Datavault AI Inc.

Good morning, and welcome to DataVault AI's third quarter conference call. With us today are Nathaniel Bradley, CEO, and Brett Moyer, CFO. This call will contain forward-looking statements which reflect management's current judgment, including certain of our expectations regarding fiscal year 2025 and 2026 financial performance. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Risk factors that could cause actual results to differ materially. I do not have the rest of the scripture, I do apologize. It's now my pleasure to turn the call over to management. Please proceed.

Nate.

Yes, hi. Nathaniel Bradley here. Thank you very much, everyone, for joining the call today. We put together a brief presentation. There's obviously the safe harbor there. So look, we had an incredible Q3. Our results really speak for themselves. Again, this is kind of loading both the performance of WISA from a more scalable to a more scalable, more nimble business model around the WISA technologies in our acoustic division and really a surge in our audio technology revenues and also the beginning of what becomes in our fourth quarter an explosion around our flagship Data Vault, our kind of pride and joy. The Data Vault platform had incredible performance in our Q4, but Q3 was really a loading of that performance, and thanks to Jeff Jones and some of the key players on our team that were able to marshal the technological resources and the integrations necessary to scale our systems globally, we're now in position with the Data Vault platform here at Q4. So aggressive revenue guidance for 2026, really the highlight of this call is that based on the performance of Data Vault, and what we can see both in the WISA and the ADIO technology lines in our acoustic divisions that we're going to aggressively advance our guidance. We're going to increase from a $50 million guidance in 2026 to a full $200 million minimum for next year. And that's just... leading into that a process that's underway in terms of tokenizing real world assets all over the world and some of the progress that we've made with our acoustic division in the WISA technology where we really honed in that technology and see a very scalable future that includes robotics and includes using WISA in signage and in other areas to deliver data over sound. And so we have a very scalable model moving forward that we're very excited about and very pleased to announce that we've increased our guidance quite substantially to $200 million by the end of 2026. And that's a process underway. It's hard to gauge in the fourth quarter how we're going to Work through a lot of that growth and and recognition and all the issues around our revenues in q4 We do know that it's coming in in in droves and we're managing that as a team And so strategic investment, you know in the financial Flexibility really this is all triggered by the 150 million dollar strategic equity and that we received this this is a lifeblood of capital that unlocked our company inside the scale of our customers operations so we're expanding globally our footprint and we've got a presence now in Zurich in London Taiwan Japan Korea Hong Kong and and we really believe that that footprint will support a scalable growth on a global basis when you look at that forecast it's really It's really predicated on these strategic partnerships. We're very proud of Platinum Partners of IBM. Of course, our NIACS partners that have given us access to the NASDAQ financial framework, which is very special, and Silex, which will lead a biotech innovation using our technology that was kind of foundational to their investment in us, but also central to how we've marshaled some of our forces to meet their design and development needs. And beginning, in fact, today, a force is rising there in biotech between Silex and Data Vault, where we're developing an exchange that will be very special in biotech and scientific research. Um, so, uh, birth products also should be mentioned, um, you know, just giving us chops with the federal government and our ability to contract with the federal government. Uh, we have a sensor technology and an inaudible tone technology and a semiconductor product, um, that, that birth products is working with our team, uh, in particular Sonia Choi and others, uh, on our team, uh, to develop. We have, of course, the RWA tokenization and our ability to tokenize really begins with our ability to really understand the attribution of many types of elements and resources. We really specialized in understanding very deeply particular resources. We've just done an announcement in geothermal. but we'll be doing a great number of announcements in this area. And we've really specialized in tokenizing things that are very valuable all over the world. And so we're really excited about our RWA positioning. Our preeminent patent position in technology is really getting recognized on a global basis, and we're really excited about that. We have innovative technology, and our partnership with IBM can't be overstated, it's really special what we have there in terms of engineering and sales throughput. We also have global execution, you know, through our headquarters now in Philadelphia and the locations that I mentioned, we're able to expand. If you look at really the patented technology that we have that's quite special, it's enhanced with partnerships and scalability. multi-billion dollar corporations that have put a stack together on our behalf that really is second to none. We've talked a lot about Clear and IBM, but Fiserv now and Houlihan Loki coming to our aid in areas where we needed help around international attribution and around RWA, everything from sovereignty to governance to the underlying assets and how they're treated. We have developed an American political exchange that we intend to launch into the midterm elections in November this coming, 2026 November. And we have an international elements exchange that we've developed that's been central to our revenue. and interesting from a standpoint of capturing an international attention and very strong use cases here in the United States given the passage of the Genius Act and the passage of Clarity Act where we're able to see now the financial governance models that will allow us to have a New York-based exchange operation. We also have the information data exchange, which is our ability to exchange information at a level where we believe companies can turn data into cash. And we're going to have a specialized biotech exchange with Silex that will add to this cadre of exchanges, but these will be tokenomic exchanges that use a myriad of blockchain and AI tools for both yield management and product attribution. We, of course, can tokenize on any blockchain. We are agnostic to chain, but can select the proper chain for any initiative across these exchanges. And we're excited about that platform, of course. Just to