Sonnet BioTherapeutics, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Sep. 30, 2023

Schedule of Deferred Tax Assets and Liabilities

The tax effects of the temporary differences that gave rise to deferred taxes were as follows:

	2023			2022
	September 30,
	2023			2022
Deferred tax assets:
Net operating loss carryforwards	$	27,996,751		$	25,858,311
Research and development credit carryforwards		3,106,675			2,151,942
Amortization		4,692,227			2,897,388
Share-based compensation		226			66,832
Operating lease liability		57,319			71,748
Accrued expenses and other		546,612			314,210
Section 163(j) disallowed interest expense		763,172			—
Property and equipment		—			4,790
Gross deferred tax assets		37,162,982			31,365,221
Less: valuation allowance		(37,100,582	)		(31,293,092	)
Deferred tax assets		62,400			72,129
Deferred tax liabilities:
Property and equipment		(7,954	)		—
Operating lease right-of-use asset		(54,446	)		(72,129	)
Net deferred tax assets	$	—		$	—

Schedule of Effective Income Tax Rate Reconciliation

The Company recorded no income tax expense or benefit for the years ended September 30, 2023 and 2022. A reconciliation of income tax (expense) benefit at the statutory federal income tax rate and income taxes as reflected in the consolidated financial statements is as follows:

	2023			2022
	Years ended September 30,
	2023			2022
U.S. federal statutory rate		(21.0	)%		(21.0	)%
State taxes, net of federal benefit		(7.1	)		(6.0	)
Change in valuation allowance		30.8			28.1
Research and development credit		(5.1	)		(3.0	)
Permanent differences		(1.6	)		0.7
Foreign tax rate differential		0.3			0.8
State NOLs		3.7			—
Other		0.0			0.4
Effective income tax rate		—	%		—	%