What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-19 compared with 2025-05-21 · 255 added, 224 removed, 232 unchanged (67% of the section changed)

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Condition and Results of Operations

The following discussion and analysis of the

financial condition and results of operations of Veea should be read together with our audited consolidated financial statements and

unaudited consolidated condensed financial statements.

In addition to our historical consolidated financial information, this discussion

includes forward-looking information regarding our business, results of operations and cash flows, and contractual obligations and arrangements

that involve risks, uncertainties, and assumptions.

Our actual results may differ materially from any future results expressed or implied

by such forward-looking statements as a result of various factors, including, but not limited to, those discussed in the Company’s

most recent Annual Report on Form 10-K filed with the SEC on April 15, 2025.

Unless the context otherwise requires, references

in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “Veea,”

“we”, “us”, “our”, and the “Company” are intended to refer to (i) following the Business

Combination, the business and operations of Veea Inc.

and its consolidated subsidiaries, and (ii) prior to the Business Combination,

Private Veea (the predecessor entity in existence prior to the consummation of the Business Combination) and its consolidated subsidiaries.

The following discussion

and analysis of the financial condition and results of operations of Veea should be read together with our audited consolidated financial

statements and unaudited consolidated condensed financial statements.

In addition to our historical consolidated financial information,

this discussion includes forward-looking information regarding our business, results of operations and cash flows, and contractual obligations

and arrangements that involve risks, uncertainties, and assumptions.

Our actual results may differ materially from any future results

expressed or implied by such forward-looking statements as a result of various factors, including, but not limited to, those discussed

in the Company’s most recent Annual Report on Form 10-K filed with the SEC on April 15, 2025.

Unless the context otherwise

requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

to “Veea,” “we”, “us”, “our”, and the “Company” are intended to refer to (i)

following the Business Combination, the business and operations of Veea Inc.

and its consolidated subsidiaries, and (ii) prior to the

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

consolidated subsidiaries.

Throughout this report, the terms “our,”

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING

This Quarterly Report on Form 10-Q contains forward-looking

statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995, including

statements regarding, among other things, the plans, strategies and prospects, both business and financial, of the Company.

These statements

are based on the beliefs and assumptions, whether or not identified in this Quarterly Report, of the management of the Company.

the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable,

the Company cannot assure you that it will achieve or realize these plans, intentions or expectations.

Forward-looking statements are

inherently subject to risks, uncertainties and assumptions.

Generally, statements that are not historical facts, including statements

concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to

projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking

These statements may be preceded by, followed by or include the words “anticipate,” “believe,” “could,”

“continue,” “estimate,” “expect,” “forecast,” “intend,” “may,”

“might,” “plan,” “possible,” “potential,” “project,” “scheduled,”

“seek,” “should,” “will” or similar expressions, but the absence of these words does not mean that

a statement is not forward-looking.

Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements

about the ability of the Company to:

● failure to maintain

adequate operational and financial resources or raise additional capital or generate sufficient

● sell shares of Common

Stock under the ELOC Common Stock Purchase Agreement;

● risks related to its

current growth strategy and the Company’s ability to generate revenue and become profitable;

● market acceptance

of its platform and products;

● the length and unpredictable

nature of its sales cycles;

● Veea’s reliance

on distribution and partnering arrangements and third-party manufacturers;

● cybersecurity incidents,

security vulnerabilities, and real or perceived errors, failures, defects, or bugs in its

platforms or products;

● the ability to maintain

the listing of our Common Stock and the warrants on Nasdaq, and the potential liquidity and

trading of such securities;

● our public securities’

potential liquidity and trading;

● the ability to recognize

the anticipated benefits of the Business Combination, which may be affected by, among other

things, competition, the ability of the combined company to grow and manage growth profitably

and retain its key employees;

● our success in retaining

or recruiting, or changes required in, our officers, key employees or directors following

the completion of the Business Combination, and our ability to attract and retain key personnel;

This Quarterly Report on

Form 10-Q contains forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation

Reform Act of 1995, including statements regarding, among other things, the plans, strategies and prospects, both business and financial,

of the Company.

