Tevogen Inc. 10-Q

Item 1. Financial Statements (Unaudited) Tevogen Bio Holdings Inc. UNAUDITED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2024 2023 Assets Current assets: Cash $ 2,330,681 $ 1,052,397 Prepaid expenses and other assets 1,038,217 670,582 Due from related party 158,819 — Total current assets 3,527,717 1,722,979 Property and equipment, net 336,994 458,651 Right-of-use assets - operating leases 291,485 469,862 Deferred transaction costs — 2,582,870 Other assets 133,276 271,141 Total assets $ 4,289,472 $ 5,505,503 Liabilities and stockholders’ deficit Current liabilities: Accounts payable $ 5,838,362 $ 3,418,378 Accrued expenses and other liabilities 1,405,403 1,096,450 Operating lease liabilities 258,507 252,714 Notes payable 1,651,000 — Convertible promissory notes — 80,712,000 Loan agreement 1,012,466 — Due to related party 250,000 — Total current liabilities 10,415,738 85,479,542 Convertible promissory notes — 14,220,000 Operating lease liabilities 42,567 234,858 Derivative warrant liabilities 14,572 — Written call option derivative liabilities 7,064 — Total liabilities 10,479,941 99,934,400 Stockholders’ deficit Series A Preferred Stock, $ 0.0001 par value; 2,000 shares authorized; 500 shares issued and outstanding as of September 30, 2024 2,799,990 — Series C Preferred Stock, $ 0.0001 par value; 600 shares authorized; 400 shares issued and outstanding as of September 30, 2024 4,000,000 — Preferred Stock Value - — Common stock, $ 0.0001 par value; 800,000,000 shares authorized; 170,773,864 and 119,999,989 shares issued and outstanding at September 30, 2024 and December 31, 2023 17,078 12,000 Additional paid-in capital 90,933,028 5,216,840 Accumulated deficit ( 103,940,565 ) ( 99,657,737 ) Total stockholders’ deficit ( 6,190,469 ) ( 94,428,897 ) Total liabilities and stockholders’ deficit $ 4,289,472 $ 5,505,503 See accompanying notes to the unaudited consolidated financial statements. 1 TEVOGEN BIO HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS 2024 2023 2024 2023 Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Operating expenses: Research and development $ 3,260,938 $ 1,116,911 $ 28,196,970 $ 3,495,477 General and administrative 2,824,589 $ 1,208,097 16,004,308 3,338,279 Total operating expenses 6,085,527 2,325,008 44,201,278 6,833,756 Loss from operations ( 6,085,527 ) ( 2,325,008 ) ( 44,201,278 ) ( 6,833,756 ) Interest expense, net ( 12,459 ) ( 299,943 ) ( 168,239 ) ( 888,827 ) Merger transaction costs — — ( 7,499,353 ) — Change in fair value of warrants 7,613 — 14,428 — Change in fair value of convertible promissory notes — ( 1,280,000 ) 48,468,678 ( 49,122,865 ) Change in fair value of written call option derivative liabilities 206,150 — ( 7,064 ) — Loss on issuance of commitment shares — — ( 890,000 ) — Net loss $ ( 5,884,223 ) $ ( 3,904,951 ) $ ( 4,282,828 ) $ ( 56,845,448 ) Net loss attributable to common stockholders, basic $ ( 5,909,428 ) $ ( 3,904,951 ) $ ( 864,521 ) $ ( 56,845,448 ) Net loss attributable to common stockholders, diluted $ ( 5,909,428 ) $ ( 3,904,951 ) $ ( 864,521 ) $ ( 56,845,448 ) Net loss per share attributable to common stockholders, basic $ ( 0.03 ) $ ( 0.03 ) $ ( 0.01 ) $ ( 2.30 ) Net loss per share attributable to common stockholders, diluted $ ( 0.03 ) $ ( 0.03 ) $ ( 0.01 ) $ ( 2.30 ) Weighted-average common stock outstanding, basic 170,174,533 119,999,989 160,000,569 24,752,000 Weighted-average common stock outstanding, diluted 170,174,533 119,999,989 160,000,569 24,752,000 See accompanying notes to the unaudited consolidated financial statements. 2 Tevogen Bio Holdings Inc. UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT Shares Amount Shares Amount Shares Amount Shares Amount capital deficit Total Series A Preferred Stock Series B Preferred Stock Series C Preferred Stock Common Stock Additional paid-in Accumulated Shares Amount Shares Amount Shares Amount Shares Amount capital deficit Total Balance at January 1, 2024 — $ — — $ — — — 119,999,989 $ 12,000 $ 5,216,840 $ ( 99,657,737 ) $ ( 94,428,897 ) Issuance of Series A preferred stock 500 2,799,990 — — — — — — — — 2,799,990 Nonrefundable prepaid proceeds towards anticipated Series A-1 preferred stock issuance — — — — — — — — 200,000 — 200,000 Issuance of Series B preferred stock — — 3,613 3,613,000 — — — — — — 3,613,000 Conversion of convertible promissory notes into common stock in connection with merger — — — — — — 10,337,419 1,034 46,621,593 — 46,622,627 Merger, net of redemptions and transaction costs — — — — — — 14,778,056 1,478 ( 2,885,459 ) — ( 2,883,981 ) Issuance of restricted common stock — — — — — — 19,348,954 1,935 ( 1,935 ) — — Issuance of common stock for Sponsor advisory service fee — — — — — — 150,000 15 676,485 — 676,500 Stock-based compensation — — — — — — — — 26,333,249 — 26,333,249 Net income — — — — — — — — — 11,264,842 11,264,842 Balance at March 31, 2024 500 $ 2,799,990 3,613 $ 3,613,000 — $ — 164,614,418 $ 16,462 $ 76,160,773 $ ( 88,392,895 ) $ ( 5,802,670 ) Issuance of commitment shares in connection with the unsecured equity line of credit facility — — — — — — 1,000,000 100 889,900 — 890,000 Issuance of common stock in connection with Polar note payable — — — — — — 1,500,000 150 ( 150 ) — — Issuance of common stock in settlement of vested restricted stock units — — — — — — 1,711,984 171 ( 171 ) — — Nonrefundable prepaid proceeds towards anticipated Series A-1 preferred stock issuance — — — — — — — — 2,800,000 — 2,800,000 Contribution from related party — — ( 3,613 ) $ ( 3,613,000 ) — — — — 3,613,000 — — Stock-based compensation — — — — — — — — 4,142,220 — 4,142,220 Net loss — — — — — — — — — ( 9,663,447 ) ( 9,663,447 ) Balance at June 30, 2024 500 $ 2,799,990 — — — $ — 168,826,402 $ 16,883 $ 87,605,572 $ ( 98,056,342 ) $ ( 7,663,897 ) Issuance of Series C preferred stock — — — — 400 4,000,000 — — — — 4,000,000 Issuance of preferred stock — — — — 