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Item 7. Management’s Discussion and Analysis

2025-04-15 compared with 2024-03-01 · 570 added, 765 removed, 6 unchanged (100% of the section changed)

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

in this report (the “Annual Report”) to “we,” “us” or the “Company” refer to Plum Acquisition

References to our “management” or our “management team” refer to our officers and directors, and references

to the “Sponsor” refer to Plum Partners, LLC.

The following discussion and analysis of the Company’s financial condition

and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this

Annual Report.

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that

involve risks and uncertainties.

Note Regarding Forward-Looking Statements

Annual Report on Form 10-K includes “forward-looking statements” within the meaning of Section 27A of the Securities

Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual

results to differ materially from those expected and projected.

All statements other than statements of historical fact included in this

Form 10-K including statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations,

are forward-looking statements.

Words such as “expect,” “believe,” “anticipate,” “intend,”

“estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking

Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs,

based on information currently available.

A number of factors could cause actual events, performance or results to differ materially

from the events, performance and results discussed in the forward-looking statements.

The Company’s securities filings can be accessed

on the EDGAR section of the SEC’s website at www.sec.gov.

Except as expressly required by applicable securities law, the Company

disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future

events or otherwise.

are a blank check company incorporated as a Cayman Islands exempted company on January 11, 2021 and formed for the purpose of effecting

a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more

We intend to consummate an initial business combination using cash from the proceeds of our Public Offering (the “Public

Offering”) that closed on March 18, 2021 (the “Closing Date”) and the Private Placement, and from additional issuances

of, if any, our equity and our debt, or a combination of cash, equity and debt.

November 27, 2023, we entered into a definitive business combination agreement with Veea Inc.

(“Veea”) (the “Business

Combination Agreement”) related to a proposed merger expected to result in Veea becoming a publicly traded company (referred to

herein as the “Combined Company” ) whose business, after the closing (the “Closing”), assuming the occurrence

thereof, will be the continued business of Veea.

following discussion and analysis of the financial condition and results of operations of Veea should be read together with the “Item

Business” section and our audited financial statements as of the years ended December 31, 2024 and 2023, and related notes and

other information included elsewhere in this Annual Report.

addition to our historical consolidated financial information, this discussion includes forward-looking information regarding our business,

results of operations and cash flows, and contractual obligations and arrangements that involve risks, uncertainties, and assumptions.

Our actual results may differ materially from any future results expressed or implied by such forward-looking statements as a result

of various factors, including, but not limited to, those discussed in the sections of this Annual Report entitled “Cautionary Note

Regarding Forward-Looking Information” below and “Risk Factors” included elsewhere in this Annual Report.

the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results

of Operations” to “Veea,” “we”, “us”, “our”, and the “Company” are

intended to refer to (i) following the Business Combination, the business and operations of Veea Inc.

and its consolidated subsidiaries,

and (ii) prior to the Business Combination, Private Veea (the predecessor entity in existence prior to the consummation of the Business

Combination) and its consolidated subsidiaries.

this report, the terms “our,” “we,” “us,” “Veea” and the “Company” refer

We are dedicated to simplifying

the journey towards creating a world in which virtually everyone and everything is intelligently connected, while bringing applications

and AI to the edge of the network.

Most service providers, equipment suppliers, system integrators and even hyperscalers have adopted

or advocated for similar solutions to various degrees either independently or in collaboration with the Company.

However, to our knowledge,

we are the first to market with patented technologies that a) bring virtualized data center capabilities to the far edge of the network,

commonly referred to as the Device Edge, where all wired and wireless devices connect to the network, b) spawns hyperconvergence of computing,

multiaccess communications and storage, c) provides for Cloud-managed applications at the Edge, d) enables machine learning with AI training,

inferencing, and agentic AI at the Edge including AI-driven cybersecurity for heterogenous networks.

Such networks are given rise through

any combination of our developed devices and third-party devices, with CPUs, GPUs, TPUs, DPUs and/or NPUs, that run the Veea Edge Platform Ô

software stack.

