8-K: Datavault AI to Acquire API Media Innovations in Cash, Stock, and Convertible Note Deal

Datavault AI Inc. has entered into a definitive agreement to acquire API Media Innovations Inc. for a total consideration comprising $6 million in cash, 5,117,188 shares of common stock, and $2 million in convertible promissory notes.

Summary

• Datavault AI Inc. (Buyer) entered into a Stock Purchase Agreement on July 13, 2025, to acquire all outstanding shares of API Media Innovations Inc. (Company) from its sellers, David Reese and Frank Tomaino.
• The aggregate purchase price for API Media Innovations Inc. includes $6,000,000 in cash, 5,117,188 shares of Datavault AI Inc. common stock (par value $0.001 per share), and $2,000,000 in convertible promissory notes.
• The convertible notes will bear interest at a rate of ten percent (10%) per annum and are payable in eight equal quarterly installments, with the final payment due on the second anniversary of the closing.
• Sellers have the option to convert the unpaid balance of the notes into Datavault AI Inc. common stock in increments of $250,000, at a price of $1.14 per share.
• A key closing condition for Datavault AI Inc. is the completion of one or more financings totaling a minimum of $10,000,000 in net proceeds.
• The transaction is also conditioned on Mr. Reese and Mr. Tomaino entering into consulting agreements with Datavault AI Inc.
• David Reese, one of the sellers, is to be nominated and elected to Datavault AI Inc.'s board of directors and appointed as chairman upon closing.
• The agreement includes a $1,000,000 irrevocable and non-refundable breakup fee payable by Datavault AI Inc. to the sellers if Datavault AI Inc. terminates the Purchase Agreement for a reason other than as permitted by the agreement.

Sentiment

Score: 7

Explanation: The acquisition represents a strategic expansion for Datavault AI Inc. into a related market, with key sellers retaining involvement through consulting agreements and board membership. The financial terms are clearly defined, and the company has a financial advisor's opinion on fairness. However, the significant capital raise condition and potential for dilution from stock issuance and convertible notes, along with a breakup fee, introduce notable financial and execution risks.

Positives

• The acquisition of API Media Innovations Inc. is expected to expand Datavault AI Inc.'s business in audiovisual and information technology services, aligning with strategic growth objectives.
• The transaction structure, combining cash, stock, and convertible notes, provides flexibility and potentially preserves cash for Datavault AI Inc. while aligning the sellers' interests with the future performance of Datavault AI Inc.'s stock.
• The requirement for sellers David Reese and Frank Tomaino to enter into consulting agreements ensures continuity of operations and the transfer of valuable expertise post-acquisition.
• The appointment of David Reese, a key seller, as chairman of Datavault AI Inc.'s board of directors indicates strong alignment and commitment from the acquired entity's leadership.

Negatives

• Datavault AI Inc. is required to complete one or more financings totaling a minimum of $10,000,000 in net proceeds as a closing condition, which introduces a significant capital raising risk.
• The issuance of 5,117,188 shares of common stock and the potential conversion of $2,000,000 in notes into common stock could lead to substantial shareholder dilution for existing Datavault AI Inc. investors.
• A $1,000,000 breakup fee is payable by Datavault AI Inc. to the sellers if the agreement is terminated by Datavault AI Inc. for reasons not permitted by the agreement, creating a financial penalty risk.
• The convertible notes carry a 10% annual interest rate, representing a direct financial obligation and ongoing cost for Datavault AI Inc.

Risks

• Uncertainty regarding the timing of the transaction's completion.
• Risk that the conditions required to consummate the transaction, such as securing $10,000,000 in financing or obtaining stockholder approval, may not be met.
• Possibility of an event, change, or circumstance that could lead to the termination of the Purchase Agreement.
• Potential negative effect of the announcement or pendency of the transaction on Datavault AI Inc.'s business relationships, performance, and general business operations.
• Inability to recognize the anticipated benefits of the transaction, which may be affected by factors such as competition and the post-combination company's ability to grow, manage growth profitably, and retain key employees.
• Costs related to the stock purchase may exceed expectations.
• Challenges in implementing business plans, forecasts, and other expectations after the completion of the proposed stock purchase, and in identifying and realizing additional opportunities.
• Risk of downturns and rapid change in the highly competitive industries in which Datavault AI Inc. and API Media operate.
• Risk that any adverse changes in API Media's relationships with buyers, sellers, and partners may adversely affect the predicted business, financial condition, and results of operations.
• Periods of rapid growth and expansion could place a significant strain on Datavault AI Inc.'s resources, including its employee base, which could negatively impact operating results.
• Risk that Datavault AI Inc. may need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all.

