Veea Inc.(VEEA) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents VEEA INC.'s unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition ITEM 1. Financial Statements This section presents VEEA INC.'s unaudited condensed consolidated financial statements and related notes for the periods ended June 30, 2025 and 2024 Condensed Consolidated Balance Sheet This statement details Veea's financial position, including assets, liabilities, and stockholders' deficit as of June 30, 2025 Condensed Consolidated Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Assets | | | | Total current assets | $15,239,583 | $14,879,122 | | Total assets | $28,602,053 | $21,093,895 | | Liabilities | | | | Total current liabilities | $31,600,070 | $20,136,171 | | Total liabilities | $39,534,642 | $38,118,720 | | Stockholders' Deficit | | | | Total stockholders' deficit | $(10,932,589) | $(17,024,825) | - Total assets increased by approximately $7.5 million, driven by increases in inventory, goodwill, and intangible assets. Total liabilities also increased significantly, primarily due to a rise in current liabilities, including revolving line of credit, accounts payable, and deferred payables[12] - Stockholders' deficit improved from $(17.0) million at December 31, 2024, to $(10.9) million at June 30, 2025, indicating a reduction in the accumulated deficit[12] Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) This statement presents Veea's revenues, expenses, and net loss for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations and Comprehensive Loss Highlights | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales, net | $72,927 | $40,811 | $87,168 | $57,581 | | Gross profit | $68,340 | $10,105 | $82,018 | $14,901 | | Loss from operations | $(4,920,943) | $(6,837,497) | $(10,671,116) | $(12,399,461) | | Net loss | $(7,410,858) | $(7,278,070) | $(3,111,806) | $(13,297,064) | | Basic Net loss per share | $(0.19) | $(0.34) | $(0.08) | $(0.64) | | Diluted Net loss per share | $(0.19) | $(0.34) | $(0.08) | $(0.64) | - Net sales increased significantly year-over-year for both the three-month (79% increase) and six-month (51% increase) periods ended June 30, 2025. Gross profit also saw substantial increases[13] - The company reported a lower net loss for the six months ended June 30, 2025, at $(3.1) million, compared to $(13.3) million for the same period in 2024, primarily due to a significant gain from the change in fair value of Earn-out Share Liability[13] Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit This statement details Veea's stockholders' deficit, including stock issuances and net loss, for the six months ended June 30, 2025 Changes in Stockholders' Deficit (Six Months Ended June 30, 2025) | Item | Amount | | :------------------------------------------------ | :------------- | | Balance, December 31, 2024 | $(17,024,824) | | Stock based compensation | $439,913 | | Common stock issued upon exercise of stock options | $11 | | Common stock issued upon vesting of RSUs | $0 | | Common stock issued upon draw on equity line of credit | $836,766 | | Common stock issued as compensation for equity line of credit commitment fee | $25,000 | | Common stock issued as consideration for Crowdkeep | $6,830,358 | | Common stock issued for services | $183,000 | | Settlement of convertible note agreement for shares issued | $700,000 | | Cumulative translation adjustment | $188,993 | | Net loss | $(3,111,806) | | Balance, June 30, 2025 | $(10,932,589) | - The total stockholders' deficit decreased from $(17.0) million at December 31, 2024, to $(10.9) million at June 30, 2025, primarily due to the issuance of common stock for the Crowdkeep acquisition and equity line of credit draws, partially offset by the net loss[21] Unaudited Condensed Consolidated Statements of Cash Flows This statement summarizes Veea's cash flows from operating, investing, and financing activities for the six months ended June 30 Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :----------------------------------- | :------------- | :------------- | | Net cash used in operating activities | $(7,065,145) | $(14,994,009) | | Net cash used in investing activities | $(159,543) | $(133,312) | | Net cash provided by financing activities | $5,762,777 | $9,986,840 | | Net decrease in cash and cash equivalents | $(1,447,625) | $(5,140,481) | | Cash and cash equivalents at end of year | $238,008 | $869,594 | - Net cash used in operating activities significantly decreased from $(14.99) million in 2024 to $(7.07) million in 2025, indicating improved operational cash management[25] - Cash provided by financing activities decreased from $9.99 million in 2024 to $5.76 million in 2025, reflecting different funding sources, including proceeds from revolving line of credit, related party notes, and convertible notes in 2025, compared to Series A-2 preferred stock issuance in 2024[25] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements 1 - DESCRIPTION OF BUSINESS Veea Inc. focuses on intelligent connectivity, bringing applications and AI to the network edge with its VeeaONE platform - Veea's core business is simplifying intelligent connectivity and bringing applications and AI to the network edge with its patented VeeaONE platform[27][136] - The VeeaONE platform offers virtualized data center capabilities at the Device Edge, hyperconvergence, Cloud-managed applications at the Edge, and Edge AI with AI-driven cybersecurity[27][136] - VeeaHub products are highly integrated all-in-one devices incorporating a Linux server, Wi-Fi Access Point, mesh router, firewall, IoT gateway, NVMe data storage, and 4G/5G modules[28][137] - The company holds an extensive patent portfolio of 123 granted patents and 32 pending applications covering 26 patent families[28] - Veea focuses on high-growth market segments including fixed-line/5G-based fixed wireless broadband access, subscription-based managed Wi-Fi, climate smart buildings, smart farming, smart warehouses, and smart retail[32] 2 - LIQUIDITY AND MANAGEMENT'S PLAN Veea addresses its accumulated deficit and negative cash flows with a plan to fund operations for the next 12 months - Veea incurred operating losses of $4.9 million and $10.7 million for the three and six months ended June 30, 2025, respectively, and has an accumulated deficit of $220.9 million[36] Liquidity Position (June 30, 2025) | Metric | Amount | | :----------------- | :------------- | | Cash | $238,008 | | Outstanding Debt | $20.2 million | | - September 2024 Notes | $750,000 | | - Crowdkeep Convertible Notes | $1.0 million | | - Working Capital Facility | $14.0 million | | - NLabs 2025 Notes (related party) | $2,626,000 | | - Inventory Vendor Notes Payable | $1.8 million | - Funding plans for the next 12 months include $6.0 million from a public offering, the ELOC Program, up to $1.0 million in UK R&D tax refunds, and potential additional debt or equity investments from existing/new investors, including related parties[37] 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This section outlines Veea's significant accounting policies, including consolidation, estimates, segment information, and recent pronouncements - Financial statements are prepared in accordance with GAAP and SEC rules for interim financial information, with necessary adjustments included for fair presentation[38] - Veea consolidates VeeaSystems MX as a variable interest entity (VIE) where it is the primary beneficiary[39] - The company operates as a single operating and reportable segment, with the majority of assets attributable to U.S. operations[44] - Veea is an emerging growth company and has elected to use the extended transition period for complying with new or revised accounting standards[43] - The company adopted ASU 2023-09 (Income Taxes) effective January 1, 2025, and ASU 2023-07 (Segment Reporting) effective December 31, 2024, with no material effect on consolidated financial statements[45][46] 4 - ACQUISITION Veea acquired IoT technology platform assets from Crowdkeep, Inc. for common stock, accounted for as an asset acquisition - On May 13, 2025, Veea acquired IoT technology platform assets from Crowdkeep, Inc. for 4,065,689 shares of Common Stock[48] Crowdkeep Acquisition Consideration | Item | Amount | | :-------------------------------- | :------------- | | Equity consideration (shares issued) | $6,830,358 | | Direct acquisition-related costs | $127,098 | | Total purchase consideration | $6,957,456 | - The transaction was accounted for as an asset acquisition, with the fair value concentrated in proprietary technology, which will be amortized over 10 years[49][51] - The acquisition