give you kind of the use case around one of our exchanges, the Elemis Exchange, which has a bit of a hot hand in terms of answering the call on a global basis. The International Elements Exchange allows for farming, mining, banking, and manufacturing organizations to tokenize and realize a value. Again, our technology does really three things. It is a refinery that allows you to refine your data assets and identify them. to objectify them. We have a data vault where you can value your assets. And you can use our agents that we've developed that are AI agents that are designed to score and value your data assets. And then when you are able to score and value them, the last piece is to exchange them. And of course, we have our exchanges. This elements exchange is focused on the elements of Earth and all of the products of Earth that are under Earth in terms of being mined or that are forthcoming in crops or other manufacturing outputs, even geothermal, as we announced today, where you have an energy output of Earth. Our elements exchange will have a myriad of elements. It's a number of them. We have a focus around our elements exchange and how we make money on that exchange is our use of these elements to create objects that are traded on our exchange. We're focused on right now revenue drivers, including commodities, agricultural and soft commodities, that's sugar and cotton. Commodities include gold and rare earth, pharma and genomics and biotech, our partnership with Silex, our partnership with Brookhaven National Laboratories. We are focused around tokenizing, valuing, and refining these objects and producing a revenue around these objects that is received on every tick of the trade on these exchanges. We operate exactly like the New York Stock Exchange or the NASDAQ. We are able to uplist companies' assets in the form of token, and we can trade them in between buyers and sellers in a brokered exchange that is secure and using world-class infrastructure, as I discussed. So we have the ability to do this in real estate as well. We have large RWA products in real estate, corporate data, including data in situations of banking, insurance and accounting, tort law, a number of interesting data sets that are valuable and can be traded on our exchanges. We also have, of course, our NIL Exchange. And our international NIL Exchange will be making an enormous announcement about its rebranding. And we've targeted a corporation that has identified us, and we've identified them. And we're going to make a big step forward and a big announcement in the near future around our sports NIL Exchange. our focus around, of course, developing our quantum computing and high-performance computing capability. This is in combination, of course, with IBM, but it's also targeted around our London and New York and Hong Kong operations and also looking at using that technology infrastructure team and resource around our exchange resources, as well as our ability to use that technology to optimize the output and the performance of our own company. We are focused on, of course, VerifyU, our credentialing technology, DV Hollow, our ability to turn data into experience and to monetize experience on our exchanges. Our ability to use our NIL exchange with an enormous global brand recognized around the world across all professional sports and collegiate sports. And our ability to focus on our digital twin capability through our twin institute. Our acquisition of API media and our consolidation of CSI in the event space, our ability to have data from events to look at events around the world as creating data in their wage that is more valuable potentially than tickets themselves and the ability to optimize those events through data the sales of merchandise the development of connections to fans and the continuation of revenue streams for our customers that engage our acoustic division and which is data over sound, WISA, which is the ability to control sound in high definition and spatial environments, and to broadcast wirelessly a synchronization that will have extreme value in robotics and into the future. We have, of course, the Sumerian crypto anchors and our ability to map the real world and bring data from adamant objects from real things to know when a file in a physical world is opened, to know when a statue is moved. Our Sumerian anchors are breakthrough technologies. We have, of course, our pipeline that's driven us to increase our guidance from 50 million to 200 million next year. This is driven by gold, diamonds, tin, Windsor Ruby deal we have in Africa. We just announced this morning a geothermal deal worth $8 million in tokenization that we believe we can recognize in our fourth quarter. We will then engage in a 5% revenue stream around geothermal energy, which we're excited to be a part of, the battery of America. We also have, of course, The contract discussions and projects that are underway in aluminum, titanium, tungsten, silver, copper, oil, natural gas, boron, real estate. We have a number of opportunities around our X Club. which is an international Asian-focused club around XRP. And our move forward there is exciting around these elements. We have our acquisition of API Media that's going to bring us into some high-powered activations and big-time events. You know, the Kentucky Derby PGA Tour. These are all events that we're excited to be part of, and we're part of it because of API Media. We have new leadership. We have new corporate governance and quality in our management because of that acquisition, and we're so excited to have that team on board with us in Philadelphia and New Jersey. have a guidance and updated our strategic, you know, guidance is really around our launch of these exchanges. That's how we're going to drive revenue. That's how we're going to meet these expanded goals. It's difficult. It's not easy. But we didn't want a low bar for our team or for our management moving forward. We see this giant opportunity and we've increased guidance accordingly. There's a lot of wood to chop, a lot of work to do. We're doing it. Scalable licensing models is our focus. We've upgraded our financial outlook, as I discussed. RWA and tokenomics, a world leader in that space with patents to prove it, underlying intellectual property that continues to grow. Big shout out to that team, Josh Paul and now Jacob on that team that are developing patent resources for us on a daily basis, including the opportunity to license the WISA technologies on a scalable and global basis moving forward. with partners that are second to none. So that sums up really our presentation today or my prepared remarks. We really appreciate the time and interest in our company. We're excited about what the future has to offer. And happy holidays to everyone. And we give thanks to our shareholders and everybody involved in our company moving and driving this forward. Thank you very much. Thank you.

