UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant To Section 14(a)
of
the Securities Exchange Act of 1934 (Amendment No. )
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐ |
Preliminary
Proxy Statement |
|
|
☐ |
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
|
|
☒ |
Definitive
Proxy Statement |
|
|
☐ |
Definitive
Additional Materials |
|
|
☐ |
Soliciting
Material under § 240.14a-12 |
SONNET
BIOTHERAPEUTICS HOLDINGS, INC.
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check all boxes that apply):
☒ |
No
fee required. |
|
|
☐ |
Fee
paid previously with preliminary materials. |
|
|
☐ |
Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
SONNET
BIOTHERAPEUTICS HOLDINGS, INC.
100
Overlook Center, Suite 102
Princeton,
New Jersey 08540
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
be held on August 31, 2023
To
the Stockholders of Sonnet BioTherapeutics Holdings, Inc.
You
are cordially invited to attend the Annual Meeting of Stockholders (the “Annual Meeting”) of Sonnet BioTherapeutics Holdings,
Inc. (the “Company”) to be held on Thursday, August 31, 2023 at 9:00 a.m. Eastern Time. We are planning to hold the Annual
Meeting virtually via the Internet at www.viewproxy.com/SONN/2023/VM. You will not be able to attend the Annual Meeting at a physical
location.
At
the Annual Meeting, stockholders will act on the following matters:
● |
To
elect six directors to the Company’s Board of Directors (the “Board) to hold office for the following year until their
successors are elected; |
|
|
● |
To
approve an amendment to our Certificate of Incorporation, as amended (the “Charter”), to effect a reverse stock split
of our issued and outstanding shares of Common Stock, at a specific ratio, ranging from two-for-one (2:1) to thirty five-for-one
(35:1), at any time prior to the one-year anniversary date of the annual meeting, with the exact ratio to be determined by the
Board (the “Reverse Split”); |
|
|
● |
To
ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending September 30, 2023; and |
|
|
● |
To
consider any other matters that may properly come before the Annual Meeting. |
Only
stockholders of record at the close of business on July 27, 2023 are entitled to receive notice of and to vote at the Annual Meeting
or any postponement or adjournment thereof.
Your
vote is important. Whether or not you plan to attend the Annual Meeting, please vote electronically via the Internet or by telephone,
or, if you requested paper copies of the proxy materials, please complete, sign, date and return the accompanying proxy card or voting
instruction card in the enclosed postage-paid envelope. If you attend the Annual Meeting virtually and prefer to vote at the Annual Meeting,
you may do so even if you have already voted your shares. You may revoke your proxy in the manner described in the proxy statement at
any time before it has been voted at the Annual Meeting.
IMPORTANT
NOTICE OF AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 31, 2023.
Our
proxy materials including our Proxy Statement for the 2023 Annual Meeting, our Annual Report for the fiscal year ended September 30,
2022 and proxy card are available on the Internet at www.viewproxy.com/SONN/2023/VM. Under Securities and Exchange Commission rules,
we are providing access to our proxy materials both by sending you this full set of proxy materials and by notifying you of the availability
of our proxy materials on the Internet.
|
By
Order of the Board of Directors |
|
|
|
/s/
Pankaj Mohan, Ph.D. |
|
Chief
Executive Officer and Chairman of the Board |
|
|
August
7, 2023 |
|
Princeton,
New Jersey |
|
If
you have any questions or require any assistance in voting your shares, please call:
Alliance
Advisors LLC
200
Broadacres Drive, 3rd Floor, Bloomfield, NJ 07003
(833)
782-7196
TABLE
OF CONTENTS
SONNET
BIOTHERAPEUTICS HOLDINGS, INC.
PROXY
STATEMENT
FOR
THE 2023 ANNUAL MEETING OF STOCKHOLDERS
GENERAL
INFORMATION
This
proxy statement contains information related to the Annual Meeting of Stockholders to be held on Thursday, August 31, 2023 at 9:00 a.m.
Eastern Time (the “Annual Meeting”). We are planning to hold the Annual Meeting virtually via the Internet, or at such other
time and place to which the Annual Meeting may be adjourned or postponed. In order to attend our Annual Meeting, you must log in to www.viewproxy.com/SONN/2023/VM
using the password provided to you after registration. Attendees will need to register prior to the meeting in order to receive access
to the meeting.
Proxies
for the Annual Meeting are being solicited by our Board of Directors (the “Board”). This proxy statement is first being made
available to stockholders on or about August 7, 2023.
Important
Notice of Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on August 31, 2023.
Our
proxy materials including our Notice of Internet Availability of Proxy Materials, Proxy Statement for the 2023 Annual Meeting, our annual
report for the fiscal year ended September 30, 2022 and proxy card are available on the Internet at www.viewproxy.com/SONN/2023/VM. Under
Securities and Exchange Commission rules, we are providing access to our proxy materials both by sending you this full set of proxy materials
and by notifying you of the availability of our proxy materials on the Internet.
In
this Proxy Statement, the terms the “Company,” “we,” “us,” and “our” refer to Sonnet
BioTherapeutics Holdings, Inc. The mailing address of our principal executive offices is Sonnet BioTherapeutics Holdings, Inc., 100 Overlook
Center, Suite 102, Princeton, New Jersey 08540.
About
the Meeting
Why
are we calling this Annual Meeting?
We
are calling the Annual Meeting to seek the approval of our stockholders:
● |
To
elect six directors to our Board to hold office for the following year until their successors are elected; |
|
|
● |
To
approve an amendment to our Certificate of Incorporation, as amended (the “Charter”), to effect a reverse stock split
of our issued and outstanding shares of Common Stock, at a specific ratio, ranging from two-for-one (2:1) to thirty five-for-one
(35:1), at any time prior to the one-year anniversary date of the annual meeting, with the exact ratio to be determined by the
Board (the “Reverse Split”); |
● |
To
ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending September 30, 2023; and |
|
|
● |
To
consider any other matters that may properly come before the Annual Meeting. |
What
are the Board’s recommendations?
Our
Board believes that the election of the director nominees identified herein, the approval of an amendment to our Charter to effect the
Reverse Split, and the appointment of KPMG LLP as our independent registered public accounting firm for the year ending September 30,
2023 are advisable and in the best interests of the Company and our stockholders and recommends that you vote FOR these proposals.
If you are a stockholder of record and you return a properly executed proxy card or vote by proxy over the Internet but do not mark the
boxes showing how you wish to vote, your shares will be voted in accordance with the recommendations of the Board, as set forth above.
With respect to any other matter that properly comes before our Annual Meeting, the proxy holders will vote as recommended by the Board
or, if no recommendation is given, at their own discretion.
Who
is entitled to vote at the meeting?
Only
holders of record of our common stock at the close of business on the record date, July 27, 2023, are entitled to receive notice of the
Annual Meeting and to vote either class of our common stock that they held on that date at the meeting, or any postponement or adjournment
of the meeting. As of the record date, there were 38,511,014 shares of our common stock outstanding. Each share of our common stock is
entitled to one vote on each proposal.
Who
can attend the meeting?