These statements are based on the beliefs and assumptions, whether or not identified in this Quarterly Report, of the

management of the Company.

Although the Company believes that its plans, intentions and expectations reflected in or suggested by these

forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions or expectations.

Forward-looking statements are inherently subject to risks, uncertainties and assumptions.

Generally, statements that are not historical

facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any

statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying

assumptions, are forward-looking statements.

These statements may be preceded by, followed by or include the words “anticipate,”

“believe,” “could,” “continue,” “estimate,” “expect,” “forecast,”

“intend,” “may,” “might,” “plan,” “possible,” “potential,” “project,”

“scheduled,” “seek,” “should,” “will” or similar expressions, but the absence of these

words does not mean that a statement is not forward-looking.

Forward-looking statements contained in this Quarterly Report include, but

are not limited to, statements about the ability of the Company to:

failure to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows;

sell shares of Common Stock under the ELOC Common Stock Purchase Agreement;

risks related to its current growth strategy and the Company’s ability to generate revenue and become profitable;

market acceptance of its platform and products;

the length and unpredictable nature of its sales cycles;

Veea’s reliance on distribution and partnering arrangements and third-party manufacturers;

cybersecurity incidents, security vulnerabilities, and real or perceived errors, failures, defects, or bugs in its platforms or products;

the ability to maintain the listing of our Common Stock and the warrants on Nasdaq, and the potential liquidity and trading of such securities;

our public securities’ potential liquidity and trading;

the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably and retain its key employees;

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the completion of the Business Combination, and our ability to attract and retain key personnel;

macroeconomic conditions;

● each of the other

factors detailed under the section entitled “Risk Factors.”

each of the other factors detailed under the section entitled “Risk Factors.”

Forward-looking statements

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Company Overview

We are dedicated to simplifying

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

and AI to the edge of the network.

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

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

However, to our knowledge,

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

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

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

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

Such networks are given rise through

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

software stack.

are dedicated to simplifying the journey towards creating a world in which virtually everyone and everything is intelligently connected,

while bringing applications and AI to the edge of the network.

Most service providers, equipment suppliers, system integrators and even

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

However, to our knowledge, we are the first to market with patented technologies that a) bring virtualized data center capabilities to

the far edge of the network, commonly referred to as the Device Edge, where all wired and wireless devices connect to the network, b)

spawns hyperconvergence of computing, multiaccess communications and storage, c) provides for Cloud-managed applications at the Edge,

d) enables machine learning with AI training, inferencing, and agentic AI at the Edge including AI-driven cybersecurity for heterogenous

Such networks are given rise through any combination of our developed devices and third-party devices, with CPUs, GPUs, TPUs,

DPUs and/or NPUs, that run the Veea Edge Platform Ô software

Veea has developed several

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

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

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

With an extensive patent portfolio of approximately

125 granted patents and 25 pending patent applications that cover 26 patent families, our end-to-end Hybrid Edge-Cloud Computing platform

represents a new product category that has the potential for wide scale customer adoption in large segments of consumer and enterprise

Veea Edge Platform’s

our patented secured docker containers, together with a Wi-Fi Access Point with a mesh router, a firewall, an IoT gateway, NVMe data storage

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

With an extensive patent portfolio of approximately 125 granted patents

and 25 pending patent applications that cover 26 patent families, our end-to-end Hybrid Edge-Cloud Computing platform represents a new

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

VeeaONE Platform’s

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

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efficiency, scalability, and reduced costs compared to alternatives.

VeeaHub products, about

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

and are both locally- and cloud-managed.

products, about the size of a typical Wi-Fi Access Point, are offered in variety of forms with different capabilities for indoor and outdoor

coverage and are both locally- and cloud-managed.

