DEF 14C: Datavault AI Secures $12M, Approves Major Share Issuances

Datavault AI Inc. announced stockholder approval for the issuance of up to 130.8 million shares for $12 million in convertible notes and 31 million shares for warrant exchanges, leading to significant dilution.

Summary

• Majority stockholders approved the issuance of shares of Common Stock for senior secured convertible notes with an aggregate principal amount of $13,333,332 (Initial Notes and Additional Notes) for an aggregate purchase price of $12,000,000.
• The maximum amount of shares issuable under these notes is 130,847,236, assuming a Floor Price of $0.1019 per share.
• Majority stockholders also approved the issuance of approximately 31 million shares of Common Stock in exchange for existing common stock purchase warrants.
• These actions were approved by written consent of the Majority Stockholders on August 4, 2025, and are not subject to a general stockholder vote.
• The issuances are required to comply with Nasdaq Listing Rule 5635(d) because they represent over 20% of the company's outstanding shares on a pre-transaction basis and the issuance price is below the Minimum Price.
• The actions will not be implemented until at least 20 days after the Information Statement was first mailed to stockholders on or about September 9, 2025.
• As of August 4, 2025, the company had 97,692,374 shares of Common Stock outstanding; as of September 9, 2025, 116,701,378 shares were outstanding.

Sentiment

Score: 3

Explanation: While the company secured capital, the extremely high level of dilution from both the convertible notes and warrant exchanges, coupled with a very low floor price for conversion, indicates a distressed capital raise that significantly erodes existing shareholder value.

Positives

• The company secured $12,000,000 in capital through the issuance of senior secured convertible notes, providing funding for operations or strategic initiatives.

Negatives

• The issuance of up to 130,847,236 shares for the convertible notes and approximately 31 million shares for warrant exchanges will result in substantial dilution for existing stockholders.
• The initial conversion price for the notes is $1.00 per share, with an alternate conversion price potentially as low as the Floor Price of $0.1019, indicating a low valuation for the capital raise.
• New investors (Purchasers and Holders) will gain significant beneficial ownership, potentially influencing future company decisions.

Risks

• Significant dilution of existing stockholders' percentage ownership due to the issuance of over 160 million new shares.
• Potential for further downward pressure on the stock price if the Alternate Conversion Price is frequently utilized, especially if the stock trades near the $0.1019 Floor Price.
• Increased influence of new large shareholders (Purchasers and Holders) on company decisions due to their substantial beneficial ownership.

Future Outlook

The Additional Closing of the senior secured convertible notes is subject to certain conditions and will occur on or after 20 calendar days following the mailing of this Information Statement. The approved share issuances for both the notes and warrant exchanges will be implemented after this 20-day period.

Management Comments

• "By Order of the Board of Directors, /s/ Nathaniel Bradley Nathaniel Bradley Director and Chief Executive Officer"

Industry Context

Companies often raise capital through convertible notes or warrant exchanges to fund operations, growth initiatives, or manage debt. Such transactions, especially those involving significant equity dilution, are common for smaller or growth-stage companies seeking to strengthen their balance sheets or extend their operational runway, though they can signal a need for capital at potentially unfavorable terms for existing shareholders.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Stakeholder Impact

• **Shareholders:** Will experience significant dilution of their ownership percentage and voting power due to the issuance of a large number of new shares.
• **New Investors (Purchasers of Notes & Holders of Warrants):** Will gain substantial beneficial ownership and potential influence over company decisions.
• **Company:** Secures necessary capital for operations or strategic initiatives, but at a high cost in terms of equity dilution.

Next Steps

• The company will implement the approved share issuances for the convertible notes and warrant exchanges after a 20-day waiting period following the mailing of the Information Statement.
• The Additional Closing for the senior secured convertible notes will take place on or after the date that is 20 calendar days after the mailing of this Information Statement.

Key Dates

Recommendation

The approval of share issuances totaling over 160 million shares (130.8 million for convertible notes and 31 million for warrant exchanges) on a current base of 116.7 million shares outstanding represents extreme dilution for existing shareholders. The convertible notes' initial conversion price of $1.00 and a floor price of $0.1019 indicate a low valuation and significant downside risk. This capital raise, while providing funds, comes at a very high cost to shareholder value, making the stock highly unattractive for current investors.

Keywords

Convertible Notes, Share Issuance, Stockholder Approval, Dilution, Nasdaq Listing Rule 5635(d), Warrant Exchange, Capital Raise, SEC Filing, Datavault AI