All
stockholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting. Attendance at the Annual Meeting
shall solely be via the Internet at www.viewproxy.com/SONN/2023/VM using the password provided to you after registration. Stockholders
will not be able to attend the Annual Meeting at a physical location. Attendees will need to register prior to the meeting in order to
receive access to the meeting.
The
live webcast of the Annual Meeting will begin promptly at 9:00 a.m. Eastern Time. Online access to the audio webcast will open approximately
30 minutes prior to the start of the Annual Meeting to allow time for our stockholders to log in and test their devices’ audio
system. We encourage our stockholders to access the meeting in advance of the designated start time.
An
online portal will be available to our stockholders at www.FCRvote.com/SONN commencing approximately on or about August 7, 2023.
By accessing this portal, stockholders will be able to vote in advance of the Annual Meeting. Stockholders may also vote, and submit
questions, during the Annual Meeting on www.viewproxy.com/SONN/2023/VM. To demonstrate proof of stock ownership, you will need to enter
the control number received with your Notice, proxy card or voting instruction form to submit questions and vote at our Annual Meeting.
If you hold your shares in “street name” (that is, through a broker or other nominee), you will need authorization from your
broker or nominee in order to vote. We intend to answer questions submitted during the meeting that are pertinent to the Company and
the items being brought for stockholder vote at the Annual Meeting, as time permits, and in accordance with the Rules of Conduct for
the Annual Meeting. To promote fairness, efficiently use the Company’s resources and ensure all stockholder questions are able
to be addressed, we will respond to no more than two questions from a single stockholder. We have retained Alliance Advisors, LLC to
host our virtual Annual Meeting and to distribute, receive, count and tabulate proxies.
What
constitutes a quorum?
The
presence at the Annual Meeting, in person or by proxy, of the holders of one-third of the voting power of the issued and outstanding
shares of our common stock entitled to vote at the Annual Meeting will constitute a quorum for our meeting. Signed proxies received but
not voted and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.
How
do I vote?
Your
vote is important. On or about August 7, 2023, we will begin mailing a Notice of Internet Availability of Proxy Materials (the
“Notice”) as well as the full set of proxy materials to all stockholders of record on our books at the close of business
on the record date and will post our proxy materials at www.viewproxy.com/SONN/2023/VM.
You
may vote on the Internet, by telephone, by mail or by attending the Annual Meeting and voting electronically (or by ballot if the meeting
is held at our offices), all as described below. The Internet and telephone voting procedures are designed to authenticate stockholders
by use of a control number and to allow you to confirm that your instructions have been properly recorded. If you vote by telephone or
on the Internet, you do not need to return your proxy card or voting instruction card.
Vote
on the Internet
If
you are a stockholder of record, you may submit your proxy by going to www.FCRvote.com/SONN and following the instructions provided in
the Notice or with your proxy materials and on your proxy card. If your shares are held with a broker, you will need to go to the website
provided on your Notice or voting instruction card. Have your Notice, proxy card or voting instruction card in hand when you access the
voting website. On the Internet voting site, you can confirm that your instructions have been properly recorded. If you vote on the Internet,
you can also request electronic delivery of future proxy materials. Internet voting facilities will be available 24 hours a day until
11:59 p.m., Eastern Time, on August 30, 2023.
Vote
by Telephone
If
you are a stockholder of record, you can also vote by telephone by dialing 1-866-402-3905. If your shares are held with a broker, you
can vote by telephone by dialing the number specified on your voting instruction card. Have your proxy card or voting instruction card
in hand when you call. Telephone voting facilities will be available 24 hours a day until 11:59 p.m., Eastern Time, on August 30,
2023.
Vote
by Facsimile or Email
You
may sign, date and submit your Proxy Card by facsimile to 904-212-0449, or sign, date, scan and email your scanned Proxy Card to tabulation@allianceadvisorsllc.com
until 11:59 p.m., Eastern Time, on August 30, 2023.
Vote
by Mail
You
may choose to vote by mail, by marking your proxy card or voting instruction card, dating and signing it, and returning it in the postage-paid
envelope provided. If the envelope is missing and you are a stockholder of record, please mail your completed proxy card to Alliance
Advisors, LLC, 200 Broadacres Drive, 3rd Floor, Bloomfield, New Jersey 07003, Attention: Proxy Department. If the envelope
is missing and your shares are held with a broker, please mail your completed voting instruction card to the address specified therein.
Please allow sufficient time for mailing if you decide to vote by mail as it must be received by 11:59 p.m. on August 30, 2023.
Please
note that you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote on the Internet.
Voting
at the Annual Meeting
You
will have the right to vote at the Annual Meeting.
You
will have the right to vote on the day of, or during, the Annual Meeting at www.viewproxy.com/SONN/2023/VM, but the site will only record
votes from attending stockholders. To demonstrate proof of stock ownership, you will need to enter the control number received with your
Notice, proxy card or voting instruction form to vote at our Annual Meeting.
Even
if you plan to attend our Annual Meeting remotely, we recommend that you also submit your proxy as described above so that your vote
will be counted if you later decide not to attend our Annual Meeting.
The
shares voted electronically, telephonically, or represented by the proxy cards received, properly marked, dated, signed and not revoked,
will be voted at the Annual Meeting.
What
if I vote and then change my mind?
You
may revoke your proxy at any time before it is exercised by:
● |
filing
with our Secretary a notice of revocation; |
|
|
● |
submitting
a later-dated vote by telephone or on the Internet; |
|
|
● |
sending
in another duly executed proxy bearing a later date; or |
|
|
● |
attending
the Annual Meeting remotely and casting your vote in the manner set forth above. |
Your
latest vote will be the vote that is counted.
What
is the difference between holding shares as a stockholder of record and as a beneficial owner?
Many
of our stockholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized
below, there are some distinctions between shares held of record and those owned beneficially.
Stockholder
of Record
If
your shares are registered directly in your name with our transfer agent, Securities Transfer Corporation, you are considered, with respect
to those shares, the stockholder of record. As the stockholder of record, you have the right to grant your voting proxy directly to us
or to vote at the Annual Meeting.
Beneficial
Owner
If
your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held
in street name, and these proxy materials are being forwarded to you by your broker, bank or nominee which is considered, with respect
to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker as to how to vote and are
also invited to attend the Annual Meeting. However, because you are not the stockholder of record, you may not vote these shares unless
you obtain a signed proxy from the record holder giving you the right to vote the shares. If you do not vote your shares or otherwise
provide the stockholder of record with voting instructions, your shares may constitute broker non-votes. The effect of broker non-votes
is more specifically described in “What vote is required to approve each proposal?” below.
What
vote is required to approve each proposal?
The
holders of one-third of the voting power of the common stock issued and outstanding on the record date must be present, in person
or by proxy, at the Annual Meeting in order to have the required quorum for the transaction of business. Pursuant to Delaware corporate
law, abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.
With
respect to Proposal 1, the election of directors, assuming a quorum is present, the affirmative vote of a plurality of the votes cast
at the Annual Meeting is required to elect each nominee and the director nominees who receive the greatest number of votes at the
Annual Meeting (up to the total number of directors to be elected) will be elected. If any of the incumbent director nominees does
not receive a plurality vote, under Delaware law he or she will continue to serve on the Board until a successor is elected. As a result,
abstentions and “broker non-votes” (see below), if any, will not affect the outcome of the vote on this proposal.
