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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 9 Months Ended
Sep. 30, 2025
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

These unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). In the opinion of management, all adjustments considered necessary for a fair statement of the financial position and results of operations of the Company have been included.

 
Segment Reporting

Segment Reporting

 

Operating segments are defined as components of an entity for which discrete financial information is both available and regularly reviewed by its chief operating decision maker or decision-making group. The Company views its operations and manages its business in one segment. As part of new requirements under ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), the Company has included enhanced footnotes within its quarterly reporting—see Note 11.

 
Fair Value Measurements

Fair Value Measurements

 

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

 

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities;
   
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar, but not identical, assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data;
   
Level 3 Unobservable inputs in which there is little or no market data available and which require the Company to develop its own assumptions that market participants would use in pricing an asset or liability.

 

 

TEVOGEN BIO HOLDINGS INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Financial instruments recognized at historical amounts in the balance sheets consist of accounts payable and notes payable. The Company believes that the carrying value of accounts payable and notes payable approximates their fair values due to the short-term nature of these instruments.

 

The Company’s recurring fair value measurements consist of the convertible promissory notes prior to the Merger, for which the Company elected the fair value option to reduce accounting complexity, and private warrants after the Merger. Such fair value measurements are Level 3 inputs. The following table provides a roll-forward of the aggregate fair values of the Company’s convertible promissory notes.

 

Balance at January 1, 2024  $94,932,000 
Accrued interest expense   159,305 
Change in fair value   (48,468,678)
Derecognition upon conversion of convertible promissory notes   (46,622,627)
Balance at September 30, 2024  $— 

 

The Company used the probability weighted expected return method valuation methodology to determine the fair value of the convertible promissory notes prior to the Merger. Significant assumptions and ranges used in determining the fair value of convertible promissory notes prior to the Merger include volatility (80%), discount rate (35% - 36%), and probability of a future liquidity event (85% - 95%). The Company used its stock price on the Closing Date to determine the fair value for the derecognition of the convertible promissory notes upon conversion on the Closing Date.

 

The Company recorded a gain on change in fair value of derivative warrant liabilities of $64,959 and $57,406 during the three and nine months ended September 30, 2025, respectively. The Company recorded a gain on change in fair value of $7,613 and $14,428 during the three and nine months ended September 30, 2024, respectively. The change in value during these periods was largely attributable to changes in the price of the underlying common stock and risk-free rates. During the fiscal year ended December 31, 2024, the Company acquired private warrants in connection with the Closing and issued written call options in connection with the Loan Agreement. The fair value of the written call options decreased to $0 between their issuance and December 31, 2024, and remained at $0 as of September 30, 2025. Accordingly, the written call options are not included in the tables below. Such fair value measurements are Level 3 inputs. The following table provides a roll-forward of the aggregate fair values of the warrants.

 

  

Derivative

warrant liabilities

 
Balance at January 1, 2024  $— 
Initial fair value at issuance   29,000 
Change in fair value   (14,428)
Balance at September 30, 2024  $14,572 
      
Balance at January 1, 2025  $87,180 
Change in fair value   (57,406)
Balance at September 30, 2025  $29,774 

 

The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at September 30, 2025, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.

 

   Level   Quoted
Prices in
Active Markets
(Level 1)		   Significant Other
Observable Inputs
(Level 2)		   Significant Other
Unobservable
Inputs
(Level 3)		 
Liabilities:                    
Derivative warrant liabilities   3   $—   $—   $29,774 

 

There were no transfers between levels during the nine months ended September 30, 2025 and 2024.

 

 

TEVOGEN BIO HOLDINGS INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The Company’s nonrecurring fair value measurements consist of Series A Preferred Stock. Such fair value measurements are Level 3 inputs. The Company determined the fair value of Series A Preferred Stock using a Monte Carlo Simulation (“MCS”). Key inputs utilized in the MCS to estimate fair value of Series A Preferred Stock included a range of volatility between 75% to 85%, a holding period to a deemed liquidation event, as defined in the Series A Preferred Stock agreement, ranging from 0.5 to 10.0 years, and a risk-free interest rate between 4.3% and 5.3%. The difference between the cash received of $2,000,000 upon issuance of the Series A Preferred Stock and its estimated fair value was recognized as general and administrative expense on the unaudited consolidated statements of operations during the nine months ended September 30, 2024.

 

The Company used a MCS valuation methodology to determine the fair value of the freestanding $14,000,000 purchase option and remaining embedded $24,000,000 purchase option associated with the Loan Agreement as of September 30, 2025. The MCS methodology simulates the Company’s future stock price to estimate if and when the Trailing VWAP (as defined below) will reach $10.00 per share, and discounts the resulting payoff back to each valuation date using a present value factor. Significant assumptions used in determining the fair value of these options include volatility of 78.5% and discount rate of 4.0%. At September 30, 2025 and December 31, 2024, the MCS produced a fair value of $0 relating to these freestanding and embedded options.

 
Net Loss Per Share

Net Loss Per Share

 

The Company computes basic net loss per share by dividing net loss by the weighted-average common stock outstanding during the period. Given the Company’s net loss, basic and diluted net loss per share for the three and nine months ended September 31, 2025 and 2024 are the same.

 
Recently Issued Accounting Standards

Recently Issued Accounting Standards

 

In November 2023, the FASB issued ASU 2023-07, which enhances reportable segment disclosures by requiring disclosures such as significant segment expenses. The main provisions of this update require companies to disclose, on an annual and interim basis, significant segment expenses, segment profit and loss, and other segments items that are regularly provided to the chief operating decision maker (the “CODM”). This update also requires companies to disclose the title and position of the CODM and to explain how the CODM uses the reported segment measures in assessing segment performance and deciding how to allocate resources. The update also requires companies with a single reportable segment to provide all required segment reporting disclosures. This new standard was effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this standard on January 1, 2024 for annual reporting and interim periods beginning in 2025.

 

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which modifies the disclosure requirements for income taxes. This update requires disclosure of tabular statutory to effective rate reconciliation in both percentages and dollars, additional disaggregated rate reconciliation categories and disaggregation of both income taxes paid and income tax expense by jurisdiction. This guidance is effective for annual periods beginning after December 15, 2024. We expect this update to only impact our disclosures with no impact to our results of operations, cash flows and financial condition.

 

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, (Subtopic 220-40) (“ASU 2024-03”), which was clarified in January 2025 with ASU 2025-01 (collectively, “ASU 2025-01 and 2024-03”). ASU 2025-01 and 2024-03 improves disclosures regarding the types of expenses included in commonly presented expense captions, including disaggregating the amounts of employee compensation, depreciation and amortization included within each income statement expense caption. This standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the standard on its consolidated financial statements and disclosures.