Veea has developed several generations

of highly integrated all-in-one devices that incorporate a Linux server, with a virtualized software environment, supporting our patented

secured docker containers, together with a Wi-Fi Access Point (AP) with a mesh router, a firewall, an IoT gateway, NVMe data storage and

4G/5G modules, referred to as the “VeeaHub” product.

With an extensive patent portfolio of 125 granted patents and 25 pending

patent applications that cover 26 patent families, our end-to-end Hybrid Edge-Cloud Computing platform represents a new product category

that has the potential for wide scale customer adoption in large segments of consumer and enterprise markets.

Veea Edge Platform’s products,

applications, and services with a distributed computing architecture, offered as a Platform-as-a-Service capability, empower companies

to capitalize on the transformative potential of Edge AI, where most of the data from smartphones, tablets, laptops, cameras, sensors,

and other devices is generated, with data privacy and sovereignty, reliability, low latency for real-time decisions, bandwidth efficiency,

scalability, and reduced costs compared to alternatives.

VeeaHub products, about the size

of a typical Wi-Fi Access Point (AP), are offered in variety of forms with different capabilities for indoor and outdoor coverage and

are both locally- and cloud-managed.

Veea Edge Platform architecture and business model, VeeaHub Ò

and third-party devices on Veea Edge Platform with Hybrid Edge-Cloud Computing and AI-enabled applications and services resemble the Android

OS platform architecture and business model for Android devices.

The Veea Edge Platform offers

a complement, and in some cases an alternative, to cloud computing by enabling the formation of highly secure, but easily accessible,

private clouds and networks across one or multiple user(s) or enterprise location(s) across the globe.

Benefits of the Veea Edge Platform

include optimal latency, lower data transport costs, data privacy, security and ownership, Edge AI, as well as “always-on”

availability for mission critical applications, and contextual awareness for people, devices and things connected to the Internet.

leading technology, telecom,

Veea earns revenue primarily

from the sale of its VeeaHub® devices, licenses and subscriptions.

On September 13, 2024 Plum Acquisition Corp.

PLMI), a special purpose acquisition company, Private Veea consummated its previously announced Business Combination.

In connection

with the consummation of the Business Combination (the “Closing”) (i) Plum de-registered from the Register of Companies in

the Cayman Islands by way of continuation out of the Cayman Islands and into the State of Delaware, migrating to and domesticating as

a Delaware corporation (the “Domestication”), and (ii) the merger (the “Merger”) of Plum Merger Sub with and into

the Private Veea was completed and the separate corporate existence of Plum Merger Sub ceased, with Private Veea as the surviving corporation

becoming a wholly owned subsidiary of Plum.

Following the Closing, Plum changed its name from “Plum Acquisition Corp.

“Veea Inc.” and Private Veea changed its name from “Veea Inc.” to “VeeaSystems Inc.”

The Business Combination was accounted for as a “reverse recapitalization,”

with no goodwill or other intangible assets recorded, in accordance with GAAP.

A reverse recapitalization did not result in a new basis

of accounting, and the financial statements of the combined entity represent the continuation of the financial statements of Private Veea

in many respects.

Under this method of accounting, Plum was treated as the “acquired”

company for financial reporting purposes.

For accounting purposes, Private Veea was deemed to be the accounting acquirer in the transaction

and, consequently, the transaction was treated as a recapitalization of Private Veea (i.e., a capital transaction involving the issuance

of stock by Plum for the stock of Private Veea).

Accordingly, the consolidated assets, liabilities and results of operations of Private

Veea became the historical financial statements of the combined company, and Plum’s assets, liabilities and results of operations

were consolidated with the Company’s beginning on the acquisition date.

Operations prior to the Business Combination were presented

as those of Private Veea in future reports.

The net assets of Private Veea were recognized at carrying value, with no goodwill or other

intangible assets recorded.