With
respect to Proposal 2, the approval of an amendment to our Charter to effect the Reverse Split, the affirmative vote of a majority of
the votes cast at the Annual Meeting is required to approve this proposal. As a result, abstentions and “broker non-votes”,
if any, will not affect the outcome of the vote on this proposal.
With
respect to Proposal 3, the approval of the ratification of the appointment of KPMG LLP, the affirmative vote of a majority of the votes
cast at the Annual Meeting is required to approve this proposal. As a result, abstentions and “broker non-votes”, if any,
will not affect the outcome of the vote on this proposal.
Holders
of the common stock will not have any dissenters’ rights of appraisal in connection with any of the matters to be voted on at the
meeting.
What
are “broker non-votes”?
Banks
and brokers acting as nominees are permitted to use discretionary voting authority to vote proxies for proposals that are deemed “routine”
by the New York Stock Exchange, but are not permitted to use discretionary voting authority to vote proxies for proposals that are deemed
“non-routine” by the New York Stock Exchange. The determination of which proposals are deemed “routine” versus
“non-routine” may not be made by the New York Stock Exchange until after the date on which this proxy statement has been
mailed to you. As such, it is important that you provide voting instructions to your bank, broker or other nominee, if you wish to determine
the voting of your shares.
A
broker “non-vote” occurs when a proposal is deemed “non-routine” and a nominee holding shares for a beneficial
owner does not have discretionary voting authority with respect to the matter being considered and has not received instructions from
the beneficial owner.
Under
the applicable rules governing such brokers, we believe Proposal 2, to approve an amendment to our Charter to effect the Reverse Split,
and Proposal 3, to ratify the appointment of KPMG LLP as our independent registered public accounting firm, are likely to be considered
“routine” items. This means that brokers may vote using their discretion on such proposals on behalf of beneficial owners
who have not furnished voting instructions. In contrast, certain items are considered “non-routine”, and a “broker
non-vote” occurs when brokers do not receive voting instructions from beneficial owners with respect to such items because the
brokers are not entitled to vote such uninstructed shares. We believe Proposal 1, to elect directors as described in this proxy statement,
is likely to be considered “non-routine”, which means that brokers cannot vote your uninstructed shares when they do not
receive voting instructions from you. Furthermore, if approvals of Proposal 2 and/or Proposal 3 are deemed by the New York Stock Exchange
to be “non-routine” matters, brokers will not be permitted to vote on Proposal 2 and/or Proposal 3 if the broker has not
received instructions from the beneficial owner. Accordingly, it is particularly important that beneficial owners instruct their brokers
how they wish to vote their shares for these proposals.
If
your shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee
as to how you wish your shares to be voted so you may participate in the stockholder voting on these important matters.
How
are we soliciting this proxy?
We
are soliciting this proxy on behalf of our Board and will pay all expenses associated therewith. Some of our officers and other employees
also may, but without compensation other than their regular compensation, solicit proxies by mail or personal conversations, or by telephone,
facsimile or other electronic means.
In
addition, we have engaged Alliance Advisors, LLC to assist in the solicitation of proxies and provide related informational support,
for a services fee, which is not expected to exceed $7,500.
We
will also, upon request, reimburse brokers and other persons holding stock in their names, or in the names of nominees, for their reasonable
out-of-pocket expenses for forwarding proxy materials to the beneficial owners of the capital stock and to obtain proxies.
PROPOSAL
1: TO ELECT SIX DIRECTORS TO THE BOARD OF DIRECTORS TO HOLD OFFICE FOR THE FOLLOWING YEAR UNTIL THEIR SUCCESSORS HAVE BEEN DULY ELECTED
AND QUALIFIED
Our
Board currently consists of six directors and each of our six directors holds their positions on the Board until the Annual Meeting.
Each of the six director nominees named below will stand for election at the Annual Meeting. Each director’s term will then continue
until the earlier of the election and qualification of their successor, or their death, resignation or removal. At the recommendation
of our Nominating and Corporate Governance Committee, our Board proposes that the six director nominees named below be elected as directors
to serve until the 2023 Annual Meeting and until such director’s successor is duly elected and qualified or until such director’s
earlier resignation or removal. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors.
A director elected by the Board to fill a vacancy, including vacancies created by an increase in the number of directors, shall serve
for the remainder of the full term and until the director’s successor is duly elected and qualified.
Directors
are elected by the affirmative vote of a plurality of the votes cast at the Annual Meeting. If any of the incumbent director nominees
does not receive a plurality vote, under Delaware law he or she will continue to serve on the Board until a successor is elected. Stockholders
may not vote, or submit a proxy, for a greater number of nominees than the six nominees named below. Shares represented by executed proxies
will be voted, if authority to do so is not withheld, for the election of the six director nominees named below. If any director nominee
becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead
be voted for the election of a substitute nominee proposed by our Board. Each person nominated for election has agreed to serve if elected.
Our management has no reason to believe that any nominee will be unable to serve.
Nominees
for Election for a Term Expiring at the 2023 Annual Meeting
The
following table sets forth the name, age, position and tenure of our directors who are up for election at the 2023 Annual Meeting:
Name |
|
Age |
|
Position(s) |
|
Served as a
Director Since |
Pankaj
Mohan, Ph.D. |
|
59 |
|
Chief
Executive Officer, President and Chairman of the Board |
|
2020 |
Nailesh
Bhatt |
|
51 |
|
Director |
|
2020 |
Albert
Dyrness |
|
60 |
|
Director |
|
2020 |
Donald
Griffith |
|
74 |
|
Director |
|
2020 |
Raghu
Rao |
|
61 |
|
Director |
|
2020 |
Lori
McNeill |
|
50 |
|
Director |
|
2022 |
The
following biographical descriptions set forth certain information with respect to the director nominees, based on information furnished
to us by each director nominee.
Pankaj
Mohan, Ph.D. founded Sonnet BioTherapeutics, Inc., our wholly-owned operating subsidiary and accounting predecessor (“Sonnet”)
in 2015 and has since served as a member of its board of directors, and was appointed to our Board of Directors (the “Board”)
as Chairman at the closing of the merger between the Company and Sonnet, which occurred on April 1, 2020 (the “Merger”).
Dr. Mohan became the Chairman of Sonnet in June 2018 and the Chief Executive Officer of Sonnet in January 2019 and was appointed President
and Chief Executive Officer of the Company at the closing of the Merger. From January 2011 to June 2018, he served as the President,
Chief Executive Officer and Chairman of Oncobiologics, Inc. (Now Outlook Therapeutics, Inc. Nasdaq: OTLK), a company that he founded
in 2011. Previously, Dr. Mohan served as head of Business Operations and Portfolio Management of Biologics Process and Product Development
at Bristol-Myers Squibb Company and as a Director of Bioprocess Engineering at Genentech, Inc. Prior to that, Dr. Mohan served as a senior
manager at Eli Lilly and Company. From May 1993 to April 1996, Dr. Mohan served as Assistant Professor (Lecturer/Fellow) at the Advanced
Centre for Biochemical Engineering, University College London, London, United Kingdom. Dr. Mohan received a Ph.D. in Biochemical Engineering
from the School of Chemical Engineering, University of Birmingham, Birmingham, United Kingdom, a Masters in Financial Management from
Middlesex University Business School, London, United Kingdom, an Executive Management Program (AMP) from Fuqua School of Business at
Duke University and a Bachelor of Chemical Engineering from the Indian Institute of Technology in Roorkee, India. He is also an author
of an industry reference book on bioprocess operations (McGraw Hill). The Company believes Dr. Mohan is capable of making valuable contributions
to the Board due to his extensive knowledge of the biopharmaceutical industry and his prior experience as an executive officer.
