Company: VEEAW
Filing Date: 2025-01-10
Form Type: S-1/A
Source: 0001213900-25-002701
Chunk: 117

Company: VEEA INC.
Filing Date: 2025-01-10
Form: S-1/A
Chunk 117
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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.

Contingent Financing Asset

The Company recorded a contingent financing asset
on the condensed consolidated balance sheets for the fair value of the Transferred Shares issued to Investors for the unfunded portion
of the September 2024 Notes.

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, DistinguishingLiabilities 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,