VEEA INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management, with the participation of Allen Salmasi, our Chief Executive Officer, and Janice Smith, our Interim Chief Financial Officer and Chief Operating Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Annual Report. Based on such evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that as of December 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Report on Internal Controls over Financial Reporting As disclosed elsewhere in this Annual Report, we completed the Business Combination on September 13, 2024. Prior to the Business Combination our predecessor, Plum Acquisition Corp. I, was a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization or similar business combination with one or more businesses. As a result, previously existing internal controls are no longer applicable or comprehensive enough as of the assessment date, because Plum Acquisition Corp. I’s operations prior to the Business Combination were insignificant compared to those of the consolidated entity post-Business Combination. As a result, management was unable, without incurring unreasonable effort or expense, to complete an assessment of our internal control over financial reporting as of December 31, 2024. Accordingly, we are excluding management’s report on internal control over financial reporting pursuant to Section 215.02 of the SEC Division of Corporate Finance’s Regulation S-K Compliance and Disclosure Interpretations. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. During the quarterly period ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act) adopted or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 65 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following table sets forth the name and age as of March 14, 2025, and position of the individuals who currently serve as directors and executive officers of the Company. The following also includes certain information regarding the individual experience, qualifications, attributes and skills of our directors and executive officers as well as brief statements of those aspects of our directors’ backgrounds that led us to conclude that they are qualified to serve as directors. Name Age Position Executive Officers Allen Salmasi 70 Chief Executive Officer, Chairman of the Board Janice K. Smith 63 Chief Operating Officer and Interim Chief Financial Officer Michael Salmasi 37 Chief Executive Officer of Veea Solutions Inc., Director Mark Tubinis 66 Chief Commercial Officer Non-Employee Directors Douglas Maine 77 Director Kanishka Roy 49 Director Alan Black 63 Director Helder Antunes 62 Director Gary Cohen 68 Director Executive Officers Allen Salmasi is the Chairman of the Board and CEO at Veea. Prior to co-founding Veea in 2014, Mr. Salmasi was the Chairman, Chief Executive Officer and President of NextWave Telecom Inc. and, its spin-off, NextWave Wireless Inc. (“ NextWave ”), a San Diego-based company that he founded in 1996. In partnership with MCI Communications Corporation, NextWave developed and substantially implemented the first Mobile Virtual Network Operator (“ MVNO ”) service in the US. NextWave also acquired substantial spectrum assets in the US and other countries between 1996 and 2007. NextWave Telecom was acquired by Verizon in 2005 and, its spin-off, NextWave Wireless was acquired by AT&T in 2013. NextWave, through its wholly owned subsidiaries, also pioneered several products and technologies that were acquired at various times such as an all IP-based packet-switched wireless broadband network equipment and devices based on TD-CDMA and OFDMA waveforms (4G/5G) as well as mobile media and streaming software platform that was adopted by Google for Android devices. During 2000s, its TD-CDMA was deployed in Eastern Europe as a “wireless Internet” network by Deutsche Telekom and in New York metro area, with an upgrade to 4G LTE as a public safety network after 9/11 (“ NYCWiN ”) with Northrop Grumman. Beginning 1988, at Qualcomm Incorporated, he served in various positions as the first President of its wireless business division (QCT), Chief Strategy Officer and a member of the Board of Directors, where he initiated and led the business development activities for the first digital cellular products, including its chipset and handset developments and production, based on Code Division Multiple Access (“ CDMA ”) technology, which became the first global wireless standard as 3G and gave birth to smartphones. Prior to Qualcomm, from 1983 to 1988, Mr. Salmasi was the Chief Executive Officer and President of Omninet Corporation, which developed and launched OmniTRACS product and services in 1985. As the first large scale commercial application of spread spectrum communications incorporating CDMA, OmniTRACS became the world’s first and largest commercial terrestrial mobile satellite communications service for two-way messaging, SCADA (IoT) and position reporting service. Omninet entered into a contract with Qualcomm, immediately after its formation in 1985, to manufacture OmniTRACS and then merged with Qualcomm in 1988. He holds two Bachelor of Science degrees with honors in Electrical Engineering and Business Management and Economics from Purdue University and two Master of Science degrees in Electrical Engineering and Applied Mathematics from Purdue University and the University of Southern California, respectively. 66 Janice K. Smith is our Chief Operating Officer and Interim Chief Financial Officer. Ms. Smith joined Veea in 2018. From February 2014 to June 2018, Ms. Smith was Chief Administrative Officer of NLabs Inc., an affiliate of Veea. Prior to joining NLabs, Ms. Smith was SVP, Chief Risk Officer and Head of Governmental Affairs for Overseas Ship holding Group, Inc., the former largest NYSE-listed crude oil and petroleum product transportation company, where she was responsible for the enterprise risk management function, establishing and executing legislative agenda, including management of the firm’s “PAC” and supervising outside lobbyists. Prior to OSG, Ms. Smith was a corporate partner in the New York office of global law firm Proskauer Rose where her practice focused on mergers and acquisitions, corporate finance and securities law transactions. Ms. Smith holds a BBA from Iona College, a JD from Fordham Law School. Mark Tubinis is our Chief Commercial Officer. Mr. Tubinis joined Veea in 2020. He is a seasoned technology executive recognized for building and managing global product and services organizations. He has broad experience in virtualized and cloud-based fixed and mobile service delivery (voice, video, data and IoT), and has worked in engineering management, product management, business development, and strategic planning and partnering over his career. He served as SVP of SeaChange International, an OTC-listed supplier of video delivery software, from October 2016 to January 2019; as the Chairman of the Board of Airfusion, a private AI driven data analytics company, from 2016 to 2020; and as a director of Classco, Inc., a specialist in Calling Line ID technologies, from 1996 to 2019. Since 2022, he has served as an advisor of zTouch, LLC, a private AI based network optimization and automation company. At Alcatel-Lucent (via acquisition of WaterCove Networks), Cedar Point Communications, Savant, SeaChange International and now Veea, Mr. Tubinis enjoys working with industry thought leaders to deliver innovative, award-winning solutions. Mr. Tubinis holds an MSEE/Computer Engineering and Communications from Massachusetts Institute of Technology (MIT) and a BSEE from Boston University. Michael Salmasi serves as a member of the Board. Michael Salmasi is a co-founder of Veea Inc. and has served on its board of directors since its inception. Michael has also served as CEO of Veea Solutions Inc., a subsidiary of Veea Inc., since 2013. In this role, Mr. Salmasi plays a leading role in a variety of initiatives and engages with the company’s business partners to deliver edge computing solutions to customers in a range of projects, including Smart Retail, Smart Buildings, and Smart Agriculture. Prior to co-founding Veea Inc., Mr. Salmasi worked at UBS Financial Services from 2009 to 2012. Mr. Salmasi holds a Master of Business Administration from New York University Stern School of Business. Non-Employee Directors Douglas Maine serves as a member of the Board. Mr. Maine joined International Business Machines Corporation (“ IBM ”) in 1998 as Chief Financial Officer following a 20-year career with MCI (now part of Verizon) where he was Chief Financial Officer from 1992-1998. He was named General Manager of ibm.com in 2000 and General Manager, Consumer Products Industry in 2003 and retired from IBM in 2005. Mr. Maine previously served as a director of the following public companies: Acreage Holdings from 2018-2023; Albemarle Corporation from 2015 to 2020, Orbital-ATK, Inc. from 2006-2017, BroadSoft, Inc. from 2006-2017 and Rockwood Holdings, Inc. from 2005-2015. Maine is a former two-term member of the Standing Advisory Group of the Public Company Accounting Oversight Board. Mr. Maine holds a BS from Temple University and an MBA from Hofstra University. Mr. Maine is also a Columbia Business School Executive in Residence. 67 Kanishka Roy serves as a member of the Board. Mr. Roy is a technology and finance veteran, with over 20 years of experience as a technology investment banker, public company executive, and growth investor. From 2014 to 2019, Mr. Roy helped leading Software and Internet companies with mergers and acquisitions (M&A) and capital markets transactions. Mr. Roy also served as the Global Head of Tech M&A Origination for Morgan Stanley, where he was responsible for initiating large, industry-transforming mergers, helping clients take a long-term view of the competitive landscape and implementing winning M&A playbooks to maximize shareholder value. Over his career, Mr. Roy has participated in over $100 billion of M&A transactions. Most recently, from 2019 to 2020, he was Global CFO at SmartNews, a multi-billion-dollar private AI company with over 20 million monthly average users and led the strategic finance and growth of a rapidly growing company across multiple geographies. Mr. Roy started his career as a software engineer at two software startups, both of which were acquired by larger public companies, and also worked in executive strategy roles at IBM. Mr. Roy is also President, Chief Executive Officer, Secretary, Treasurer, and board member of Plum Acquisition Corp. III, a special purpose acquisition company traded on Nasdaq. Mr. Roy holds an undergraduate degree in Electrical & Computer Engineering and an MBA from the Tuck School of Business at Dartmouth. Alan Black serves as a member of the Board. Mr. Black founded Surfspray Capital, LLC in 2017 through which he has advised over a dozen companies including Looker Data Sciences where he served on the Board and was Chair of the Audit Committee (acquired by Google in 2019); Bill.com Holdings (2019 IPO), HashiCorp (2021 IPO), and private software companies including Intercom, Komodo Health, Mattermost, Netlify, Nozomi Networks, and others. He brings more than 35 years of experience as an executive leading public and private software enterprises, including IPO experience as CFO at Zendesk (2014 IPO) and Openwave Systems (1999 IPO). In between those companies, Mr. Black was President and CEO of Intelliden (acquired by IBM in 2010). Mr. Black currently sits on the boards of Nextiva, Matillion, and Plum Acquisition Corp. III. He holds a Bachelor of Commerce and a Graduate Diploma in Public Accountancy degrees from McGill University in Montreal, Canada, and serves on McGill’s Board of Advisors for the Western United States, co-chairing its Bursary Subcommittee. Mr. Black is now retired from active membership in the Institute of Chartered Accountants of Ontario (Canada) and Society of Certified Public Accountants (California), in which professional organizations he was a licensed member for over two decades. Helder Antunes serves as a member of the Board. Mr. Antunes is an entrepreneur, technologist, and executive with over 30 years of experience in Silicon Valley and around the world. Currently he serves as CEO of Crowdkeep, an Internet of Things (IoT) company specializing in asset, people, and condition tracking across multiple industries. Mr. Antunes previously served as a Cisco executive for over 20 years, crucial in leading corporate innovation and in the development of many of Cisco’s many security products, such as IoS imbedded security, Cisco Virtual Office (CVO), and Dynamic Multipoint VPN, as well as leading projects like Cisco Connected Car, founding the OpenFog Consortium, and developing the reference architecture for all things IoT. A renowned expert in data security, Internet of Things (IoT), fog computing, and disruptive innovation, Mr. Antunes speaks at numerous conferences and symposiums around the world every year and has presented to the U.S. Congress, and the parliaments of countries like Norway and Portugal on the topics of technology and innovation. Mr. Antunes has also served as an advisor to the Government of Portugal and the Regional Government of the Azores, counseling on the topics of stimulating high tech development, fostering investment environments, and promoting science & technology education. Gary Cohen serves as a member of the Board. Mr. Cohen is an experienced business leader with a background in global management. Mr. Cohen currently serves on the Board of Trustees for Northwell Health. Mr. Cohen has previously served on the President’s Council for Union College, the Global Advisory Board of Ragon Institute of MGH, MIT and Harvard, the Global Advisory Council of African Leadership University, US Advisory Council of African Leadership Academy, and Director and Treasurer of Gift of Hope USA. Mr. Cohen has been retired since 2014. Prior to retirement, Mr. Cohen was employed with IBM Corporation from 1978 to 2014 (with an 18-month gap). During his time at IBM Corporation, Mr. Cohen served as General Manager, Global Communications Sector, Chairman of IBM Africa, and Executive Leader of Global Alliances, among other roles. Mr. Cohen led IBM Corporation’s $12 billion business with telecommunications, energy and utilities, and media and entertainment clients worldwide, with particular focus in leading the development in Africa. Prior to that Mr. Cohen served as General Manager of IBM’s Pervasive Computing (IoT) business unit and before that was Vice President of Strategy. Furthermore, Mr. Cohen managed critical partnerships with businesses like SAP, Cisco, and Oracle. Mr. Cohen holds an MBA in Finance from New York University and a Bachelor of Science in Economics and Psychology from Union College. Mr. Cohen is independent as defined under the applicable Nasdaq rules. Mr. Cohen is qualified to serve on the board because of his long-time global business experience and leadership experiences. 68 Family Relationships Except for Allen Salmasi, our CEO and chairman, who is the father of, Michael Salmasi, our director and Chief Executive Officer of our subsidiary, Veea Solutions, Inc., there are no family relationships between any of the executive officers or directors of the Company. Director or Officer Involvement in Certain Prior Legal Proceedings Our directors and executive officers were not involved in any legal proceedings as described in Item 401(f) of Regulation S-K in the past ten years. Board Composition and Election of Directors Our board of directors currently consists of seven members. Under our amended and restated bylaws, the number of directors will be determined from time to time by our board of directors. Director Independence Nasdaq listing rules require that a majority of the board of directors of a company listed on Nasdaq be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. The Company’s Board has determined that each of Douglas Maine, Kanishka Roy, Gary Cohen and Alan Black is an independent director under the Nasdaq listing rules and Rule 10A-3 of the Exchange Act. In making these determinations, the Board considered the current and prior relationships that each non-employee director had with Veea and has with the Company and all other facts and circumstances the Board deemed relevant in determining independence, including the beneficial ownership of our Common Stock by each non-employee director. Classified Board of Directors In accordance with our amended and restated certificate of incorporation and amended and restated bylaws, our board of directors is divided into three classes with staggered, three-year terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. Our directors are divided among the three classes as follows: ● the Class I directors are Gary Cohen and Michael Salmasi, and their terms will expire at our annual meeting of stockholders in 2027 ● the Class II directors are Douglas Maine, Helder Antunes, and Alan Black, and their term will expire at our annual meeting of stockholders in 2025, and ● the Class III directors are Allen Salmasi and Kanishka Roy, and their terms will expire at the annual meeting of stockholders in 2026. Our amended and restated certificate of incorporation and amended and restated bylaws provide that the authorized number of directors may be changed only by resolution of the board of directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control of our company. Our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds of our outstanding voting stock entitled to vote in the election of directors. 69 Board Leadership Structure The Board does not have a policy about whether the roles of Chairman of the Board and Chief Executive Officer should be separate or combined. Rather, the Board has flexibility to annually choose the leadership structure that it believes will provide the most effective leadership and oversight for the company and its growth strategy. The Nominating and Governance Committee routinely reviews our governance practices and Board leadership structure, and the Board selects the structure that it believes provides the most effective leadership and oversight for the company. Role of the Board in Risk Oversight Of the key functions of the Board is informed oversight of the Company’s risk management process. The Board does not have a standing risk management committee but rather administers this oversight function directly through the Board as a whole, as well as through various standing committees of the Board that address risks inherent in their respective areas of oversight. For example, the Company’s audit committee is responsible for overseeing the management of risks associated with the Company’s financial reporting, operational, privacy and cybersecurity, competition, legal, regulatory, compliance and reputational matters; and the Company’s compensation committee oversees the management of risks associated with our compensation policies and programs. Committees of the Board of Directors The standing committees of Company’s Board consists of an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The composition of each committee following the Business Combination is set forth below. Audit Committee The Company’s Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Exchange Act and consists of Douglas Maine, Gary Cohen and Alan Black, each of whom is an independent director and is “financially literate” as defined under the Nasdaq listing standards. Douglas Maine serves as chair of the Audit Committee. The Company’s Board has determined that Mr. Maine qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC. Compensation Committee The Company’s Compensation Committee consists of Gary Cohen and Douglas Maine, each of whom is an independent director under Nasdaq’s listing standards, and Gary Cohen serves as chair of the Compensation Committee. Nominating and Corporate Governance Committee The Company’s Nominating and Corporate Governance Committee consists of Kanishka Roy and Alan Black, each of whom is an independent director under Nasdaq’s listing standards, and Kanishka Roy serves as the chair of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for overseeing the selection of persons to be nominated to serve on the Board. The Nominating and Corporate Governance Committee considers persons identified by its members, management, shareholders, investment bankers and others. 