Nailesh
Bhatt has served on Sonnet’s board of directors since July 2018. Since January 2018, Mr. Bhatt has been the Chief Executive
Officer and a Board Member of VGYAAN Pharmaceuticals LLC, a company focused on developing and commercializing clinically critical drugs.
Prior to that, Mr. Bhatt Founded Proximare in November 2001 and is its Managing Director. Proximare is a strategic advisory firm focused
exclusively on the pharmaceutical industry. In June 2015, Mr. Bhatt founded Proximare Lifesciences Fund. Mr. Bhatt pursued Bachelor of
Arts at Boston University with major in Biology. He also serves as a Board Member of Azurity Pharmaceuticals, Inc. since April 2018 and
CoreRx, Inc. since January 2021. The Company believes Mr. Bhatt can make valuable contributions to the Board due to his years of experience
in the pharmaceutical industry working with start-ups to Fortune 500 companies.
Albert
Dyrness has served on Sonnet’s board of directors since October 2019, and was appointed to our Board at the closing of
the Merger. Mr. Dyrness is a recognized biopharmaceutical industry expert in bio-process engineering with expertise in upstream, downstream,
and fill/finish processes. Since July 2019, Mr. Dyrness has been the Managing Director of ADVENT Engineering Services, Inc., a Trinity
Consultants Company, which serves as its life-sciences division. In 1988, Mr. Dyrness Co-Founded ADVENT Engineering Services, Inc., an
engineering consulting firm serving the energy and life sciences industries. Starting with only 4 employees in the San Francisco Bay
Area, ADVENT has grown to a staff of over 130 engineers with offices in Toronto, Canada, Singapore, Raleigh, North Carolina, Portland
Oregon, Boston, Massachusetts, Irvine and San Ramon, California. In 2016, Mr. Dyrness became President and Chief Technical Officer of
ADVENT and, in 2017, guided the company to a merger with Trinity Consultants, a 700-person engineering consulting firm. He also served
as a member of the board of directors of Oncobiologics, Inc. (now Outlook Therapeutics, Inc.; Nasdaq: OTLK) from December 2015 to September
2017. In 1986, Mr. Dyrness graduated from the Massachusetts Institute of Technology where he studied mechanical engineering and entrepreneurism.
The Company believes Mr. Dyrness is capable of making valuable contributions to the Board due to his years of experience in a Nasdaq-listed
public company along with years of entrepreneurial experience, including in the biopharmaceutical industry.
Donald
Griffith, CPA has served on Sonnet’s board of directors since its inception in April 2015, was Chairman of the Sonnet board
from April 2015 to June 2018, and was appointed to our Board at the closing of the Merger. Mr. Griffith has served as Sonnet’s
Financial Controller since January 1, 2019, and since the Merger serves as our Controller. Prior to being Financial Controller, he served
as Sonnet’s Chief Executive Officer and Chief Financial Officer from April 2015 to December 2016. Before that, Mr. Griffith was
the Chief Financial Officer, Director and Secretary of Oncobiologics Inc. (now Outlook Therapeutics; Nasdaq OTLK) from 2011 to 2018.
Mr. Griffith has over 40 years’ experience in finance and accounting and is the founder and Partner of Stolz & Griffith, LLC,
a New Jersey accounting firm. The Company believes Mr. Griffith is capable of making valuable contributions to the Board due to his years
of experience in finance as well as in the pharmaceutical industry.
Raghu
Rao has served on Sonnet’s board of directors since November 2019, and was appointed to our Board at the closing of the
Merger. Mr. Rao is a serial entrepreneur, strategic business advisor and angel investor. Mr. Rao has founded, scaled and had successful
exits with several high-technology companies. In his 33-year career, Mr. Rao has advised clients on the strategy and roll-out of high-profile
projects, such as USA.gov, TSA Screening Gateway, Cancer.gov and other eGovernment initiatives. As the Vistage Princeton Chair, from
July 2012 to March 2017, Mr. Rao ran three high-performing peer advisory boards for middle-market CEOs and business leaders of companies
with total revenues exceeding $2 Billion. As the Chairman & President of InfoZen from August 1995 to July 2008, Mr. Rao has managed
over $1 Billion in U.S. Federal Government contracts. Mr. Rao is a 20-year Charter Member of The Indus Entrepreneurs (TiE.org) and a
5-year patron of the Indiaspora. He has held board positions at several companies including Cellix BioSciences (Jan 2016 - Jan 2017),
Paper Battery Company (Jan 2009 - Dec 2018), Kovid Group (Feb 2016 - Oct 2017) , WizNucleus (Jun 2010 - present) and InfoZen (Aug 1995
- Jul 2008). Mr. Rao is active in social entrepreneurship and community service. He co-founded the Hindu Jewish Coalition in December
2012 and Forum for Religious Freedom in March 2007 to preserve religious diversity worldwide. He has held non-profit board positions
at the Infinity Foundation (New Jersey), Arsha Vidya Gurukulam (Pennsylvania) and the Family Services Agency (Maryland). Mr. Rao has
an MBA in Finance from George Washington University (Dec 1991), an M.S. in Computer Science from Virginia Tech (Dec 1986), and a B.Tech.
in Electrical Engineering from Indian Institute of Technology Madras (June 1984). The Company believes Mr. Rao is capable of making valuable
contributions to the Board due to his 15 years of experience as an executive, along with 25 years of entrepreneurial experience, including
in the biotech industry.
Lori
McNeill has served on our Board since September 2022 and as Chairperson of our Business Advisory Committee since September 2019.
Ms. McNeill is the founder and Chief Executive Officer of McNeill Consulting, LLC since 2016, a management consulting company focused
on developing leaders to be more effective and ensuring that change management initiatives are seamless. Ms. McNeill has over twenty
years’ experience in the healthcare industry, thirteen of which were at Pfizer Inc., which included working as the Chief of Staff
of Global Operations in the Integrated Health Business unit. From 2020 to 2021, Ms. McNeill was the Chief Operating Officer and Chairperson
of the board of directors of Global PPE, Inc., a worldwide supplier of personal protective equipment and safety supplies focused on healthcare
and government entities to fight the COVID-19 pandemic. She has been recognized by several institutions: Top 100 Global Women in Leadership
- Global Council for the Promotion of International Trade, 2021; Changemakers Summit Award Winner, 2021; The State of Women in Leadership
– Cover article for HR.com, 2020; and Pfizer International Innovation Excellence Award, 2011 and is currently Global Chairperson
of Womenomics. The Company believes Ms. McNeill is capable of making valuable contributions to the Board due to her over 20 years of
experience in the healthcare industry, including in senior leadership positions.
