SEC Filings

AVEXIS, INC. filed this Form S-1/A on 02/01/2016
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AveXis, Inc.

Notes to Consolidated Financial Statements (Continued)

12. Stock-based Compensation (Continued)

Mr. Carbona for the price per share of $0.00007, or $28.44 in the aggregate. Additionally, the agreement contained a cross option (the "Cross Option"), which provided Mr. Carbona the option to buy one-third of any eligible shares acquired in the future by JDH or West Summit for the price paid by them to acquire the shares, and provided JDH or West Summit the option to buy one-third of any eligible shares acquired in the future by Mr. Carbona, JDH or West Summit for the price paid by them to acquire the shares. The Cross Option would only terminate upon a reorganization or merger of the Company, a sale of the assets of the Company or an initial public offering.

          As the shares sold to Mr. Carbona were fully vested on the date of the purchase and there was no service to be performed by Mr. Carbona in order to retain the shares, the Company recognized compensation expense in the amount of $594,088 representing the difference between the fair value of the shares on the date of agreement and the amount paid by Mr. Carbona to JDH and West Summit. Such amount is included within general and administrative expense in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2014. The Company estimated the fair value of the common stock on the date of the agreement to be $1.51 per common share utilizing the framework of the AICPA Practice Guide, including an independent third party valuation (see the discussion regarding the Company's January 28, 2014 common stock valuation below).

          Although the Cross Option was fully vested on the grant date, it was not exercisable unless one of the other parties (JDH or West Summit) to the agreement acquired additional shares of stock in the future (a performance condition). Because the agreement contained a performance condition, the Company concluded that the award was an equity classified award. ASC 718 indicates that a company should recognize compensation cost for awards with performance conditions if and when the company concludes that it is probable that the performance condition will be achieved, net of an estimate of pre-vesting forfeitures over the requisite service period. Because the performance option contained in the award was not probable of being satisfied until such time as the event (the purchase of shares by JDH or West Summit) occurred, no expense was recognized for the award.

          In connection with the termination of Mr. Carbona's employment in April 2015 (unaudited) (see Note 15), the Stock Purchase and Option Agreement was terminated. In connection with the termination of this agreement, the parties agreed to one-final true-up of the Cross Option. As a result, it was agreed that Mr. Carbona would transfer, for no additional consideration, one-third of the 207,000 stock options that he had been granted in June 2014 to each of JDH and West Summit. Contemporaneously, with such true-up, the parties terminated the Cross Option. Because Mr. Carbona never exercised the Cross Option to acquire additional shares from JDH or West Summit, no expense related to this Cross Option was recognized by the Company in its historical financial statements.

Mr. Carbona Share Exchange

          As discussed in Note 10, on January 30, 2014, the Company entered into an Exchange Agreement pursuant to which Mr. Carbona exchanged 202,347 common shares held by him for 202,347 Class B-1 preferred shares. There was no consideration paid by Mr. Carbona in connection with such exchange.


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