70 The guidelines for selecting nominees, including nominees who will permit the Continuing Company to comply with applicable California and Nasdaq diversity standards, are specified in the Nominating and Corporate Governance Committee Charter. Compensation Committee Interlocks and Insider Participation None of the members of the Company’s compensation committee has ever been an executive officer or employee of the Company. None of the Company’s executive officers currently serve, or have served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers that will serve as a member of the Board or compensation committee. Corporate Governance Guidelines and Code of Business Conduct The Board has adopted Corporate Governance Guidelines that address items such as the qualifications and responsibilities of its directors and director candidates and corporate governance policies and standards applicable. In addition, the Board has adopted a Code of Business Conduct and Ethics that applies to all of its employees, officers and directors, including its Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. The full text of the Company’s Corporate Governance Guidelines and its Code of Business Conduct and Ethics are posted on the Corporate Governance portion of the Company’s website at www.veea.com . Information contained on or accessible through the Company’s website is not a part of this Annual Report, and the inclusion of the Company’s website address in this Annual Report is an inactive textual reference only. The Company intends to make any legally required disclosures regarding amendments to, or waivers of, provisions of its code of ethics on its website rather than by filing a Current Report on Form 8-K. Insider Trading Policies On September 13, 2024, the Company adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of our securities by directors, officers and employees, which are reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards (the “ Insider Trading Policy ”). The foregoing description of the Insider Trading Policy does not purport to be complete and is qualified in its entirety by the terms and conditions of the Insider Trading Policy, a copy of which is attached hereto as Exhibit 19.1 and is incorporated herein by reference. 71 ITEM 11. EXECUTIVE COMPENSATION Overview We are currently considered a “smaller reporting company” for purposes of the SEC’s executive compensation and other disclosure rules. In accordance with such rules, we are required to provide a Summary Compensation Table and an Outstanding Equity Awards at Fiscal Year End Table, as well as limited narrative disclosures. Our policies with respect to the compensation of our executive officers are administered by the board of directors our Compensation Committee. The compensation policies we follow are designed to provide for compensation that is sufficient to attract, motivate and retain executives and to establish an appropriate relationship between executive compensation and the creation of shareholder value. In addition to the guidance provided by the compensation committee, the board of directors may utilize the services of third parties from time to time in connection with the recruiting, hiring and determination of compensation awarded to executive employees. Financial Restatement It is a policy of our Board that the Compensation Committee will, to the extent permitted by governing law, have the sole and absolute authority to make retroactive adjustments to any cash or equity-based incentive compensation paid to executive officers and certain other officers where the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement. Where applicable, the Company will seek to recover any amount determined to have been inappropriately received by the individual executive. Clawback Policy We have adopted a Compensation Recovery Policy in accordance with applicable Nasdaq rules, a copy of which is filed as the Exhibit 97.1 to this Annual Report. It is generally our policy that the Company will recoup any incentive compensation erroneously awarded to any current or former executive officers due to material noncompliance with any financial reporting requirement under applicable securities laws during the three completed fiscal years immediately preceding the date the Company determines that an accounting restatement is required. Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Non-Public Information The Company does not maintain a policy on the timing of awards of options in relation to the disclosure of material nonpublic information. Our board and compensation committee did not take into account any material nonpublic information in determining the timing of the equity awards made to our NEOs in 2024. We did not time the disclosure of material nonpublic information for the purpose of affecting the value of our executive compensation in 2024. Summary Compensation We have also included the material elements of compensation awarded to, earned by or paid to other officers of the company that may be named executive officers of the Business Combination. Together, these officers are referred to as our “ named executive officers ” or “ NEOs .” Other than as set forth in the table and described more fully below, during the fiscal year ended December 31, 2024, Veea did not pay any fees, make any equity awards or non-equity awards, or pay any other compensation to the named executive officers. The compensation reported in this summary compensation table below is not necessarily indicative of how we will compensate our named executive officers in the future. We expect that we will continue to review, evaluate and modify our compensation framework as a result of becoming a publicly-traded company, and our compensation program following the consummation of the Business Combination could vary significantly from our historical practices. 72 Summary Compensation Table Name and Principal Position Year Salary ($) Bonus ($) Option Awards (1) ($) All Other Compensation (2) ($) Total ($) Allen Salmasi 2024 - - $ 11,640,727 $ 11,640,727 Chief Executive Officer 2023 - - - - - Janice K. Smith 2024 250,000 40,000 (2) 163,438 11,600.00 465,038 Chief Operating Officer 2023 250,838 500 10,034 261,372 Mark Tubinis 2024 210,000 30,000 8,428 248,428 Chief Commercial Officer 2023 210,708 500 - 8,850 220,058 (1) The amounts reported in this column do not reflect dollar amounts actually received by our named executive officers. Instead, these amounts reflect the grant date fair value of each stock option award granted, computed in accordance with the provisions of FASB ASC Topic 718. See Note 10, Stock Incentive Plans to the accompanying consolidated financial statements included elsewhere in this Annual Report for the assumptions used in calculating the grant date fair value of the stock option awards reported in this column. (2) Consists of Company 401(k) matching contributions. (3) Consists of a special cash bonus in recognition of exceptional performance by Ms. Smith in 2024. Existing NEO Employment Agreements Allen Salmasi, as founder and Chief Executive Officer of Veea and largest stockholder, has largely controlled all significant decisions of Veea since its inception. Because of this unique role, Mr. Salmasi previously was not a party to an employment agreement or letter agreement with Veea; and prior to December 2024, Mr. Salmasi received no salary or equity awards since Veea’s inception. Ms. Smith does not have a written employment agreement with Veea. On December 31, 2019, Private Veea entered into an offer letter with Mr. Tubinis, pursuant to which Mr. Tubinis began serving as Chief Commercial Officer. The offer letter provides for an indefinite term of employment. Pursuant to the offer letter, Mr. Tubinis was entitled to an initial annual salary of $210,000. Each of the NEOs is eligible to participate in a number of Company-sponsored benefit plans, programs and arrangements. 73 Outstanding Equity Awards at Year-End The following table provides information on outstanding equity awards as of December 31, 2024 to our NEOs. Stock Awards Name Number of shares or units of stock that have not vested (#) Market value of shares or units of stock that have not vested ($) Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) Equity Incentive Plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) Allen Salmasi (1) 0 0 0 $ 0 Janice K. Smith (2) 0 0 0 $ 0 Mark Tubinis 0 0 0 $ 0 Name Grant Date Number of securities underlying unexercised options exercisable (#) Number of securities underlying unexercised options unexercisable (#) Equity incentive plan awards: number of securities underlying unexercised unearned options (#) Option exercise price ($) Option expiration date Allen Salmasi (1) 12/30/24 3,036,308 0 0 $ 3.89 12/30/28 Janice K. Smith (2) 5/19/22 29,345 0 0 3.01 5/19/32 5/10/24 18,013 0 0 9.07 5/10/34 Mark Tubinis (3) 12/31/19 15,695 0 0 2.75 12/31/29 4/30/20 23,542 0 0 2.75 4/30/30 5/19/22 9,975 0 0 3.01 5/10/32 5/10/24 3,306 0 0 9.01 5/10/24 (1) All equity awards held by Mr., Salmasi are fully vested. (2) All equity awards held by Ms. Smith are fully vested. (3) All equity awards held by Mr. Tubinis are fully vested. Narrative Disclosure to Summary Compensation Table Base Salaries In 2024 and 2023, as applicable, the named executive officers received annual base salaries to compensate them for services rendered to the Company. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. In 2023 the annual base salaries of Ms. Smith and Mr. Michael Salmasi were $250,000, $210,000 and $240,000, respectively and remained unchanged in 2024. Mr. Allen Salmasi did not receive an annual salary in 2023 and 2024. Cash Bonuses In 2024 and 2024 we did not have any formal arrangement swith our named executive officers providing for annual cash bonus awards. Ms. Smith received a discretionary cash bonus in 2024, as discussed below. CEO Equity Award On December 30, 2024, the Board approved an equity award to Mr. Salmasi in the form of a non-qualified stock option to purchase 2,992,475 shares of common stock for an exercise price per share of $3.89, which was the fair market value of a share of common stock on the grant date. The award was fully vested and exercisable at the time of grant and expires December 30, 2028. The award was made in recognition of Mr. Salmasi’s exceptional performance and contributions to the Company and its subsidiaries. 74 2024 Special Bonus to Ms. Smith On November 11, 2024, the Compensation Committee approved a discretionary special cash bonus in the amount of $40,000 to Ms. Smith, for her exceptional performance in fiscal year 2024. The special bonus was paid, less applicable tax withholding in December 2024. Equity Compensation Veea maintains the Veea Inc. 2024 Incentive Award Plan (the “2024 Incentive Plan”), which became effective upon the Closing. 4,460,437 shares of Common Stock were initially reserved for issuance of awards under the 2024 Incentive Plan (the “Initial Limit”). The Initial Limit is subject to increase over a ten-year period. The 2024 Incentive Plan provides for the grant of stock options, which may be ISOs or non-statutory stock options (“NSOs”), stock appreciation rights (“SARs”), restricted shares, restricted stock units and other stock or cash-based awards that the administrator determines are consistent with the purpose of the 2024 Incentive Plan. As of December 31, 2024, the Company had 111,364 shares available for issuance under the 2024 Incentive Plan. Veea also maintains the 2024 Employee Stock Purchase Plan (the “ESPP”), which became effective upon the Closing. An aggregate of 1,070,603 shares of Common Stock have been reserved for issuance under the ESPP, which represents 3% of the aggregate number of shares of the Company’s common stock outstanding immediately after the Closing. This amount is subject to increase each year over a ten-year period. The ESPP provides eligible employees with an opportunity to purchase Common Stock from the Company at a discount through accumulated payroll deductions. The first purchase period has not begun as of December 31, 2024. Under the terms of the ESPP, the purchase price per share cannot be less than 85% of the lower of the fair market value per share of our common stock on either the offering date or on the purchase date. Health and Welfare Plans Our NEOs are eligible to participate in the employee benefit plans that we offer to our employees generally, including medical, dental, vision, life and accidental death and dismemberment, and short- and long-term disability benefits. Retirement Plan In 2024 and 2023, as applicable the named executive officers participated in a 401(k) retirement savings plan maintained by us. The Internal Revenue Code of 1986, as amended (the “Code”) allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. In 2024 and 2023, contributions made by participants, including the named executive officers, in the 401(k) plan were matched by the Company up to a specified percentage of the employee contribution. These matching contributions generally vest on the date on which the contribution is made. Our named executive officers continue to be eligible to participate in the 401(k) plan on the same terms as other full-time employees. We do not maintain any other retirement or separation benefits for our named executive officers. Director Compensation The following table provides information for the compensation of our non-employee directors for the fiscal year ended December 31, 2024: Fees earned or Stock paid in cash Awards Total Name ($)(1) ($)(2)(3) ($) Douglas Maine 20,000 250,000 270,000 Kanishka Roy 20,000 250,000 270,000 Alan Black 20,000 250,000 270,000 Helder Antunes 20,000 250,000 270,000 Gary Cohen 20,000 250,000 270,000 (1) Consist of cash compensation paid to the directors for services as a director in 2024. (2) As of December 31, 2024, the aggregate number of stock and option awards held by each director was as follows: ● Douglas Maine holds 19,619 option awards and 81,116 RSU awards; ● Mr. Roy holds 81,116 RSU awards; ● Mr. Black holds 81,1186RSU awards; ● Mr. Antunes holds 81,1186 RSU awards; and ● Mr. Cohen holds 81,116 RSU awards. (3) Consists of grants of RSUs. Reflects the aggregate grant date fair value of any RSUs granted, determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation. Assumptions used in the calculation of this amount are included in Note 10, Stock Incentive Plans to the Consolidated Financial Statements included in the this Annual Report. This amount does not reflect the actual economic value that will ultimately be realized by each director. 75 Our non-employee director compensation program provides for annual retainer fees and/or equity awards for our non-employee directors as summarized below. In 2024, non-employee directors received an annual cash retainer of $20,000 and an equity award in the form of RSUs, as set forth above. Position Annual Cash Retainer Non-Executive Member of Board $ 35,000 Audit Committee Chair 15,000 Other Audit Committee Member 7,500 Compensation Committee Chair 10,000 Other Compensation Committee Member 5,000 Nominating and Corporate Governance Committee Chair 7,500 Other Nominating and Corporate Governance Member 4,000 Compensation under our non-employee director compensation policy will be subject to the annual limits on non-employee director compensation set forth in the 2024 Plan, as described above,. Our board of directors or its authorized committee may modify the non-employee director compensation program from time to time in the exercise of its business judgment, taking into account such factors, circumstances and considerations as it shall deem relevant from time to time, subject to the annual limit on non-employee director compensation set forth in the 2024 Plan. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth information known to the Company regarding beneficial ownership of shares of the Company’s Common Stock as of March 14, 2025 by: ● each person known by the Company to be the beneficial owner of more than 5% of the Company’s outstanding Common Stock; ● each of the Company’s named executive officers and directors; and ● all executive officers and directors as a group. Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options, warrants and certain other derivative securities that are currently exercisable or will become exercisable within 60 days. The percentage of beneficial ownership is based on 34,440,377 shares of Common Stock issued and outstanding as of March 14, 2025. In accordance with SEC rules, shares of our Common Stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the Closing are deemed beneficially owned by the holders of such options and warrants and are deemed outstanding for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage of ownership of any other person. 76 Unless otherwise indicated, the business address of each of the entities, directors and executives in this table is 164 E. 83rd Street, New York, New York, United States. Unless otherwise indicated and subject to community property laws and similar laws, the Company believes that all parties named in the table below have sole voting and investment power with respect to all shares of Common Stock beneficially owned by them. Name and Address of Beneficial Owners (1) Number of Shares of Common Stock % Directors and Executive Officers Allen Salmasi (2) 18,877,959 34.13 % Janice K. Smith (3) 147,868 * Mark Tubinis (4) 52,518 * Douglas Maine (5) 125,627 * Helder Antunes (6) 121,116 * Michael Salmasi 309,441 * Kanishka Roy (7) 3,217,278 8.11 % Gary Cohen 81,116 * Alan Black 120,836 * 5% Stockholders NLabs Inc. 12,148,921 25 % Salmasi 2004 Trust 2,808,475 7.16 % Ursula Burns (8) 2,071,207 5.38 % Mike Dinsdale (9) 2,477,302 6. 37 % All directors and executive officers as a group (9 individuals) 23,053,759 38.75 % * Less than 1%. (1) Unless otherwise noted, the business address of each of the following entities or individuals is 164 E. 83rd Street, New York, New York, United States. (2) Consists of 12,148,921 shares held by NLabs Inc., an entity controlled by Mr. Salmasi and members of his immediate family, 2,808,475 shares held by Salmasi 2004 Trust, the trustee of which is a member of Mr. Salmasi’s immediate family, 437,029 shares held directly by Mr. Salmasi, 491,059 shares held by Mr. Salmasi’s spouse and options to purchase 2,992,475 shares of Common Stock. (3) Includes options to purchase 47,359 shares of Common Stock. (4) Consists of options to purchase 52,518 shares of Common Stock. (5) Includes options to purchase 14,714 shares of Common Stock. (6) Includes 20,000 shares of Common Stock issuable upon conversion of a convertible promissory note issued at the Closing of the Business Combination. (7) Includes 985,277 shares of Common Stock issuable upon exercise of Private Warrants. (8) Includes 973,358 shares of Common Stock issuable upon exercise of Private Placement Warrants.. (9) Includes 1,517,644 shares of Common Stock issuable upon exercise of Private Placement Warrants. 