Income Taxes

12 Months Ended

Sep. 30, 2024

Income Taxes

Income Taxes

13.   Income Taxes

Income tax benefit for the years ended September 30, 2024 and 2023 consists of the following:

	Year ended September 30,
	2024		2023
State tax	$	2,800	$	2,800

A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows:

	Year ended September 30,
	2024		2023
U.S. federal statutory rate	(21.0)	%	(21.0)	%
State taxes, net of federal benefit	(6.2)		(7.3)
Deferred true-up	0.2		0.1
Permanent differences	2.5		(0.7)
Foreign tax credits	1.7		1.3
Research and development credit	(2.4)		(1.3)
Change in valuation allowance	25.3		29.0
Other	(0.1)		(0.1)
Effective income tax rate	0.0	%	0.0	%

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

	September 30,
	2024		2023
Deferred tax assets:
Net operating loss carryforwards	$	102,906,140	$	92,961,718
Capitalized research and development costs		15,200,918		6,531,508
Stock-based compensation		6,463,068		5,066,375
Lease liability		83,720		—
Research and development credit carryforward		13,748,600		11,953,956
Foreign tax credits		290,188		1,562,639
Accruals and others		144,079		1,656,239
Gross deferred tax assets		138,836,713		119,732,435
Less: valuation allowance		(138,759,510)		(119,725,078)
		77,203		7,357
Deferred tax liabilities:
Property and equipment		—		—
Right-of-use assets		(77,203)		(7,357)
Net deferred tax assets	$	—	$	—

As of September 30, 2024, the Company had approximately $406.7 million and $242.5 million of U.S. federal and New Jersey NOLs that will begin to expire in 2030 and 2039, respectively. As of September 30, 2024, the Company had federal and state research and development tax credit carryforwards of $13.0 million and $0.8 million, respectively, available to reduce future tax liabilities which will begin to expire in 2032 and 2033, respectively. As of September 30, 2024, the Company has federal foreign tax credit (“FTC”) carryforwards of $0.3 million available to reduce future tax liabilities which began to expire starting in 2023, of which $0.3 million of the FTC carryforward is included in the balance of unrecognized tax benefits. Realization of the deferred tax asset is contingent on future taxable income and based upon the level of historical losses, management has concluded that the deferred tax asset does not meet the more-likely-than-not threshold for realizability. Accordingly, a full valuation allowance continues to be recorded against the Company’s deferred tax assets as of September 30, 2024 and 2023. The valuation allowance increased by $19.0 million and $17.1 million during the year ended September 30, 2024 and 2023, respectively.

When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely-than-not be realized. The determination as to whether the tax benefit will more-likely-than-not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes interest and penalties accrued on any unrecognized tax benefits within the provision for income taxes in its consolidated statements of operations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Year ended September 30,
	2024		2023
Balance at beginning of year	$	1,856,629	$	1,856,629
Changes based on tax positions related to the current year		—		—
Balance at end of year	$	1,856,629	$	1,856,629

The Company does not anticipate material change in the unrecognized tax benefits in the next 12 months. These unrecognized tax benefits, if recognized, would affect the annual effective tax rate. The Company’s income tax returns for the years from 2011 through 2023 remain open for examination by the Internal Revenue Service as well as various states and municipalities.

Due to the change in ownership provisions of the Code, the availability of the Company’s NOL carryforwards may be subject to annual limitations against taxable income in future periods, which could substantially limit the eventual utilization of such carryforwards. The Company has not analyzed the historical or potential impact of its equity financings

on beneficial ownership and therefore no determination has been made whether the net operating loss carry forward is subject to any Code Section 382 limitation. To the extent there is a limitation, there would be a reduction in the deferred tax assets with an offsetting reduction in the valuation allowance.