Board
Diversity Matrix
In
accordance with Nasdaq’s recently adopted board diversity listing standards, we are also disclosing aggregated statistical information
about our Board’s self-identified gender and racial characteristics and LGBTQ+ status as voluntarily confirmed to us by each of
our directors.
Board
Diversity Matrix (As of August 7, 2023)
Total
Number of Directors - 6
| |
Female | | |
Male | | |
Non-Binary | | |
Did
Not Disclose Gender | |
Directors | |
| 1 | | |
| 5 | | |
| — | | |
| — | |
Number of Directors who
identify in Any of the Categories Below: | |
| | | |
| | | |
| | | |
| | |
African American or Black | |
| — | | |
| — | | |
| — | | |
| — | |
Alaskan Native or Native American | |
| — | | |
| — | | |
| — | | |
| — | |
Asian | |
| — | | |
| 3 | | |
| — | | |
| — | |
Hispanic or Latinx | |
| — | | |
| 1 | | |
| — | | |
| — | |
Native Hawaiian or Pacific Islander | |
| — | | |
| — | | |
| — | | |
| — | |
White | |
| 1 | | |
| 1 | | |
| — | | |
| — | |
Two or More Races or Ethnicities | |
| — | | |
| — | | |
| — | | |
| — | |
LGBTQ+ | |
| — | | |
| | | |
| | | |
| | |
Did Not Disclose Demographic Background | |
| — | | |
| | | |
| | | |
| | |
Required
Vote and Recommendation
In
accordance with our bylaws and Delaware law and as further discussed in What vote is required to approve each proposal?, the election
of directors requires the affirmative vote of a plurality of the votes cast at the Annual Meeting. Abstentions and broker non-votes,
if any, with respect to this proposal are not counted as votes cast and will not affect the outcome of this proposal.
THE
BOARD OF DIRECTORS RECOMMENDS
A
VOTE “FOR” THE ELECTION OF THE DIRECTOR NOMINEES.
CORPORATE
GOVERNANCE MATTERS
Board
of Director Composition
Our
Board currently consists of six members. Our directors hold office until their successors have been elected and qualified or until the
earlier of their resignation or removal.
We
have no formal policy regarding board diversity. Our priority in selection of board members is identification of members who will further
the interests of our stockholders through his or her established record of professional accomplishment, the ability to contribute positively
to the collaborative culture among board members, knowledge of our business and understanding of the competitive landscape.
Board
of Director Meetings
During
our fiscal year ending September 30, 2022, (i) our Board met 4 times; (ii) our audit committee of the Board (the “Audit Committee”)
met 4 times; (iii) our compensation committee of the Board (the “Compensation Committee”) met 1 time, and (iv) our nominating
and corporate governance committee of the Board (the “Nominating and Corporate Governance Committee”) acted by written consent
during such period. Each director attended at least 75% of the aggregate of (i) the total number of meetings of our Board (held during
the period for which such director served on the Board) and (ii) the total number of meetings of all committees of our Board on which
such director served (during the periods for which the director served on such committee or committees). We do not have a formal policy
requiring members of the Board to attend our annual meetings.
Director
Independence
In
accordance with the listing standards of The Nasdaq Stock Market LLC (“Nasdaq”), the Board must consist of a majority of
independent directors. The Board performed a review to determine the independence of its members and made a subjective determination
as to each of these independent directors that no transactions, relationships, or arrangements exist that, in the opinion of the Board,
would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations,
the Board considered several factors including the purchase or sales of goods and/or services between the company and an entity with
which a director is affiliated, and reviewed information provided by the directors and our management with regard to each director’s
business and personal activities as they may relate to us and our management.
Additionally,
Audit Committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee
of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other
board committee, accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of
its subsidiaries or be an affiliated person of the listed company or any of its subsidiaries.
Further,
each member of our Compensation Committee also must qualify as independent under the listing standards, as “non-employee directors”
as defined in Rule 16b-3 promulgated under the Exchange Act and as “outside directors” as that term is defined in Section
162(m) of the Internal Revenue Code of 1986, as amended.
Our
Board has undertaken a review of the independence of each director. Based on information provided by each director concerning their background,
employment and affiliations, our Board determined that Messrs. Bhatt, Dyrness and Rao, and Ms. McNeill are “independent”
as that term is defined under the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”)
and the listing requirements and rules of Nasdaq. In making these determinations, our Board considered the current and prior relationships
that each non-employee director has with our Company and all other facts and circumstances our Board deemed relevant in determining their
independence, including the beneficial ownership of our capital stock by each non-employee director, and any transactions involving them
described in the section entitled “Transactions with Related Persons.”
Board
Committees
Audit
Committee
The
Board has established an Audit Committee currently consisting of Messrs. Bhatt (Chairman), Dyrness and Rao. The Audit Committee’s
primary functions are to oversee and review: the integrity of the Company’s consolidated financial statements and other financial
information furnished by the Company, the Company’s compliance with legal and regulatory requirements, the Company’s systems
of internal accounting and financial controls, the independent auditor’s engagement, qualifications, performance, compensation
and independence, related party transactions, and compliance with the Company’s Code of Business Conduct and Ethics.
Each
member of the Audit Committee is “independent” as that term is defined under the applicable rules of the SEC and the applicable
rules of Nasdaq. The Board has determined that each Audit Committee member has sufficient knowledge in financial and auditing matters
to serve on the Committee. The Board determined that Mr. Rao is an “audit committee financial expert,” as defined under the
applicable rules of the SEC and the applicable rules of The Nasdaq Stock Market. The Company’s Board has adopted an Audit Committee
Charter, which is available for viewing at https://www.sonnetbio.com/investors/corporate-governance/governance-documents.
Compensation
Committee
The
Compensation Committee of the Board of Directors is currently composed of the following two non-employee directors: Mr. Rao (Chairman)
and Mr. Dyrness. None of these Compensation Committee members was an officer or employee of the Company during the year. Each member
of the Compensation Committee is “independent” as that term is defined under the applicable rules of the SEC and the applicable
rules of Nasdaq. The responsibilities of the Compensation Committee include overseeing the evaluation of executive officers (including
the Chief Executive Officer) of the Company, determining the compensation of executive officers of the Company, and overseeing the management
of risks associated therewith. The Compensation Committee determines and approves the Chief Executive Officer’s compensation. The
Compensation Committee also administers the Company’s equity-based plans and makes recommendations to the board with respect to
actions that are subject to approval of the board regarding such plans. The Compensation Committee also reviews and makes recommendations
to the board with respect to the compensation of directors. The Compensation Committee monitors the risks associated with the Company’s
compensation policies and practices as contemplated by Item 402(s) of Regulation S-K.
The
Company’s Board has adopted a Compensation Committee Charter, which is available for viewing at https://www.sonnetbio.com/investors/corporate-governance/governance-documents.