400 4,000,000 — — — — 4,000,000 Issuance of common stock in settlement of vested restricted stock units — — — — — — 1,947,462 195 ( 195 ) — — Stock-based compensation — — — — — — — — 3,327,651 — 3,327,651 Net loss — — — — — — — — — ( 5,884,223 ) ( 5,884,223 ) Balance at September 30, 2024 500 $ 2,799,990 — — 400 $ 4,000,000 170,773,864 $ 17,078 $ 90,933,028 $ ( 103,940,565 ) $ ( 6,190,469 ) Series A Preferred Stock Series B Preferred Stock Series C Preferred Stock Common Stock paid-in Accumulated Shares Amount Shares Amount Shares Amount Shares Amount capital deficit Total Balance at January 1, 2023 — $ — — $ — — $ — 119,999,989 $ 12,000 $ 5,216,840 $ ( 39,180,057 ) $ ( 33,951,217 ) Net loss — — — — — — — — — ( 30,756,144 ) ( 30,756,144 ) Balance at March 31, 2023 — $ — — — — $ — 119,999,989 $ 12,000 $ 5,216,840 $ ( 69,936,201 ) $ ( 64,707,361 ) Net loss — — — — — — — — — ( 22,184,353 ) ( 22,184,353 ) Balance at June 30, 2023 — $ — — $ — — $ — 119,999,989 $ 12,000 $ 5,216,840 $ ( 92,120,554 ) $ ( 86,891,714 ) Balance — $ — — $ — — $ — 119,999,989 $ 12,000 $ 5,216,840 $ ( 92,120,554 ) $ ( 86,891,714 ) Net loss — — — — — — — — — ( 3,904,951 ) ( 3,904,951 ) Net income (loss) — — — — — — — — — ( 3,904,951 ) ( 3,904,951 ) Balance at September 30, 2023 — $ — — $ — — $ — 119,999,989 $ 12,000 $ 5,216,840 $ ( 96,025,505 ) $ ( 90,796,665 ) Balance — $ — — $ — — $ — 119,999,989 $ 12,000 $ 5,216,840 $ ( 96,025,505 ) $ ( 90,796,665 ) See accompanying notes to the unaudited consolidated financial statements. 3 Tevogen Bio Holdings Inc. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS 2024 2023 For the nine months ended September 30, 2024 2023 Cash flows from operating activities: Net loss $ ( 4,282,828 ) $ ( 56,845,448 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 121,657 119,206 Stock-based compensation expense 33,803,120 — Non-cash interest expense 171,771 889,135 Merger transaction costs 7,099,353 — Change in fair value of convertible promissory notes ( 48,468,678 ) 49,122,865 Loss on Series A Preferred Stock issuance 799,990 — Loss on issuance of commitment shares 890,000 — Change in fair value of warrants ( 14,428 ) — Change in fair value of written call option derivative liabilities 7,064 Amortization of right-of-use asset 178,377 158,282 Change in operating assets and liabilities: Prepaid expenses and other assets ( 365,134 ) 196,181 Other assets ( 68,446 ) 21,343 Accounts payable 2,323,809 764,636 Accrued expenses and other liabilities ( 960,172 ) ( 459,163 ) Operating lease liabilities ( 186,499 ) ( 161,683 ) Net cash used in operating activities ( 8,951,044 ) ( 6,194,646 ) Cash flows from investing activities: Purchases of property and equipment — ( 133,000 ) Net cash used in investing activities — ( 133,000 ) Cash flows from financing activities: Cash acquired in connection with the reverse recapitalization 229,328 — Proceeds from issuance of Series A Preferred Stock 2,000,000 — Proceeds from issuance of Series C Preferred Stock 4,000,000 — Nonrefundable prepaid proceeds towards anticipated Series A-1 Preferred Stock Issuance 3,000,000 — Proceeds from loan agreement 1,000,000 — Payments of deferred transaction costs — ( 200,000 ) Proceeds from issuance of convertible promissory notes — 3,650,000 Net cash provided by financing activities 10,229,328 3,450,000 Net increase (decrease) in cash 1,278,284 ( 2,877,646 ) Cash – beginning of period 1,052,397 5,484,265 Cash – end of period $ 2,330,681 $ 2,606,619 Supplementary disclosure of noncash investing and financing activities: de-SPAC transaction fees included in accrued expenses and other liabilities — 1,798,115 Conversion of convertible promissory notes into common stock in connection with Merger 46,622,627 — Repurchase of Series B preferred stock 3,613,000 — Issuance of common stock for net liabilities upon reverse recapitalization, net of transaction costs ( 3,113,309 ) — See accompanying notes to the unaudited consolidated financial statements. 4 TEVOGEN BIO HOLDINGS INC. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. NATURE OF BUSINESS Tevogen Bio Holdings Inc., a Delaware corporation (the “Company”), is a clinical-stage specialty immunotherapy company harnessing the power of CD8+ cytotoxic T lymphocytes to develop off-the-shelf, precision T cell therapeutics for the treatment of infectious diseases and cancers. The Company’s precision T cell technology, ExacTcell, is a set of processes and methodologies to develop, enrich, and expand single human leukocyte antigen-restricted CTL therapies with proactively selected, precisely defined targets. The Company has completed a Phase 1 proof-of-concept trial for the first clinical product of ExacTcell, TVGN 489, for the treatment of ambulatory, high-risk adult COVID-19 patients, and has other product candidates in its pipeline. On February 14, 2024 (the “Closing Date”), pursuant to the agreement and plan of merger dated June 28, 2023 (the “Merger Agreement”), by and among Semper Paratus Acquisition Corporation (“Semper Paratus”), Semper Merger Sub, Inc., a wholly owned subsidiary of Semper Paratus (“Merger Sub”) SSVK Associates, LLC, (the “Sponsor”) Tevogen Bio Inc (n/k/a Tevogen Bio Inc.) (“Tevogen Bio”), and Dr. Ryan Saadi in his capacity as seller representative, Merger Sub merged with and into Tevogen Bio with Tevogen Bio being the surviving company and a wholly owned subsidiary of the Company (the “Merger,” and together with the other transactions contemplated by the Merger Agreement, the “Business Combination”), and Semper Paratus was renamed Tevogen Bio Holdings Inc. In connection with the closing of the Business Combination (the “Closing”), the then-outstanding shares of common stock of Tevogen Bio, were converted into shares of the common stock of the Company at an exchange ratio of approximately 4.85 shares of Company common stock for each share of Tevogen Bio common stock (the “Exchange