We'll now be conducting a question and answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, that's star one to be placed into question queue. Our first question today is coming from Ken Londoner from Endicott Partners. Your line is live.

Hi, good morning. That was a comprehensive update. Thank you so much. Can you give us some detail on the scope of contracts you're talking about regarding the tokenization of real world assets? You mentioned quite a few, but what are sort of the big focuses for you going forward?

So, um, really, uh, the, the strategy there is, um, driven by the quality of the assets, um, uh, that are being tokenized, uh, gold diamonds, uh, silver, uh, we're big believers in copper, uh, copper, uh, we'll have, uh, it's a conductive metal of course. And, um, as we rebuild, um, around the world. and build new infrastructure around the world, including data centers. Copper, we believe, has a lot of value, as do many other elements. We're kind of an open ear around the world. The cool thing is we've been invited to governors' mansions. We've been invited into really, you know, the governments of international countries and countries places that we're excited to go and listen and find where the most valuable assets reside and how we can help move those assets. We did open out of Zurich the opportunity to have a Swiss exchange and we're working through all the legalities and proper modalities for that and we're not quick to to, to, um, you know, work through all of that. Uh, we're careful to work through all of that. And once we do, um, we will launch, uh, their internationally, uh, here, uh, in the U S uh, really from, uh, our Philadelphia headquarters, we intend to have these token exchanges, um, all expand. So to answer your question quite succinctly, We're following the money. We're listening to our customers and following the most valuable assets, proprietories and those assets that are most valuable that we could, our team would focus on tokenizing assets that we could tokenize this year and recognize revenue for this year and also then move into volume on our exchanges where we have revenue, you know, generated on every tick of the trade, as do our clients. So we're focused on, you know, RWA that is most valuable. I think the announcement today with geothermal, if you look at our priorities, we've started there with one of our big priorities, geothermal.