Veea Edge Platform architecture and business model, VeeaHub Ò

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

Android OS platform architecture and business model for Android devices.

The Veea Edge Platform offers

and third-party devices on Veea Edge Platform with Hybrid Edge-Cloud Computing

and AI-enabled applications and services resemble the Android OS platform architecture and business model for Android devices.

The VeeaONE Platform offers

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

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Recent Developments

Public Offering

On August 14, 2025, the Company closed a public

offering to purchase up to 9,189,096 shares of common stock and warrants to purchase up to 9,189,096 shares of common stock at a combined

offering price of $1.00 per share and accompanying warrant (the “Offering”).

The Company received aggregate cash gross process

of approximately $6.0 million, before deducting placement agent fees and other offering expenses.

The warrants have an exercise price

of $1.10 per share, are exercisable immediately and will expire five years from the original issuance date.

Included in the aggregate

securities issued are 3,239,096 shares of common stock and accompanying warrants that were issued to NLabs in consideration and satisfaction

of the NLabs 2025 Notes.

The Company intends to use the net proceeds from the Offering for investments in inventory and the Company’s

customer support infrastructure and for other working capital and general corporate purposes.

Supply Agreement

August 7, 2025, VeeaSystems Inc., a Delaware corporation (“VeeaSystems”), a wholly owned subsidiary of Veea Inc., a Delaware

corporation (the “Company”), entered into a certain Framework Agreement for the Licenses, Equipment and Services (the “Supply

Agreement”) with RadioMovil Dipsa, S.A.

(“Telcel”), a Mexican wireless telecommunications company owned by América

Móvil, effective August 7, 2025.

The Supply Agreement was signed by the parties following the completion of an extensive certification

and homologation process with Telcel;

and the successful completion of trials with certain Telcel enterprise customers of the Company’s

VeeaHub STAX Ò -5G product,

incorporating Telcel SIM cards.

Supply Agreement sets forth the general guidelines, terms and conditions that govern the solution implementation and marketing, as well

as the provisioning of the services provided by VeeaSystems.

Under the agreement, VeeaSystems will supply a comprehensive Platform-as-a-Service

solution featuring 5G-based Fixed Wireless Access (FWA) through its VeeaHub STAX Ò -5G

device, which incorporates 4G and 5G cellular connectivity, Wi-Fi 6 Access Point, IoT gateway, storage and Linux server capabilities to

deliver connectivity with integrated AI-driven cybersecurity services, managed connectivity, and monitoring tools while capable of hosting

applications on STAX-5G including third-party application.

The parties have agreed to work together in the development of the marketing

strategy, branding and promotion of VeeaSystems’s services to Telcel’s customers in Mexico.

The agreement provides for an

initial term of three years and automatically renews for successive one-year terms, unless either party elects not to renew upon 90-day

prior notice.

Appointment of Acting Chief Financial Officer

On July 15, 2025, Randal V.

Stephenson was appointed

as the Company’s Acting Chief Financial Officer.

Appointment of Acting Chief Revenue Officer

On July 15, 2025, Mr.

Helder Antunes a current

member of the Company’s Board of Directors was appointed acting Chief Revenue Officer.

Asset Purchase Transaction with Crowdkeep,

Asset Purchase Agreement

On May 13, the Company entered

into an Asset Purchase Agreement (the “APA”) with Crowdkeep, Inc., a Delaware corporation (the “Seller”), pursuant

to which, subject to the terms and conditions set forth in the APA, the Company acquired, upon the closing (the “Crowdkeep Closing”,

and the date of such Crowdkeep Closing, the “Crowdkeep Closing Date”) certain assets of Seller relating to Seller’s

IoT technology platform business (collectively, the “Crowdkeep Assets”), free and clear of any liens other than certain specified

liabilities of Seller that are being assumed (collectively, the “Crowdkeep Liabilities” and such acquisition of the Crowdkeep

Assets and assumption of the Crowdkeep Liabilities together, the “Crowdkeep Transaction”) in consideration for the issuance

to the Seller of 4,065,689 shares of Common Stock (the “Purchase Price”).

