then ended in accordance with the accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of CompuSystems, Inc. and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Recurring Operating Losses and Capital Deficiency

CompuSystems, Inc. has suffered recurring losses from operations and has a net capital deficiency. As discussed in Note 8 to the financial statements, on December 19, 2024, CSI entered into an asset purchase agreement whereby substantially all of CSI's assets will be sold to another party with a closing date no later than March 31, 2025. The financial statements do not include any adjustments that might result from this pending sale. Our opinion is not modifed with respect to this matter.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about CompuSystems, Inc.'s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards, we:

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CompuSystems, Inc. as of December 31, 2024 and 2023, and the changes in its net assets and cash flows for the years then ended in accordance with the accounting principles generally accepted in the United States of America.

Naperville, Illinois 

March 19, 2025

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2024, AND 2023

See accompanying notes to financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2024, AND 2023 

See accompanying notes to financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2024, AND 2023

See accompanying notes to financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2024, AND 2023

See accompanying notes to financial statements.

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CompuSystems, Inc. (CSI), incorporated on July 20, 1976 under the Illinois business corporation act of 1933, provides registration, lead collection, and ancillary data processing services to the meeting, convention and tradeshow industry. CSI conducts business throughout the United States, and in Europe and Asia.

Basis of Accounting and Presentation

The financial statements are prepared on the accrual basis of accounting whereby revenues and assets are recognized when earned, and expenses and liabilities are recognized when incurred.

Cash

Cash consists of demand deposits in financial institutions that include balances the exceed federally insured limits. CSI has not experienced any losses on such accounts and its managment does not believe it is exposed to significant risk.

Allowance for Credit Losses

CSI grants trade credit to its customers located within and outside of the United States of America. The allowance for credit losses is an estimate based on CSI's historical collection experience. Such allowances were $108,568 and $128,568 as of December 31, 2024 and 2023, respectively.

Unbilled Receivables

Unbilled receivables consist of costs incurred for future shows in excess of billing realized.

Materials Inventory

Materials inventory is stated at the lower of cost (determined under the first-in, first-out method) or market.

Property and Equipment

Property and equipment is recorded at cost. Depreciation is provided using straight-line and accelerated methods over the estimated useful lives of assets ranging from from 3 to 15 years.

CSI capitalizes in-house and contracted costs related to the design, development, and implementation of computer software marketed to clients and to exhibitors and registrants attending client events. Such capitalized costs are amortized over a three-year term.

Customer Deposits and Allowances

Customer deposits and allowances consists of remittances for future shows. Such deposits are applied to revenue in the period in which the show occurs, or refunded.

Revenue Recognition

Revenue is primarily from the sale of products, services, and digital assets, including software, applications, technology solutions, lead generation, customer support, and event-related activities. Revenue is recognized once service or product is invoiced and delivered, all typically within one year. Additional revenue is derived from rental income, physical goods sales, and other sources.

Leases

Effective January 1, 2022, CSI implemented Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No 2016-02, Leases (Topic 842), which requires the recognition of right-of-use assets and lease liabilities based on the present value of the remaining lease payments. A risk-free rate of return of 3.39% was used as the discount rate in order to determine present value.

Income Taxes

CSI has elected to be taxed as an S corporation under the provisions of the Internal Revenue Code. Under these provisions, the company does not pay federal corporate income taxes on its taxable income. Instead, the stockholders are liable for individual federal income tax on their respective share of the CSI's taxable income. CSI is subject to other various state and franchise taxes in states in which operations are conducted.

CSI evaluates all significant tax positions for federal and state income tax purposes. As of December 31, 2024 and 2023, CSI does not believe it has taken any positions that would require the recording of any additional tax liability.

CSI is subject to routine audits by taxing jurisdictions. Tax years that remain open for examination generally include the current and threee preceding years, however, there are currently no audits for any tax periods in progress. CSI's policy is to classify income tax related interest and penalities in interest expense and other expenses.

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Property and equipment as of December 31 consists of:

Depreciation and amortization expense for the years ended December 31, 2024 and 2023 was $1,007,637 and $2,180,630, respectively.

CSI maintains a $2,000,000 revolving line of credit (LOC) that originated in March 1, 2021, has a one-year term, is secured by a Blanket UCC Lien on all business assets, and has an interest rate equal to the prime rate as published in the Wall Street Journal plus one percent (which was 8.50% as of December 31, 2023) and has been periodically renewed. Effective October 31, 2024, the LOC has been renewed through February 28, 2025 with interest at the prime rate plus 4.00%. Interest on the revolving line of credit is computed daily and is payable on a monthly basis.

