Company: VEEAW
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032215
Chunk: 306

Company: VEEA INC.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1A
Chunk 306
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 of expected stock price volatility
on the historical volatility of a representative group of publicly traded companies for which historical information is available. The
historical volatility is generally calculated for a period of time commensurate with the expected term assumption. We use the simplified
method to calculate the expected term for options granted to employees and directors. We utilize this method as we do not have sufficient
historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based
on a U.S. treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed
to be zero, as we have never paid dividends and do not have current plans to pay any dividends on our Common Stock.

As there was no public market for Private Veea’s
common stock prior to the closing of the Business Combination, the estimated fair value of our common stock was previously approved by
our Board of Directors, with input from management, as of the date of each award grant, considering our most recently available independent
third-party valuations of Private Veea’s common stock and its board of directors’ assessment of additional objective and subjective
factors deemed relevant that may have changed from the date of the most recent valuation through the date of the grant.

Fair Value of Certain Debt and Liability Instruments,
and the Fair Value Option of Accounting

When financial instruments contain various embedded
derivatives which require bifurcation and separate accounting of those derivatives apart from the host instruments, if eligible, GAAP
allows issuers to elect the fair value option (“FVO”) of accounting for those instruments. The FVO allows the issuer to account
for the entire financial instrument, including accrued interest, at fair value with subsequent remeasurements of that fair value recorded
through the statements of operations. We elected the FVO of accounting for the September 2024 Notes, including contingently issuable common
stock and accrued interest, as discussed in Note 3, Summary of Significant Accounting Policies and Note 4, Reverse Recapatialization
to the accompanying consolidated financial statements included elsewhere in this Annual Report.

62

The September 2024 Notes, which include the related
contingently issuable common stock, contain embedded derivatives, which require bifurcation and separate accounting under GAAP, for which
the Company elected the FVO for the September 2024 Notes. The September 2024 Notes and accrued interest at their stated interest rates
were initially recorded at fair value as liabilities on