Simultaneously with the closing

of the Business Combination, the Company and Private Veea issued convertible notes under note purchase agreements (the “Note Purchase

Agreements”) with certain accredited investors unaffiliated with Plum and Private Veea (each, an “Investor”) for the

sale of unsecured subordinated convertible promissory notes (the “September 2024 Notes”) as part of a private placement offering

of up to $15 million in purchase price for such September 2024 Notes in the aggregate (the “Financing Closing”).

received $1.45 million in proceeds from the issuance of its convertible promissory note with a commitment from a convertible note purchaser

for the remaining unfunded amount of $13.55, which is to be funded on or prior to November 15, 2024, subsequently extended to December

In addition, each Investor received as a transfer from NLabs immediately prior to the Financing Closing a number of shares of

Private Veea’s Series A-1 Preferred Stock that upon the Closing became a number of registered shares of our common stock equal to

such Investors’ original principal note amount divided by $7.50 (the “Transferred Shares”).

2,000,000 Transfer Shares

were delivered to Investors at the Financing Closing.

The Note Purchase Agreements include customary registration rights.

The Transferred Shares were recorded at a fair value of $21.6 million

on the Company’s consolidated financial statements, which reflected a significant discount to the face amount of the September 2024

Notes, In addition to the cash received at the Financing Closing, one of the Investors committed to purchase approximately $13.6 million

(the “Commitment Amount”) of September 2024 Notes, on or prior to November 15, 2024, which date was subsequently extended

to December 15, 2024.

On December 31, 2024, the Company and the Investor entered into a mutual Settlement and Release Agreement pursuant

to which the Company agreed to terminate the Investor’s obligation to purchase a note in the Commitment Amount and provided for

a mutual release of claims, in exchange for a payment to the Company of an aggregate amount of approximately $5.4 million, which amount

includes payments previously made to the Company in respect of the Commitment Amount.

As the Company received approximately $1.5 million

of the total expected $15 million proceeds at the Financing Closing, a proportional amount (approximately $19.5 million) of the substantial

discount had been deferred and recorded as a deferred financing asset on the Company’s consolidated financial statements.

31, 2024, the deferred financing assets was reversed on the Company’s consolidated financial statements.

The Company and Private Veea are co-borrowers under each September

2024 Note (together, the “Borrowers”) and are jointly responsible for the obligations to each Investor thereunder.

Each September

2024 Note has a maturity date of 18 months after the Financing Closing but is prepayable in whole or in part by the Borrowers at any time

without penalty.

The outstanding obligations under each September 2024 Note accrue interest at a rate equal to the Secured Overnight Financing

Rate plus 2% per annum, adjusted quarterly, but interest is only payable upon the maturity of the September 2024 Notes as long as there

is no event of default thereunder.

Each September 2024 Note is unsecured and expressly subordinated to any senior debt of the Borrowers.

The September 2024 Notes and the Note Purchase Agreements do not include any operational or financial covenants for the Borrowers.

September 2024 Note includes customary events of default for failure to pay amounts due on the maturity date, for failure to otherwise

comply with the Borrowers’ covenants thereunder or for Borrower insolvency events, in each case, with customary cure periods, and

upon an event of default, the Investor may accelerate all obligations under its September 2024 Note and the Borrowers will be required

to pay for the Investor’s reasonable out-of-pocket collection costs.

The outstanding obligations under each September 2024 Note are convertible

in whole or in part into shares of our common stock (the “Conversion Shares”) at a conversion price of $7.50 per share (subject

to equitable adjustment for stock splits, stock dividends and the like with respect to our common stock after the Financing Closing) (the

“Conversion Price”) at any time after the Financing Closing at the sole election of the Investor.

The outstanding obligations

under each September 2024 Note will automatically convert at the Conversion Price if (i) the Company or its subsidiaries consummate one

or more additional financings for equity or equity-linked securities for at least $20 million in the aggregate or makes one or more significant

acquisitions valued in the aggregate (based on the consideration provided by the Company and its subsidiaries) to be at least $20 million,

(ii) the Investors holding a majority of the aggregate outstanding obligations under the September 2024 Notes expressly agree to convert

all obligations under the September 2024 Notes or (iii) the Common Stock trades with an average daily VWAP of at least $10.00 (subject

to equitable adjustment for stock splits, stock dividends and the like with respect to the Common Stock after the Financing Closing) for

ten (10) consecutive trading days.