Thank you. Next question today is coming from Jack Vander Aard from Maxim Gruger. Line is now live.

okay great wow good morning nate brett i i appreciate the update you covered quite a lot of ground there um where do i start you know the guidance is jumped off the page to me so revenue guidance raised in 2025 to over 30 million and 200 million plus revenue for 2026. so maybe nate um i mean this is this is this really leveled up here i mean clearly so Maybe help us understand what sort of locked in to that 2026 guidance versus how much is kind of are you working towards locking in? Just so we have a sense of maybe stress testing that a little bit. Thanks.

So look, I had to arm wrestle with, you know, many on my financial team, Brett Moyer, you know, who deserves a lot of credit for unlocking this value in the first place. But, you know, the concept here is to really, you know, under promise and over deliver. I don't, look at that 200 number and feel intimidated. I want my team to feel inspired and to be fired up about a mission that we jointly have together. But I also, you know, so I didn't want to have a low bar where we are simply overperforming by a function of living. I wanted us to have a goal as a team, you know, you know in our public guidance is obviously our public guidance internally we aim high and you know as a leader you know we would we would aspire to be much greater than that number our competitors have numbers that are much greater but they were much older much much more I would say bloated and stuck in their way we have a very nimble ai strategy we have the number one partner in the world uh in ibm around our development around our technology and and the development of quantum uh systems which are you know in near term a concern for every operation that has any technological reach uh so um you know to stress test the the fourth quarter is to understand that this is our first go around We're working with our auditors. We're working with, you know, sophisticated systems around the world. There are revenue recognition and other things to consider that we simply need to understand. So the fourth quarter is likely the steepest climb. It has a lot to do with our technological resources and putting a lot of pressure on that Georgia Development Center that we've, you know, begun to develop. We will be expanding that development to meet the demand of this international demand for tokenomics. We also have our new facility in Philadelphia where we're bringing a team that worked disparately or worked from a Philadelphia location that was private, but many from their homes and from locations that were disparate. Bringing our team together, there's a common coffee pot focus that I think when we bring our team together, these numbers start to be quite achievable. And I hope to readjust guidance because we don't want to have a situation where it's easy to achieve what we intend to achieve. We are a rookie. in terms of our first year on the NASDAQ as Data Vault. We have exceptional pedigree technology from WISA and a tenure on the NASDAQ that shows in our volume and the respect that we're getting worldwide. We're also garnering a number of government and you can see today very important projects that impact our world. So I want to thank you for your early guidance, for seeing this so early, and for having the strength to come out and call us at $3. And as we shoot past that guidance, I hope people recognize your prowess. And we appreciate you following our company for so long.

Great. No, and I appreciate that. There's so much to chew on here, Nate. I just want to understand it and also make sure I'm I'm also setting expectations appropriately. And if Brett's there as well, maybe that would be helpful too. On the gross margin line, so if we just look kind of going forward, these are, I imagine, high margin licensing agreements. Now on paper, and I've yet to see it play out within the tokenization on your guys' income statement. So that's going to be a forward-looking thing. Can you just help maybe help us help investors understand what are we going to look like on the gross margin line as these revenues would seem to be pretty large, especially relative to historical levels?

I'll let Brett answer that. But what I would tell you is that we do a great deal of work. You know, if you look at the refinement of data, you might make 20 points. on your best day on refinement. You're not looking to get your customer really, you know, into these large contracts of CapEx expenditure where you end up in these kind of slow moving, you know, board level type decisions. Instead, we have a low cost approach to that. We like to refine on our customer's premises and give them a data, you know, refinery and a essentially a vending machine for their data. The ability to buy and sell data from our data vault on the exchange is our aim. So when you get to the exchange and our SAS has traditional SAS margins, which are great, but our exchange has exceptional margins. And those can flirt with, you know, upper 80s, you know, on the exchange. So it's refine or revolt exchange. And as you walk through those tires, I think you have varying degree of margin in the business. And then, of course, our acoustic division takes on the more traditional, you know, cost of goods versus, you know, price of product type analysis. But, Brett, with that, I'll turn it to you.