Ratio”). See Note 4 for more information on the Business Combination. As discussed in Note 4, the Merger was accounted for as a reverse recapitalization under which the historical financial statements of the Company prior to the Merger are those of Tevogen Bio. All information related to the common stock of Tevogen Bio prior to the Closing and presented in the consolidated financial statements and notes thereto has been retroactively adjusted to reflect the Exchange Ratio. Following the Merger, the former equity holders and holders of convertible promissory notes of Tevogen Bio held 91.0 % of the outstanding shares of common stock of the Company and the former shareholders, creditors, and other contractual counterparties of Semper Paratus held 9.1 % of the Company. NOTE 2. DEVELOPMENT-STAGE RISKS AND LIQUIDITY The Company has generally incurred losses and negative cash flows from operations since inception. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales from its product candidates currently in development. Management believes that cash of $ 2,330,681 as of September 30, 2024, the $ 2,000,000 received for the sale of Series C Preferred Stock subsequent to September 30, 2024, and the Loan Agreement entered into in June 2024 (as defined in Note 7), which allows the Company to draw down term loans of $ 1,000,000 per month over thirty-six months for an initial total of $ 36,000,000 , will allow the Company to have adequate cash and financial resources to operate for at least the next 12 months from the date of issuance of these unaudited consolidated financial statements. The Company does not plan to initiate a clinical trial until additional funding is received. Management regularly evaluates different strategies to obtain funding for operations for subsequent periods. These strategies may include but are not limited to private placements of securities, licensing and/or marketing arrangements, partnerships with other pharmaceutical or biotechnology companies, and public offerings of securities. The Company may not be able to obtain financing on acceptable terms and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain sufficient funding, the Company could be required to delay, reduce or eliminate research and development programs, product portfolio expansion, or future commercialization efforts, which could adversely affect its business prospects. Operations since inception have consisted primarily of organizing the Company, securing financing, developing licensed technologies, performing research, conducting pre-clinical studies and a clinical trial, and pursuing and completing the Business Combination. The Company is subject to risks associated with any specialty biotechnology company that requires considerable expenditures for research and development. The Company’s research and development projects may not be successful, products developed may not obtain necessary regulatory approval, and any approved product may not be commercially viable. In addition, the Company operates in an environment of rapid technological change and is largely dependent on the services of its employees and consultants. 5 Tevogen Bio Holdings Inc. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The summary of significant accounting policies included in the Company’s annual financial statements that can be found in Exhibit 99.1 of the Company’s Current Report on Form 8-K/A filed with the SEC on April 29, 2024 (the “Form 8-K”), have not materially changed, except as reflected in the following: Basis of Presentation The accompanying unaudited consolidated financial statements of the Company are presented in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC. 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, the accompanying unaudited consolidated financial statements include all adjustments, consisting of a normal recurring nature, (which consist primarily of accruals, estimates, and assumptions that impact the consolidated financial statements) that are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations of Tevogen Bio filed as Exhibits 99.1 and 99.2 to the Form 8-K. The interim results for the period presented are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any future interim periods. Use of Estimates In preparing unaudited consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of expenses. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed, and the effects of revisions are reflected in the unaudited consolidated financial statements in the period they are determined to be necessary. Significant areas that require management’s estimates include the fair value of the common stock and convertible promissory notes prior to the Merger, the fair value of the Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock, fair value of the purchase options under the Loan Agreement, stock-based compensation assumptions, the estimated useful lives of property and equipment and accrued research and development expenses. Freestanding and Embedded Common Stock Purchase Options Equity-linked purchase options issued in connection with the Company’s debt agreements are assessed to determine whether they are freestanding or embedded with the host instrument under ASC 815, Derivatives and Hedging Contracts in Entity’s Own Equity (“ASC 815”). Each type of purchase option is then assessed for equity or liability classification under ASC 815. The Company’s embedded and freestanding purchase options were determined to be liability-classified derivative instruments and are measured at fair value both on the date of issuance and at each subsequent balance sheet date, with changes in fair value recorded to ‘Change in fair value of written call option derivative liabilities’ within the consolidated statements of operations and consolidated statements of cash flows. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash. 