Nominating
and Corporate Governance Committee
The
Nominating and Corporate Governance Committee of the Board is currently composed of Messrs. Bhatt, Dyrness (Chairman) and Rao. None of
these members was an officer or employee of the Company during the year. Each member of the Nominating and Corporate Governance Committee
is “independent” as that term is defined under the applicable rules of the SEC and the applicable rules of Nasdaq. The Nominating
and Corporate Governance Committee nominates individuals to be elected to the Board by our stockholders. The Nominating and Corporate
Governance Committee considers recommendations from stockholders if submitted in a timely manner in accordance with the procedures set
forth in our bylaws and will apply the same criteria to all persons being considered.
The
Company’s Board has adopted a Nominating and Corporate Governance Committee Charter, which is available for viewing at https://www.sonnetbio.com/investors/corporate-governance/governance-documents.
Stockholder
Nominations for Directorships
Our
Nominating and Corporate Governance Committee will consider potential director candidates recommended by stockholders as long as the
stockholders comply with our Charter and bylaws, in recommending a potential candidate. A stockholder of record can nominate a candidate
for election to the Board by complying with the procedures set forth in our bylaws. Stockholders wishing to recommend a candidate for
nomination should contact our Secretary in writing at: The Board of Directors, Sonnet BioTherapeutics Holdings, Inc., 100 Overlook Center,
Suite 102, Princeton, New Jersey 08540, Attention: Secretary. For more information, please see the section below titled “Stockholder
Proposals.”
Assuming
that the appropriate information is provided for candidates recommended by stockholders, our Nominating and Corporate Governance Committee
will evaluate those candidates by following substantially the same process, and applying substantially the same criteria, as for candidates
submitted by members of our Board or other persons, as described above and as set forth in our Charter.
Board
Leadership Structure and Role in Risk Oversight
Currently,
Dr. Mohan serves as the Company’s Chief Executive Officer and Chairman of the Board. Periodically, our Board will assess the roles
of Chairman and Chief Executive Officer, and the Board leadership structure to ensure the interests of the Company and our stockholders
are best served. Our Board believes the current combination of the two roles is satisfactory at present. Dr. Mohan, as our Chief Executive
Officer and Chairman, has extensive knowledge of all aspects of the Company and its business. The Board has not appointed a Lead Independent
Director. We have no policy requiring the combination or separation of leadership roles and our governing documents do not mandate a
particular structure.
This
has allowed, and will continue to allow, our Board the flexibility to establish the most appropriate structure for the Company at any
given time.
While
management is responsible for assessing and managing risks for the Company, our Board is responsible for overseeing management’s
efforts to assess and manage risk. This oversight is conducted primarily by our full Board, which has responsibility for general oversight
of risks, and our standing Board committees. Our Board satisfies this responsibility through full reports by each committee chair regarding
the committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight
of particular risks within the Company. Our Board believes that full and open communication between management and the Board is essential
for effective risk management and oversight.
Stockholder
Communications
The
Board will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate.
Absent unusual circumstances or as contemplated by committee charters, and subject to advice from legal counsel, our Secretary is primarily
responsible for monitoring communications from stockholders and for providing copies or summaries of such communications to the Board
as he considers appropriate.
Communications
from stockholders will be forwarded to all directors if they relate to important substantive matters or if they include suggestions or
comments that the Secretary considers to be important for the Board to know. Communication relating to corporate governance and corporate
strategy are more likely to be forwarded to the Board than communications regarding personal grievances, ordinary business matters, and
matters as to which we tend to receive repetitive or duplicative communications.
Stockholders
who wish to send communications to the Board should address such communications to: The Board of Directors, Sonnet BioTherapeutics Holdings,
Inc., 100 Overlook Center, Suite 102, Princeton, New Jersey 08540, Attention: Secretary.
Code
of Business Conduct and Ethics
The
Company has adopted a Code of Business Conduct and Ethics that applies to its directors, officers and employees. The purpose of the Code
of Business Conduct and Ethics is to deter wrongdoing and to provide guidance to the Company’s directors, officers and employees
to help them recognize and deal with ethical issues, to provide mechanisms to report unethical or illegal conduct and to contribute positively
to the Company’s culture of honesty and accountability. The Company’s Code of Business Conduct and Ethics is publicly available
on the Company’s website at https://www.sonnetbio.com/investors/corporate-governance/governance-documents. If the Company
makes any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver, including any implicit waiver from
a provision of the Code of Business Conduct and Ethics to its directors or executive officers, the Company will disclose the nature of
such amendments or waiver on its website or in a current report on Form 8-K.
EXECUTIVE
OFFICERS
The
following table sets forth certain information regarding our current executive officers:
Name |
|
Age |
|
Position(s) |
|
Served
as an
Officer
Since |
Pankaj
Mohan, Ph.D. |
|
59 |
|
Chief
Executive Officer, President and Chairman of the Board |
|
2020 |
Jay
Cross |
|
52 |
|
Chief
Financial Officer |
|
2020 |
John
K. Cini, Ph.D. |
|
71 |
|
Chief
Scientific Officer |
|
2020 |
Susan
Dexter |
|
67 |
|
Chief
Technical Officer |
|
2020 |
Richard
Kenney, M.D. |
|
65 |
|
Chief
Medical Officer |
|
2021 |
Our
executive officers are elected by, and serve at the discretion of, our Board. The business experience for the past five years, and in
some instances, for prior years, of each of our executive officers is as follows:
Pankaj
Mohan, Ph.D. For Dr. Mohan’s biography, please see the section above entitled “Nominees for Election for a Term
Expiring at the 2023 Annual Meeting.”
Jay
Cross joined Sonnet in May 2019 and has since served as its Chief Financial Officer and Chief Business Officer, and was appointed
Chief Financial Officer of the Company at the closing of the Merger. Prior to Sonnet, Mr. Cross was a Managing Director with Chardan
Capital’s healthcare investment banking team from November 2015 to March 2019, where he focused on biopharmaceuticals. Prior to
that, from May 2014 to June 2015, Mr. Cross served as a Director with Alere Financial Partners and from May 2011 to October 2013 as a
Senior Analyst at Balyasny Asset Management. He launched his career in finance in 1999 as an associate analyst covering biotechnology
on the healthcare equity research team at Hambrecht & Quist. Mr. Cross earned an M.P.H. from the Yale University School of Medicine
and a B.S. in psychology from Washington & Lee University.
John
K. Cini, Ph.D. co-founded Sonnet in 2015 and has since served as its Chief Scientific Officer, and was appointed Chief Scientific
Officer of the Company at the closing of the Merger, where he oversees and directs the Company’s discovery and development programs.
His role includes the oversight of the selection process of cancer and immune oncology targets and proof-of-concept testing. Prior to
joining Sonnet, he was Vice President of Discovery and Development Sciences at Oncobiologics, Inc. from January 2011 to April 2015. Dr.
Cini has successfully advanced more than 20 novel monoclonal antibody products from discovery to IND. He is the holder of several novel
product and formulation patents and applications. He has also been directly involved in several successful novel biologics through early
discovery research into development and manufacturing through clinical trials and commercialization. Previous positions include Executive
Director at Mederex (acquired by Bristol-Myers Squibb in 2010), lead discovery scientific roles at Johnson & Johnson (Ethicon, OrthoBioTech
& Pharmaceutical Research), and Bayer. Dr. Cini’s therapeutic areas of expertise in system biology include oncology, immune
oncology, inflammation, osteoporosis, wound healing, surgical adhesion and cellular aging. Dr. Cini has a PhD in Biochemistry from University
of North Texas.