The obligations under each September 2024 Note will also automatically convert in connection with a

Brokerage Transfer, as described below.

The September 2024 Notes and the Conversion Shares are subject to a

lock-up for a period of 6 months after the Financing Closing (subject to early release for a liquidation, merger, share exchange or other

similar transaction that results in all of the Company’s stockholders having the right to exchange their equity holdings in the

Company for cash, securities or other property, and subject to customary permitted transfer exceptions).

The Transferred Shares are not

be subject to any lock-up restrictions, but for a period of 6 months after the Closing they will be separately designated by SPAC’s

transfer agent and kept as book entry shares on the transfer agent’s records and will not be eligible to be held by Depository Trust

Company (“DTC”) without the Investor first notifying the Company of its intent to transfer any such Transferred Shares to

a brokerage account and/or to be held by DTC or another nominee (a “Brokerage Transfer”).

If the Investor provides such notice

or otherwise has any Transferred Shares subject to a Brokerage Transfer within 6 months after the Closing, a portion of the outstanding

obligations under such Investor’s Note will automatically convert into a number of Conversion Shares equal to the number of Transferred

Shares subject to such Brokerage Transfer, and the lock-up period for such Conversion Shares will be extended for an additional 6 months

to 12 months after the Financing Closing.

As of December 31, 2024 $250,000 in aggregate principal amount of the September 2024 Notes,

together with associated interest, had automatically converted upon the occurrence of a Brokerage Transfer.

Line of Credit

On December 2, 2024, the Company entered into a common stock purchase

agreement (“Common Stock Purchase Agreement”) and related registration rights agreement (the “White Lion Registration

Rights Agreement”) with White Lion Capital, LLC ( “White Lion”).

Pursuant to the Common Stock Purchase Agreement, the

Company has the right, but not the obligation, to direct White Lion to purchase up to 25,000,000 shares of Common Stock, subject to certain

limitations and conditions as described below (the "ELOC Program") at a purchase price equal to (i) 96.5% of the volume weighted

average stock price for the three consecutive business days after a purchase notice is given, (ii) 98% of the volume weighted average

stock price on the day a notice is delivered, or (iii) the lowest traded price for a given purchase date.

The Company controls the timing and amount of any sales to White Lion,

which depended on a variety of factors including, among other things, market conditions, the trading price of the Company’s common

stock, and determinations by the Company as to appropriate sources of funding for its business and operations.

However, White Lion’s

obligation to purchase shares is subject to certain conditions, including the daily trading volume of the Company’s stock.

instances, the Company may not sell shares of its common stock under the Purchase Agreement if it would result in White Lion and its affiliate

beneficially owning more than 4.99% of its outstanding voting power or shares of common stock at any one point in time, or the aggregate

number of shares of common stock would not exceed 19.99% of the voting power of the issued and outstanding common.

As of December 31, 2024, the Company had sold no shares under the ELOC

of Results of Operations

Company recognizes revenue based on the satisfaction of distinct obligations to transfer goods and services to customers.

generates revenue from hardware sales and the sale of licenses and subscriptions.

The Company applies a five-step approach as defined

in ASC 606, Revenue from Contracts with Customers, in determining the amount and timing of revenue to be recognized:

(1) identify the

contract with a customer;

(2) identify the performance obligations in the contract;

(3) determine the transaction price;

the transaction price to the performance obligations in the contract;

and (5) recognize revenue when a corresponding performance obligation

is satisfied.

Most contracts with customers are to provide distinct products or services within a single contract.

However, if a contract

is separated into more than one performance obligation, the total transaction price is allocated to each performance obligation in an

amount based on the estimated relative standalone selling price.

licenses of technology, recognition of revenue is dependent upon whether the Company has delivered rights to the technology, and whether

there are future performance obligations under the contract.

Revenue from non-refundable upfront payments is recognized when the license

is transferred to the customer and the Company has no other performance obligations.