was a related party transaction, evaluated and approved by a special committee of independent board members[50] 5 - REVERSE RECAPITALIZATION The Business Combination on September 13, 2024, was a reverse recapitalization, including contingent earn-out shares - The Business Combination on September 13, 2024, was accounted for as a reverse recapitalization, with Private Veea as the accounting acquirer[52] - The initial value of the Earn-out Share Liability was recorded as a transaction cost within operating expenses in 2024, with subsequent changes in fair value reported in financial statements[55] - Former Private Veea stockholders have a contingent right to receive up to 4.5 million additional common shares if specific trading-price milestones or a change of control occur within ten years post-closing[54] 6 - BALANCE SHEET COMPONENTS This section details the composition of Veea's inventory and property and equipment, net, as of June 30, 2025 Inventory Composition | Item | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Inventory | $8,014,752 | $7,377,966 | | Inventory allowance | $(904,653) | $(904,653) | | Consigned parts | $2,301,975 | $985,927 | | Total | $9,412,074 | $7,459,240 | Property and Equipment, net | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total property and equipment gross | $1,433,808 | $1,420,030 | | Less - Accumulated depreciation | $(1,296,584) | $(1,209,401) | | Total property and equipment net | $137,224 | $210,629 | | Depreciation expense (6 months) | $77,391 | $109,000 | - Inventory, net, increased by approximately $1.95 million from December 31, 2024, to June 30, 2025, largely due to an increase in consigned parts[56] - Property and equipment, net, decreased by $73,405, primarily due to depreciation, with six-month depreciation expense totaling $77,391 in 2025[57] 7 - GOODWILL AND INTANGIBLE ASSETS This section details changes in goodwill and intangible assets, including additions from the Crowdkeep acquisition Goodwill Activity | Period | Balance at December 31, 2024 | Foreign exchange transactions | Balance at June 30, 2025 | | :----- | :--------------------------- | :---------------------------- | :----------------------- | | 2025 | $4,779,625 | $453,874 | $5,233,499 | Intangible Assets, net (June 30, 2025) | Asset Type | Costs as of Dec 31, 2024 | Additions | Ending Costs | Accumulated Amortization | Net Book Value | | :-------------------- | :----------------------- | :-------- | :----------- | :----------------------- | :------------- | | Patents | $7,551,468 | $158,464 | $7,709,932 | $(6,803,650) | $906,282 | | Proprietary technology | $0 | $6,904,306 | $6,904,306 | $(89,029) | $6,815,276 | | Total | $7,551,468 | $7,062,770 | $14,614,238 | $(6,892,679) | $7,721,559 | - Intangible asset amortization expense for the six months ended June 30, 2025, was $127,272, a significant increase from $28,000 in the prior year, primarily due to the Crowdkeep technology acquisition[61][168] 8 - DEBT This section details Veea's outstanding debt, including a revolving loan facility and convertible notes Total Outstanding Debt (June 30, 2025 vs. December 31, 2024) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Revolving Loan Facility | $14,000,000 | $12,700,000 | | Convertible note payable, current | $1,000,000 | $0 | | Convertible note payable, net | $438,432 | $97,316 | | Notes payable | $1,762,415 | $0 | | Total Debt | $17,200,847 | $12,797,316 | - The revolving loan facility had an outstanding principal of $14.0 million as of June 30, 2025, with no additional funds available for borrowing[64] - Crowdkeep Convertible Notes, totaling $1.0 million, were issued in April and May 2025, accruing 8% annual interest and convertible into common stock at $5.00 per share[72][73] - As of June 30, 2025, $700,000 in aggregate principal of the September 2024 Notes had automatically converted into common stock due to Brokerage Transfers[69] 9 - INVESTMENTS Veea accounts for private company investments using the cost method, with a carrying value of $235,737 as of June 30, 2025 - Private company investments without readily determinable fair values are accounted for using the cost method, measured at cost less impairment, plus or minus observable price changes[74] Private Company Investments Carrying Value | Date | Carrying Value | | :--------------- | :------------- | | June 30, 2025 | $235,737 | | December 31, 2024 | $235,737 | - An impairment loss of $216,278 was recognized in 2024, but no impairment indicators were present as of June 30, 2025[74] 10 - STOCKHOLDERS' EQUITY This section details Veea's capital structure, including authorized shares and ELOC Program activity - Veea domesticated as a Delaware corporation and restated its certificate of incorporation, authorizing 550,000,000 shares of Common Stock and 1,000,000 shares of preferred stock[75] - The company has an Equity Line of Credit (ELOC) Program with White Lion Capital, LLC, to sell up to $25.0 million in newly issued common stock[78] ELOC Program Activity (Six Months Ended June 30, 2025) | Metric | Amount | | :-------------------------------- | :------------- | | Proceeds received | $836,766 | | Common Stock issued | 358,000 shares | - A commitment fee of $25,000 for the ELOC Program was recorded as transaction costs. The ELOC agreement was amended to extend the sales period and increase the minimum gross proceeds target[81] 11 - STOCK INCENTIVE PLANS This section details Veea's stock incentive plans, including the 2024 Incentive Award Plan, ESPP, stock options, and RSUs - The Veea Inc. 2024 Incentive Award Plan reserved 4,460,437 shares of Common Stock for awards, with approximately 429,724 shares available for grant as of June 30, 2025[83] - The 2024 Employee Stock Purchase Plan (ESPP) reserved 1,070,603 shares, but no offering periods have commenced as of June 30, 2025[84] Stock Option Activity (Six Months Ended June 30, 2025) | Metric | Number of Options | Weighted Average Exercise Price per Share | | :-------------------------- | :---------------- | :-------------------------------------- | | Outstanding at Dec 31, 2024 | 3,790,702 | $1.04 | | Granted | 178,937 | $1.64 | | Forfeited / Expired | (33,055) | $1.80 | | Outstanding at June 30, 2025 | 3,936,107 | $3.60 | | Exercisable at June 30, 2025 | 3,806,983 | $3.66 | Restricted Stock Units (RSU) Activity (Six Months Ended June 30, 2025) | Metric | Number of RSUs | Weighted Average Grant Date Fair Value | | :------------------------ | :------------- | :------------------------------------- | | Unvested at Dec 31, 2024 | 0 | $0 | | Granted | 695,034 | $1.60 | | Vested | (60,852) | $1.60 | | Forfeited | (3,581) | $1.60 | | Unvested at June 30, 2025 | 630,603 | $1.60 | | Unrecognized expense | $824,670 | | 12 - WARRANTS This section details Veea's outstanding Public, Private Placement, and Exchanged Warrants, including exercise prices Warrants Outstanding (June 30, 2025) | Warrant Type | Number Outstanding | Exercise Price per Share | | :------------------------ | :----------------- | :----------------------- | | Public Warrants | 6,384,326 | $11.50 | | Private Placement Warrants | 5,256,218 | $11.50 | | Exchanged Warrants | 159,307 | $10.19 | - Public Warrants are equity-classified, while Private Placement Warrants are recognized as liabilities at fair value, with fair value changes impacting the statement of operations[94][95] - The company may redeem outstanding Public Warrants under certain conditions, including when the common stock price equals or exceeds $18.00 or $10.00 per share[93][97] 13 - RELATED PARTY TRANSACTIONS This section details Veea's related party transactions, including lease agreements and loans from affiliates Related Party Lease Liabilities (Accrued and Unpaid Rent) | Lessor | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | NLabs Inc. | $1,836,000 | $1,713,600 | | 83 Street LLC | $2,088,000 | $1,944,000 | - NLabs Inc., an affiliate of the CEO, provided $2,626,000 in loans (NLabs 2025 Notes) to Veea during the six months ended June 30, 2025, accruing 10% annual interest[102] - The NLabs 2025 Notes, including accrued interest of $28,432, were satisfied by issuing approximately 3,239,096 shares of Common Stock and accompanying warrants in a public offering[102][122] 14 - COMMITMENTS AND CONTINGENCIES This section outlines Veea's commitments, including lease obligations, indemnifications, and deferred legal fees - As of June 30, 2025, Veea had no unconditional purchase obligations for goods or services[103] - The company leases office space in multiple countries, including related party leases in the U.S. guaranteed by the CEO[104] - Veea has indemnification obligations but has not made any indemnity payments to date, and no current legal proceedings are expected to have a material adverse effect[106][107] - Deferred legal fees related to the Business Combination amounted to $2,257,457 as of June 30, 2025, recorded as current deferred payables[108] 15 - FAIR VALUE MEASUREMENTS Veea measures financial instruments at fair value, including private warrant, convertible note option, and earn-out share liabilities Fair Value Measurements (June 30, 2025) | Liability | Total | Level 1 | Level 2 | Level 3 | | :-------------------------- | :---------- | :------ | :---------- | :---------- | | Private warrant liability | $735,870 | $0 | $735,870 | $0 | | Convertible note option liability | $270 | $0 | $0 | $270 | | Earn-out share liability | $6,760,000 | $0 | $0 | $6,760,000 | | Total | $7,496,140 | $0 | $735,870 | $6,760,270 | - The fair value of the convertible note option liability decreased by $59,730 during the six months ended June 30, 2025, to $270, valued using an option pricing model[113][114] - The fair value of the Earn-out Share Liability decreased by $8.8 million during the six months ended June 30, 2025, to $6,760,000, primarily driven by a decline in the company's stock price[115][116][170] 16 - EARNINGS PER SHARE Veea reported basic and diluted net loss per share of $(0.08) for the six months ended June 30, 2025 Net Loss Per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--------------------------------------- | :----- | :----- | | Net loss attributable to common shareholders | $(3,111,806) | $(13,297,064) | | Weighted-average common shares outstanding | 37,621,401 | 20,926,336 | | Net loss per share – basic | $(0.08) | $(0.64) | | Net loss per share – diluted | $(0.08) | $(0.64) | - Potential common shares from stock options, RSUs, warrants, earn-out liability, and convertible notes were excluded from diluted EPS calculations because their inclusion would have been anti-dilutive due to the net loss[117][118] 17 - EMPLOYEE 401(k) PLAN Veea sponsors a 401(k) plan for employees, matching contributions up to 4% of eligible earnings - Veea sponsors a 401(k) plan with tax-deferred and after-tax contribution options for eligible employees[119][120] - The company matches pretax and Roth employee contributions up to 4% of eligible earnings, with immediate vesting[120] 401(k) Matching Contributions (Six Months Ended June 30) | Year | Amount | | :--- | :------------- | | 2025 | $37,240 | | 2024 | $77,697 | 18 - SUBSEQUENT EVENTS This section details events after June 30, 2025, including a public offering, a Telcel supply agreement, and executive appointments - On August 14, 2025, Veea closed a public offering, raising approximately $6.0 million in cash gross proceeds from the sale of 9,189,096 shares of common stock and accompanying warrants[122] - The net proceeds from the offering will be used for investments in inventory, customer support infrastructure, and general corporate purposes[122] - On August 7, 2025, VeeaSystems Inc. entered into a three-year Supply Agreement with Telcel to provide a 5G-based Fixed Wireless Access (FWA) Platform-as-a-Service solution in Mexico[123][124] - Randal V. Stephenson was appointed Acting Chief Financial Officer and Mr. Helder Antunes was appointed Acting Chief Revenue Officer on July 15, 2025[125][126] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Veea's financial condition, results of operations, business overview, and liquidity Company Overview Veea focuses on intelligent connectivity, bringing applications and AI to the network edge with its patented VeeaONE platform - Veea is dedicated to intelligent connectivity, bringing applications and AI to the edge of the network with patented technologies for virtualized data center capabilities at the Device Edge, hyperconvergence, Cloud-managed applications, and Edge AI[136] - The VeeaONE Platform offers a Platform-as-a-Service (PaaS) capability, enabling Edge AI with benefits like data privacy, low latency, bandwidth efficiency, and reduced costs[138] - Veea earns revenue primarily from the sale of its VeeaHub devices, licenses, and subscriptions[141] Recent Developments This section highlights Veea's recent activities, including a public offering, a Telcel supply agreement, and executive appointments - Veea closed a public offering on August 14, 2025, raising approximately $6.0 million in gross cash proceeds, with funds allocated for inventory, customer support, and working capital[142] - VeeaSystems Inc. signed a three-year Supply Agreement with Telcel on August 7, 2025, to provide a 5G-based Fixed Wireless Access (FWA) Platform-as-a-Service solution in Mexico[143][144] - Randal V. Stephenson was appointed Acting Chief Financial Officer and Mr. Helder Antunes was appointed Acting Chief Revenue Officer on July 15, 2025[145][146] - On May 13, 2025, Veea acquired IoT technology platform assets from Crowdkeep, Inc. for 4,065,689 shares of Common Stock, and also issued $1.0 million in convertible promissory notes to the Crowdkeep Investor[147][149] Components of Results of Operations This section describes how Veea recognizes revenue, calculates cost of goods sold, and categorizes its operating expenses - Revenue is recognized based on a five-step approach, primarily from hardware sales, licenses, and subscriptions, with subscription revenue recognized over the applicable period[155][156] - Cost of goods sold includes finished goods, manufacturing components, freight, and third-party cloud hosting fees[157] - Operating expenses are categorized into product development, sales and marketing, general and administrative, depreciation and amortization, and impairment[158] Results of Operations This section analyzes Veea's financial performance, including revenues, gross profit, operating expenses, and net income (loss) Key Financial Results (Three Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :------- | :------- | :--------- | :--------- | | Revenues, net | $72,927 | $40,811 | $32,116 | 79% | | Cost of Goods Sold | $4,587 | $30,706 | $(26,119) | -85% | | Gross profit | $68,340 | $10,105 | $58,235 | 576% | | Product development expense | $53,417 | $701,946 | $(648,529) | -92% | | Sales and marketing expense | $40,515 | $292,140 | $(251,625) | -86% | | General and administrative | $4,750,744 | $5,785,051 | $(1,034,307) | -18% | | Depreciation and amortization | $144,607 | $68,465 | $76,142 | 111% | | Net income (loss) | $(7,410,858) | $(7,278,070) | $(132,788) | 2% | Key Financial Results (Six Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :------- | :-------- | :--------- | :--------- | | Revenues, net | $87,168 | $57,581 | $29,587 | 51% | | Cost of Goods Sold | $5,150 | $42,690 | $(37,540) | -88% | | Gross profit | $82,018 | $14,891 | $67,127 | 451% | | Product development expense | $171,068 | $796,169 | $(625,101) | -79% | | Sales and marketing expense | $389,766 | $378,404 | $11,362 | 3% | | General and administrative | $9,987,637 | $11,102,408 | $(1,114,771) | -10% | | Depreciation and amortization | $204,663 | $137,381 | $67,282 | 49% | | Net income (loss) | $(3,111,806) | $(13,297,064) | $10,185,258 | -77% | - Revenue growth is expected in the coming quarters from hardware, licenses, and subscriptions, focusing on Digital Equity and Inclusion, Energy and Sustainability, Fixed/Wireless/5G Networks, and Smart Retail/Warehouses[163] - The significant decrease in Cost of Goods Sold for both periods is attributed to a shift towards more service-based revenue compared to paid pilots for VeeaHub devices[164] - The substantial decrease in Product Development and Sales and Marketing expenses for the three-month period reflects reduced internal development, outside contractor costs, and unpaid customer pilots[165][166] - The decrease in General and Administrative expense is primarily due to the Company's continued cost reduction measures[167] - The increase in Depreciation and Amortization is due to additional amortization for the Crowdkeep technology acquisition[168] - The significant improvement in net loss for the six-month period is largely driven by a gain from the change in fair value of derivative liabilities, particularly the Earn-Out Share Liability, due to a decline in the Company's stock price[170] Liquidity and Capital Resources This section discusses Veea's cash position, outstanding debt, and plans to fund operations for the next 12 months - Veea incurred operating losses of $4.9 million and $10.7 million for the three and six months ended June 30, 2025, respectively, and had an accumulated deficit of $220.9 million[173] Liquidity Position (June 30, 2025) | Metric | Amount | | :----------------- | :------------- | | Cash | $238,008 | | Outstanding Debt | $20.2 million | | - September 2024 Notes | $750,000 | | - Crowdkeep Convertible Notes | $1.0 million | | - Working Capital Facility | $14.0 million | | - NLabs 2025 Notes (related party) | $2,626,000 | | - Inventory Vendor Notes Payable | $1.8 million | - The company plans to fund operations for the next 12 months through a $6.0 million public offering, the ELOC Program, a potential $1.0 million UK R&D tax refund, and additional debt/equity investments, including from related parties[174] - Management believes these funding plans provide a reasonable basis to alleviate substantial doubt about the company's ability to continue as a going concern[174] Non-GAAP Financial Measures This section explains Veea's use of Adjusted EBITDA as a non-GAAP financial measure for evaluating core operating performance - Veea uses Adjusted EBITDA as a non-GAAP financial measure to evaluate core operating performance and for internal budgeting, excluding items like interest, taxes, depreciation, amortization, stock-based compensation, and non-core expenses/gains[175][176] Adjusted EBITDA Reconciliation (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--------------------------------------- | :-------------- | :--------------- | | Net loss | $(3,111,806) | $(13,297,064) | | Interest expense | $1,379,581 | $900,942 | | Depreciation and amortization | $204,663 | $137,381 | | EBITDA | $(1,527,562) | $(12,258,741) | | Change in fair value of conversion note option liability | $(59,730) | $0 | | Change in fair value of warrant liabilities | $(105,124) | $0 | | Change in fair value of Earn Out Shares Liability | $(8,800,000) | $0 | | Share-based compensation | $439,913 | $334,774 | | Transaction costs | $25,000 | $0 | | ADJUSTED EBITDA | $(10,027,503) | $(11,923,967) | - Adjusted EBITDA for the six months ended June 30, 2025, was $(10.0) million, an improvement from $(11.9) million in the prior year, reflecting adjustments for non-cash and non-recurring items[177][181] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Veea is not required to provide quantitative and qualitative disclosures about market risk - Veea is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[178] ITEM 4. Controls and Procedures Veea's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - As of June 30, 2025, Veea's disclosure controls and procedures were deemed effective to provide reasonable assurance for timely and accurate reporting[179] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[180] PART II. OTHER INFORMATION This section provides additional information, including legal proceedings, risk factors, equity sales, and other disclosures ITEM 1. Legal Proceedings Veea is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial results - Veea is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business or financial results[183] ITEM 1A. Risk Factors As a smaller reporting company, Veea is not required to provide new risk factor disclosures in this quarterly report - As a smaller reporting company, Veea is not required to provide information for this item[184] - No material changes to the risk factors disclosed in the 2025 Form 10-K have occurred[184] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[185] ITEM 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[186] ITEM 4. Mine Safety Disclosures Mine safety disclosures are not applicable to Veea's operations - Mine safety disclosures are not applicable[187] ITEM 5. Other Information This section reports executive salary increases and confirms no insider trading arrangements - Effective August 1, 2025, the annual base salaries of Janice Smith (EVP and COO) and Randal Stephenson (Acting CFO) were increased to $300,000[188] - No insider trading arrangements were reported[189] ITEM 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including Sarbanes-Oxley Act certifications - Exhibits include certifications of the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, and Inline XBRL documents[190] SIGNATURES This section contains the official signatures of Veea's Chief Executive Officer and Acting Chief Financial Officer - The report was signed by Allen Salmasi, Chief Executive Officer and Chairman, and Randal V. Stephenson, Acting Chief Financial Officer, on August 18, 2025[194]