Yeah. So, Jack, if you... I think Nate framed it actually, right? So when you look at the businesses we're acquiring or have acquired, right, CSI, API, and ultimately NIACS, that creates probably the opportunity to do 35 to 50 million next year. And that's going to be more traditional margins in the call it 35 to 45% range. But when you move to, if you go back and look at the deals we've announced, they all have a component of licensing. So I would expect the rest of the revenue to be weighted higher to the 60 range. So I think when you blend it all out, you're going to be in a 55%, 60% margin across the company.

Fantastic. Okay, those are excellent margins. And then can I get an update? There's so many moving parts here, obviously, because you guys are on fire. How do I think about the balance sheet? Because the third quarter, it doesn't really do it justice, I don't believe. So we have a huge Bitcoin investment, it sounds like, coming in from Stilix. There's been a lot more acquisitions that have closed subsequent to the quarter. So there's debt, there's fiat cash. Maybe if we could just boil it down, do we have a rough sense of what cash is and what the state of that investment is from Skillix?

From Silix? Yeah, Nate, you want me to answer this? Silix.

Yes, please.

All right, so... Let's take the investment from Silex, because that's $150 million. We got aid in just at the end of the close of the quarter, but that investment is locked down and documented. The only thing between us and having that on the balance sheet is the shareholder vote on November 24th. That is an annual shareholder meeting, so we will have quorum, and we have voting agreements prior that we had signed at the time of signing the Silex deal that amount to, I believe, more than 40 million yes votes. So we're highly confident that the majority of the votes passed will approve the increase authorized so we can close that 150 million on November 24th or 5th. So when you think about the balance sheet, that deal triggered a couple reactions on the balance sheet. A, it means by the end of the year you have $130 million plus of liquid assets. Maybe $125 million because we're buying API. It also meant that the convertible debt that we had in Q3 triggered out and is off our balance sheet for good. So the only debt on the balance sheet currently These debt associated with the strategic acquisitions of CSI and Data Vault Holdings, now known as EOS Technologies. So I think you get to a pretty powerful and strong balance sheet as we report out the K at the end of the year.

Excellent. That's very helpful. Just one more follow-up to that with the Bitcoin investment. Let's say the shareholder... Vote is approved. So all $150 worth of Bitcoin is now in your possession. Are you going to be – does that mean you're – how much of that is going to be kept in the form of Bitcoin versus how much of that is out the door to fund some of this stuff?

Well, look, I think it's real important for investors to understand that when we took the 150 – when we signed that financing deal, there are no treasury restrictions around it. So from management's perspective, Nate in my mind, that $150 million is the same as cash, except it has a little bit more volatility than cash, right? But fundamentally, we look at it as cash, so we don't look at having any pressure for multiple years to have to raise cash, raise any money for the company. which is fundamentally changing our platform.

Yeah, so for all effective purposes, it's both working capital or it's an investment. It's kind of whatever you need it to be when it's in the door. Exactly. That's terrific. Okay. Excellent. You know what? I think I could keep asking more questions. I'm going to let the dust settle. It's great to see the momentum, guys. I'll hop back in the queue. Thanks. Thank you very much.

Thank you. Our next question today is coming in from Peter Ruggieri from a private investor. Your line is now live.

Good morning. How are you?

Well, thank you.

Great. I'm going to tell you a little bit about myself. I got involved originally as an investor in Sorrento, which owns Silex, which owns Semner. They're involved with Cellularity, a piece of Aardvark, Wormed's involved, and now Senra or Silas has put $150 million into Datable, which is new to me. And, you know, I have a lot of questions because with all this, with like IPMC and precision medicine globally, with Robert Herrera with Cellularity, you're running a whole platform globally with increasing medicine AI. It's a big thing. And I'm just astounded by it. the revenue guidance, by the way, I'm wondering what's the revenue contract backlog right now.

