Company: VEEAW
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032215
Chunk: 719

Company: VEEA INC.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 2
Chunk 719
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 earned from paid pilots for our VeeaHub®  devices.

Product
Development Expense

Product
development expense increased by $679,903, or 98%, in the year ended December 31, 2024 compared to the year ended December 31, 2023.
The increase in product development expenses was due to increased internal development and additional costs incurred of outside contractors
related to software development and product manufacturing during the period.

Sales
and Marketing Expense

Sales
and marketing expense increased by $596,205, or 277%, in the year ended December 31, 2024 compared to the year ended December 31, 2023.
The year-to-date increase was due primarily to an increase in customer evaluations and fees paid to third-party marketing firm during
the period.

General
and Administrative Expense

General and administrative expense increase by $9.4 million, or 55%,
in the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase is primarily related to a $6.3 million
increase to share based compensation, $1.2 million for employee benefits and other office related expenditures, $0.7 million increase
related to professional fees, a the foreign exchange gain of $0.7 million and a $0.5 million increase in our inventory reserve for the
year ended December 31, 2024 The year-to-date overall increase was primarily due to an increase in net foreign exchange losses, as well
as an increase in professional and consulting fees relating to the Business Combination.

58

Transaction
costs including those incurred with 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”). The initial value of the Earn-out Share Liability of
approximately $55 million is recorded as a transaction cost within operating expenses. The fair value of the Earn-out Share
Liability was estimated using Monte Carlo simulation utilizing assumptions related to the contractual term of the instruments,
estimated volatility, and current interest rates and the price of our Common