CSI also has a term loan that originated in August 2016 in the amount of $4,912,117. This loan bears a variable interest rate equal to the lender's prime rate plus one percent (which was 8.5% as of January 31, 2023), and is collateralized by all business assets. The loan, as amended in March 2021, was due April 1, 2023 and has been periodically renewed. Effective October 31, 2024, the term loan was renewed through through February 28, 2025.

The revolving line of credit and bank loan agreements are subject to meet certain loan covenants pertaining to debt service liquidity. As of December 31, 2024, CSI was in compliance with these covenants or they were waived. Management is in process of obtaining a six month extension on these agreements.

Effective April 19, 2024, CSI entered into a loan and security agreement with a related party which provides for loans up to $1,500,000 with interest payable at 15% and a maturity date of October 31, 2025.

CSI is party to separate lease agreements for its primary office space and warehouse facilities. The lease agreement for CSI’s primary office space located at 2601 Navistar Drive, Lisle, Illinois commenced in July 2020 and continued through June 2023. During July 2022, the agreement was renewed through June 2027 at an initial annual base rent of $178,882, scheduled to increase by $0.50 per rentable square foot annually through the end of the lease term. Rent expense under this agreement for the years ended December 31, 2024 and 2023 was $182,948 and $197,639, respectively.

The lease agreement for CSI’s warehouse facilities located at 4995 Varsity Drive, Lisle, Illinois commenced in October 2014 and continues through December 2025. Initial monthly rent under this agreement was $6,184 and is scheduled for 3% annual increases. Rent expense under this agreement for the years ended December 31, 2024 and 2023 was $97,550 and $94,709, respectively.

During June 2024, CSI entered into an equipment finance agreement requiring 60 monthly payments of $3,745 through June 2029 with a discount rate of 8.5%. The agreement is collateralized by the underlying equipment acquired.

In accordance with generally accepted accounting principles in the United States of America, CSI has recognized right-of-use assets and corresponding lease liabilities as follows:

The Company maintains a 401(k) plan that covers substantially all of its employees. Under the 401(k) plan, the Company can voluntarily match 35% of employee contributions up to 3% of each participating employee's gross compensation. The Company did not make voluntary matching contributions to the plan for the years ended December 31, 2024 or 2023.

Pursuant to an amended complaint filed on September 23, 2024, a vendor of CSI is seeking to collect from CSI approximately $929,000 in unpaid invoices. CSI has submitted its response on October 17, 2024 disputing this claim and has filed a counterclaim alleging deficiencies in services rendered, seeking damages of approximately $6 million for amounts previously paid. Due to the deficiencies in services, CSI has written off related amounts previously capitalized and recorded an impairment loss for the remaining unamortized amount of $1,614,487 as of December 31, 2023. Management plans to vigorously defend this action and does not anticipate any further losses.

For the years ended December 31, 2024 and 2023, CSI incurred net losses of $157,468 and $4,162,131 and has stockholders deficits of $3,207,011 as of $3,049,543, respectively. As further discussed in Note 8, CSI entered into an asset purchase agreeement with another party to sell substantially all of CSI's assets. Should this agreement be terminated for any reason, the shareholders are committed to providing the necessary financing to sustain operations for a period of at least one year after the balance sheet date.

On December 19, 2024, CSI entered into an asset purchase agreeement with another party to sell substantially all of CSI's asset which is scheduled to close no later than May 15, 2025. In connection with this sale, certain liabilities will be transferred to the purchaser pursuant to terms of the asset purchase agreement. Proceeds from the sale will be used to satisfy remaining liablities retained by CSI. Subsequent to the sale, management plans to wind down operations of CSI which will ultimately be dissolved.

In connection with the asset purchase agreement, CSI received a $1,000,000 exclusivity fee which is included in other income.

Subsequent events have been evaluated through March 19, 2025, which was the date that these financial statements were available for issuance

As further discussed in Note 4, effective October 31, 2024, the revolving line of credit and term loan were renewed through February 28, 2025. Management is in process of obtaining a six month extension.

Other than the matter described above, management is not aware of any additional subsequent events that would require recognition or disclosure in the financial statements.

APPENDIX A