Revenue for licenses delivered under a subscription

model having terms between one and twelve-months are recognized over-time.

Subscription revenue is generated through sales of monthly

subscriptions.

Customers pay in advance for the licenses and subscriptions.

Revenue is initially deferred and is recognized using the

straight-line method over the term of the applicable subscription period.

of Goods Sold

of goods sold consists primarily of the cost of finished goods, components purchased for manufacturing and freight.

Cost of goods sold

also includes third-party vendor costs related to cloud hosting fees.

classify our operating expenses into the following categories:

development expenses .

Product development expenses primarily consist of employee compensation,

employee benefits, stock-based compensation related to technology developers and product

management employees, as well as fees paid for outside services and materials.

and marketing expenses .

Sales and marketing expenses consist of compensation and other

employee-related costs for personnel engaged in selling, marketing and sales support functions.

Selling expenses also include marketing and the costs associated with customer evaluations.

The Company does not currently incur advertising costs.

and administrative expenses .

General and administrative expenses consist of compensation

expense (including stock-based compensation expense) for employees and executive management,

and expenses associated with finance, tax, and human resources.

General and administrative

expenses also includes transaction costs, expenses associated with facilities, information

technology, external professional services, legal costs and settlement of legal claims and

other administrative expenses.

● Depreciation

and amortization :

Depreciation and amortization expense consists of depreciation of Veea’s

property and equipment and amortization of Veea’s patents and other intellectual property.

● Impairment:

Impairment consists of impairment charges related to our in-process research and development

of Operations

the year ended December 31, 2023, we had a loss of $34,727.

In addition to the loss from operations of $3,098,285, we recognized other

income of $3,063,558 consisting of interest earned on cash held in the Trust Account of $4,758,906, reduction of deferred underwriter

fee payable of $328,474 and change in fair value of FPA of $308,114, offset by an unrealized loss on our warrant liabilities of $1,264,054,

issuance of FPA of $308,114 and interest expense – debt discount of $759,768.

the year ended December 31, 2022, we had a net income of $10,578,125.

In addition to the loss from operations of $4,074,437, we

recognized other income of $14,652,562 consisting of the change in fair value of our warrant liabilities of $8,973,522, termination fee

of $1,000,000 and interest earned on investments held in the Trust Account of $4,679,040.

December 31, 2023, our efforts have been limited to organizational activities, activities relating to identifying and evaluating prospective

acquisition candidates and activities relating to general corporate matters.

We have not generated any realized income, other than interest

The change in fair value of our warrant liabilities had no impact on cash.

As of December 31, 2023, $35,555,976 was held in the

Trust Account, $94,703 of cash held outside of Trust Account and $4,587,330 of accounts payable and accrued expenses.

with respect to interest earned on the funds held in the Trust Account that may be released to us to pay taxes, if any, the proceeds

in the Trust will not be released from the Trust Account (1) to us, until the completion of our initial Business Combination, or

(2) to the Public Shareholders, until the earliest of (i) the completion of our initial Business Combination, and then only

in connection with those Class A ordinary shares that such shareholders properly elected to redeem, subject to the limitations,

(ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated

memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A

ordinary shares the right to have their shares redeemed in connection with our initial Business Combination or to redeem 100% of the

public shares if we do not complete an initial Business Combination within the combination period or (B) with respect to any other

provision relating to the rights of holders of the Class A ordinary shares, and (iii) the redemption of the public shares if

we have not consummated a Business Combination within the Combination Period, subject to applicable law.

Results of Operations for the Three and Nine Months ended September

30, 2023 (As Restated)

For the three months ended September 30, 2023, we

had a loss from operations of $353,372.

In addition to the loss from operations, we recognized other income of $15,322 consisting of interest

earned on cash held in the Trust Account of $626,310 offset by unrealized loss on our warrant liabilities of $334,975 and interest expense

– debt discount of $279,013.

For the three months ended September 30, 2022, we

had a loss from operations of $633,050.

In addition to the loss from operations, we recognized other income of $3,118,342 consisting of

an unrealized gain on our warrant liabilities of $1,674,871 and interest earned on cash held in the Trust Account of $1,443,471.