77 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The following includes a summary of transactions since January 1, 2023 to which we have been a party in which the amount involved will exceed $120,000, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock, or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described under “ Item 11 - Executive Compensation.” We also describe below certain other transactions with our directors, executive officers and stockholders. Certain Relationships and Related Person Transactions of Veea Lease Agreements On March 1, 2014, Private Veea entered into a sublease agreement with NLabs Inc., an affiliate of Private Veea’s CEO (“ NLabs ”) for office space for an initial term of five years. At December 31, 2024, NLabs held approximately 26% of Veea’s outstanding capital stock. In 2018, Private Veea renewed the sublease for an additional five-year term with all other terms and conditions of the sublease remaining the same. The renewal term expired February 28, 2024 and was subsequently extended to June 30, 2025. Rent for the office space is accrued and not paid in cash. The Company recognized rent expense of approximately $244,000 and $237,000, respectively, for the years ended December 31, 2024 and 2023, all of which is classified as general and administrative expenses in the Company’s consolidated statements of operations and comprehensive loss. Accrued and unpaid rent expense included in the Company’s consolidated balance sheet was $1,713,600and $1,468,800, respectively, as of December 31, 2024 and 2023. In April 2017, Private Veea entered into a lease agreement with 83 rd Street LLC to lease office space for an initial term of two years. The sole member of 83 rd Street is the Salmasi 2004 Trust. At December 31, 2024, the Salmasi 2004 Trust held approximately 8% of Veea’s outstanding capital stock. Veea’s CEO is the grantor of the Salmasi 2004 Trust. In 2018, Private Veea renewed the lease for an additional five-year term, with all other terms and conditions of the lease remaining the same. The renewal term expired February 28, 2024 and was subsequently extended to December 31, 2024. Rent for the office space is accrued and not paid in cash. The Company recognized rent expense of approximately $281,000 and $247,000, respectively, for the years ended December 31, 2024 and 2023, all of which is classified as general and administrative expenses in the Company’s consolidated statements of operations and comprehensive loss. Accrued and unpaid rent expense included in the Company’s consolidated balance sheet was $1,944,000 and $1,656,000, respectively, as of December 31, 2024 and 2023. Rent expense for the above leases is reported as general and administrative expenses in the Company’s consolidated statements of operations. Related Party Debt In 2021 and 2022, NLabs made loans to Private Veea evidenced by promissory notes aggregating $9,500,000 (the “Bridge Notes”). Interest on the outstanding principal amount of the Bridge Notes accrued at a rate of 10% per annum, calculated on the basis of a 365-day year. Principal and accrued interest was payable on the maturity date of the Bridge Notes. The original maturity date of the Bridge Notes was December 31, 2022, which was extended to December 31, 2023, and was subsequently extended to September 30, 2024. The Company accounted for the extension as a modification of the Bridge Notes. Interest expense for the years ended December 31, 2024 and 2023 was $195,155 and $237,500, respectively. 78 In 2022 and 2023, NLabs made loans to Private Veea evidenced by promissory notes in the aggregate principal amount of $3,098,000 (the “Promissory Notes” and collectively with the Bridge Notes, the “Related Party Notes”). Interest on the outstanding principal amount of the Promissory Notes accrued at a rate of 10% per annum, calculated on the basis of a 365-day year. Principal and interest on the Promissory Notes was repayable upon the earlier of demand and December 31, 2023. The Promissory Notes remained outstanding as of December 31, 2023 and was subsequently extended to September 30, 2024. Interest expense for the years ended December 31, 2024 and 2023 was $63,709 and $78,087, respectively. At the Closing, the Related Party Notes were converted into shares of common stock at a price of $5.00 per share of common stock, which shares were not considered Private Veea Shares and were in addition to the shares of common stock issued to holders of Private Veea Shares. See Note 4 “Recapitalization” for further information regarding the conversion of the Related Party Notes. In January 2023, Janice Smith, the Company’s Interim Chief Financial Officer and Chief Operating Officer, made a loan to Private Veea in the aggregate principal amount of $50,000. The loan accrues interest on the outstanding principal amount at a rate of 10% per annum. Principal and interest on the loans are repayable upon the earlier of demand and December 31, 2023. The loan was repaid in full in March 16, 2023. In March and April 2025, the Company’s CEO and NLabs made loans to the Company in the aggregate amount of $826,000. Interest on the loan accrues at a rate of 10% per annum, calculated on the basis of a 365-day year. Principal and accrued interest is payable on the earlier of demand or June 30, 2025. Common Stock Warrants In consideration for the guarantee by the Company’s CEO of the Company’s obligations under the 2021 Revolving Loan Agreement and a previously outstanding loan agreement with First Republic Bank, the Company issued warrants to purchase an aggregate of 2,430,000 shares of the Company’s common stock (the “Loan Guarantee Warrants”). The exercise price of the warrants is $.01 per share. The warrants are exercisable for a period of seven years. The warrants were equity classified and had a fair value of $2,189,014 on the date of grant which is recognized as deferred cost and amortized to interest expense over the life of the loan agreements. In December 2021, the Company issued warrants to purchase 630,000 shares of common stock in connection with the Bridge Notes issued to NLabs (the “Tranche 1 Bridge Note Warrants”). The exercise price of the warrants is $.01 per share. The warrants are exercisable for a period of seven years. The warrants were equity classified and had a relative fair value of $499,416 on the date of grant which was recognized as original issue discount on the Bridge Notes in the year ended December 31, 2021. In 2022, the Company issued warrants to purchase 320,000 shares of common stock in connection with the Bridge Notes issued to NLabs (the “Tranche 2 Bridge Note Warrants” and collectively with the Loan Guarantee Warrants and the Tranche 1 Bridge Note Warrants, the “Related Party Common Stock Warrants”). The exercise price of the warrants is $.01 per share. The warrants are exercisable for a period of seven years. The warrants were equity classified and had a fair value of approximately $253,816 on the date of grant which was recognized as original issue discount on the Bridge Notes in the year ended December 31, 2022. At Closing, the Related Party Common Stock Warrants were exercised in whole, on a net basis, for 3,880,000 shares of common stock of Private Veea at a conversion price of $0.01 per share for an aggregate purchase price of $38,800. A total of 21,798 shares of Common Stock were surrendered in payment of the purchase price. Indemnification Agreements Our corporate governance documents provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law, subject to certain exceptions contained in our restated certificate of incorporation. We have also entered into indemnification agreements with certain officers and directors. These agreements provide, among other things, that the Company will indemnify the officer or director, under the circumstances and to the extent provided for in the agreement, for expenses, damages, judgments, fines and settlements they may be required to pay in actions or proceedings which they are or may be made a party by reason of their position as a director, officer or other agent of the Company, and otherwise to the fullest extent permitted under Delaware law and our bylaws. 79 Certain Pre-Business Combination Relationships and Related Person Transactions of Plum Founder Shares On January 13, 2021, the Plum Sponsor paid $25,000, or approximately $0.003 per share, to cover certain offering costs in consideration for 8,625,000 Class B ordinary shares, par value $0.0001 per share (the “Founder Shares”). Up to 1,125,000 Founder Shares were subject to forfeiture to the extent that the over-allotment option was not exercised in full by the underwriter. On April 14, 2021, the underwriter partially exercised its over-allotment option buying 1,921,634 Units thus reducing the total number of share subject to forfeiture to 644,591. On May 2, 2021, the underwriter’s over-allotment option expired and 644,591 Founder Shares were forfeited to the Company. Plum Sponsor and Plum’s directors and executive officers agreed not to transfer, assign or sell any of their Founder Shares until earliest of (A) 180 days after the completion of the initial Business Combination and (B) subsequent to the initial Business Combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading-day period commencing at least 150 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the public shareholders having the right to exchange their Ordinary Shares for cash, securities or other property (the “Lock-up”). Any permitted transferees would be subject to the same restrictions and other agreements of the Plum Sponsor and the directors and executive officers with respect to any Founder Shares. Private Placement Warrants Simultaneously with the closing of the Plum Initial Public Offering, the Plum Sponsor purchased an aggregate of 6,256,218 Private Placement Warrants at a price of $1.50 per Private Placement Warrant in a private placement, generating gross proceeds of $9,384,327. No underwriting discounts or commissions were paid with respect to sale of the Private Placement Warrants. The issuance of the Private Placement Warrants was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. The proceeds from the Private Placement Warrants were added to the proceeds from the Plum Initial Public Offering held in the Trust Account. The Private Placement Warrants are identical to the Warrants sold in the Plum Initial Public Offering, except that the Private Placement Warrants (including the underlying securities) are subject to certain transfer restrictions and the holders thereof are entitled to certain registration rights, and, if held by the original holder or their permitted assigns, the Warrants (i) may be exercised on a cashless basis and (ii) are not subject to redemption. If the Private Placement Warrants are held by holders other than the initial purchasers or their permitted transferees, then the Warrants will be redeemable by Plum and exercisable by the holders on the same basis as the Public Warrants included in the Units sold in the Plum Initial Public Offering. Related Party Loans On January 13, 2021, the Plum Sponsor agreed to loan the Company up to $300,000 to cover expenses related to the Plum Initial Public Offering pursuant to a promissory note (the “Note”). This loan was non-interest bearing and payable on the earlier of November 30, 2021, or the completion of the Plum Initial Public Offering. As of December 31, 2022, the Company has no borrowings under the Note. Borrowings under this note are no longer available. In addition, in order to finance transaction costs in connection with an intended Business Combination, the Plum Sponsor or an affiliate of the Plum Sponsor, or certain of Plum’s officers and directors, and third parties committed to loan Plum funds as may be required (“Working Capital Loans”). If Plum completed a Business Combination, Plum would repay the Working Capital Loans out of the proceeds of the Trust Account released to it. In the event that a Business Combination did not close, the Company could use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of the Working Capital Loans were convertible into Private Placement Warrants of the post Business Combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants. Except as set forth above, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. 80 On April 17, 2023, Plum issued an unsecured promissory note, dated effective as of March 17, 2023 (the “March 2023 Note”), in the principal amount of up to $1,500,000 to Sponsor, which may be drawn down by Plum from time to time prior to the consummation of Plum’s Business Combination. An initial draw in the amount of $480,000 occurred on March 17, 2023. The March 2023 Note did not bear interest, matured on the date of consummation of the Business Combination and was subject to customary events of default. The March 2023 Note would be repaid only to the extent that Plum had funds available to it outside of the Trust Account and is convertible into Private Placement Warrants of Plum at a price of $1.50 per warrant at the option of the Plum Sponsor. On July 25, 2023, Plum issued an unsecured promissory note (the “July 2023 Note”), in the principal amount of up to $1,090,000, to Plum Sponsor, which may be drawn down by Plum from time to time prior to the consummation of Plum’s Business Combination. The July 2023 Note did not bear interest, matured on the date of consummation of the Business Combination and was subject to customary events of default. The July 2023 Note would be repaid only to the extent that Plum had funds available to it outside of the Trust Account and was convertible into Private Placement Warrants of Plum at a price of $1.50 per warrant at the option of the Plum Sponsor. On September 11, 2024 the Company entered into an amendment to the Plum Partners Promissory Note where, upon consummation of a business combination, the outstanding principal balance in excess of $250,000 were converted into common stock of the post-closing entity in an amount of shares equal to the outstanding principal balance divided by $5.00 per share. On January 31, 2022, Plum issued an unsecured promissory note (the “Dinsdale Note”) in the principal amount of $500,000 to Mike Dinsdale. The Dinsdale Note did not bear interest and was repayable in full upon consummation of a Business Combination. Plum could draw on the Dinsdale Note from time to time, in increments of not less than $50,000, until the earlier of March 18, 2023 or the date on which Plum consummates a Business Combination. If Plum did not complete a Business Combination, the Dinsdale Note would not be repaid and all amounts owed under it would be forgiven. Upon the consummation of a Business Combination, the Mr. Dinsdale had the option, but not the obligation, to convert the principal balance of the Dinsdale Note, in whole or in part, into Private Placement Warrants (as defined in that certain Warrant Agreement, dated March 18, 2021, by and between Plum and the Transfer Agent), at a price of $1.50 per Private Placement Warrant. The Dinsdale Note was subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Dinsdale Note and all other sums payable with regard to the Dinsdale Note becoming immediately due and payable. The Dinsdale Note was issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. On September 11, 2024 the Dinsdale Note was amended to provided that upon consummation of the Business Combination, the outstanding principal balance would convert into common stock of the Company in an amount of shares equal to the outstanding principal balance divided by $5.00 per share. On July 11, 2022, Plum issued an unsecured promissory note (the “Burns Note”) in the principal amount of $500,000 to Ursula Burns. The Burns Note did not bear interest and was repayable in full upon consummation of Plum’s initial business combination. Up to fifty percent (50%) of the principal of the Burns Note could be drawn down from time to time at Plum’s option prior to August 25, 2022 and any or all of the remaining undrawn principal of the Burns Note could be drawn down from time to time at the Company’s option after August 25, 2022, in each case in increments of not less than $50,000. If Plum did not complete a Business Combination, the Burns Note would not be repaid and all amounts owed under it would be forgiven. Upon the consummation of a Business Combination, Ms. Burns had the option, but not the obligation, to convert the principal balance of the Burns Note, in whole or in part, into Private Placement Warrants (as defined in that certain Warrant Agreement, dated March 18, 2021, by and between Plum and the Transfer Agent), at a price of $1.50 per Private Placement Warrant. The Burns Note was subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Burns Note and all other sums payable with regard to the Burns Note becoming immediately due and payable. On September 11, 2024 the Burns Note was amended to provided that upon consummation of the Business Combination, the outstanding principal balance would convert into common stock of the Company in an amount of shares equal to the outstanding principal balance divided by $5.00 per share. 81 On March 16, 2023, Plum issued an unsecured promissory note in the total principal amount of up to $250,000 (the “Roy Note”) to Mr. Kanishka Roy, individually and as a member of Plum Sponsor. Mr. Roy funded the initial principal amount of $250,000 on March 16, 2023. The Roy Note did not bear interest and matured upon the consummation of Plum’s initial business combination with one or more businesses or entities. In the event Plum did not consummate a business combination, the Roy Note would be repaid upon Plum’s liquidation only from amounts remaining outside of the Trust Account, if any. The Roy Note was subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Roy Note and all other sums payable with regard to the Roy Note becoming immediately due and payable. On September 11, 2024 the Roy Note was amended to provided that upon consummation of the Business Combination, the outstanding principal balance would convert into common stock of the Company in an amount of shares equal to the outstanding principal balance divided by $5.00 per share. Administrative Support Agreement Plum entered into certain administrative support agreement, pursuant to which Plum paid the Plum Sponsor or an affiliate of the Plum Sponsor for office space, secretarial and administrative services provided to members of the management team. In addition, Plum reimbursed the Plum Sponsor for the reasonable costs of salaries and other services provided to Plum by the employees, consultants and or members of the Plum Sponsor or its affiliates. For the year ended December 31, 2023, Plum incurred $120,000 in fees for office space, secretarial and administrative services and $215,094 in fees for reimbursement of costs of salaries. Pursuant to its terms, the Administrative Support Agreement terminated upon Closing. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. The following table sets forth the aggregate fees billed by PKF O’Connor Davies, LLP for the fiscal years ending December 31, 2024 and 2023, respectively, as described below: 2024 2023 Audit and Related Fees $ 620,472 $ 404,975 Tax Fees $ 21,299 $ 34,000 Total $ 641,771 $ 438,975 Pre-Approval Policies and Procedures The Audit Committee mandate requires that the Audit Committee pre-approve any retainer of the auditor of the Company to perform any non-audit services to the Company that it deems advisable in accordance with applicable legal and regulatory requirements and policies and procedures of the Board. The Audit Committee is permitted to delegate pre-approval authority to one of its members; however, the decision of any member of the Audit Committee to whom such authority has been delegated must be presented to the full Audit Committee at its next scheduled meeting. 82 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES. Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Veea Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Veea Inc. and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, comprehensive income (loss), stockholder’s equity (deficit), and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the auditing standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ PKF O’Connor Davies, LLP We have served as the Company’s auditor since 2023. New York, New York April 15, 2025 PCAOB ID No. 127 * * * * * F- 1 VEEA INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, December 31, 2024 2023 ASSETS Cash $ 1,685,633 $ 6,010,075 Receivables, net 84,655 52,838 Inventory, net 7,459,240 7,375,621 Prepaid and other current assets 5,649,594 513,670 Total current assets 14,879,122 13,952,204 Property and equipment, net 210,629 376,667 Goodwill 4,779,625 4,797,078 Intangible assets, net 786,061 628,477 Right-of-use assets 117,365 545,411 Investments 235,596 451,874 Security deposits 85,497 85,595 TOTAL ASSETS $ 21,093,895 $ 20,837,306 LIABILITIES AND STOCKHOLDERS’ DEFICIT Revolving line of credit $ 12,700,000 $ 9,000,000 Related party notes, net of discount - 12,598,000 Accrued interest, related party - 2,272,993 Accounts payable 1,290,824 1,077,898 Accrued expenses (Note 2) 5,569,322 4,741,495 Investor deposits - 2,048,776 Share issuance liability 250,000 - Deferred payables, current 204,445 - Operating lease liabilities, current 121,579 445,850 Total current liabilities 20,136,171 32,185,012 Convertible note payable, net 37,316 - Conversion option liability 60,000 - Warrant liabilities 840,995 - Earn-out Share Liability (Note 4) 15,560,000 - Deferred payables 1,484,238 - Operating lease liabilities - 119,424 TOTAL LIABILITIES 38,118,720 32,304,436 STOCKHOLDERS’ DEFICIT Preferred stock, $ 0.0001 par value; 1,000,000 shares authorized; none issued and outstanding - - Common Stock, $ 0.0001 par value, 551,000,000 shares authorized, 36,202,798 and 19,635,912 shares issued and outstanding at December 31, 2024 and 2023, respectively 3,621 1,964 Additional paid-in capital 200,667,682 159,475,010 Accumulated deficit ( 217,830,518 ) ( 170,282,750 ) Accumulated other comprehensive income (loss) 135,391 ( 661,354 ) TOTAL STOCKHOLDERS’ DEFICIT ( 17,024,825 ) ( 11,467,130 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 21,093,895 $ 20,837,306 The accompanying notes are an integral part of these consolidated financial statements. F- 2 VEEA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended December 31, 2024 2023 Sales, net $ 141,760 $ 9,072,130 Cost of goods sold 83,290 466,802 Gross profit 58,470 8,605,328 Operating Expenses: Product development 1,373,351 693,448 Sales and marketing 811,537 215,332 General and administrative, net 26,638,816 17,238,184 Transaction costs including those incurred with contingent Earn-out Share Liability 55,038,544 - Depreciation and amortization 273,772 818,203 Total operating expenses 84,136,020 18,965,167 Income (loss) from operations ( 84,077,550 ) ( 10,359,839 ) Other income and (expense): Other income, net 21,390 59,982 UK R&D tax credit 1,251,243 - Loss on initial issuance of convertible note ( 1,770,933 ) - Change in fair value of convertible note option liability 840,933 - Change in fair value of warrant liabilities 200,124 - Change in fair value of Earn-out Share Liability 38,040,000 - Other expense ( 244,732 ) ( 21,857 ) Interest income - 1,942 Interest expense ( 1,808,243 ) ( 5,318,817 ) Total other income and (expense) 36,529,782 ( 5,278,750 ) Net loss $ ( 47,547,768 ) $ ( 15,638,589 ) Basic and diluted weighted average shares outstanding, common stock 25,257,473 16,154,794 Basic and diluted net (loss) income per Common Stock $ ( 1.88 ) $ ( 0.97 ) The accompanying notes are an integral part of these consolidated financial statements. F- 3 VEEA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the Year Ended December 31, 2024 2023 Net loss $ ( 47,547,768 ) $ ( 15,638,589 ) Other comprehensive income (loss): Foreign currency translation adjustment 795,745 ( 1,433,388 ) Comprehensive loss $ ( 46,752,023 ) $ ( 17,071,977 ) The accompanying notes are an integral part of these consolidated financial statements. F- 4 VEEA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2024 and 2023 Series A-2 Preferred Stock Series A-1 Preferred Stock Series A Preferred Stock Private Veea Common Stock Common Stock Additional Paid-in- Accumulated Other Comprehensive Total Stockholders’ Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Gain (Loss) Deficit Balance, December 31, 2022 - $ - 35,094,893 $ 351 35,920,813 $ 359 $ 7,203,514 $ 72 $ - $ - $ 123,779,186 $ ( 154,849,725 ) $ 772,034 $ ( 30,297,723 ) Retroactive application of Business Combination (Note 1) - - ( 35,094,893 ) ( 351 ) ( 35,920,813 ) ( 359 ) ( 7,203,514 ) ( 72 ) 15,345,255 1,535 ( 753 ) – Balance, December 31, 2022, recasted - - - - - - - - 15,345,255 1,535 123,778,433 ( 154,849,725 ) 772,034 ( 30,297,723 ) Conversion of convertible notes and accrued interest - - - - - - - - 1,074,022 107 10,949,090 - - 10,949,197 Issuance of warrants in connection with term note - - - - - - - - 119,732 12 2,010,286 - - 2,010,298 Conversion of promissory notes to Series A-2 Preferred Stock - - - - - - - - 410,170 41 3,076,233 - - 3,076,274 Conversion of vendor payable to Series A-2 Preferred Stock - - - - - - - - 256,017 26 1,920,098 - - 1,920,124 Series A-2 Preferred Stock Issuances, net of transaction costs - - - - - - - - 2,422,870 242 17,256,283 - - 17,256,525 Common stock issued upon exercise of stock options - - - - - - - - 7,847 1 3 - - 4 Stock based compensation due to common stock purchase options - - - - - - - - - - 484,584 - - 484,584 Foreign currency translation (loss) - - - - - - - - - - - - ( 1,433,388 ) ( 1,433,388 ) Change in ownership percentage of non-controlling interest - - - - - - - - - - - 205,564 - 205,564 Net Loss - - - - - - - - - - - ( 15,638,589 ) - ( 15,638,589 ) Balance, December 31, 2023 - - - - - - - - 19,635,912 1,964 159,475,010 ( 170,282,750 ) ( 661,354 ) ( 11,467,130 ) Series A-2 Preferred Stock Issuances, net of transaction costs - - - - - - - - 1,682,799 169 12,009,963 - - 12,010,132 Conversion of vendor payable to Series A-2 Preferred Stock - - - - - - - - 27,654 3 207,405 - - 207,408 Common stock issued upon exercise of stock options - - - - - - - - 41,556 4 25,480 - - 25,484 Stock based compensation for stock options - - - - - - - - - - 5,449,081 - - 5,449,081 Common stock issued upon exercise of stock options, pre Business Combination - - - - - - - - 19,618 2 53,998 - - 54,000 Exercise of Common Stock Warrants - related party - - - - - - - - 756,912 76 ( 76 ) - - - Issuance of Common Stock in exchange for services in connection with A-2 Preferred Stock Issuances, recasted - - - - - - - - 615,385 61 ( 62 ) - - ( 1 ) Issuance of Common Stock upon conversion of debt at Business Combination (Note 1) - - - - - - - - 3,147,970 315 15,739,531 - - 15,739,846 Issuance of Common Stock upon conversion of Sponsor and related party notes and warrants at Business Combination (Note 1) - - - - - - - - 817,453 82 2,205,415 - - 2,205,497 Issuance of Common Stock to Plum Sponsors and Investors at Business Combination (Note 1) - - - - - - - - 6,102,562 610 241,638 - - 242,248 Issuance of Common Stock to Plum Shareholders at Business Combination (Note 1) - - - - - - - - 603,077 60 ( 6,901,658 ) - - ( 6,901,598 ) Issuance of Common Stock related to new financing (Note 1) - - - - - - - - 2,000,000 200 23,999,800 - - 24,000,000 Common Stock issued for services - - - - - - - - 241,667 24 3,214,597 - - 3,214,621 Common stock issued upon exercise of stock options, post Business Combination - - - - - - - - 25,000 2 ( 2 ) - - - Warrant exercise - - - - - - - - 79,653 8 ( 8 ) - - - Common Stock issued as stock based compensation for restricted stock units - - - - - - - - 405,580 41 1,249,959 1,250,000 Settlement of convertible note agreement for shares issued - - - - - - - - - - ( 16,302,389 ) - - ( 16,302,389 ) Foreign currency translation gain - - - - - - - - - - - - 795,745 795,745 Net Loss - - - - - - - - - - - ( 47,547,768 ) - ( 47,547,768 ) Balance, December 31, 2024 - - - - - - - - 36,202,798 3,621 200,667,682 ( 217,830,518 ) 134,391 ( 17,024,824 ) The accompanying notes are an integral part of these consolidated financial statements. F- 5 VEEA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2024 and 2023 For the year ended December 31, 2024 2023 Cash flows from operating activities Net loss $ ( 47,547,768 ) $ ( 15,638,589 ) Adjustments to reconcile net loss to net cash used for operating activities: Depreciation and amortization 273,772 818,203 Amortization of debt issuance costs 287,316 2,010,298 Loss on initial issuance of debt 1,770,933 - Change in fair value of convertible note option liability ( 840,933 ) - Change in fair value of warrant liabilities ( 200,124 ) - Loss on initial issuance of Earn-out Share Liability 53,600,000 - Change in fair value of Earn-out Share Liability ( 38,040,000 ) - Impairment loss on investment 216,278 174,066 Stock based compensation 6,699,081 484,584 Provision for inventory obsolescence 551,492 320,335 Interest expense on convertibles notes converted 868,853 979,611 Unrealized foreign currency transaction (gain) loss 741,844 ( 1,332,914 ) Amortization of operating lease right of use assets 428,046 793,209 Changes in operating assets and liabilities: Accounts receivable ( 31,776 ) ( 27,843 ) Inventories ( 639,340 ) ( 147,982 ) Prepaid and other current assets ( 5,064,849 ) ( 388,673 ) Security deposit - 12,176 Accounts payable 341,913 ( 1,591,487 ) Accrued expenses 1,183,951 340,525 Accrued interest - 1,386,048 Operating lease payments ( 193,695 ) ( 844,198 ) Net cash used in operating activities ( 25,595,008 ) ( 12,652,630 ) Cash flows from investing activities Purchase of property and equipment ( 46,204 ) ( 34,966 ) Purchase of intangible assets and trademarks ( 219,241 ) ( 120,088 ) Net cash used in investing activities ( 265,445 ) ( 155,054 ) Cash flows from financing activities Proceeds from issuance of unrelated party convertible notes 1,450,000 3,000,000 Proceeds from term loan - 5,000,000 Payment of unrelated party debt - ( 10,979,611 ) Proceeds from revolving line of credit 3,700,000 - Proceeds from notes - related party 5,286,016 2,248,000 Proceeds from reverse recapitalization 1,103,640 - Proceeds from the exercise of stock options for common stock 79,484 4 Proceeds from prepaid investor subscriptions - 2,048,776 Proceeds from the issuance of Class A common stock, net of transaction costs 9,961,356 17,256,525 Net cash provided by financing activities 21,572,753 18,573,694 Effect of exchange rate changes on cash ( 36,743 ) 58,184 Net increase (decrease) in cash and cash equivalents ( 4,324,442 ) 5,824,194 Cash and cash equivalents at beginning of year 6,010,075 185,881 Cash and cash equivalents at end of year $ 1,685,633 $ 6,010,075 Non-cash activities Initial measurement of debt discount on the convertible note $ ( 1,450,000 ) $ - Initial measurement of the Contingent Financing Costs $ 549,067 $ - Initial measurement of the convertible note option liability $ 900,933 $ - Conversion of related party notes to Common Stock $ 2,205,497 $ - Initial measurement of the convertible note option liability $ 1,450,000 $ - Conversion of principal on related party notes to Common Stock $ 12,598,000 $ - Conversion of interest on related party notes to Common Stock $ 3,141,846 $ - Issuance of Common Stock related to convertible note payable $ 24,000,000 $ - Conversion of vendor payable to Common Stock $ 3,422,028 $ 1,920,124 Conversion of principal on convertible notes to preferred stock - Series A-1 $ - $ 8,993,240 Conversion of interest on convertible notes to preferred stock - Series A-1 $ - $ 1,955,957 Private Veea Warrants issued with term note payable $ - $ 1,682,750 Conversion of notes payable to Series A-2 Preferred Shares $ - $ 3,076,274 Supplemental cash flow information Interest paid $ 504,431 $ 892,336 The accompanying notes are an integral part of these consolidated financial statements. F- 6 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 1 - DESCRIPTION OF BUSINESS The Company is a provider of edge computing and communications devices (i.e., “VeeaHub®” devices), applications and services hosted on its edge Platform-as-a-Service (“ePaaS”). Veea Edge Platform ePaaS is an end-to-end platform that is both locally- and cloud-managed. VeeaHub® products are converged computing and communications (i.e., hyperconverged) indoor and outdoor devices, about the size of a Wi-Fi Access Point (AP), that provide for networking and computing solutions for AI-assisted applications and solutions at the edge where people, places, and things connect to the network. Veea Edge Platform™ provides for highly secure connectivity, computing, and IoT solutions through full stack platform for digital transformation of industries as well as unserved or underserved communities that lack Internet connectivity and essential applications and services. It further enables 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. We have redefined and simplified edge computing and connectivity with Veea Edge Platform™, easily deployable products that fully integrate hardware, system software, technologies, and edge applications. We are demonstrating, globally, that the Veea Edge Platform™ enables our partners and customers to champion digital transformations in multiple vertical markets. Through our innovative Veea Edge Platform, we have created a new product category that brings cloud capabilities close to the user, as an alternative to cloud computing, with benefits in optimal latency, lower data transport costs, data privacy, security and ownership, Edge AI, “always-on” availability at the edge for mission critical applications, and contextual awareness for people, devices and things connected to the Internet. The Company was recognized in 2023 by Gartner as a Leading Smart Edge Platform for the innovativeness and capabilities of our Veea Edge Platform and a Cool Vendor in Edge Computing in 2021. Veea was named in Market Reports World’s in its research report published in October 2023 as one of the top 10 Edge AI solution providers alongside of IBM, Microsoft, Amazon Web Services among others. On September 13, 2024 Plum Acquisition Corp. I. (“Plum”), a special purpose acquisition company, Veea Inc., a Delaware corporation (“Private Veea”) consummated its previously announced Business Combination, pursuant to that certain Business Combination Agreement, dated November 27, 2023 (as amended on June 13, 2024 and September 13, 2024, the “Business Combination Agreement”), between Plum, Private Veea, and Plum Merger Sub, a Delaware corporation) (“Plum Merger Sub”). 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 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. I” to “Veea Inc.” (hereinafter “Veea” or “the Company” and Private Veea changed its name from “Veea Inc.” to “VeeaSystems Inc.” See Note 4 “Recapitalization” for more information. The Company has six wholly owned subsidiaries, VeeaSystems Inc., formerly known as Veea Inc. a Delaware corporation, Veea Solutions Inc., a Delaware corporation VeeaSystems Development Inc., formerly known as Veea Systems Inc., a Delaware corporation, Veea Systems Ltd., a company organized under the laws of England and Wales, VeeaSystems SAS, a French simplified joint stock company and Veea Systems Mexico, S. de R.L. de C.V., a limited liability company organized under the General Mercantile Corporations law of Mexico (“VeeaSystems MX”). VeeaSystems MX is 95 % owned by Veea Systems Inc. and, due to local law requirements, the remaining 5 % is held by Veea’s CEO The Company is headquartered in New York City with offices in the United States, Mexico and Europe. F- 7 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 2 – LIQUIDITY AND MANAGEMENT’S PLAN Since our inception the Company has incurred significant operating losses and negative cash flows. To date, the Company has financed its operations primarily through private placements of equity securities and debt. As of December 31, 2024 and 2023, the Company had an accumulated deficit of $ 217.8 million and $ 170.3 million, respectively. As of December 31, 2024 and 2023, the Company had cash of $ 1.7 million and $ 6.0 million, respectively. As of December 31, 2024, the Company had $ 13.9 million outstanding debt, of which approximately $ 1.2 million was outstanding under the September 2024 Notes and $ 12.7 million was outstanding under our working capital facility. The Company’s consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include adjustments to reflect the possible future effects on the recoverability and classification of recorded assets or the amounts of liabilities that might be necessary should the Company be unable to continue as a going concern. Although we have incurred recurring losses each year since our inception, we plan to fund our operations and capital funding needs through a combination of private and public equity and debt offerings, or a combination thereof, including, (1) available cash proceeds from equity sales under the ELOC Program, (2) cash proceeds from a substantial strategic investment anticipated to close in the second quarter of 2025, and (3) savings from planned expense reduction measures. Taking into account these plans as well as (1) the expected cash tax refund of up to $ 2.0 million in respect of the Company’s UK subsidiary’s 2023 and 2024 research and development activities, (2) the anticipated refund by June 30, 2025, of up to $ 5.0 million of the Company’s prepayment for purchased inventory and (3) potential additional investments in the form of debt or equity to fund operating deficits from existing investors, including related parties, which may include the Company’s CEO and his affiliates, the Company expects it will be able to fund its operations over the next twelve months and has a reasonable basis to believe it has alleviated substantial doubt regarding its ability to continue as a going concern. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company, if at all. 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The Company’s consolidated financial statement include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We consolidate any variable interest entity (“VIE”) where we have determined we are the primary beneficiary. The primary beneficiary is the entity which has both: (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the entity that could potentially be significant to the VIE. During 2024, the Company had one VIE, VeeaSystems MX. Transactions with VeeaSystems MX were immaterial during all periods presented and are not separately disclosed. Basis of Presentation and Significant Accounting Policies The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding annual financial reporting. Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative U.S. GAAP included in the Accounting Standards Codification (“ASC”), and Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). Use of Estimates Management of the Company is required to make certain estimates, judgments, and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. The Company believes that these estimates, judgments and assumptions are reasonable under the circumstances. These estimates, judgments, and assumptions impact the reported amounts of assets, liabilities, revenue, and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates. Changes in such estimates could affect amounts reported in future periods. On an ongoing basis, the Company evaluates its estimates and judgments including those related to: liquidity and going concern, the useful lives and recoverability of property and equipment and definite-lived intangible assets; the recoverability of goodwill and indefinite-lived intangible assets; the carrying value of accounts receivable, including the determination of the allowance for credit losses; inventory, including the determination of allowances for estimated excess or obsolescence; the fair value of warrants; the fair value of acquisition- related contingent consideration arrangements; unrecognized tax benefits; legal contingencies; the incremental borrowing rate for the Company’s leases; and the valuation of stock-based compensation, among others. F- 8 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Reclassification Certain amounts from prior period financial statements have been reclassified to align with the presentation used in the current consolidated financial statements for comparative purposes. These reclassifications had no material effect on the Company’s previously issued financial statements. Emerging Growth Company Status The Company is an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Segment Information The Company complies with ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses among other disclosure requirements. See Note 17 – Segment information for more information. Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable: Level 1 - Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets. Level 2 - Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active, and inputs that are derived principally from or corroborated by observable market data. Level 3 - Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the assets or liabilities. The Company issued common stock warrants classified as equity securities which do not require recurring fair value measurement. See Note 11 – Warrants for the assumptions used in estimating the fair value of such common stock warrants . F- 9 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Recurring Fair Value Measurements The following methods and assumptions were used to estimate the fair value of each class of financial assets and liabilities for which it is practicable to estimate fair value: Money market funds - The carrying amount of money market funds approximates fair value and is classified within Level 1 because the fair value is determined through quoted market prices. Private Warrants - The carrying value of the warrants is classified within Level 2 because the fair value is determined through quoted market prices, which are valued using the closing market price of the public warrants as the private placement warrants have terms and provisions that are identical to those of the public warrants. Convertible Note Option Liability - The initial measurement and carrying value of the conversion option is classified within Level 3 because the fair value is determined through an option pricing model. Earn-Out Share Liability - The initial measurement and carrying value is classified within Level 3 because the fair value is determined through Monte Carlo simulation. The Company’s remaining financial instruments that are measured at fair value on a recurring basis consist primarily of cash, accounts receivable, accounts payable, accrued expenses, and other current liabilities. The Company believes their carrying values are representative of their fair values due to their short-term maturities. Business Combinations The Company evaluates whether acquired net assets should be accounted for as a business combination or an asset acquisition by first applying a screen test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If so, the transaction is accounted for as an asset acquisition. If not, the Company applies its judgement to determine whether the acquired net assets meets the definition of a business by considering if the set includes an acquired input, process, and the ability to create outputs. The Company accounts for business combinations using the acquisition method when it has obtained control. The Company measures goodwill as the fair value of the consideration transferred, including the fair value of any non-controlling interest recognized, less the net recognized amount of the identifiable assets acquired and liabilities assumed, all measured at their fair value as of the acquisition date. Transaction costs, other than those associated with the issuance of debt or equity securities, that the Company incurs in connection with a business combination are expensed as incurred. Any contingent consideration (i.e., earnout liabilities) is measured at fair value at the acquisition date. For contingent consideration that do not meet all the criteria for equity classification, such contingent consideration are required to be recorded at their initial fair value at the acquisition date, and on each balance sheet date thereafter. Changes in the estimated fair value of liability-classified contingent consideration are recognized on the consolidated statements of operations in the period of change. F- 10 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 When the initial accounting for a business combination has not been finalized by the end of the reporting period in which the transaction occurs, the Company reports provisional amounts. Provisional amounts are adjusted during the measurement period, which does not exceed one year from the acquisition date. These adjustments, or recognition of additional assets or liabilities, reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date. Cash and Cash Equivalents Cash balances are held in U.S. and European banks. Cash balances held in the U.S. are insured by the Federal Deposit Insurance Corporation subject to certain limitations. The Company maintains its cash balances in highly rated financial institutions. At times, cash balances may exceed federally insurable limits. Restricted Cash The Company is not subject to any contractual agreement that contains restrictions on the Company’s use or withdrawal of its cash or cash equivalents. Revenue Recognition The Company recognizes revenue based on the satisfaction of distinct obligations to transfer goods and services to customers. The Company 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; (4) allocate 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. The Company earns revenue from the sale of its VeeaHub® devices, licenses and subscriptions. The Company generated revenues of $ 141,760 and $ 9,072,130 during the years ended December 31, 2024 and 2023, respectively. 2023 revenue was generated from the license of AdEdge™. 2024 revenue for all periods presented was generated principally from paid pilots. For 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. Revenue from hardware sales is recognized at a point-in-time, which is generally at the point in time when products have been shipped, right to payment has been obtained and risk of loss has been transferred. Certain of the Company’s product’s performance obligations include proprietary operating system software, which typically is not considered separately identifiable. Therefore, sales of these products and the related software are considered one performance obligation. Revenue from all sales types is recognized at the transaction price - the amount management expects to be entitled to in exchange for transferring goods or providing services. Transaction price is calculated as selling price net of variable consideration which may include estimates for future returns, price protection, warranties, and other customer incentive programs based upon the Company’s expectation and historical experience. The Company contracts with customers under non-cancellable arrangements. While customers, including resellers, may cancel master purchase agreements under certain circumstances, customers may not cancel or modify purchase orders placed under the terms of such master purchase agreements. Each purchase order is therefore a contract with the customer, i.e., the purchase of a quantity of any given, single product; further, purchase orders do not commit the customer to purchase any further volumes over time. Contract modifications do not carry revenue recognition implications as revenue is not recognized until control over products, or intellectual property, as applicable, has transferred to the customer. The Company has service arrangements where net sales are recognized over time. These arrangements include a variety of post-contract support service offerings, which are generally recognized over time as the services are provided, including maintenance and support services, and professional services to help customers maximize their utilization of deployed systems. F- 11 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 A contract liability for deferred revenue is recorded when consideration is received or is unconditionally due from a customer prior to transferring control of goods or services to the customer under the terms of a contract. Deferred revenue balances typically result from advance payments received from customers for product contracts or from billings in excess of revenue recognized on services arrangements. Deferred revenue balances were not significant as of December 31, 2024 and 2023. Disaggregation of Revenue The following tables summarize revenue from contracts with customers for the years ended December 31, 2024 and 2023, respectively: For the year ended December 31, 2024 2023 Hardware, net $ 110,529 $ 22,612 License 11,920 9,006,716 Subscription 1,116 243 Others 18,195 42,559 Total Revenue $ 141,760 $ 9,072,130 Warranties The Company accrues the estimated cost of product warranties at the time of recognizing revenue. The Company’s standard product warranty terms generally include post-sales support and repairs or replacement of a product at no additional charge for a specified period of time. The Company actively monitors and evaluates the quality of its component suppliers. The estimated warranty obligation is based on contractual warranty terms, repair costs, and the Company’s baseline experience. The Company’s standard warranty terms are twelve months. Warranty expense was not significant for the years ended December 31, 2024 and 2023. Accounts Receivable Trade accounts receivable are recognized and carried at billed amounts less an allowance for credit losses. The Company adopted the Current Expected Credit Losses (“CECL”) guidance effective January 1, 2023. The Company maintains the allowance for estimated losses resulting from the inability of the Company’s customers to make required payments. The allowance represents the current estimate of lifetime expected credit losses over the remaining duration of existing accounts receivable considering current market conditions and supportable forecasts when appropriate. The estimate is a result of the Company’s ongoing evaluation of collectability, customer creditworthiness, historical levels of credit losses, and future expectations. The allowance for credit losses were not significant as of December 31, 2024 and 2023. Inventory The Company values inventory at the lower of cost or net realizable value. Cost is computed using standard cost which approximates actual cost on a first-in, first-out basis. At each reporting period, the Company assesses the value of its inventory and writes down the cost of inventory to its net realizable value, if required, for estimated excess or obsolescence. Factors influencing these adjustments include changes in future demand forecasts, market conditions, technological changes, product life cycle and development plans, component cost trends, product pricing, physical deterioration, and quality issues. The write down for excess or obsolescence is charged to the provision for inventory, in the Company’s consolidated statements of operations and comprehensive loss. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. For the year ended December 31, 2024, the Company recorded $ 551,492 as a provision for inventory. F- 12 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Cost of Goods Sold Cost 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. Shipping and Handling The Company considers shipping and handling to customers to represent activities performed in fulfilling the contract with the customer. When shipping is charged to the customer, the Company nets such charges against actual shipping costs incurred. Tax Collected from Customers Taxes imposed by governmental authorities on the Company’s revenue producing activities, such as sales taxes, are excluded from net sales. Research and Development Research and development (“R&D”) costs that do not meet the criteria for capitalization are expensed as incurred. R&D costs 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. Sales and Marketing Sales and marketing costs consist of compensation and other employee related costs for personnel engaged in selling and marketing, and sales support functions. Selling expenses also include marketing, and the costs associated with customer evaluations. The Company does not incur advertising costs. General and Administrative Expense General and administrative expense consists of compensation expense (including stock-based compensation expense), executive management, finance, legal, tax, and human resources. General and administrative expense also include transaction costs, expenses associated with facilities, information technology, external professional services, legal costs and settlement of legal claims, unrealized foreign currency transaction gain/loss and other administrative expenses. F- 13 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Property and Equipment, net Property and equipment, net is stated at cost and depreciated on a straight-line basis of five to seven years for furniture and fixtures and five years for computer equipment. Leasehold improvements are capitalized and amortized over the shorter of their useful lives or remaining lease term. Repair and maintenance costs are charged to operations in the periods incurred. Upon retirement or sale, costs and related accumulated depreciation or amortization are removed from the balance sheets and the resulting gain or loss is included in operating expense in the Company’s consolidated statements of operations and comprehensive loss. Goodwill Goodwill represents the excess of the aggregate purchase consideration over the fair value of the net assets acquired. Goodwill is reviewed for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may be impaired. In conducting its annual impairment test, the Company first reviews qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If factors indicate that the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative assessment, and the fair value of the reporting unit is determined by analyzing the expected present value of future cash flows. If the carrying value of the reporting unit continues to exceed its fair value, the fair value of the reporting unit’s goodwill is calculated and an impairment loss equal to the excess is recorded. The Company’s goodwill was recorded in connection with an acquisition consummated in June 2018. For each of the years ended December 31, 2024 and 2023, there were no events or indicators that goodwill was impaired. Impairment of Long-Lived Assets Long-lived assets with finite lives consist primarily of property and equipment, operating lease right-of-use assets, and intangible assets which are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Stock-Based Compensation The Company accounts for stock-based compensation expense in accordance with ASC 718, Compensation-Stock Compensation (“ ASC 718”). The Company measures and recognizes compensation expense for all stock-based awards based on estimated fair values on the date of the grant, recognized over the requisite service period. For awards that vest solely based on a service condition, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period. The Company accounts for forfeitures in the period in which they occur. Income Taxes Effective June 8, 2018, the Company converted from an S Corporation to a C Corporation for federal and state income tax purposes. Accordingly, prior to the conversion to a C corporation, the Company did not record deferred tax assets or liabilities or have any net operating loss carryforwards. The Company is required to file tax returns in the U.S. federal jurisdiction and various states and local municipalities. The Companies non-US subsidiaries are required to files tax returns in the jurisdictions of their organization. Significant judgment is required in determining the Company’s uncertain tax positions. It is not expected that there will be a significant change in uncertain tax positions for the years ended December 31, 2024 and December 31, 2023, respectively. Foreign Operations and Foreign Currency Translation The currency of the primary economic environment in which the operations of the Company and its U.S. subsidiaries are conducted is the United States dollar (“USD”). Accordingly, the Company and all of its U.S. subsidiaries use USD as their functional currency. The results of the Company’s non-U.S. subsidiaries, whose functional currency are the local currencies of the economic environment in which they operate, are translated into USD in accordance with GAAP. F- 14 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Assets and liabilities are translated at year-end exchange rates, while revenues and expenses are translated at average exchange rates during the year. Differences resulting from translation are presented in equity as accumulated other comprehensive loss. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Foreign currency transaction (gain) loss, mainly related to intercompany transactions, is included in the consolidated statements of operations. For the years ended December 31, 2024 and 2023, transactions losses were $ 1,231,954 and $ 1,433,388 , respectively. Comprehensive Loss Comprehensive loss consists of two components, net loss and other comprehensive income (loss), net. Other comprehensive income (loss), net is defined as revenue, expenses, gains, and losses that under GAAP are recorded as an element of stockholders’ deficit but are excluded from net loss. The Company’s other comprehensive loss consists of foreign currency translation adjustments that result from the consolidation of its foreign subsidiaries and is reported net of tax effects. Investments The Company holds non-marketable equity and other investments (“privately held investments”) which are included in noncurrent assets in the Company’s consolidated balance sheet. The Company monitors these investments for impairments and makes adjustments in carrying values if management determines that an impairment charge is required based primarily on the financial condition and near-term prospects of these investments. Concentration of Risks Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents, and accounts receivable. Cash balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit of $ 250,000 . The Company has not experienced any losses in such accounts. For the year ended December 31, 2024, four customers accounted for 15 %, 20 %, 15 % and 15 %, respectively, of the Company’s revenue. For the year ended December 31, 2023 one customer accounted for 99 % of the Company’s revenue. For the year ended December 31, 2024, two vendors accounted for 37 % and 36 %, respectively, of the Company’s total vendor purchases. For the year ended December 31, 2023, one supplier accounted for 39 % of the Company’s total supplier purchases. As of December 31, 2024, three customers accounted for 11 %, 14 % and 17 % of the Company’s accounts receivable, and two vendors accounted for 19 % and 13 % of the Company’s accounts payable balance. As of December 31, 2023, two customers accounted for 36 % and 23 % of the Company’s accounts receivable, and no vendor accounted for 10% or more of the Company’s accounts payable balance. F- 15 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Earnings per Share, recasted Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the year. Diluted net loss per share is based upon the diluted weighted-average number of shares outstanding during the year. Diluted net loss per share gives effect to all potentially dilutive common share equivalents, including stock options, and warrants, to the extent they are dilutive. See Note 15 - Earnings Per Share . Convertible Note Payable When the Company issues convertible debt, it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine (1) whether the instrument should be classified as a liability under ASC 480, Distinguishing Liabilities from Equity, and (2) whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible debt instrument would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of a “derivative” in ASC 815, Derivatives and Hedging. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the consolidated balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements of operations. See Note 7 “Debt” for further information. Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB Accounting Standards Codification 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and at their fair value on each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss in the Company’s consolidated statements of operations. The Company accounts for the Public and Private warrants in accordance with guidance contained in ASC 815-40. Such guidance provides that because the Public warrants meet the criteria for equity treatment. Such guidance provides that because the Private warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability See Note 11 “Warrants” for further information. F- 16 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Accounting Pronouncements Recently Adopted In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. This ASU includes amendments that expand the existing reportable segment disclosure requirements and requires disclosure of (i) significant expense categories and amounts by reportable segment as well as the segment’s profit or loss measure(s) that are regularly provided to the chief operating decision maker (the “CODM”) to allocate resources and assess performance; (ii) how the CODM uses each reported segment profit or loss measure to allocate resources and assess performance; (iii) the nature of other segment balances contributing to reported segment profit or loss that are not captured within segment revenues or expenses; and (iv) the title and position of the individual or name of the group or committee identified as the CODM. We adopted the ASU on January 1, 2024, and the adoption did not have a material impact on the Company’s consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as reconciling items that meet a quantitative threshold. Further, the ASU requires additional disclosures on income tax expense and taxes paid, net of refunds received, by jurisdiction. The new standard is effective for annual periods beginning after December 15, 2024 on a prospective basis with the option to apply it retrospectively. Early adoption is permitted. The adoption of this guidance will result in the Company being required to include enhanced income tax related disclosures. The Company is currently evaluating the impact this standard will have on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, " Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):Disaggregation of Income Statement Expenses " ("ASU 2024-03"). The standard requires additional disclosure of certain costs and expenses within the notes to the financial statements. The provisions of the standard are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. This accounting standards update may be applied either prospectively or retrospectively. The Company is currently evaluating the impact this standard will have on its consolidated financial statements. 4 - REVERSE RECAPITALIZATION As discussed in Note 1, “Organization and Business Operations”, the Business Combination was consummated on September 13, 2024, which, for accounting purposes, was treated as the equivalent of Private Veea issuing stock for the net assets of Plum, accompanied by an equity recapitalization of Private Veea. Under this method of accounting, Plum was treated as the acquired company for financial accounting and reporting purposes under GAAP. This determination was primarily based on the assumption that: ● Private Veea’s current shareholders will hold a majority of the voting power of New Plum (“New Plum”) post Business Combination ● effective upon the Business Combination, the post-combination Board will consist of seven (7) directors, including five (5) directors designated by Private Veea, one (1) director designated by Plum and one (1) director mutually agreed upon by Plum and Private Veea; F- 17 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 ● Private Veea’s operations will substantially comprise the ongoing operations of New Plum; and ● Private Veea’s senior management will comprise the senior management of New Plum. Another determining factor was that Plum does not meet the definition of a “business” pursuant to ASC 805-10-55, Business Combinations (“ASC 805”), and thus, for accounting purposes, the Business Combination will be accounted for as a reverse recapitalization, within the scope of ASC 805. The net assets of Plum will be stated at historical cost, with no goodwill or other intangible assets recorded. Any excess of the fair value of shares issued to Plum over the fair value of Plum’s identifiable net assets acquired represents compensation for the service of a stock exchange listing for its shares and is expensed as incurred. Transaction Proceeds Upon closing of the Business Combination, the Company received net proceeds of $ 1.1 million from the Business Combination, offset by total transaction costs of $ 5.3 million. The following table reconciles the elements of the Business Combination to the consolidated statements of cash flows and the consolidated statement of changes in stockholders’ equity (deficit) for the year ended December 31, 2024: Cash-trust and cash, net of redemptions $ 6,448,862 Less: transaction costs and professional fees, paid ( 5,345,222 ) Net proceeds from the Business Combination 1,103,640 Less: private placement warrant liabilities ( 1,041,119 ) Less: related party notes ( 2,205,497 ) Less: accrued expenses ( 3,079,281 ) Less: deferred payables ( 1,749,723 ) Add: prepaid expenses 70,382 Reverse recapitalization, net $ ( 6,901,598 ) The number of shares of common stock issued immediately following the consummation of the Business Combination were: Plum Class A common stock, outstanding prior to the Business Combination 3,255,593 Less: Redemption of Plum Class A common stock ( 2,652,516 ) Class A common stock of Plum 603,077 Plum Class A common stock, outstanding prior the Business Combination 6,102,562 Business Combination shares 6,705,639 Veea Shares 22,133,644 Issuance of new financing shares 2,000,000 Conversion of debt for Common Stock 3,147,970 Conversion of Sponsor Notes for Common Stock 817,453 Common Stock issued for services 857,052 Common Stock immediately after the Business Combination 35,661,757 The number of Veea shares was determined as follows: Private Veea Shares Veea Shares after conversion ratio Private Veea Series A-2 Preferred Stock 19,670,118 4,799,511 Private Veea Series A-1 Preferred Stock 41,179,790 8,078,761 Private Veea Series A Preferred Stock 35,920,813 7,047,041 Private Veea Common Stock 7,398,303 1,451,419 Private Veea Common Stock Warrants 3,858,202 756,912 Total 108,027,226 22,133,644 F- 18 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Public and private placement warrants The 6,384,326 Public Warrants issued at the time of Plum’s initial public offering, and 6,256,218 warrants issued in connection with private placement at the time of Plum’s initial public offering (the “Private Placement Warrants”) remained outstanding and became warrants for the Company. Earn-out Share Liability Following the closing of the Business Combination, holders of certain capital stock of Private Veea immediately prior to the closing will have the contingent right to receive up to 4.5 million additional shares of the Company’s common stock if certain trading-price based milestones of the Company’s common stock are achieved or a change of control transaction occurs during the ten-year period following the Closing. Under accounting principles, the Company’s obligation to issue the earnout shares is recorded as a contingent liability (the “Earn-out Share Liability”) in the Company’s financial statements and the initial value of the Earn-out Share Lability is recorded as a transaction cost within operating expense in the Company’s financial statements. For each subsequent reporting period, changes in the fair value of the Earn-out Share Liability will be reported in the Company’s financial statements. Veea Transaction related expenses The below table represents the amount of Veea Inc. related transaction expenses included in operating expenses for the year ended December 31, 2024: December 31, 2024 Legal expenses $ 1,000,000 Professional fees 413,544 Listing fee - NASDAQ 25,000 Total $ 1,438,544 5 - BALANCE SHEET COMPONENTS Inventory, net Inventory consists of the following: December 31, 2024 December 31, 2023 Inventory $ 7,377,966 $ 7,392,919 Inventory allowance ( 904,653 ) ( 1,145,548 ) Consigned parts 985,927 1,128,250 Total $ 7,459,240 $ 7,375,621 F- 19 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Prepaid and other current assets Prepaid and other current assets consists of the following: December 31, 2024 December 31, 2023 Prepaid expenses $ 312,239 $ 177,027 Inventory purchase deposit 5,000,000 - Production deposit 336,643 336,643 Other current assets 712 - Total $ 5,649,594 $ 513,670 In January 2024, the Company placed an inventory order and paid a $ 5.0 million deposit against the order. The inventory was to be delivered on or before June 30, 2024. The inventory was not delivered by such date; and as a result, the Company is entitled to a refund of its deposit. The Company was granted a security interest in the purchased inventory. Upon the return of the Company’s down payment, the order will terminate. As of December 31, 2024, the deposit has not been returned. The Company expects the return of the deposit before June 30, 2025. Property and Equipment, net Property and equipment, net consists of the following: December 31, 2024 December 31, 2023 Furniture and fixtures $ 702,122 $ 683,763 Computer equipment 327,166 300,101 Leasehold improvements 390,742 390,742 Total property and equipment gross 1,420,030 1,374,606 Less - Accumulated depreciation ( 1,209,401 ) ( 997,939 ) Total property and equipment net $ 210,629 $ 376,667 Total depreciation expense for the years ended December 31, 2024 and 2023, totaled approximately $ 212,000 and $ 226,000 , respectively. F- 20 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: December 31, 2024 December 31, 2023 Payroll and payroll related expenses $ 605,138 $ 503,629 Rent expenses - related party 3,657,000 3,124,800 Legal expenses 783,695 325,000 Consulting expenses 80,917 268,684 CEO expenses - 179,075 Other accrued expenses and current liabilities 442,572 340,307 Total accrued expenses and other current liabilities $ 5,569,322 $ 4,741,495 6 - GOODWILL AND INTANGIBLE ASSETS Goodwill The following is a summary of activity in goodwill: December 31, 2024 Balance at December 31, 2022 $ 4,576,572 Foreign exchange transaction 220,506 Balance at December 31, 2023 4,797,078 Foreign exchange transactions ( 17,453 ) Balance at December 31, 2024 $ 4,779,625 Intangibles Intangible assets consist of the following: As of December 31, 2024 Amortization Period Costs as of January 1, 2024 Additions Disposals Ending Costs Accumulated Amortization Accumulated Impairment Net Book Value Patents 5 - 15 years $ 7,332,227 $ 219,241 $ - $ 7,506,485 $ ( 6,765,407 ) $ - $ 786,061 IPR&D 5 years 5,015,694 - - 5,015,694 ( 3,554,784 ) ( 1,460,910 ) - Other intellectual assets 5 years 969,278 - - 969,278 ( 969,278 ) - - Intangible assets, net $ 13,317,199 $ 219,241 $ - $ 13,536,440 $ ( 11,289,469 ) $ ( 1,460,910 ) $ 786,061 F- 21 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 As of December 31, 2023 Amortization Costs as of January 1, Ending Accumulated Accumulated Net Book Period 2023 Additions Disposals Costs Amortization Impairment Value Patents 5 - 15 years $ 7,220,776 $ 111,451 $ - $ 7,332,227 $ ( 6,703,750 ) $ - $ 628,477 IPR&D 5 years 5,015,694 - - 5,015,694 ( 3,554,784 ) ( 1,460,910 ) - Other intellectual assets 5 years 969,278 - - 969,278 ( 969,278 ) - - Intangible assets, net $ 13,205,748 $ 111,451 $ - $ 13,317,199 $ ( 11,227,812 ) $ ( 1,460,910 ) $ 628,477 Intangible assets primarily consist of patents, patent applications, and in-process research and development (“IPR&D”) and other identifiable intangible assets. Intangible assets are generally amortized on a straight-line basis over the periods of benefit. The Company’s patents have estimated remaining economic useful lives ranging from 5 - 15 years. Management reviews intangible assets for impairment when events and circumstances warrant. December 31, 2024 and 2023, no events have occurred that required additional impairment of intangible assets. Intangible asset amortization expense, for the years ended December 31, 2024 and 2023 totaled approximately $ 62,000 and $ 534,000 , respectively. Future estimated amortization expense for the Company’s intangible assets is approximately as follows: Future estimated amortization as of December 31, 2024 2025 55,444 2026 55,444 2027 55,444 2028 55,444 2029 55,444 Thereafter 508,841 $ 786,061 7 - DEBT Total outstanding debt of the Company is comprised of the following, including convertible notes and other related party debt: December 31, 2024 Principal Debt Discount Accrued Interest Total Revolving Loan Facility $ 12,700,000 $ - $ - $ 12,700,000 Convertible note payable 1,200,000 ( 1,102,684 ) - 97,316 Total $ 13,900,000 $ ( 1,102,684 ) $ - $ 12,797,316 December 31, 2023 Principal Debt Discount Accrued Interest Total Revolving Loan Facility $ 9,000,000 $ - $ - $ 9,000,000 Other related party debt (Note 11) 12,598,000 - 2,272,993 14,870,993 Total $ 21,598,000 $ - $ 2,272,993 $ 23,870,993 F- 22 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Revolving Loan Facility In June 2021, the Company entered into a revolving loan agreement (the “2021 Revolving Loan Agreement”)with First Republic Bank , which was subsequently acquired by JPMorgan Chase, (the “Bank”) providing up to $ 14,000,000 of advances (collectively, the “Loan”). The Loan accrues interest at a variable rate based on an index rate established by reference to the average 12 -month trailing one-year US treasuries plus a spread of 1.80 % per annum and a minimum floor rate of 1.5 % per annum. Interest is payable monthly in cash. The Company was not required to provide collateral for the advances or comply with any covenants. The advances were secured by a lien on certain personal assets of the CEO. In consideration for the security provided by the CEO, the Company issued common stock warrants (the “Related Party Common Stock Warrants”) to NLabs a significant shareholder of the Company (“NLabs”) in consideration for the CEO’s guaranteeing the advances. See Note 12 – Related Party Transactions, Common Stock Warrants . In December 2023, the Company repaid $ 5,000,000 of the principal balance of the Loan. Following the acquisition of First Republic the Loan was transferred to the Bank. As of December 31, 2024, the outstanding principal amount of the Loan was $ 12.7 million and $ 1.3 million is available for borrowing. Convertible Note Payable 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 the Company 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”). The Company 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 $ 13.6 million, which is to be funded on or prior to November 15, 2024, subsequently extended to December 15, 2024. In addition to a September 2024 Note, 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 loan amount under their respective notes 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. At December 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 accrues 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 date of the September 2024 Note 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. Each 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. F- 23 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 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 our 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 our 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 the Transfer Agent and kept as book entry shares on the Transfer Agent’s records and will not be eligible to be held by 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. The Company reviewed the conversion feature granted in the notes under ASC 815 and concluded that the conversion price was based on a variable (enterprise value) that was not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 – 40 and is therefore considered a conversion option liability that should be bifurcated from the debt host. As the fair value of the conversion option liability exceeded the net proceeds received, in accordance with ASC 470-20, the Company recorded the conversion option liability at fair value with the excess of the fair value over the net proceeds received recognized as a loss in earnings. See Note 14 “Fair Value Measurements” for further information. 8 - INVESTMENTS The Company accounts for its private company investments without readily determinable fair values under the cost method. These investments, for which the Company is not able to exercise significant influence over any one individual investee, are measured and accounted for using an alternative measurement basis of a) the security’s carrying value at cost, b) less any impairment and c) plus or minus any qualifying observable price changes. Observable price changes or impairments recognized on the Company’s private company investments would be classified as a Level 3 financial instrument within the fair value hierarchy based on the nature of the fair value inputs. Any adjustments to the carrying values are recognized in other income, net in the Company’s consolidated statements of operations and comprehensive loss. As of December 31, 2024, the Company performed the qualitative assessment for impairment of its investments. Based on this qualitative assessment, impairment indicators were present for one of its investments; therefore, the Company performed an analysis to estimate its current fair value and subsequently recognized an impairment loss of $ 216,278 , as it was determined that the investment was fully impaired. As of December 31, 2024 and 2023, the carrying value of the Company’s private company investments, including impairment, was $ 235,596 and $ 451,874 , respectively, and were included in investments on the Company’s consolidated balance sheet as these investments did not have a stated contractual maturity date. F- 24 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 9 – STOCKHOLDERS’ EQUITY On September 13, 2024, the Company consummated the Business Combination which was accounted for as a reverse recapitalization. See Note 4 – Reverse Recapitalization for more information . In connection with the consummation of the Business Combination (i) the Company 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) restated our certificate of incorporation (“Restated Certificate of Incorporation”). In connection with the Domestication, each share of outstanding Class A ordinary shares were converted by operation of law into shares of common stock, on a one-for-one basis. Upon filing of the Restated Certificate of Incorporation, each issued and outstanding share of Class B stock outstanding immediately prior to the filing of the Restated Certificate of Incorporation was converted in shares of common stock on a one-for-one basis. Under the Restated Certificate of Incorporation, the Company is authorized to issue 551,000,000 shares of capital stock, consisting of (a) 550,000,000 shares of Common Stock with a par value of $ 0.0001 per share, (b) 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share, and (c) 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share. Holders of our common stock are entitled vote on all matters submitted to the stockholders vote or approval, other than on any amendment to the Restated Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to the Restated Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock). Holders of our common stock are entitled to one vote per share on all matters submitted to the stockholders for their vote or approval. Equity 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 had the right, but not the obligation, to direct White Lion to purchase up to 25,000,000 shares of our 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 depend 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. In all 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 stock. F- 25 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 10 - STOCK INCENTIVE PLANS In September 2014, the Private Veea’s Board of Directors adopted the Max2 Inc. Equity Incentive Plan (“2014 Plan”). Upon adoption of the 2014 Plan, the aggregate number of shares of common stock reserved for awards under the Plan were 1,250,000 . In September 2018, Private Veea’s Board of Directors adopted the Veea Inc. 2018 Equity Incentive Plan (“2018 Plan” and collectively with the 2014 Plan, the “Private Veea Plans”). Upon adoption of the 2018 Plan, 4,900,000 shares of the Company’s common stock were reserved for the issuance of incentive awards. In January 2021, the 2018 Plan was amended to increase the total number of authorized shares reserved for issuance to 12,492,910 . Under the Private Veea Plans, option awards were generally granted with an exercise price equal to the fair market value of the Company’s stock at the date of grant; those option awards generally vested with a range of one to four years of continuous service and had ten-year contractual terms. Certain option awards provided for accelerated vesting if there was a change in control, as defined in the Private Veea Plans. The Private Veea Plans also permitted the granting of restricted stock and other stock-based awards. Unexercised options were cancelled upon termination of employment and became available for reissuance under the Private Veea Plans. On June 4, 2024, the stockholders of the Company approved the Veea Inc. 2024 Incentive Award Plan (the “2024 Incentive Plan”, collectively with the Private Veea Plans, the “Plans”), which became effective upon the Closing. The Company initially reserved 4,460,437 shares of common stock for the issuance of awards under the 2024 Incentive Plan (“Initial Limit”). The Initial Limit represents 10 % of the aggregate number of shares of the Company’s common stock outstanding immediately after the Closing plus the number of shares of common stock issuable under the 2014 Plan and the 2016 Plan and is subject to increase each year over a ten-year period. The 2024 Incentive Plan provides for the