Future Outlook

Datavault AI Inc. anticipates that the acquisition of API Media Innovations Inc. will expand its business in audiovisual and information technology services. The company expects to integrate API Media's operations and realize anticipated benefits from the transaction, though it acknowledges risks related to timing, conditions, competition, and the ability to manage growth and retain key employees. Datavault AI Inc. also notes the potential need to raise additional capital to execute its business plan.

Management Comments

• The respective board of directors of Buyer and the Company have each approved, adopted, and ratified the Proposed Transaction upon the terms and subject to the conditions set forth herein.
• Sellers have, in accordance with the Company's charter documents and applicable Law, obtained the written consents of the stockholders of the Company in favor of the adoption of this Agreement and the approval of the Proposed Transaction.
• Buyer has obtained an opinion from its financial advisor to the effect that the transactions contemplated hereby are fair to the Buyer and its stockholders from a financial point of view, and such opinion has not been withdrawn, revoked, or modified as of the date of this Agreement.

Industry Context

This acquisition positions Datavault AI Inc. to expand its footprint in the audiovisual and information technology services sector, a highly competitive industry characterized by rapid change. By acquiring API Media Innovations Inc., Datavault AI Inc. aims to enhance its offerings in installed and managed media distribution systems, potentially leveraging API Media's existing customer and supplier relationships. The transaction reflects a strategic move to consolidate or expand market share within this specialized technology segment.

Management Changes

Stakeholder Impact

• Shareholders (Datavault AI Inc.): Potential dilution due to the issuance of 5,117,188 shares of common stock and the potential conversion of $2,000,000 in convertible notes into common stock. Will be asked to vote on the share issuance if required by Nasdaq rules.
• Sellers (David Reese and Frank Tomaino): Will receive $6,000,000 in cash, 5,117,188 shares of Datavault AI Inc. common stock, and $2,000,000 in convertible notes. Will enter into consulting agreements, and David Reese will join Datavault AI Inc.'s board as chairman.
• Employees (API Media Innovations Inc.): Datavault AI Inc. has committed not to terminate any employee of API Media for one year from the closing date (other than for cause or policy violation) or make material adverse changes to compensation, benefit, or severance plans for one year.
• Customers and Suppliers (API Media Innovations Inc.): Datavault AI Inc. aims to maintain and preserve existing business relationships.

Next Steps

• Datavault AI Inc. to complete one or more financings totaling a minimum of $10,000,000 in net proceeds.
• Mr. Reese and Mr. Tomaino to execute and deliver consulting agreements to Datavault AI Inc.
• Datavault AI Inc. to file an application for listing of additional shares with Nasdaq Capital Market and obtain approval.
• If required by Nasdaq rules, Datavault AI Inc. to obtain written consent of stockholders or organize a stockholders meeting to approve the issuance of common stock.
• Datavault AI Inc. may file a proxy statement and other required materials with the SEC concerning the transaction.
• David Reese to be nominated and elected to Datavault AI Inc.'s board of directors and appointed as chairman.
• Consummation of the purchase and sale of API Media Innovations Inc. shares (the Closing).
• Convertible notes to be paid in eight equal quarterly installments, with the final payment due on the second anniversary of the Closing, or converted into common stock at the sellers' option.

Key Dates

Recommendation

Keywords

Acquisition, Stock Purchase Agreement, API Media Innovations Inc., Datavault AI Inc., Merger, Convertible Notes, Common Stock, Nasdaq Capital Market, SEC Filing, Corporate Governance, Technology Services, Audiovisual, Information Technology