On May 13, 2025, the Company

entered into an Asset Purchase Agreement (the “APA”) with Crowdkeep, Inc., a Delaware corporation (the “Seller”),

pursuant to which, subject to the terms and conditions set forth in the APA, the Company acquired, upon the closing (the “Crowdkeep

Closing”, and the date of such Crowdkeep Closing, the “Crowdkeep Closing Date”) certain assets of Seller relating to

Seller’s IoT technology platform business (collectively, the “Crowdkeep Assets”), free and clear of any liens other

than certain specified liabilities of Seller that are being assumed (collectively, the “Crowdkeep Liabilities” and such acquisition

of the Crowdkeep Assets and assumption of the Crowdkeep Liabilities together, the “Crowdkeep Transaction”) in consideration

for the issuance to the Seller of 4,065,689 shares of Common Stock (the “Purchase Price”).

The APA contains other customary

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are attached hereto as Exhibit 10.4 and Exhibit 10.5, respectively, and are incorporated herein by reference.

Appointment of Chief Strategy Officer and

Senior Vice President, Finance

On May 1, 2025, Randal V.

Stephenson was appointed

the Company’s Senior Vice President, Finance and Chief Strategy Officer.

Equity Line of Credit

On December 2, 2024, the

Company entered into a common stock purchase agreement (the “Common Stock Purchase Agreement”) and related registration rights

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

to the Common Stock Purchase Agreement, the Company has the right, but not the obligation, to direct White Lion to purchase up to $25.0

million in aggregate gross purchase price of newly issued shares of Common Stock, subject to certain limitations and conditions as described

below (the “ELOC Program”), at a purchase price equal to (i) 96.5% of the volume weighted average stock price for the three

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

delivered, or (iii) the lowest traded price for a given purchase date.

The Company controls the

timing and amount of any sales to White Lion, which depends 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 common 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.

During the three months ended

March 31, 2025, the Company issued 27,498 shares of Common Stock to White Lion in payment of its commitment fee and sold 240,500 shares

to White Lion under the ELOC Program for aggregate proceeds of $604,426, with the stock price of shares purchased by the White Lion ranging

from $1.79 per share to $3.31 per share.

The Company agreed to issue to White Lion 27,498 shares of Common Stock as a commitment fee (the

“Commitment Shares”).

The fair value of the Commitment Shares was $25,000, which pursuant to ASC 815, was recorded in transaction

costs in the condensed consolidated statement of operations and comprehensive income (loss) of the Company for the three months ended

March 31, 2025.

The Common Stock Purchaser has agreed that during the term of the Common Stock Purchase Agreement, neither it nor any

of its affiliates will engage in any short sales or hedging transactions involving the Common Stock.

Components of Results of Operations

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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.

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.

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.

Cost of Goods Sold

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Product development expenses .

Product development expenses primarily consist of employee compensation, employee benefits, stock-based compensation related to technology

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

Product development expenses primarily consist of employee compensation, employee benefits, stock-based compensation related to technology developers and product management employees, as well as fees paid for outside services and materials.

Sales and marketing expenses .

Sales and marketing expenses consist of compensation and other employee-related costs for personnel engaged in selling, marketing and

sales support functions.

Sales and marketing expenses consist of compensation and other employee-related costs for personnel engaged in selling, marketing and sales support functions.

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

The Company does

not currently incur advertising costs.

● General and administrative

General and administrative expenses consist of compensation expense (including stock-based compensation expense) for employees

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

General and administrative expenses also includes

transaction costs, expenses associated with facilities, information technology, external professional services, legal costs and settlement

of legal claims and other administrative expenses.

The Company does not currently incur advertising costs.

General and administrative expenses .

General and administrative expenses consist of compensation expense (including stock-based compensation expense) for employees and executive management, and expenses associated with finance, tax, and human resources.