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. 6 Tevogen Bio Holdings Inc. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Warrants As the result of the Merger, the Company accounts for its warrants originally sold as part of Semper Paratus’s initial public offering (the “IPO”) in accordance with ASC 815 and ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). The assessment considers whether the warrants are freestanding financial instruments and meet the definition of a liability pursuant to ASC 480 and meet all of the conditions for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own shares of common stock, among other conditions. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter until settlement. Changes in the estimated fair value of the warrants are recognized as a non-cash loss on the consolidated statements of operations. Under these standards, the Company’s private placement warrants sold at the time of the IPO do not meet the criteria for equity classification and must be recorded as liabilities while the public warrants sold in connection with the IPO do meet the criteria for equity classification and must be recorded as equity. 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. 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. SCHEDULE OF FAIR VALUE MEASUREMENT 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 $ — Balance at January 1, 2023 $ 39,297,000 Initial fair value at issuance 3,650,000 Accrued interest expense 889,135 Change in fair value 49,122,865 Balance at September 30, 2023 $ 92,959,000 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 included 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 conversion derecognition of the convertible promissory notes on the Closing Date. There were no transfers between levels during the nine months ended September 30, 2024 and 2023. 7 Tevogen Bio Holdings Inc. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Upon the Closing, the Company acquired private warrants, the fair value of which decreased by $ 14,428 between the Closing Date and September 30, 2024. In June 2024, the Company acquired written call options, the fair value of which decreased by $ 367,936 between the issuance and September 30, 2024. Such fair value measurements are Level 3 inputs. The following table provides a roll-forward of the aggregate fair values of the warrants and the written call option derivative liabilities. SCHEDULE OF FAIR VALUES OF WARRANTS Derivative warrant liabilities Written call option derivative liabilities Balance at February 15, 2024 $ — $ — Initial fair value at issuance 29,000 375,000 Change in fair value ( 14,428 ) ( 367,936 ) Balance at September 30, 2024 $ 14,572 $ 7,064 The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2024, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value. SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS 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 $ — $ — $ 14,572 Written call option derivative liabilities 3 $ — $ — $ 7,064 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 consolidated statements of operations during the three months ended March 31, 2024. The Company used a MCS valuation methodology to determine the fair value of the freestanding $ 14,000,000 purchase option and remaining embedded $ 33,000,000 purchase option associated with the Loan Agreement as of September 30, 2024. 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 78.6 % and discount rate of 3.9 %. 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. The Company determined that each outstanding share of preferred stock and restricted common stock would participate in earnings available to common stockholders but would not participate in losses. The Company computes diluted net loss per share by dividing the net loss by the sum of the weighted-average number of common stock outstanding during the period, plus the potential dilutive effects, if any, of potentially dilutive securities. Recently Issued Accounting Standards In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815 -40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. ASU 2020-06 also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. Effective January 1, 2024, the Company adopted ASU 2020-06 and that adoption did not have an impact on its consolidated financial statements and related disclosures. 8 Tevogen Bio Holdings Inc. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 enhances reportable segment disclosures by requiring disclosures such as significant segment expenses, information on the chief operating decision maker and disclosures for entities with a single reportable segment. Additionally, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, and contain other disclosure requirements. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company does not expect the adoption of ASU 2023-07 to have a material impact on its consolidated financial statements and related disclosures. NOTE 4. BUSINESS COMBINATION On the Closing Date, the Company completed the Business Combination described in Note 1. The Merger was accounted for as a reverse recapitalization under GAAP because Tevogen Bio was determined to be the accounting acquirer based upon the terms of the Merger and other factors, including that following the Merger, former Tevogen Bio (i) equityholders and holders of convertible promissory notes owned approximately 91.0 % of the Company, (ii) directors constituted the majority (six of seven) of the directors of the Company, and (iii) management held all key positions of management of the Company. Accordingly, the Merger was treated as the equivalent of Tevogen Bio issuing stock to acquire the net assets of Semper Paratus. As a result of the Merger, the net liabilities of Semper Paratus were recorded at their acquisition-date fair value in the consolidated financial statements and the