Income taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income taxes

Note 11—Income taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due. Deferred taxes relate to differences between the basis of assets and liabilities for financial and income tax reporting which will be either taxable or deductible when the assets or liabilities are recovered or settled.

The components of the provision for income taxes are as follows:

	2024		2023
Current provision
Federal		-		-
State		3,768		-
Total current provision		3,768		-
Deferred provision
Federal		-		-
State		-		-
Total current provision		-		-
Total provision for income taxes		3,768		-

For the years ended December 31, 2024 and 2023, the loss before income taxes was $21.7 million and $29.3 million, respectively. The Company had an effective tax rate of -0.02% and 0.00% for the years ended December 31, 2024 and 2023, respectively. The reconciliation of the statutory federal income tax rate to the Company's effective tax rate for the years ended December 31, 2024 and 2023 were as follows

	2024			2023
U.S. statutory rate		21.00	%		21.00	%
State taxes, net of federal		4.33	%		4.35	%
Change in valuation allowance		1.65	%		-26.72	%
Return to provision - 2023 Tax Free Reorganization		-18.89	%		0.00	%
Return to provision - Other		-0.46	%		0.00	%
R&D Credit		-1.65	%		1.22	%
Other permanent differences		-6.00	%		0.15	%
Effective tax rate		-0.02	%		0.00	%

The Company made an acquisition in 2023. The transaction was complex and when preparing the tax provision for the year ended December 31, 2023, the Company made the assumption that the acquisition was taxable asset acquisition for US federal

income tax purposes when preparing its initial estimates. The Company booked a deferred tax asset for the intangible tax basis assumed to be acquired in a deemed asset acquisition of $16.2 million which would have been amortized over the next 15 years. After further analysis of the complex transaction, it was determined that the acquisition met the criteria of a tax free reorganization under Section 368(a) and was not a taxable asset acquisition. Therefore, the Company filed its 2023 income tax returns to correctly reflect the acquisition as a tax free reorganization and the temporary book-to-tax difference for intangible tax basis estimate was reclassified a permanent adjustment of $16.1 million (net of carryover tax basis). This resulted in a -18.89% impact to the Company's effective tax rate for the tax year ended December 31, 2024.

The components for the Company's deferred tax assets and liabilities as of December 31, 2024 and 2023, were as follows:

	2024			2023
Deferred tax assets:
Net operating loss carryforwards	$	25,098,126		$	11,143,664
Stock compensation expense		2,467,541			589,118
Accrued payroll		294,420			358,732
Section 174 R&D		6,172,416			3,505,667
Intangible assets		26,272			3,909,369
Lease liability		51,334			5,277
Depreciation		94,926			46,960
Capital loss carryforward		10,889,722			-
R&D credits		1,451,300			1,808,131
Total gross deferred tax assets	$	46,546,057		$	21,366,918
Less valuation allowance		(46,494,883	)		(21,301,471	)
Net deferred tax assets	$	51,174		$	65,447
Deferred tax liabilities
Debt discount	$	-		$	(60,170	)
Accrued expense		(697	)		-
ROU asset		(50,477	)		(5,277	)
Total deferred tax liabilities	$	(51,174	)	$	(65,447	)
Total deferred tax assets / (liabilities)	$	-		$	-

The Company has Federal and State net operating loss (“NOLs”) carryforwards of approximately $102.8 million and $69.1 million, respectively, as of December 31, 2024 and 2023. $33.3 million in federal NOLs were generated in tax years beginning prior to January 1, 2018 and can be deducted at 100% of income, some of these NOLs start to expire in 2025. The remaining Federal NOLs of $69.5 million were generated in tax years beginning on or after January 1, 2018 and have an infinite carryforward period but are subject to 80% deduction limitation based upon pre-NOL deduction taxable income. State NOLs generated have various expiration rules and dates with the first amount of NOLs expiring in 2025.

The utilization of the Company’s net operating loss carryforwards and research tax credit carryovers could be subject to annual limitations under Section 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state tax provisions, due to ownership change limitations that may have occurred previously or that could occur in the future. These ownership changes limit the amount of net operating loss carryforwards and other deferred tax assets that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383 of the Code, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percent points over a three-year period.

The acquisition of Kintara by TuHURA Delaware caused an ownership change with respect to the Kintara net operating losses. The Company is in the process of determining what the Section 382 limitation is with respect to the Kintara net operating losses for this ownership change and any prior ownership changes that will limit the Company's ability to utilize the net operating losses under Section 382. The Company may also make an election to forgo the acquisition of a certain amount of these net operating losses. Since there is a full valuation allowance against the net operating losses, the Company will keep the gross amount of net

operating losses with a full valuation allowance until a future date when it is relevant and the Company can better assess the gross amount of Kintara net operating losses that are available subject to Section 382. Due to the full valuation allowance, a Section 382 Analysis is not relevant at this time.

The Company has not completed an analysis of an ownership change under Section 382 of the Code with respect to TuHURA Delaware. The Company understands due to multiple rounds of financing and debt conversions to equity, there may have been an ownership change under Section 382. The Company plans to perform a Section 382 Analysis in the future when it is relevant. Due to the full valuation allowance, a Section 382 Analysis is not relevant at this time.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of December 31, 2024 and 2023.

There was income tax expense for the years ended December 31, 2024 and 2023 of $3,768 and $0, respectively.