General and administrative expenses also includes transaction costs, expenses associated with facilities, information technology, external professional services, legal costs and settlement of legal claims and other administrative expenses.

Depreciation and amortization :

Depreciation and amortization expense consists of depreciation of Veea’s property and equipment and amortization of Veea’s

patents and other intellectual property.

● Impairment:

consists of impairment charges related to our in-process research and development (“IPR&D”)

Depreciation and amortization expense consists of depreciation of Veea’s property and equipment and amortization of Veea’s patents and other intellectual property.

Impairment consists of impairment charges related to our in-process research and development (“IPR&D”)

Results of Operations

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of financial results is not necessarily indicative of future results.

F or the three months ended March 31, 2025

compared to three months ended March 31, 2024

F or the three months ended June 30, 2025

compared to three months ended June 30, 2024 and the six months ended June 30, 2025 compared to three months ended June 30, 2024

The following table sets

forth Veea’s unaudited statements of operations data for the three months ended March 31, 2025 and 2024, respectively.

prepared the three month data on a consistent basis with the audited consolidated financial statements as of and for the years ended

December 31, 2024 and 2023, included in the Form 10-K filed with the SEC on April 15, 2025.

In the opinion of Veea’s management,

the unaudited three month financial information reflects all necessary adjustments, consisting only of normal recurring adjustments,

necessary for a fair presentation of this data.

forth Veea’s unaudited statements of operations data for the three and six months ended June 30, 2025 and 2024, respectively.

has prepared the data on a consistent basis with the audited consolidated financial statements as of and for the years ended December

31, 2024 and 2023, included in the Form 10-K filed with the SEC on April 15, 2025.

In the opinion of Veea’s management, the unaudited

three and six month financial information reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary

for a fair presentation of this data.

For the Three Months Ended

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General and administrative

Transaction costs

$ (1,034,307 )

Depreciation and amortization

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Change in fair value of Earn-Out Share Liability

$ (1,730,000 )

Other expense

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$ (7,410,858 )

$ (7,278,070 )

For the Six Months Ended

Revenues, net

Cost of Goods Sold

Operating Expenses:

Product development

Sales and marketing

General and administrative

$ (1,114,771 )

Depreciation and amortization

Total operating expenses

Loss from operations

(10,671,116 )

(12,399,471 )

Other Income (Expense):

Other income, net

Change in fair value of convertible note option liability

Change in fair value of warrant liabilities

Change in fair value of Earn-Out Share Liability

Other expense

Interest expense

Total other income (expense)

Net income (loss)

$ (3,111,806 )

$ (13,297,064 )

The Company generated revenue

of $14,262 and $16,770 for the three months ended March 31, 2025 and 2024, respectively.

Revenue has been principally earned from paid

pilots for our VeeaHub ® devices.

Our focus over the past several years has been on field testing and refining our product

to meet customer needs as well as market developments.

As a result of these efforts, we expect revenue to grow over the next several

quarters through the sales of our hardware, licenses and subscriptions.

of $72,927 and $40,811 for the three months ended June 30, 2025 and 2024, and revenue of $87,168 and $57,581 for the six months ended

June 30, 2025 and 2024, respectively.

Revenue has been principally earned from paid pilots for our VeeaHub ® devices.

focus over the past several years has been on field testing and refining our product to meet customer needs as well as market developments.

As a result of these efforts, we expect revenue to grow over the next several quarters through the sales of our hardware, licenses and

subscriptions.

We are especially focused in four principal market opportunities:

1) Digital Equity and Inclusion, 2) Energy and Sustainability solutions for Smart Buildings and Climate Smart Agriculture, 3) Convergence

of Fixed, Wireless, and 5G Networks, and 4) Smart Retail and Smart Warehouses.