reported operating results prior to the Merger are those of Tevogen Bio. Immediately after the Merger, there were 164,614,418 shares of the Company’s common stock outstanding. The following table shows the net liabilities acquired in the Merger: SCHEDULE OF NET LIABILITIES ACQUIRED IN MERGER February 14, 2024 Cash $ 229,328 Due from Sponsor 158,819 Prepaid expenses and other assets 2,501 Accounts payable ( 96,175 ) Accrued expenses ( 1,269,126 ) Notes payable ( 1,651,000 ) Derivative warrant liabilities ( 29,000 ) Total net liabilities acquired ( 2,654,653 ) Plus: Merger transaction costs limited to cash acquired ( 229,328 ) Total net liabilities acquired plus transaction costs $ ( 2,883,981 ) Total transaction costs of $ 7,728,681 were incurred in relation to the Merger through the Closing Date, of which $ 229,328 were charged directly to equity to the extent of the cash received from the Merger, with the balance of $ 7,499,353 charged to Merger transaction costs for the nine months ended September 30, 2024. Former holders of Tevogen Bio common stock and the Sponsor are eligible to receive up to an aggregate of 24,500,000 shares of common stock (“Earnout Shares”) if the volume-weighted average price (the “VWAP”) of the Company’s common stock reaches specified threshold levels during the three-year period commencing on the Closing Date. Refer to Note 5, Earnout Shares, for further details of the earnout arrangement. In connection with the Merger, the Company issued Series B Preferred Stock to the Sponsor in return for the Sponsor assuming $ 3,613,000 of liabilities and obligations (“Assumed Liabilities”) of Semper Paratus and Tevogen Bio. The issuance date fair value of the Series B Preferred Stock was recorded to Merger transaction costs within the consolidated statements of operations. All of the issued Series B Preferred Stock was repurchased by the Company during the three months ended June 30, 2024 in exchange for the Sponsor being released from their obligation to repay the Assumed Liabilities. See Note 9 for additional information. NOTE 5. EARNOUT SHARES Following the Closing, former holders of Tevogen Bio common stock may receive up to 20,000,000 Earnout Shares in tranches of 6,666,667 , 6,666,667 , and 6,666,666 shares of common stock per tranche, respectively. The first, second, and third tranches are issuable if the VWAP per share of the Company’s common stock is greater or equal to $ 15.00 , $ 17.50 , and $ 20.00 , respectively, over any twenty trading days within any thirty consecutive day trading period during the three-year period after the Closing. The Sponsor received the right to Earnout Shares with the same terms above, except that each of the Sponsor’s three earnout tranches are for 1,500,000 shares of common stock, for an aggregate of 4,500,000 shares of common stock across the entire Sponsor earnout. The Earnout Shares are a form of dividend for holders of Tevogen Bio common stock, and the Earnout Shares earnable by the Sponsor are treated as contingent consideration in a reverse recapitalization. In accordance with ASC 815, the Earnout Shares were considered to be indexed to the Company’s common stock and are classified within permanent equity. 9 Tevogen Bio Holdings Inc. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 6. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consisted of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES September 30, December, 31 2024 2023 Professional services $ 1,344,096 $ 976,301 Other 61,307 120,149 Total $ 1,405,403 $ 1,096,450 NOTE 7. DEBT Loan Agreement In June 2024, the Company entered into a Loan Agreement (the “Loan Agreement”) with The Patel Family, LLP (the “Lender”), a related party of the Company, providing for an unsecured line of credit facility (the “Facility”) for term loans of up to an initial total of $ 36,000,000 . Under the Facility, the Company may draw up to $ 1,000,000 in term loans per calendar month over a draw period of 36 months. Each term loan draw will have a maturity date of 48 months and will accrue interest at the lower of (i) daily SOFR plus 2.00 % and (ii) 7.00 %. Interest accrues quarterly and is payable on the three-month anniversary of the draw date. Interest is payable in shares of common stock at an effective price of $ 1.50 per share. Principal may be prepaid at any time without penalty, and repayments or prepayments may be made in cash or common stock at the Company’s election. Payments of principal in common stock would be made at an effective price of the greater of $ 1.50 per share and the ten-day trailing volume weighted average price per share of the common stock (the “Trailing VWAP”) as of the trading day prior to payment. As an inducement to enter into the Loan Agreement, the Company issued 1,000,000 shares of common stock to the Lender during June 2024. As of September 30, 2024, the Company has drawn $ 1,000,000 from the Facility with a remaining $ 33,000,000 available for future financing over the remaining 33 months. The Loan Agreement includes a purchase option whereby the Lender has the option to purchase up to $ 14,000,000 of shares of common stock at a purchase price equal to 70 % of the Trailing VWAP per share (the “$ 14 million Purchase Option”). The $ 14 million Purchase Option only becomes exercisable once Trailing VWAP reaches $ 10.00 per share. The $ 14 million Purchase Option was determined to be a freestanding derivative liability under ASC 815 and is carried at fair value, with changes in fair value recorded to change in fair value of written call option derivatives liabilities within the consolidated statements of operations and consolidated statements of cash flows. The Loan Agreement also includes a purchase option (the “Additional Amount Purchase Option”) that is identical to the $ 14 million Purchase Option, except that the option is exercisable for an amount up to the