grant of stock options, which may be ISOs or non-statutory stock options (“NSOs”), stock appreciation rights (“SARs”), restricted shares, restricted stock units and other stock or cash-based awards that the Administrator determines are consistent with the purpose of the 2024 Incentive Plan. As of December 31, 2024, the Company had approximately 213,000 shares available for grant. On June 4, 2024, the stockholders of the Company approved Veea Inc. 2024 Employee Stock Purchase Plan (the “ESPP”), which become effective upon the Closing. An aggregate of 1,070,603 shares of the Company’s Common Stock has been reserved for issuance or transfer pursuant to rights granted under the ESPP (“Aggregate Number”). The Aggregate Number represents 3 % of the aggregate number of shares of the Company’s common stock outstanding immediately after the Closing and is subject to increase each year over a ten-year period. The ESPP provides eligible employees with an opportunity to purchase common stock from the Company at a discount through accumulated payroll deductions. The ESPP will be implemented through a series of offerings of purchase rights to eligible employees. Under the ESPP, the Company’s Board of Directors may specify offerings but generally provides for a duration of 12 months. The purchase price will be specified pursuant to the offering, but cannot, under the terms of the ESPP, be less than 85 % of the lower of the fair market value per share of the Company’s common stock on either the offering date or on the purchase date. As of December 31, 2024, there have not yet been any offering periods available to purchase common stock under the ESPP. In connection with the Business Combination, each Private Veea option that was outstanding immediate prior to Closing, whether vested or unvested, was exchanged for a stock option under the 2024 Plan (each an “Exchanged Option”) to acquire a number of shares of common stock equal to the product of (i) the number of shares of Private Veea’s common stock subject to such Private Veea option immediately prior to the Business Combination and (ii) the Exchange Ratio, at an exercise price per share equal to (A) the exercise price per share of such Private Veea option immediately prior to the consummation of the Business Combination, divided by (B) the Exchange Ratio. Following the Business Combination, each Exchanged Option will continue to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to the corresponding former Private Veea option immediately prior to the consummation of the Business Combination. Unvested Private Veea options did not accelerate nor vest on the consummation of the Business Combination. All stock option activity was retroactively restated to reflect the effect of the Exchange Ratio. Generally, stock options vest 25 % on the first anniversary of the vesting commencement date and then quarterly thereafter for 12 quarters, or pursuant to another vesting schedule as approved by the Board and set forth in the option agreement. Stock options have a maximum term of ten years from the date of grant. F- 26 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Option Activity Stock option activity under the Plan was as follows for the year ended December 31, 2024: Number of Options Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Term (years) Outstanding at December 31, 2023, recasted 1,202,724 $ 0.55 5.85 Granted 3,063,139 1.78 - Exercised ( 60,454 ) - - Forfeited ( 9,127 ) 0.54 - Outstanding at December 31, 2024 4,196,282 1.04 5.98 Exercisable at December 31, 2024 4,145,552 The aggregate intrinsic value is the fair market value on the reporting date less the exercise price for each option. The fair value of each stock option award is estimated on the date of the grant using the Black-Scholes option-pricing model. For options granted during the year ended December 31, 2024 and December 31, 2023, the weighted average estimated fair value using the Black-Scholes option pricing model was $ 1.49 and $ 0.46 per option, respectively. Stock compensation expense related to the common stock options outstanding for the years ended December 31, 2024 and 2023, was approximately $ 5.5 million and $ 0.5 million, respectively, which is included in general and administrative expense, net in the Company’s consolidated statements of operations. Total unrecognized expense related to unvested options outstanding as of December 31, 2024, was approximately $ 161,000 which will be recognized over a weighted average period of 1.70 years. The Company estimates the fair value of each stock option award on the grant date using the Black-Scholes option-pricing model. The assumptions used to calculate the fair value of the options granted during the years ended December 31, 2024 are as follows: December 31, 2024 Stock Price $ 3.89 Expected term (years) 2.0 Volatility 75.0 % Risk-Free Rate 4.25 % F- 27 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Restricted Stock Unit Activity Restricted stock unit activity under the Plan was as follows for the year ended December 31, 2024: Number of units Weighted- Average Grant Date Fair Value per Unit Outstanding at September 12, 2024 - $ - RSUs granted 405,580 3.08 Vested ( 405,580 ) 3.08 Outstanding at December 31, 2024 - - The Company recorded stock-based compensation expense of $ 1,250,000 related to the RSUs granted during the year ended December 31, 2024. There were no RSUs granted during the year ended December 31, 2023. The grant date fair value of the RSUs granted in 2024 was calculated based on the average closing price of the Company’s common stock for the ten-day period prior to the grant date. 11 - WARRANTS As part of Plum’s initial public offering (“IPO”), Plum issued warrants to third-party investors where each whole warrant entitles the holder to purchase one share of the Company’s common stock at an exercise price of $ 11.50 per share (the “Public Warrants”). Simultaneously with the closing of the IPO, Plum completed the private sale of warrants (the “Private Placement Warrants” and together with the Public Warrants, the “Warrants”) where each Private Placement Warrant allows the holder to purchase one share of the Company’s common stock at $ 11.50 per share. At December 31, 2024, there are 6,384,326 Public Warrants and 5,256,218 to Private Placement Warrants outstanding. The Public Warrants become exercisable at $ 11.50 per share, subject to adjustment, at any time commencing 30 days after the completion of the Business Combination; provided that the Company has an effective registration statement under the Securities Act covering the shares of the Company’s common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. The warrants will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation. The Company has agreed that as soon as practicable, but in no event later than twenty business days after the closing of the Business Combination, it will use commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of common stock issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of the Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of common stock until the warrants expire or are redeemed, as specified in the warrant agreement, provided that if the shares of common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of the Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, but the Company will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the shares of common stock issuable upon exercise of the warrants is not effective by the 60th day after the closing of the Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption, but the Company will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the excess of the “fair market value” (as defined below) less the exercise price of the warrants by (y) the fair market value and (B) 0.361 . The “fair market value” as used in this paragraph shall mean the volume weighted average price of the shares of common stock for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the shares of common stock underlying such Warrant. F- 28 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Redemption of Warrants When the Price per Share of Common Stock Equals or Exceeds $ 18.00 Once the Warrants become exercisable, the Company may redeem the outstanding Warrants (except with respect to the Private Placement Warrants): ● in whole and not in part; ● at a price of $ 0.01 per warrant; ● upon not less than 30 days’ prior written notice of redemption to each warrant holder; and ● if, and only if, the last reported sale price of our common stock equals or exceeds $ 18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) for any 20 trading days within a 30 -trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders. Redemption of Warrants When the Price per Share of Common Stock Equals or Exceeds $ 10.00 Once the Warrants become exercisable, the Company may redeem the outstanding Warrants: ● in whole and not in part; ● at $ 0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares, based on the redemption date and the “fair market value” (as defined above) of our common stock; ● if, and only if, the closing price of our common stock equals or exceeds $ 10.00 per public share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and ● if the closing price of our common stock for any 20 trading days within a 30 -trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $ 18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above. The Private Placement Warrants were initially issued in the same form as the Public Warrants with the exception that the Private Warrants: (i) would not be redeemable by the Company and (ii) may be exercised for cash or on a cashless baseless so long as they are held by the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants. F- 29 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 The Public Warrants were initially classified as a derivative liability instrument. Upon the closing of the Business Combination, the Public Warrants in accordance with the guidance contained in ASC 815 are no longer precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity. The Company continues to recognize the Private Placement Warrants as liabilities at fair value as of the Closing Date with an offsetting entry to additional paid-in capital and adjusts the carrying value of the instruments to fair value through other income (expense) on the consolidated statement of operations at each reporting period until they are exercised. As of December 31, 2024, the Private Placement Warrants are presented within warrant liabilities on the consolidated balance sheet. See Note 14, Fair Value Measurements , for additional information on the Company’s measurements with respect to the warrants issued in connection with the foregoing transactions. Private Veea Warrants Upon the closing of the Business Combination, the Related Party Common Stock Warrants were exercised in whole, on a net basis, for 3,880,000 shares of common stock of Private Veea at a conversion price of $ 0.01 per share for an aggregate purchase price of $ 38,800 . A total of 21,798 shares of common stock were surrendered in payment of the purchase price. In connection with the Business Combination, the Company’s equity-classified Preferred stock warrants were exchanged for common stock warrants of the Company (each an “Exchanged Warrant”) to purchase a number of shares of common stock, after adjustment for anti-dilutive shares, equal to the product of (i) the number of shares of Private Veea’s common stock subject to such Preferred Stock warrant immediately prior to the Business Combination and (ii) the Exchange Ratio, at an exercise price per share equal to (A) the exercise price per share of such Preferred Stock warrant immediately prior to the consummation of the Business Combination, divided by (B) the Exchange Ratio. On November 6, 2024, the warrant holder exercised warrants to purchase 79,654 shares of common stock at an exercise price of $ 0.05 per share for an aggregate purchase price of $ 3,983 . The outstanding Exchanged Warrants are exercisable at the option of the holder until September 28, 2028 for an exercise price of $ 10.19 per share. As of December 31, 2024, there are 159,307 Exchanged Warrants outstanding. F- 30 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 12 - RELATED PARTY TRANSACTIONS Lease Agreements On March 1, 2014, Private Veea entered into a sublease agreement with NLabs Inc., an affiliate of the Company’s CEO that held approximately 26 % of the Company’s outstanding capital stock at December 31, 2024, for office space for an initial term of five years . In 2018, Private Veea renewed the sublease for an additional five-year term, with all other terms and conditions of the sublease remaining the same. The renewal term expired February 28, 2024 and was subsequently extended to June 30, 2025. Rent for the office space is accrued and not paid in cash. The Company recognized rent expense of approximately $ 244,000 and $ 237,000 , respectively, for the years ended December 31, 2024 and 2023, all of which is classified as general and administrative expenses, net in the Company’s consolidated statements of operations. Accrued and unpaid rent expense included in the Company’s consolidated balance sheets were $ 1,713,600 and $ 1,468,800 , respectively, as of December 31, 2024 and 2023. In April 2017, Private Veea entered into a lease agreement with 83 rd Street LLC to lease office space for an initial term of two years . The sole member of 83 rd Street is the Salmasi 2004 Trust. At December 31, 2024, the Salmasi 2004 Trust held approximately 8 % of Veea’s outstanding capital stock. Veea’s CEO is the grantor of the Salmasi 2004 Trust. In 2018, Private Veea renewed the lease for an additional five-year term, with all other terms and conditions of the lease remaining the same. The renewal term expired February 28, 2024 and was subsequently extended to June 30, 2025. Rent for the office space is accrued and not paid in cash. The Company recognized rent expense of approximately $ 281,000 and $ 247,000 , respectively, in each of the years ended December 31, 2024 and 2023, all of which is classified as general and administrative expenses, net in the Company’s consolidated statements of operations. Accrued and unpaid rent expense included in the Company’s consolidated balance sheet were $ 1,944,000 and $ 1,656,000 , respectively, as of December 31, 2024 and 2023. Related Party Debt In 2021 and 2022, NLabs made loans to the Company evidenced by promissory notes aggregating $ 9,500,000 (the “Bridge Notes”). Interest on the outstanding principal amount of the Bridge Notes accrued at a rate of 10 % per annum, calculated on the basis of a 365-day year. Principal and accrued interest was payable on the maturity date of the Bridge Notes. The original maturity date of the Bridge Notes was December 31, 2022, which was extended to December 31, 2023, and was subsequently extended to September 30, 2024. The Company accounted for the extension as a modification of the Bridge Notes. Interest expense for the years ended December 31, 2024 and 2023 was $ 195,155 and $ 237,500 , respectively. F- 31 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 In 2022 and 2023, NLabs made loans to the Company evidenced by promissory notes in the aggregate principal amount of $ 3,098,000 (the “Promissory Notes” and collectively with the Bridge Notes, the “Related Party Notes”). Interest on the outstanding principal amount of the Promissory Notes accrued at a rate of 10 % per annum, calculated on the basis of a 365-day year. Principal and interest on the Promissory Notes was repayable upon the earlier of demand and December 31, 2023. The Promissory Notes remained outstanding as of December 31, 2023 and was subsequently extended to September 30, 2024. Interest expense for the years ended December 31, 2024 and 2023 was $ 63,709 and $ 78,087 , respectively. At the Closing, the Related Party Notes were converted into shares of common stock at a price of $ 5.00 per share of common stock, which shares were not considered Private Veea Shares and were in addition to the shares of common stock issued to holders of Private Veea Shares. See Note 4 “Recapitalization” for further information regarding the conversion of the Related Party Notes. In March and April 2025, the Company’s CEO and NLabs made loans to the Company in the aggregate amount of $ 826,000 . Interest on the loan accrues at a rate of 10 % per annum, calculated on the basis of a 365-day year. Principal and accrued interest is payable on the earlier of demand or June 30, 2025. 13 - COMMITMENTS AND CONTINGENCIES Purchase Commitments with Contract Manufacturers and Suppliers As of June 30, 2024, the Company did not have any unconditional purchase obligations for the purchase of goods or services from suppliers and contract manufacturers. Unconditional purchase obligations are obligations that are enforceable and legally binding on the Company and specify all significant terms, including quantities to be purchased, fixed, minimum, or variable price provisions and the approximate timing of the transaction. Unconditional purchase obligations exclude agreements that are cancellable without penalty. Leases The Company leases office space in the U.S., including office space from related parties as disclosed in Note 12 - Related Party Transactions . These leases expire at various dates through 2025. Under the terms of the various lease agreements, the Company may bear certain costs such as maintenance, insurance, and taxes. Lease agreements may provide for increasing rental payments at fixed intervals. The Company’s CEO has guaranteed the obligations under the office space leased in New Jersey. The Company also leases offices in the United Kingdom and France and Mexico under short-term arrangements of twelve months or less. F- 32 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Year ended December 31, 2024 2023 Lease cost: Operating lease costs Other than related parties $ 269,915 $ 352,911 Related parties 524,599 483,592 Total 794,514 836,503 Short-term lease cost Other than related parties 39,145 35,749 Related parties - - Total 39,145 35,749 Variable lease cost Other than related parties 9,893 27,917 Related parties - - Total 9,893 27,917 Total lease cost $ 843,552 $ 900,169 Year Ended December 31, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities Operating lease costs Other than related parties $ 269,915 $ 354,691 Related parties - - Total $ 269,915 $ 354,691 Weight-average remaining lease term-operating leases Other than related parties 0.4 years 1.3 years Related Parties - years 0.2 years Aggregate 0.4 years 1.2 years ` Weight-average discount rate-operating leases Other than related parties 1.79 % 1.79 % Related Parties N/A 10.00 % Aggregate 1.79 % 3.07 % F- 33 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the net present value of its lease payments, the Company used an estimated incremental borrowing rate that is applicable to the Company based on the information available at the later of the lease commencement date, lease modification date, or the date of adoption of ASC 842. As of December 31, 2024, the maturities of the Company’s operating lease liabilities were as follows: Year Other than related parties Related Parties Total 2025 121,579 - 121,579 Total lease payments 121,579 - 121,579 Less: imputed interest ( 272 ) - ( 272 ) Present values of lease liabilities $ 121,579 $ - $ 121,579 Operating lease liabilities current 121,579 - 121,579 Operating lease liabilities noncurrent - - - $ 121,579 $ - $ 121,579 Warranties The Company accrues the estimated cost of product warranties at the time of recognizing revenue. The Company’s standard product warranty terms generally include post-sales support and repairs or replacement of a product at no additional charge for a specified period of time. The Company engages in product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers. The estimated warranty obligation is based on contractual warranty terms, repair costs, current period product shipments and product failure rates. Warranty terms are generally limited to twelve months. Indemnifications In the normal course of business, the Company has indemnification obligations to other parties, including customers, lessors, and parties to other transactions with us, with respect to certain matters. The Company has agreed to indemnify against losses arising from a breach of representations or covenants or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time or circumstances within which an indemnification claim can be made and the amount of the claim. It is not possible to determine the maximum potential amount for claims made under the indemnification obligations due to uncertainties in the litigation process, coordination with and contributions by other parties and the defendants in these types of cases, and the unique facts and circumstances involved in each particular case and agreement. To date, the Company has made no indemnity payments. In addition, the Company has entered into indemnification agreements with its officers and directors, and its Amended and Restated Bylaws contain similar indemnification obligations to its agents. F- 34 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Litigation In the normal course of business, the Company may become involved in various lawsuits and legal proceedings. While the ultimate results of these matters cannot be predicted with certainty, management does not expect them to have a material adverse effect on the financial position or results of operations of the Company. Other Commitments In connection with the Business Combination transaction, Veea agreed to pay certain legal expenses contingent upon the closing of the Business Combination, certain of which expenses were mutually agreed to be deferred to periods after the Closing. As of December 31, 2024, the amount of the deferred fees totaled approximately $ 1,750,000 . 