1) Digital Equity and Inclusion, 2) Energy and Sustainability

solutions for Smart Buildings and Climate Smart Agriculture, 3) Convergence of Fixed, Wireless, and 5G Networks, and 4) Smart Retail and

Smart Warehouses.

Cost of Goods Sold

Cost of goods sold increased

by $346, or 3%, in the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

The decrease is immaterial

as it is related to the costs incurred to generate our revenue earned from paid pilots for our VeeaHub ® devices.

Cost of goods sold decreased

by $26,119, or 85%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Cost of goods sold decreased

by $37,540, or 88%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

The decrease is primarily related

to earning more service based revenue in the quarter as opposed to paid pilots for our VeeaHub ® devices.

Product Development Expense

Product development expense

increased by $121,352, or 129%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

in product development expenses was due to increased internal development and additional costs incurred by outside contractors related

to products manufactured during the period.

decreased by $648,529, or 92%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024 and decreased

by $625,101, or 79%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The decrease in product development

expenses was due to decreased internal development and costs incurred by outside contractors related to products manufactured during the

Sales and Marketing Expense

Sales and marketing expense

increased by $262,987, or 305%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

is primarily due to increased program spend to support a greater investment in our go-to-market strategies and drive revenue growth.

decreased by $251,625, or 86%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024 and sales and

marketing expense increased by $11,362, or 3%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

decrease is primarily due both a reduction in unpaid customer pilots and costs incurred from an outside consulting service.

General and Administrative Expense

General and administrative

expense decreased by $736,302, or 13%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

decrease for the quarter is primarily related to the Company’s cost reduction measures.

Transaction costs

Transaction costs increased

$35,000 in the three months ended March 31, 2025, compared to the three months ended March 31, 2024, due to costs related to the Crowdkeep

acquisition and the ELOC Commitment Shares.

expense decreased by $1,034,307, or 18%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024 and

decreased by $1,114,771, or 10%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The decrease for

the quarter is primarily related to the Company’s continued cost reduction measures.

Depreciation and Amortization

Depreciation and amortization

decreased by $8,800, or 13%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

was due to certain assets reaching the end of their useful lives.

increased by $76,142, or 111%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024 and increased

by $67,282, or 49%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The increase was due to additional

amortization for the Crowdkeep technology.

Other income, net

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to immaterial non-operating transactions incurred during the period.

These amounts were immaterial for the three months ended March 31,

2025 and 2024.

These amounts were immaterial for the three months ended June 30,

2025 and 2024 and six months ended June 30, 2025 and 2024.

Change in fair value of derivative liabilities

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liabilities is comprised of the fair value adjustment to the conversion option, Private Warrants, and earn-out shares at balance sheet

The gain on the change in fair value of conversion note option liability of $59,000 for the three months ended March 31, 2025, was

The gain on the change in fair value of conversion note option liability of $59,730 for the six months ended June 30, 2025, was

determined using a Black-Scholes option pricing model.

The gain on the change in fair value of warrant liabilities of $420,497 for the

three months ended March 31, 2025, was determined based on the trading value of the public warrants.

The gain on the change in fair value

of the Earn-Out Share Liability of $10,530,000 for the three months ended March 31, 2025, was determined using a Monte Carlo simulation.

A significant driver of the changes in fair value was due to the decline in the Company’s stock price.

The gain on the change in fair value of warrant liabilities of for the six months

ended June 30, 2025, was determined based on the trading value of the public warrants.

The gain on the change in fair value of the Earn-Out

Share Liability of $8,800,000 for the six months ended June 30, 2025, was determined using a Monte Carlo simulation.

A significant driver

of the changes in fair value was due to the decline in the Company’s stock price.

Other expense

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immaterial non-operating expenses incurred during the period.

These amounts were immaterial for the three months ended March 31, 2025

These amounts were immaterial for the three months ended June 30, 2025 and

2024 and six months ended June 30, 2025 and 2024.