then-remaining undrawn term loan amount under the Loan Agreement at the time Trailing VWAP reaches $ 10.00 per share. The Additional Amount Purchase Option was determined to be an embedded derivative within the written loan commitment that requires bifurcation under ASC 815, and thus is carried at fair value with changes in fair value recorded to change in fair value of written call option derivatives liabilities within the consolidated statements of operations and consolidated statements of cash flows. The $ 14 million Purchase Option and the Additional Amount Purchase Option are recorded to written call option derivative liabilities within the consolidated balance sheet. The Loan Agreement is a written loan commitment that is not eligible for the fair value option under ASC 825, Financial Instruments . However, management intends to elect the fair value option for future draws under this commitment, and therefore has expensed all issuance costs associated with the Loan Agreement, which are comprised of the fair value of the 1,000,000 shares of common stock issued to the Lender as well as the issuance date fair value of the $ 14 million Purchase Option and Additional Amount Purchase Option. Notes Payable As a result of the Merger, the Company assumed notes payable held by Polar Multi-Strategy Master Fund (“Polar”) for which the proceeds were to be used for working capital purposes by Semper Paratus with an outstanding balance of $ 1,651,000 on the Closing Date and remain outstanding at September 30, 2024. The notes payable do not accrue interest. The outstanding balance of the notes was required to be repaid in full within five business days of the Merger, and the Company is therefore in default of its obligations at September 30, 2024. The notes’ default provisions do not require the Company to transfer any shares or pay any amounts to Polar. In May 2024, the Company issued 1,500,000 shares of common stock as loan consideration to Polar. 10 Tevogen Bio Holdings Inc. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 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: SCHEDULE OF RESTRICTED STOCK AND RSU ACTIVITY 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. 11 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: SCHEDULE OF STOCK-BASED COMPENSATION EXPENSE 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. NOTE 9. STOCKHOLDERS’ DEFICIT Common Stock As of February 15, 2024, the Company’s common stock and warrants began trading on The Nasdaq Stock Market LLC under the symbols “TVGN” and “TVGNW”, respectively. As of September 30, 2024, the Company had 170,773,864 shares of common stock issued and outstanding. For accounting purposes related to earnings per share, only shares that are fully vested or are not subject to repurchase are considered issued and outstanding. Below is a reconciliation of shares of common stock issued and outstanding: SCHEDULE OF RECONCILIATION OF SHARES OF COMMON STOCK ISSUED AND OUTSTANDING September 30, 2024 Total shares of common stock legally issued and outstanding 170,773,864 Plus: shares to be issued: Vested RSUs not yet legally settled into common stock (a) 5,651,210 Less: Shares subject to future vesting: Issuance of restricted common stock subject to forfeiture (b) ( 19,348,954 ) Total shares issued and outstanding 157,076,120 (a) As of September 30, 2024, there were RSUs that had vested but had not been legally settled into common stock. See Note 8 for additional information. (b) Dr. Saadi will automatically forfeit all unvested Restricted Stock granted pursuant to the Special RSU Award in the event he departs the Company. See Note 8 for additional information on the Special RSU Award. Prior to the Merger, Tevogen Bio had outstanding shares of voting and non-voting common stock. Upon the Closing, Tevogen Bio’s common stockholders received shares of the Company’s common stock in an amount determined by application of the Exchange Ratio, as discussed in Note 1. Preferred Stock The Company is authorized to issue up to 20,000,000 shares of preferred stock, par value $ 0.0001 per share. Series A Preferred Stock In March 2024, the Company authorized and issued 2,000 and 500 shares, respectively, of Series A Preferred Stock (the “Series A”) to an investor at a price of $ 4,000 per share (the “Series A Original Issue Price”), for gross proceeds of $ 2,000,000 . The Company recorded an expense of $ 799,990 in its consolidated statements of operations related to issuance of the Series A equal to the fair value of the Series A when issued of $ 5,600 per share less the purchase price of $ 4,000 per share. Dividends Holders of Series A are entitled to receive dividends accruing daily on a cumulative basis payable at a fixed rate of 5 % per annum per share on the Series A Original Issue Price, which rate will automatically increase by 2% every year that the Series A remains outstanding (the “Series A Accruing Dividends”). These dividends become payable when and if declared by the Company. The Series A Preferred Stock will also participate on an as-converted basis in any regular or special dividends paid to holders of the common stock . 12 Tevogen Bio Holdings Inc. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Liquidation The Series A ranks senior to common stock and Series C Preferred Stock in liquidation priority. In the event of a liquidation of the Company, or certain deemed liquidation events, the Series A is redeemable for a price equal to the greater of the Series A Original Issue Price plus all Series A Accruing Dividends that are unpaid through the redemption date, or such amount that would have been payable had the Series A converted into shares of common stock immediately before the liquidation or deemed liquidation event. Voting The Series A does not have any voting rights. Redemption The holders of Series A are not entitled to redeem their shares outside of the liquidation of the Company or the occurrence of a deemed liquidation event. The Company is entitled to redeem that Series A at a price equal to the Series A Original Issue Price plus any Series A Accruing Dividends accrued but unpaid thereon, if the VWAP of the Company’s common stock exceeds $ 5.00 per share for the twenty days immediately prior to the Company’s call election . Conversion The holders of Series A have the option to convert the Series A into shares of common stock at a ratio equal to the Series A Original Issue Price divided by the Series A Conversion Price, which is initially $ 4.00 per share and is subject to standard antidilution adjustments. Series A-1 Preferred Stock On March 27, 2024, the Company entered into an Amended and Restated Securities Purchase Agreement with the Series A investor covering the issuance of 600 shares of Series A-1 Preferred Stock for a gross purchase price of $ 6,000,000 . The terms of the Series A-1 Preferred Stock are identical to the Series A, except that the cumulative dividends are capped at 15% per annum, and the Series A-1 Issuance Price is defined as $ 10,000 per share . As of September 30, 2024, the investor had paid a non-refundable deposit of $ 3,000,000 towards the Series A-1 purchase price, and no shares of Series A-1 Preferred Stock were issued or outstanding. Series B Preferred Stock In connection with the Closing, the Company entered into an agreement to issue shares of Series B to the Sponsor in return for the Sponsor assuming certain liabilities and obligations of Semper Paratus and Tevogen Bio. In March 2024, 3,613 shares of Series B were issued in return for the assumption of the Assumed Liabilities. The issuance date fair value of the Series B was determined to be $ 3,613,000 and was recorded within Merger transaction costs in the consolidated statements of operations. The Series B was classified as permanent equity. On June 15, 2024, the Company and the Sponsor entered into the Preferred Stock Repurchase Agreement, pursuant to which the Company repurchased all outstanding Series B in exchange for the release of the Sponsor from its obligations related to the Assumed Liabilities, but no cash consideration. The repurchase was recorded as a deemed contribution from a related party and recorded to additional paid-in capital. As of June 30, 2024, there were no shares of Series B outstanding, and on August 9, 2024, the Company filed a Certificate of Elimination to eliminate the Series B. Although the Company was not legally released by the creditors, the Company has made payments towards the Assumed Liabilities and approximately $ 2.6 million remains on the Company’s balance sheet at September 30, 2024. Series C Preferred Stock On August 21, 2024, the Company entered into a securities purchase agreement (the “Series C Agreement”) with an investor, pursuant to which the investor purchased 600 shares of Series C Preferred Stock (the “Series C”) of the Company at a price of $ 10,000 per share (the “Series C Original Issue Price”), for gross proceeds of $ 6,000,000 . The Series C is subject to a call right providing the Company the right to call the stock at any time after the fifth anniversary of the date of issuance. The Company also agreed that so long as the Series C is outstanding, the Company will not, without the written consent of the holders of 50.1% of the Series C, amend, alter, or repeal any provision of the Company’s certificate of incorporation or bylaws in a manner adverse to the Series C. Assessed under accounting guidance within ASC 480 and ASC 815, as the Series C is unregistered and without mandatory redemption features, the Series C is classified within equity at issued face value as of September 30, 2024. 13 Tevogen Bio Holdings Inc. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Dividends The Series C carries an annual 7.5 % cumulative dividend, compounded annually, beginning on the later of (1) September 30, 2024 and (2) the date on which the investor has paid the entirety of the purchase price under the Series C Agreement and ending on the last business day of the calendar quarter ending September 30, 2034 (the “Series C Accruing Dividends”). Dividends will be payable in shares of Series C or, at the election of the Company, in cash . Liquidation The Series C ranks subordinate to the Series A and Series A-1 Preferred Stock and ranks senior to common stock in liquidation priority. In the event of a liquidation of the Company, or certain deemed liquidation events, the Series C is redeemable for a price equal to the greater of the Series C Original Issue Price plus all Series C Accruing Dividends that are unpaid through the redemption date, or such asset amount as would have been payable had the Series C converted into shares of common stock immediately before the liquidation or deemed liquidation event. Voting The Series C does not have any voting rights. Redemption The holders of Series C are not entitled to redeem their shares outside of the liquidation of the Company or the occurrence of a deemed liquidation event. The Company is entitled to redeem that Series C at a price equal to the Series C Original Issue Price plus any Series C Accruing Dividends accrued but unpaid thereon, subject to the conversion right described below. Conversion The shares of Series C will be convertible at the election of the holder, beginning six months after the date of issuance, into shares of common stock at a conversion price equal to the volume-weighted average price of the Common Stock for the 30 trading days immediately prior to the exercise of the holder’s conversion option, subject to a floor price of $ 0.6172 . Warrants Upon the Closing, 17,975,000 warrants initially issued by Semper Paratus in November 2021, comprising 17,250,000 public warrants sold in the IPO and 725,000 warrants issued in a concurrent private placement, were