14 - FAIR VALUE MEASUREMENTS Recurring Fair Value Measurements The Company’s initial value of the warrant liability was based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets and classified as level 3. The subsequent measurement of the Private Warrants is classified as Level 2 because these warrants are economically equivalent to the Public Warrants, based on the terms of the Private Warrant agreement, and as such their value is principally derived by the value of the Public Warrants. Significant deviations from these estimates and inputs could result in a material change in fair value. For the year ended December 31, 2024, there were no transfers amongst level 1, 2, and 3 values during the period. The conversion feature of the September 2024 Notes is measured at fair value using a Monte Carlo model that fair values the conversion option. The following table presents fair value information as of December 31, 2024 and 2023 of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. December 31, 2024 Total Level 1 Level 2 Level 3 Assets Money Market Funds $ - $ - $ - $ - Liabilities Private warrant liability 840,995 - 840,955 - Convertible note option liability 60,000 - - 60,000 Earn-out Share Liability 15,560,000 - - 15,560,000 Total $ 16,460,995 $ - $ 840,995 $ 15,620,000 December 31, 2023 Total Level 1 Level 2 Level 3 Assets Money Market Funds $ 120,000 $ 120,000 $ - $ - F- 35 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Convertible Note Option Liability The Company established the initial fair value for the Convertible Note Option Liability as of September 13, 2024, which was the date of the Financing Closing . On December 31, 2024, the fair value was remeasured using an option pricing model. The option pricing model was used to value the Convertible Note Option liability for the initial period and subsequent measurement periods. The Convertible Note Option liability was classified within Level 3 of the fair value hierarchy at the initial measurement date and as of and December 31, 2024, due to the use of unobservable inputs. The key inputs into the option pricing model for the Convertible Note Option liability were as follows at September 13, 2024 initial value and at December 31, 2024: December 31, 2024 September 13, 2023 Stock Price $ 3.81 $ 12.00 Expected term (years) 1.2 1.5 Volatility 75.0 % 70.0 % Risk-Free Rate 4.18 % 3.79 % Interest rate 6.49 % 7.33 % Year ended December 31, 2024 Balance at January 1, 2024 $ - Initial value, September 13, 2024 900,933 Change in fair value ( 607,067 ) Balance at December 31, 2024 $ 293,866 F- 36 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 Earn-out Share Liability Following the closing of the Business Combination, holders of certain capital stock of Private Veea immediately prior to the closing will have the contingent right to receive up to 4.5 million additional shares of the Company’s common stock if certain trading-price based milestones of the Company’s common stock are achieved or a change of control transaction occurs during the ten-year period following the Closing. The Company’s obligation to issue the earnout shares is recorded as a contingent liability (the “Earn-Out Share Liability”) in the Company’s financial statements. The initial value of the contingent earnout share liability of $ 53.6 million is recorded as a transaction cost within operating expenses for the year ended December 31, 2024. The fair value of the Earn-out Share Liabilities was estimated using Monte Carlo simulation utilizing assumptions related to the contractual term of the instruments, estimated volatility, the price of our common stock, and the risk-free rate. A significant driver of the value of the Earn-out Share Liability at the close of the Business Combination was our closing stock price on September 13, 2024, which was $ 12.00 . The following table presents the changes in fair value of the earnout liabilities: Year ended December 31, 2024 Liability at January 1, 2024 $ - Initial value, September 13, 2024 53,600,000 Change in fair value ( 38,040,000 ) Balance as of December 31, 2024 $ 15,560,000 The key inputs for the Earn-out Share Liability were as follows at September 13, 2024 initial value, and at December 31, 2024: December 31, 2024 September 13, 2024 Stock Price $ 6.50 $ 12.00 Expected term (years) 10 10 Volatility 75.0 % 70.0 % Risk-Free Rate 3.81 % 3.66 % 15 - EARNINGS PER SHARE As described in Note 4 - Reverse Recapitalization , the Company accounted for the Business Combination as a reverse recapitalization. Earnings per share calculations for all periods prior to the Closing have been retrospectively adjusted by the Exchange Ratio for the equivalent number of shares of Common Stock outstanding immediately after the Closing to effect the reverse recapitalization. Subsequent to the Closing, earnings per share is calculated based on the weighted average number of shares of Common Stock outstanding. F- 37 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 16 – INCOME TAXES Net loss for the years ended December 31, 2024 and 2023, was as follows: December 31, 2024 2023 Domestic $ ( 41,380,390 ) $ ( 9,557,067 ) Foreign ( 6,167,378 ) ( 6,081,522 ) Net Loss $ ( 47,547,768 ) $ ( 15,638,589 ) Provision for income taxes for the years ended December 31, 2024 and 2023, consisted of the following: December 31, 2024 2023 Current tax provision $ - $ - Federal State and local 15,325 7,141 Foreign - 67,356 Total current tax provision 15,325 74,497 Deferred tax provision Federal - - State and local - - Foreign - - Total deferred tax provision - - Total provision for income taxes $ 15,325 $ 74,497 Deferred tax assets (liabilities) consist of the following: 2024 2023 Deferred tax assets Stock options issued for services $ 1,160,726 $ 135,604 Net Operating Loss Carryforwards 35,154,469 27,783,834 Section 174 Expenditures 2,483,764 1,243,418 R&D Tax Credits 6,818,064 6,406,470 Interest carryforward 954,073 - Other 481,565 469,896 Total gross deferred tax assets 47,052,660 36,039,222 Less Valuation Allowance ( 47,011,175 ) ( 35,566,934 ) Net deferred tax assets $ 41,485 $ 472,288 Deferred tax liabilities Fixed Assets - $ 101,757 Right of Use Asset ( 25,298 ) ( 113,698 ) Amortization - 13,080 Unrealized Fx gain (loss) ( 776 ) ( 473,427 ) Other ( 15,411 ) - Total gross deferred tax liabilities ( 41,485 ) $ ( 472,288 ) Net deferred tax liabilities $ - $ - In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Due to the uncertainty of the Company’s ability to realize the benefit of the deferred tax assets, the net deferred tax assets are fully offset by a valuation allowance at December 31, 2024 and 2023. The valuation allowance for the year ending December 31, 2024 and 2023 was $ 47,011,175 and $ 35,566,934 , respectively. F- 38 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 The reconciliation of federal statutory income tax rate to our effective income tax rate is as follows for the years ended December 31: 2024 2023 Federal income tax at the Statutory Rate 21.00 % 21.00 % Earnout-Share Liability ( 6.87 )% Permanent Items ( 1.26 )% ( 0.21 )% Foreign 0.52 % 7.80 % State Taxes 0.27 % 24.10 % Return to Provision ( 0.01 )% 0.09 % Other 0.69 % 6.79 % Change in valuation allowance ( 14.34 )% ( 60.27 )% Total tax benefit - % - % As of December 31, 2024, the Company had gross federal net operating loss carryforwards of approximately 109,644,085 , resulting in a tax effected benefit of $ 23,025,258 , which will be carried forward indefinitely. In addition, the Company has gross state net operating loss carryforwards of approximately $ 72,622,999 with an expected net tax impact $ 4,984,749 . The state NOLs have varying expiration dates as determined by each state. The Company also has net operating losses in foreign jurisdictions that can be utilized to offset future taxable income in the United Kingdom, France, or Mexico based on the jurisdiction of generation. The gross value of these NOLs is 28,276,145 with an anticipated future tax benefit of $ 7,069,870 . The expiration of the foreign NOLs are also based on the law in each respective jurisdiction, with the earliest of these being 2034. As of December 31, 2024, the Company has federal R&D credit carryforwards of $ 4,092,749 , these credits will begin to expire in 2038. The Company has also reduced the anticipated future benefit of these credits by recording an uncertain tax benefit equal to 30 % of the credit claimed. IRC Section 382 imposes limitations on the use of net operating loss carryovers when the stock ownership of one or more 5% shareholders (shareholders owning 5% or more of the Company’s outstanding capital stock) has increased on a cumulative basis by more than 50 percentage points. As of December 31, 2024, the Company has not completed an analysis on the 382 limitation. A 382 limitation calculation will be considered prior to the usage of tax attributes. The Company's effective tax rate could also fluctuate due to changes in the valuation of its deferred tax assets or liabilities, or by changes in tax laws, regulations, and accounting principles. The Company has evaluated both positive and negative evidences and determined that all of its worldwide deferred tax assets will not be realized for the foreseeable future. As a result, the valuation allowance is recorded against all existing deferred tax assets. The current business operations and resulting need for a valuation analysis will be considered annually. Beginning on January 1, 2022, the Tax Cuts and Jobs Act (the "Tax Act”) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to capitalize such expenses pursuant to Internal Revenue Code (“IRC”) Section 174. The capitalized expenses are amortized over a five-year period for domestic expenses. As a result of this provision of the Tax Act, deferred tax assets related to capitalized research expenses increased by $ 6,114,653 in 2024, partially offset by amortization on research expenses. F- 39 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 17 - SEGMENTATION ASC Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise that engage in business activities from which it may recognize revenues and incur expenses, and for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker, or group, in deciding how to allocate resources and assess performance. The Company’s chief operating decision maker (“CODM”) has been identified as the CEO, who reviews the assets, operating results, and financial metrics for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that there is only one reportable segment. The CODM assesses the performance of and decides how to allocate resources for the one segment based on consolidated net loss. Further, EBITDA (earnings before interest taxes, depreciation and amortization), which is not presented on the face of the Company’s Consolidated Statements of Operations, is used to assist with the measurement of segment performance and allocate resources. The CODM also uses net loss and adjusted EBITDA, to decide the level of investment in various operating activities and other capital allocation activities. The measure of segment assets is reported on the Company’s Consolidated Balance Sheets as Total Assets. The following table presents the Company’s segment results for the years ended December 31, 2024 and 2023: For the years ended December 31, 2024 2023 Sales, net $ 141,760 $ 9,072,130 Cost of goods sold 83,290 466,802 Segment Gross profit 58,470 8,605,328 Operating Expenses: Product development 1,373,351 693,448 Sales and marketing 811,537 215,332 General and administrative (A) 19,171,965 17,238,184 Transaction costs including those incurred with contingent Earn-out Share Liability 55,038,544 - Depreciation and amortization 273,772 818,203 Impairment on investment 216,278 Stock-based compensation 6,699,081 Inventory impairment 551,492 Other income, net ( 21,390 ) 59,982 UK R&D tax credit ( 1,251,243 ) - Loss on initial issuance of convertible note 1,770,933 - Change in fair value of convertible note option liability ( 840,933 ) - Change in fair value of warrant liabilities ( 200,124 ) - Change in fair value of Earn-out Share Liability ( 38,040,000 ) - Other expense 244,732 ( 21,857 ) Interest income - 1,942 Interest expense 1,808,243 ( 5,318,817 ) Segment and Consolidated Net loss $ ( 47,547,768 ) $ ( 15,638,589 ) Notes: (A)-net of depreciation, amortization share-based compensation, provisions and impairments. As of and For Year Ended December 31 Total Consolidated Assets $ 21,093,895 $ 20,837,306 Capital Expenditures $ 265,445 $ 155,054 F- 40 Veea Inc. and Subsidiaries Notes to the Consolidated Financial Statements For the Years ended December 31, 2024 and 2023 18 - EMPLOYEE 401(k) PLAN The Company sponsors a 401(k) plan (the “Plan”) to provide retirement benefits for its employees. As allowed under Section 401(k) of the Internal Revenue Code, the Plan provides for tax-deferred salary contributions and after-tax contributions for eligible employees. The Plan provides for tax-deferred salary contributions and after-tax contributions for eligible employees. Employee contributions are limited to a maximum annual amount as set periodically by the Internal Revenue Code. The Company matches pretax and Roth employee contributions up to 4 % of eligible earnings that are contributed by employees. All matching contributions vest immediately. The Company’s matching contributions to the Plan for the years ended December 31, 2024 and 2023 totaled $ 164,098 and $ 159,562 , respectively. 19- SUBSEQUENT EVENTS The Company evaluated subsequent events from December 31, 2024, the date of these financial statements, through the date on which the financial statements were issued (the “Issuance Date”), for events requiring recording or disclosure in the financial statements as of and for the year ended December 31, 2024. The Company concluded that no events have occurred that would require recognition or disclosure in the financial statements, except as described below. F- 41 Exhibit Incorporated by Reference Number Description Form Exhibit Filing Date 2.1+ Business Combination Agreement, dated November 27, 2023, between Plum Acquisition Corp. I, Veea Inc. and Plum SPAC Merger Sub, Inc. 8-K 2.1 December 1, 2023 3.1 Amended and Restated Certificate of Incorporation 8-K 3.1 September 24, 2024 3.2 Amended and Restated Bylaws 8-K 3.2 September 24, 2024 4.1 Convertible Promissory Note, dated September 12, 2024 S-1 4.1 January 10, 2025 4.2* Description of the Company's Securities 10.1 Amendment No. 2 to Business Combination Agreement, dated September 11, 2024, by and among Plum Acquisition Corp. I, Plum SPAC Merger Sub, Inc., and Veea Inc. 8-K 10.1 September 12, 2024 10.2 Amendment to Promissory Note, dated September 11, 2024, by and between Plum Acquisition Corp. I and Mr. Michael Dinsdale. 8-K 10.2 September 12, 2024 10.3 Amendment to Promissory Note, dated September 11, 2024, by and between Plum Acquisition Corp. I and Ms. Ursula Burns. 8-K 10.3 September 12, 2024 10.4 Amendment to Promissory Note, dated September 11, 2024, by and between Plum Acquisition Corp. I and Mr. Kanishka Roy. 8-K 10.4 September 12, 2024 10.5 Amendment to Promissory Note, dated September 11, 2024, by and between Plum Acquisition Corp. I and Plum Partners LLC. 8-K 10.5 September 12, 2024 10.6 Sponsor Letter Agreement, dated November 27, 2023, between Plum Acquisition Corp. I, Plum Partners LLC, and Veea Inc. S-4/A 10.1 May 13, 2024 10.7 Form of Stockholder Support Agreement, dated November 27, 2023, between Plum Acquisition Corp. I, Veea Inc., and the other parties thereto S-4/A 10.4 May 13, 2024 10.8+ Closing Agreement, dated September 13, 2024, between Plum Acquisition Corp. I, Veea Inc. and Plum SPAC Merger Sub, Inc. 8-K 10.8 September 24, 2024 10.9 Amended and Restated Registration Rights Agreement, dated September 13, 2024, between Plum Acquisition Corp. I, Veea Inc., Plum Partners LLC and certain stockholders of Veea Inc. 8-K 10.9 September 24, 2024 10.10 Form of Lock-Up Agreement, dated September 13, 2024, between Veea Inc. and certain stockholders 8-K 10.10 September 24, 2024 10.11 Form of Note Conversion Agreement, dated September 13, 2024, between Plum Acquisition Corp. I, Veea Inc. and certain note holders 8-K 10.11 September 24, 2024 10.12 Amendment to Polar Lock-Up Agreement, dated September 13, 2024, between Plum Acquisition Corp. I and Polar Multi-Strategy Fund 8-K 10.12 September 24, 2024 10.13 Amendment to Cohen Lock-Up Agreement, dated September 13, 2024, between Plum Acquisition Corp. I and Cohen 8-K 10.13 September 24, 2024 10.14 2024 Incentive Equity Plan 8-K 10.14 September 24, 2024 10.15 2024 Employee Stock Purchase Plan 8-K 10.15 September 24, 2024 83 10.16 Common Stock Purchase Agreement, dated as of December 2, 2024, by and between White Lion Capital, LLC and the Company 8-K 10.1 December 6, 2024 10.17 Registration Rights Agreement, dated as of December 2, 2024, by and between White Lion Capital, LLC and the Company 8-K 10.2 December 6, 2024 10.18 Settlement and Release Agreement, dated December 31, 2024, between the Company and Harmonic Partners. 8-K 10.1 January 2, 2025 14.1* Code of Ethics 16.1 Letter from Marcum LLP to the Securities Exchange Commission 8-K 16.1 September 24, 2024 19.1* Insider Trading Policy 21.1 Subsidiaries of Veea Inc. S-1 4.1 January 10, 2025 23.1* Consent of PKF O’Connor Davies, LLP, independent registered public accounting firm. 24.1* Power of Attorney (included on signature page to this Registration Statement). 31.1* Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of the Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of the Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1* Executive Compensation Clawback Policy 99.1 Form of Restricted Stock Unit Agreement S-8 99.1 January 10, 2025 99.2 Form of Stock Option Agreement S-8 99.2 January 10, 2025 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith. 84 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VEEA INC. By: /s/ Allen Salmasi Allen Salmasi Chief Executive Officer (Principal Executive Officer) Date: April 15, 2025 By: /s/ Janice K. Smith Janice K. Smith Interim Chief Financial Officer and Chief Operating Officer (Principal Financial Officer and Principal Accounting Officer) Date: April 15, 2025 Signature Title Date /s/ Allen Salmasi Chief Executive Officer and Director April 15, 2025 Allen Salmasi (principal executive officer) /s/ Janice K. Smith Chief Financial Officer April 15, 2025 Janice K. Smith (principal financial officer and principal accounting officer) /s/ Douglas Maine Director April 15, 2025 Douglas Maine /s/ Helder Antunes Director April 15, 2025 Helder Antunes /s/ Michael Salmasi Director April 15, 2025 Michael Salmasi /s/ Kanishka Roy Director April 15, 2025 Kanishka Roy /s/ Gary Cohen Director April 15, 2025 Gary Cohen /s/ Alan Black Director April 15, 2025 Alan Black 85