Company: VEEAW
Filing Date: 2025-05-21
Form Type: 10-Q
Source: 0001213900-25-046124
Chunk: 79

Company: VEEA INC.
Filing Date: 2025-05-21
Form: 10-Q
Item: Part I, Item 8
Chunk 79
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based on the consideration provided by the Company and
its subsidiaries) to be at least $20 million, (ii) the Investors holding a majority of the aggregate outstanding obligations under the
September 2024 Notes expressly agree to convert all obligations under the September 2024 Notes or (iii) the Common Stock trades with an
average daily VWAP of at least $10.00 (subject to equitable adjustment for stock splits, stock dividends and the like with respect to
the Common Stock after the Financing Closing) for ten (10) consecutive trading days. The obligations under each September 2024 Note will
also automatically convert in connection with a Brokerage Transfer, as described below.

The Conversion Shares were initially
subject to a lock-up for a period of 6 months after the Financing Closing. The Transferred Shares were not subject to any lock-up restrictions,
but for a period of 6 months after the Closing they were separately designated by the Transfer Agent and kept as book entry shares on
the Transfer Agent’s records and were not be eligible to be held by DTC without the Investor first notifying the Company of its
intent to transfer any such Transferred Shares to a brokerage account and/or to be held by DTC or another nominee (a “Brokerage
Transfer”). If the Investor provided such notice or otherwise has any Transferred Shares subject to a Brokerage Transfer within
6 months after the Closing, a portion of the outstanding obligations under such Investor’s Note would automatically convert into
a number of Conversion Shares equal to the number of Transferred Shares subject to such Brokerage Transfer, and the lock-up period for
such Conversion Shares would be extended for an additional 6 months to 12 months after the Financing Closing. As of March 31, 2025, $750,000
in aggregate principal amount of the September 2024 Notes, together with associated interest, had automatically converted upon the occurrence
of a Brokerage Transfer.

11

The Company reviewed the conversion
feature granted in the notes under ASC 815, “Derivatives and Hedging” (“ASC 815”), and concluded that the
conversion price was based on a variable (enterprise value) that was not an input to the fair value of a “fixed-for-fixed”
option as defined under ASC 815 - 40 and is therefore considered a conversion option liability that should be bifurcated from the debt
host. As the fair value of the conversion option liability exceeded the net proceeds received, in accordance with ASC 470-20,