It's significant. Um, it's one of the hardest things to, um, get through in particularly internationally, um, just in terms of getting the company's chops up for that. And our Philadelphia, um, headquarters is going to address legal and governance and, many other things. Also, you know, these exchanges are not, you know, simple in their constructs, you know, from a governance standpoint. And we have a very kind of governance first model that's served us very well. We get to be the iTunes in the space as opposed to the the Napsters, if you will. So I'm excited about that. I think your question is regarding to the biotech space and Silex investment or interest in us. Silex is wildly accretive to our strategy. We had announced previously digital twinning and digital twins. as a marketplace that we were interested in developing technology around and we have. And it's really data into experience, data into hologram, data into model, data into experiential models where management teams don't struggle to understand the challenges or the data related to the challenges around them. They're able to actually experience that data and see the pathways before them more clearly. And that's kind of at the center of the data vault, which is experience around. And that experience includes valuation and score because it had to be sustainable. So valuation and score. And one of the things that is common across these threads but very specific in the biotech space is our work with the Brookhaven National Laboratories, which I believe Silex was studied and saw our progress there and read our cooperative research and advancement agreement drafts that are now being considered at Brookhaven. We have the great privilege of working with supercomputers there in a supercomputer environment uh, of, of people, um, that we've come to trust and in fact, love, um, that we are able to, um, develop a system, uh, between our federal laboratories, our, um, you know, our allies. So BAE over, you know, just over the pond and, you know, some of the, you know, collaborators we have here in the United States, whether it's General Dynamics, Raytheon or, um, you know, Boeing. our ability to take information and have rather than stovepipes and everybody not share their marbles, that everybody can collaborate on a global basis for the advancement of technologies across a myriad of spaces, none more important, none more probably well-funded than biotech. And Silex is a leader in that. The people there and the leaders, Dr. Henry G., you know, certainly financially, Stephen Ma, who's become a mentor to me. You know, these are incredible people who have a great grasp over biotech science and biotech technologies. And we're proud to have that investment that allows us to build that platform and so much more. We're a platform of platforms. We're exchange of exchanges. The ability to launch exchange after exchange. Our biotech exchange, which will have a great name. I know the name. I can't say it. But the biotech exchange will be a very special attribute. So to the size question about, you know, part of your question about size and, You know, why is this space so hot or why did we increase our guidance? It's only partially for the real-world asset of biotech that's in our guidance. You know, and I think it's an explosive piece that maybe makes us have to re-guide. But, you know, the biotech piece is incredibly exciting and has attribution and use case and utility. across every medical science oncology you know and and heart acute post acute when you look at the healthcare space it is not a market it's the market everyone will engage with it at some point and many of us on a daily basis many more on a on acute management basis are spending hundreds of thousands of dollars per annum to address our health. And the kind of compound nature of that makes it not only an international crisis, but something that needs technology to address. And we're happy and proud to be part of the solution of creation of digital twins. And you can see scanning the human body And having a digital twin could aid you, just like it aids management in experiencing their data decisions. When you see your digital twin, it has the same effect. And healthcare is very exceptional. It's very well funded, but also in crisis. So it's a unique combination. We're happy to be part of the solution. Thank you.

In the interest of time, we ask that you please enter yourselves to one question only going forward. Our next question is coming from Tyrone Pruitt, a private investor. Your line is now live. Tyrone, your line is now live. Perhaps your phone is on mute. We've reached the end of our question and answer session. Ladies and gentlemen, this call contained forward-looking statements which reflect management's current judgment, including certain of our expectations regarding fiscal year 2025 and 2026 financial performance. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Risk factors that could cause our actual results to differ materially from our projections and forecasts are discussed in detail in our periodic followings with the SEC. That does conclude today's teleconference and webcast. We thank you for your participation today.