Interest expense

Interest expense decreased

by $11,076, or 2%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Interest expense increased

by $489,716, or 107%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The increase was due

to additional draws on our revolving line of credit.

by $478,639, or 53%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The increase was due to additional

draws on our revolving line of credit.

Liquidity and Capital Resources

During the three months

ended March 31, 2025 and 2024, the Company incurred operating losses of $5.7 million and $6.1 million, respectively, and had an accumulated

deficit of $213.5 million as of March 31, 2025.

During the three months ended

June 30, 2025 and 2024, the Company incurred operating losses of $4.9 million and $6.8 million, respectively, and during the six months

ended June 30, 2025 and 2024, the Company incurred operating losses of $10.7 million and $12.4 million, respectively, and had an accumulated

deficit of $220.9 million as of June 30, 2025.

Since its inception, the Company has incurred significant operating losses and negative

The Company expects to continue to incur net losses as it continues to grow and scale its business.

As of March 31, 2025,

the Company had cash of $247,341 and outstanding debt of $15.2 million, of which $750,000 was outstanding under the September 2024 Notes,

$14.0 million was outstanding under the working capital facility, and $485,000 was related party debt outstanding under the NLabs 2025

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) expected cash proceeds from the ELOC Program, (2) 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 (3) the anticipated refund by June 30, 2025 of up to $5.0 million of the Company’s prepayment for purchased inventory

and (4) 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.

Since January 1, 2025, the Company has received $826,000 in additional loans from related parties and $1.0 million

of loans from unrelated parties in connection with the consummation of the acquisition of Crowdkeep.

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.

As of June 30, 2025, the

Company had cash of $238,008 and outstanding debt of $20.2 million, of which $750,000 was outstanding under the September 2024 Notes (as

defined below), $1.0 million was outstanding under the Crowdkeep Convertible Notes (as defined below), $14.0 million was outstanding under

the working capital facility, $2,626,000 was related party debt outstanding under the NLabs 2025 Notes (as defined below), and $1.8 million

was outstanding under a notes payable with an inventory vendor.

Although the Company has had recurring losses

each year since inception, the Company plans to fund its operations and capital funding needs for the next 12 months through a combination

of private and public equity and debt offerings, or a combination thereof, including (1) cash proceeds of approximately $6.0 million from

the Offering (as defined below), (2) the ELOC Program (as defined below) (3) the expected cash tax refund of up to $1.0 million in respect

of the Company’s UK subsidiary’s 2023 and 2024 research and development activities and (4) potential additional investments

in the form of debt or equity to fund operating deficits from existing and/or new investors, including related parties, which may include

the Company’s CEO and his affiliates.

The Company has a reasonable basis to believe it has alleviated substantial doubt regarding

its ability to continue as a going concern.

Since January 1, 2025, the Company has received approximately $3.2 million in additional loans

from related parties and $1.0 million in loans from unrelated parties in connection with the consummation of the acquisition of Crowdkeep.

See Note 13 for additional information.

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.

Non-GAAP Financial Measures

2 unchanged sentences

and evaluate our core operating performance.

These non-GAAP financial measures, which may differ from similarly titled measures used

by other companies, is presented to enhance investors’ overall understanding of our financial performance and should not be considered

These non-GAAP financial measures, which may differ from similarly titled measures used by

other companies, is presented to enhance investors’ overall understanding of our financial performance and should not be considered

a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

21 unchanged sentences

ADJUSTED EBITDA:

Net income (loss)

$ (7,410,858 )

$ (7,278,070 )

Interest expense

3 unchanged sentences

Change in fair value of Earn Out Shares Liability

Share-based compensation

Transaction costs

ADJUSTED EBITDA

$ (4,408,597 )

For the six Months

ADJUSTED EBITDA:

$ (3,111,806 )

$ (13,297,064 )

Interest expense

Depreciation and amortization

(12,258,741 )

Change in fair value of conversion note option liability

Change in fair value of warrant liabilities

Change in fair value of Earn Out Shares Liability

Share-based compensation

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis