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STOCK-BASED COMPENSATION
 9 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION

NOTE 8. STOCK-BASED COMPENSATION

 

In connection with the Closing, the Company adopted the Tevogen Bio Holdings Inc. 2024 Omnibus Incentive Plan (the “2024 Plan”) and no longer grants awards pursuant to the 2020 Equity Incentive Plan (the “2020 Plan”). Each restricted stock unit (“RSU”) award granted under the 2020 Plan that was outstanding and unvested as of the Closing Date was automatically canceled and converted into an award under the 2024 Plan with respect to the common stock of the Company (the “Rollover RSUs”). Such Rollover RSUs remain subject to the same terms and conditions as set forth under the applicable award agreement prior to the Closing.

 

In addition to covering the Rollover RSUs, under the 2024 Plan, the Company is authorized to grant awards up to an aggregate 40,000,000 shares of common stock. The 2024 Plan provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units, and other equity-based awards. As of September 30, 2024, awards for 19,760,196 shares remained available to be granted under the 2024 Plan.

 

The Company has issued RSUs that are subject to either service-based vesting conditions or service-based and performance-based vesting conditions. Compensation expense for service-based RSUs are recognized on a straight-line basis over the vesting period of the award. Compensation expense for service-based and performance-based RSUs (“Performance-Based RSUs”) are recognized when the performance condition, which is based on a liquidity event condition being satisfied, is deemed probable of achievement.

 

On the Closing Date, the Company issued an aggregate of 19,348,954 RSUs under the 2024 Plan to the Company’s Chief Executive Officer, Dr. Ryan Saadi (the “Special RSU Award”). Such RSUs immediately converted into shares of restricted common stock (“Restricted Stock”), the restrictions on which lapse in four equal annual installments beginning on February 14, 2031 (“Vesting Period”). Pursuant to the terms of the Special RSU Award, Dr. Saadi will be entitled to vote the Restricted Stock, but the shares may not be sold, assigned, transferred, pledged, hypothecated, or otherwise encumbered, subject to forfeit. Dr. Saadi will automatically forfeit all unvested Restricted Stock in the event he departs the Company. The fair value per share for the Special RSU Award was determined to be $4.51 per share, equivalent to the Company’s stock price on the Closing Date, resulting in a total grant date fair value of $87,263,783. In accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”), the Company will recognize compensation expense on a straight-line basis from the Closing Date until the completion of the Vesting Period.

 

Restricted Stock and RSU activity was as follows:

 

   Service-Based Restricted Stock and RSUs   Performance-Based RSUs 
   Shares  

Weighted average

grant-date

fair value

   Shares  

Weighted average

grant-date

fair value

 
Nonvested as of January 1, 2024   —   $      —    10,900,128   $     2.97 
Granted   20,239,804    4.33    —    — 
Vested   (12,000)    0.59    (9,178,656)   2.85 
Forfeited   —    —    —    — 
Nonvested as of September 30, 2024   20,227,804   $4.33    1,721,472   $3.19 

 

As a result of the Merger, the liquidity event performance condition was achieved and therefore compensation cost of $1,119,315 for the three months ended September 30, 2024 and $28,319,404 for the nine months ended September 30, 2024 was recognized for the Performance-Based RSUs, of which 3,532,446 shares were issued and outstanding as of September 30, 2024, and 5,646,210 shares will be issued subsequent to September 30, 2024. There was $82,222,657 of unrecognized compensation cost related to Service-Based Restricted Stock and RSUs as of September 30, 2024, which will be expensed over a weighted average period of 9.0 years. There was $4,018,725 of unrecognized compensation cost related to Performance-Based RSUs as of September 30, 2024, which will be expensed over a weighted average period of 0.7 years.

 

 

Tevogen Bio Holdings Inc.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The Company recorded stock-based compensation expense in the following expense categories in the accompanying consolidated statements of operations:

 

   Three months ended   Nine months ended 
  

September 30,

2024

  

September 30,

2024

 
Research and development  $2,185,958   $24,932,798 
General and administrative   1,141,693    8,870,322 
Total  $3,327,651   $33,803,120 

 

No stock-based compensation expense was recognized during the nine months ended September 30, 2023.