assumed. Public Warrants The public warrants have an exercise price of $ 11.50 per share, became exercisable on March 15, 2024 , and will expire at 5:00 p.m., New York City time, on February 14, 2029, or earlier upon redemption or liquidation. Warrant holders may, until such time as there is an effective registration statement and during any period when the Company has failed to maintain an effective registration statement covering the shares of the Company’s common stock issuable upon exercise of the warrants, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended, or another exception. The Company may redeem the public warrants if the Company’s common stock equals or exceeds $18.00 per share for 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the holders of public warrants. As of September 30, 2024, there are 17,249,978 public warrants outstanding. Private Placement Warrants Each private placement warrant is identical to the public warrants, except that the private placement warrants, so long as they are held by the initial purchasers or their permitted transferees, (i) will not be redeemable by the Company and (ii) may be exercised by the holders on a cashless basis. As of September 30, 2024, there are 725,000 private placement warrants outstanding. See Note 3 for additional information on the Company’s warrant accounting policy. 14 Tevogen Bio Holdings Inc. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 10. RELATED PARTY TRANSACTIONS Transactions with Sponsor Pursuant to the Merger Agreement, the Company incurred $ 2,000,000 in fees to the Sponsor for advisory services (the “Sponsor Advisory Service Fee”). In connection with the Merger and thereafter, the Company and Sponsor agreed that $ 250,000 of the Sponsor Advisory Service Fee is payable in cash, $ 250,000 would be offset against amounts due from the Sponsor, and the remainder of the Sponsor Advisory Service Fee was paid with issuance of 150,000 shares of the Company’s common stock at Closing. The Sponsor Advisory Service Fee payable in cash is presented on the consolidated balance sheets under the line item “Due to related party”. As of September 30, 2024, the Sponsor owes the Company $ 158,819 to cover working capital expenses, which is presented on the consolidated balance sheets under the line item “Due from related party”. See Note 9 for additional information on the Series B issued to the Sponsor. Stock-Based Compensation In January 2023, the Company issued 40,000 Performance-Based RSUs to the wife of the Company’s chair and chief executive officer for advisory services provided to the Company, and 20,000 Performance-Based RSUs to Mehtaphoric Consulting Inc, a company controlled by the daughter of the Company’s chief financial officer, for information technology services provided to the Company. In connection with the Closing, the performance condition was achieved and therefore compensation cost of $ 800,396 has been recognized. Loan Agreement See Note 7 for additional information on the Loan Agreement, which provides for an unsecured line of credit facility for term loans of up to an initial amount of $ 36,000,000 in the aggregate. 15 Tevogen Bio Holdings Inc. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 11. 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. The Company computes diluted net loss per share by dividing the net loss by the sum of the weighted-average number of common stock outstanding during the period, plus the potential dilutive effects, if any, of unvested shares of common stock and the convertible promissory notes on an as-converted basis. Given the Company’s net loss, the impact of the unvested shares of common stock and the convertible promissory notes are anti-dilutive, and basic and diluted net loss per share for the three and nine months ended September 30, 2024 and 2023 are the same. The Company excluded the following potential shares from the computation of diluted net loss per share because including them would have had an anti-dilutive effect: SCHEDULE OF ANTI-DILUTIVE NET LOSS PER SHARE 2024 2023 September 30, 2024 2023 Outstanding restricted stock units (a) 2,509,295 2,253,000 Restricted Stock 19,348,954 — Public warrants 17,249,978 — Private warrants 725,000 — Convertible promissory notes (b) — 279,706 Earnout Shares 24,500,000 — Total 63,040,395 2,532,706 (a) As of September 30, 2024 there were an additional 5,651,210 restricted stock units that had vested but had not been legally settled into common stock and therefore were included in the basic net income per share. See Note 8 for additional information. (b) The number of shares were determined based on the conversion upon maturity provisions in the convertible promissory note agreements, dividing the conversion amount (principal plus accrued interest) by three times the estimated fair value of the Company’s common stock derived from the Company’s most recently completed convertible promissory notes valuation as of the balance sheet date. The above table excludes any potentially anti-dilutive shares as a result of the $ 14 million Purchase Option and the Additional Amount Purchase Option (see Note 7). These are excluded as the number of shares issuable cannot be determined until the conditions for issuance are met and the share prices are known upon exercise. NOTE 12. SUBSEQUENT EVENTS The Company has evaluated subsequent events and transactions for potential recognition or disclosure from the balance sheet date through November 19, 2024, the issuance date of these financial statements, and has not identified any additional items requiring disclosure except as noted below. Series C Preferred Stock On October 25, 2024, the Company received $ 2,000,000 from the sale of shares of its Series C Preferred Stock and issued 200 shares of Series C Preferred Stock pursuant to its securities purchase agreement dated August 21, 2024. 16