Company: VEEAW
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001213900-25-111013
Chunk: 123

Company: VEEA INC.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 123
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    Change in fair value 
     (171,463)
  
    Balance, end of period 
    $2,958,889 

24

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 the Convertible Note was executed. As
of September 30, 2025, 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 periods and subsequent measurement periods.

The conversion feature of the Convertible
Promissory Notes is measured at fair value using a Monte Carlo model that fair values the conversion option.

The convertible note option liability
was classified within Level 3 of the fair value hierarchy due to the use of unobservable inputs. The key inputs into the option pricing
model for the convertible note option liability were as follows:

     September 30,  2025   December 31, 2024   Stock Price  $1.83   $3.81   Expected term (years)   0.45    1.2   Volatility   75.0%   75.0%  Risk-Free Rate   4.16%   4.18%  Interest rate   6.24%   6.49% 

    Nine Months Ended September 30,  2025 
  
    Balance, beginning of period, December 31, 2024 
    $60,000 
  
    Change in fair value 
     (60,000)
  
    Balance, end of period 
    $- 

Earn-out Share Liability

Following the closing of the Business
Combination, holders of certain capital stock of Private Veea immediately prior to the closing have the contingent right to receive up
to 4.5 million additional shares of Common Stock if certain trading-price based milestones of the 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 earn out shares
is recorded as a contingent liability (the “Earn-out Share Liability”) in the Company’s financial statements. The initial
value of the contingent Earn-out Share Liability of $53.6 million was recorded as a transaction cost within operating expenses. The fair
value of the Earn-out Share Liability was