{"url_path":"/sec/cik-0001106838/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 [Financial Statements and Supplementary Data](#sl_001)","topic":"sec","document":{"doc_type":"10-K/A","doc_date":"2026-07-17","source_url":"https://www.sec.gov/Archives/edgar/data/1106838/0001493152-26-033712-index.html","accession_number":"0001493152-26-033712","cik":"0001106838","ticker":null,"issuer_name":"Sonnet BioTherapeutics Holdings, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1106838/0001493152-26-033712-index.html","primary_entity_key":"0001106838","primary_entity_name":"Sonnet BioTherapeutics Holdings, Inc."},"word_count":941,"has_tables":true,"body_markdown":"** **\n\nItem\n8.\n[Financial Statements and Supplementary Data](#sl_001)\n3\n\n \n\n2\n\n \n\n \n\n**REPORT\nOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n \n\nTo\nthe Stockholders and Board of Directors\n\nSonnet\nBioTherapeutics Holdings, Inc. and Hyperliquid Strategies, Inc.:\n\n \n\n*Opinion\non the Consolidated Financial Statements*\n\n \n\nWe\nhave audited the accompanying consolidated balance sheets of Sonnet BioTherapeutics Holdings, Inc. and subsidiaries (the Company) as\nof September 30, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows\nfor the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated\nfinancial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024,\nand the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting\nprinciples.\n\n \n\n*Going\nConcern*\n\n \n\nThe\naccompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed\nin Note 1 to the consolidated financial statements, the Company has incurred recurring losses and negative cash flows from operations\nsince inception that will require substantial additional financing to continue to fund its research and development activities that raise\nsubstantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described\nin Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.\n\n \n\n*Basis\nfor Opinion*\n\n \n\nThese\nconsolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion\non these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting\nOversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal\nsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe\nconducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain\nreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.\nThe Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part\nof our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing\nan opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur\naudits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether\ndue to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence\nregarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles\nused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.\nWe believe that our audits provide a reasonable basis for our opinion.\n\n \n\n*Critical\nAudit Matter*\n\n \n\nThe\ncritical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that\nwas communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material\nto the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication\nof a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are\nnot, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or\ndisclosures to which it relates.\n\n \n\n*Accrued\nresearch and development expense*\n\n \n\nAs\ndiscussed in Notes 2 and 3 to the consolidated financial statements, research and development costs are expensed as incurred, which include\namounts due to third parties for research, development, and manufacturing services. At the end of each reporting period, the Company\ncompares the payments made to third-party service providers to the estimated progress towards completion of the related project, based\non the measure of progress as defined in the contract. Factors the Company considers in preparing the estimates include costs incurred\nby the service provider, milestones achieved, and other criteria related to the efforts of its service providers. Depending on the timing\nof payments to the third-party service providers and the progress the Company estimates has been made as a result of the services provided,\nthe Company will record a prepaid expense or accrued liability related to these costs. As of September 30, 2025, the Company reported\naccrued research and development expenses of $0.6 million.\n\n \n\nWe\nidentified the evaluation of certain accrued research and development expenses for third-party service providers as a critical audit\nmatter. Evaluating the estimated progress toward completion of research and development projects, including the factors described above,\nrequired especially subjective auditor judgment.\n\n \n\nThe\nfollowing are the primary procedures we performed to address this critical audit matter. To evaluate the Company’s estimate of\ncosts incurred as of September 30, 2025, for a selection of accrued research and development expenses, we (1) examined the provisions\nin the contracts, invoices and communications received from third party service providers related to the project status; (2) sent confirmations\nto the third-party service providers; and (3) inquired of the individuals who are responsible for monitoring and tracking the status\nof research and development activities.\n\n \n\n/s/\nKPMG LLP\n\n \n\nWe\nhave served as the Company’s auditor since 2015.\n\n \n\nPhiladelphia,\nPennsylvania\n\nDecember\n16, 2025\n\n \n\n3\n\n \n\n \n\n**PART\nIV**"}