For the nine months ended September 30, 2023, we

had a loss from operations of $2,085,609.

In addition to the loss from operations, we recognized other income $3,879,911 consisting of

change in fair value of FPA of $308,114, reduction of deferred underwriter fee payable of $328,474 and interest earned on cash held in

the Trust Account of $4,344,597 offset by an unrealized loss on our warrant liabilities of $379,216, issuance of FPA of $308,114 and interest

expense – debt discount of $413,944.

For the nine months ended September 30, 2022, we

had a loss from operations of $2,686,622.

In addition to the loss from operations, we recognized other income of $10,422,422 consisting

of an unrealized gain on our warrant liabilities of $8,499,501 and interest earned on cash held in the Trust Account of $1,922,921.

Through September 30, 2023, our efforts have been

limited to organizational activities, activities relating to identifying and evaluating prospective acquisition candidates and activities

relating to general corporate matters.

We have not generated any realized income, other than interest income.

The change in fair value

of our warrant liabilities had no impact on cash.

As of September 30, 2023, $35,096,667 was held in the Trust Account, cash outside of

Trust Account of $92,722 and $3,976,694 accounts payable and accrued expenses.

Except with respect to interest earned on the funds

held in the Trust Account that may be released to us to pay taxes, if any, the proceeds in the Trust will not be released from the Trust

Account (1) to us, until the completion of our initial Business Combination, or (2) to the Public Shareholders, until the earliest of

(i) the completion of our initial Business Combination, and then only in connection with those Class A ordinary shares that such shareholders

properly elected to redeem, subject to the limitations, (ii) the redemption of any public shares properly tendered in connection with

a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our

obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial Business

Combination or to redeem 100% of the public shares if we do not complete an initial Business Combination within 27 months from the closing

of the IPO (or up to 36 months from the closing of our initial public offering if we extend the period of time to consummate a business

combination) (the “Combination Period”) or (B) with respect to any other provision relating to the rights of holders of the

Class A ordinary shares, and (iii) the redemption of the public shares if we have not consummated a Business Combination within the Combination

Period, subject to applicable law.

Results of Operations for the Three and Six Months ended June 30,

2023 (As Restated)

For the three months ended June 30, 2023, we had

a loss from operations of $578,954.

In addition to the loss from operations, we recognized other income of $3,131,354 consisting of an

unrealized loss on our warrant liabilities of $1,978,245, change in fair value of FPA of $633,205 and interest earned on cash held in

the Trust Account of $626,320 offset by interest expense – debt discount of $106,416.

For the six months ended June 30, 2023, we had a

loss from operations of $1,732,236.

In addition to the loss from operations, we recognized other income $3,864,589 consisting of interest

earned on cash held in the Trust Account of $3,715,287, change in fair value of FPA of $308,114 and reduction of deferred underwriter

fee payable of $328,474 offset by unrealized loss on our warrant liabilities of $44,241, issuance of FPA of $308,114, interest expense

– debt discount of $134,931.

For the three months ended June 30, 2022, we had

a loss from operations of $1,544,496.

In addition to the loss from operations, we recognized other income of $3,423,925 consisting of

an unrealized gain on our warrant liabilities of $2,970,528 and interest earned on cash held in the Trust Account of $453,397.

For the six months ended June 30, 2022, we had a

loss from operations of $2,053,572.

In addition to the loss from operations, we recognized other income of $7,304,080 consisting of an

unrealized gain on our warrant liabilities of $6,824,630 and interest earned on cash held in the Trust Account of $479,450.

Through June 30, 2023, our efforts have been limited

to organizational activities, activities relating to identifying and evaluating prospective acquisition candidates and activities relating

to general corporate matters.

We have not generated any realized income, other than interest income.

The change in fair value of our warrant

liabilities had no impact on cash.

As of June 30, 2023, $55,154,617 was held in the Trust Account, cash outside of Trust Account of $20,880

and $3,853,954 accounts payable and accrued expenses.