Susan
Dexter has served as a contract consultant to Sonnet in the capacity of Chief Technical Officer since May 2019, as a contract
consultant, and was appointed full-time Chief Technical Officer of the Company at the closing of the Merger. She came to Sonnet with
more than thirty years of experience in biotechnology science, manufacturing and business development having been directly involved in
three start-up companies, and multiple M&A activities. Her expertise in CMC for biologics process development ranges from cell line
development to process development through commercial manufacturing. In her role as Managing Director at Latham Biopharm Group from September
2008 until the closing of the Merger, Ms. Dexter ran the Product Development service offering, managing the activities and disciplines
related to pre-animal toxicology, pre-clinical tox study and CMC-related activities including IND filings, Quality oversight of cGMP
activities and other related CMC supply chain activities. She came to LBG from Xcellerex, Inc., a CDMO and developer of single use technology
for bioprocessing. She was Chief Business Officer at Xcellerex from April 2004 to September 2008. Prior to Xcellerex, from July 1998
to April 2004, she was VP of Business Development at The Dow Chemical Company’s CDMO, an acquisition of Collaborative BioAlliance,
facilitated by Ms. Dexter in 2000; and Assoc. Director of Business Development, at Celltech Biologics, purchased by Lonza Biologics,
a biologics CDMO. She worked at Celltech/Lonza from 1986 to July 1998. Ms. Dexter holds a double major with Honors in Immunology and
Marketing from American University, Washington, D.C., and certifications from Harvard University in ‘Negotiations for Lawyers’
and ‘Finance for Non-financial Managers’. She was also Professor Emeritus at University College, London, Department of Bioengineering,
teaching a credited course lecture and workshop in “Project managing biologics facility”, to graduate, Ph.D. and post-graduate
professionals, from 1999 to 2006.
Richard
Kenney, M.D., has served as the Company’s Chief Medical Officer since April 2021. Dr. Kenney has more than 20 years of
experience in translational-stage development of biologics, as well as the commercialization strategy and corporate management of preclinical,
clinical-stage and commercialized vaccines and immunotherapies. As President of ClinReg Biologics, he has provided strategic consulting
in clinical and regulatory affairs of biologics and medical monitoring and pharmacovigilance in several capacities. Dr. Kenney most recently
served as Chief Development Officer at X-VAX Technology and previously held Chief Medical Officer roles at Immune Design and Crucell
Holland, where he led the clinical development and regulatory affairs groups. Dr. Kenney was a researcher/reviewer for the FDA for over
six years and did post-graduate training at Duke and NIH. Dr. Kenney received a B.S. in Chemistry from George Washington University and
his M.D. from Harvard Medical School.
EXECUTIVE
COMPENSATION
Our
Board has formed a Compensation Committee. The Compensation Committee is responsible for reviewing and approving management compensation,
including salaries, bonuses, and equity compensation. We seek to provide competitive compensation arrangements that attract and retain
key talent necessary to achieve our business objectives. At our 2019 annual meeting of stockholders, stockholders voted, on an advisory,
non-binding basis, to approve the compensation paid to the Company’s Named Executive Officers (as defined below).
Summary
Compensation Table
The
following table shows the compensation awarded to or earned by each person serving as the Company’s principal executive officer
during fiscal year 2022, the Company’s two most highly compensated executive officers who were serving as executive officers as
of September 30, 2022 and up to two additional individuals for whom disclosure would have been provided but for the fact that such individuals
were not serving as an executive officer as of September 30, 2022. The persons listed in the following table are referred to herein as
the “Named Executive Officers.”
SUMMARY
COMPENSATION TABLE
Name
and Principal Position | |
Year | |
Salary
($) | | |
Bonus
($) | | |
Stock
Awards ($)(1) | | |
Option
Awards ($)(1) | | |
All
Other Compensation ($) | | |
Total
($) | |
Pankaj Mohan, Ph.D | |
2022 | |
| 559,729 | | |
| 218,680 | | |
| 144,061 | | |
| - | | |
| 82,923 | | |
| 1,005,393 | |
President
and Chief Executive Officer(2) | |
2021 | |
| 512,236 | | |
| 279,930 | | |
| - | | |
| - | | |
| - | | |
| 792,165 | |
John Cini, Ph.D. | |
2022 | |
| 413,048 | | |
| 113,899 | | |
| 36,015 | | |
| - | | |
| 52,014 | | |
| 614,976 | |
Chief
Scientific Officer | |
2021 | |
| 382,594 | | |
| 142,505 | | |
| - | | |
| - | | |
| - | | |
| 525,099 | |
Jay Cross | |
2022 | |
| 403,676 | | |
| 127,649 | | |
| 30,128 | | |
| - | | |
| 43,358 | | |
| 604,811 | |
Chief
Financial Officer(3) | |
2021 | |
| 375,767 | | |
| 156,878 | | |
| - | | |
| - | | |
| - | | |
| 532,645 | |
(1) |
Represents
the aggregate grant date fair value for grants made in 2022 and 2021 computed in accordance
with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 718. This calculation does not give effect to any estimate of forfeitures
related to service-based vesting, but assumes that the executive will perform the requisite
service for the award to vest in full.
|
(2) |
Dr.
Mohan became the Chairman of Sonnet in June 2018 and the Chief Executive Officer in January
2019, and the Chairman, President and Chief Executive Officer of the Company at the closing
of the Merger.
|
(3) |
Mr.
Cross became the Chief Financial Officer of Sonnet in May 2019, and the Chief Financial Officer of the Company at the closing of
the Merger. |
Narrative
Disclosure to Summary Compensation Table
Employment
Agreements
The
material terms of each named executive officer’s employment agreement or arrangement are described below.
Sonnet
entered into an employment agreement with Dr. Mohan on December 31, 2018, as amended (the “Mohan Agreement”), setting forth
the terms of his employment as Chief Executive Officer, which agreement was assumed by the Company at the closing of the Merger. Pursuant
to the employment agreement, Dr. Mohan is entitled to, among other things, (i) an annual gross base salary of $490,000, (ii) eligibility
for a bonus equal to 5.4% of gross revenue received by the Company from a strategic transaction and (iii) for any year in which the bonus
in the previous clause amounts to less than 50% of the base salary, an additional performance-based cash bonus to bring the aggregate
cash bonus for such year to up to 50% of the base salary, as determined by the Board. The employment agreement shall terminate in accordance
with its terms. Pursuant to Dr. Mohan’s employment agreement, if he is terminated without “Cause” or for “Good
Reason” within 2 months prior to or within 12 months following a “Change in Control”, he is entitled to (i) his base
salary for 18 months, (ii) a bonus equal to his performance bonus for the year in which the termination occurs, divided by 12, and then
multiplied by 18, and (iii) if he timely continued coverage under COBRA, payment for COBRA premiums necessary to continue coverage until
the earliest of (a) 18 months following the termination date, (b) the date he becomes eligible for substantially equivalent health insurance
coverage in connection with new employment or self-employment, or (c) the date he becomes ineligible for COBRA continuation coverage.
If Dr. Mohan is terminated without “Cause” or for “Good Reason” not coincident with a “Change in Control”,
he is entitled to (i) his base salary for 18 months, (ii) any performance bonus for the performance year in which his termination occurs,
and (iii) if he timely continued coverage under COBRA, payment for COBRA premiums necessary to continue coverage until the earliest of
(a) 18 months following the termination date, (b) the date he becomes eligible for substantially equivalent health insurance coverage
in connection with new employment or self-employment, or (c) the date he becomes ineligible for COBRA continuation coverage.
Sonnet
entered into an employment agreement with Dr. Cini on January 10, 2020, as amended (the “Cini Agreement”), setting forth
the terms of his employment as Chief Scientific Officer, which agreement was assumed by the Company at the closing of the Merger. Pursuant
to the employment agreement, Dr. Cini is entitled to, among other things, (i) an annual gross base salary of $370,000, (ii) eligibility
for a bonus equal to 1.1% of gross revenue received by the Company from a strategic transaction and (iii) for any year in which the bonus
in the previous clause amounts to less than 35% of the base salary, an additional performance-based cash bonus to bring the aggregate
cash bonus for such year to up to 35% of the base salary, as determined by the Board. The employment agreement shall terminate in accordance
with its terms. Pursuant to Dr. Cini’s employment agreement, if he is terminated without “Cause” or for “Good
Reason” within 2 months prior to or within 12 months following a “Change in Control”, he is entitled to (i) his base
salary for 12 months and (ii) if he timely continued coverage under COBRA, payment for COBRA premiums necessary to continue coverage
until the earliest of (a) 18 months following the termination date, (b) the date he becomes eligible for substantially equivalent health
insurance coverage in connection with new employment or self-employment, or (c) the date he becomes ineligible for COBRA continuation
coverage. If Dr. Cini is terminated without “Cause” or for “Good Reason” not coincident with a “Change
in Control”, he is entitled to (i) his base salary for 9 months and (ii) if he timely continued coverage under COBRA, payment for
COBRA premiums necessary to continue coverage until the earliest of (a) 12 months following the termination date, (b) the date he becomes
eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment, or (c) the date
he becomes ineligible for COBRA continuation coverage.
Sonnet
entered into an employment agreement with Mr. Cross on January 10, 2020 (the “Cross Agreement”), setting forth the terms
of his employment as Chief Financial Officer, which agreement was assumed by the Company at the closing of the Merger. Pursuant to the
employment agreement, Mr. Cross is entitled to, among other things, (i) an annual gross base salary of $365,000 and (ii) eligibility
for a performance-based cash bonus of up to 40% of the base salary, as determined by the Board. The employment agreement shall terminate
in accordance with its terms. Pursuant to Mr. Cross’s employment agreement, if he is terminated without “Cause” or
for “Good Reason” within 2 months prior to or within 12 months following a “Change in Control”, he is entitled
to (i) his base salary for 12 months, (ii) any performance bonus for the performance year in which his termination occurs, and (iii)
if he timely continued coverage under COBRA, payment for COBRA premiums necessary to continue coverage until the earliest of (a) 18 months
following the termination date, (b) the date he becomes eligible for substantially equivalent health insurance coverage in connection
with new employment or self-employment, or (c) the date he becomes ineligible for COBRA continuation coverage. If Mr. Cross is terminated
without “Cause” or for “Good Reason” not coincident with a “Change in Control”, he is entitled to
(i) his base salary for 9 months, (ii) any performance bonus for the performance year in which his termination occurs, and (iii) if he
timely continued coverage under COBRA, payment for COBRA premiums necessary to continue coverage until the earliest of (a) 12 months
following the termination date, (b) the date he becomes eligible for substantially equivalent health insurance coverage in connection
with new employment or self-employment, or (c) the date he becomes ineligible for COBRA continuation coverage.
Other
Agreements
On
April 1, 2020, the Company entered into an employment agreement with Ms. Dexter (the “Dexter Agreement”), setting forth the
terms of her employment as Chief Technical Officer. Pursuant to the employment agreement, Ms. Dexter is entitled to, among other things,
(i) an annual gross base salary of $310,000 and (ii) eligibility for a performance-based cash bonus of up to 35% of the base salary,
as determined by the Board. The employment agreement shall terminate in accordance with its terms. Pursuant to Ms. Dexter’s employment
agreement, if she is terminated without “Cause” or for “Good Reason” within 2 months prior to or within 12 months
following a “Change in Control”, she is entitled to (i) her base salary for 12 months, (ii) any performance bonus for the
performance year in which her termination occurs, and (iii) if she timely continued coverage under COBRA, payment for COBRA premiums
necessary to continue coverage until the earliest of (a) 18 months following the termination date, (b) the date she becomes eligible
for substantially equivalent health insurance coverage in connection with new employment or self-employment, or (c) the date she becomes
ineligible for COBRA continuation coverage. If Ms. Dexter is terminated without “Cause” or for “Good Reason”
not coincident with a “Change in Control”, she is entitled to (i) his base salary for 9 months, (ii) any performance bonus
for the performance year in which her termination occurs, and (iii) if she timely continued coverage under COBRA, payment for COBRA premiums
necessary to continue coverage until the earliest of (a) 12 months following the termination date, (b) the date she becomes eligible
for substantially equivalent health insurance coverage in connection with new employment or self-employment, or (c) the date she becomes
ineligible for COBRA continuation coverage.
Outstanding
Equity Awards at Fiscal Year End
The
following table sets forth certain information, on an award-by-award basis, concerning unexercised options to purchase common stock,
restricted shares of common stock and common stock that has not yet vested for each named executive officer and outstanding as of September
30, 2022.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END - 2022
|
|
Stock
Awards |
|
Name |
|
Equity
incentive plan
awards:
Number of unearned
shares,
units or
other
rights that have
not
vested (#) |
|
|
Equity
incentive plan
awards:
Market or
payout
value of unearned
shares,
units or
other
rights that have
not
vested ($) |
|
Pankaj Mohan Ph.D. |
|
|
22,866 |
(1) |
|
|
33,613 |
|
|
|
|
|
|
|
|
|
|
John Cini, Ph.D. |
|
|
5,716 |
(1) |
|
|
8,403 |
|
|
|
|
|
|
|
|
|
|
Jay Cross |
|
|
4,782 |
(1) |
|
|
7,030 |
|
(1) |
Each restricted stock unit
( “RSU”) award vests 100% on January 1, 2023. |
Director
Compensation
Non-Employee
Director Compensation Policy
In
connection with the Merger, the Board approved a compensation policy for its non-employee directors. Other than reimbursement for reasonable
expenses incurred in connection with attending board and committee meetings, this policy provides for the following cash compensation:
●
each non-employee director is entitled to receive an annual fee from us of $35,000;
●
the chair of our audit committee will receive an annual fee from us of $15,000;
●
the chair of our compensation committee will receive an annual fee from us of $10,000;
●
the chair of our nominating and corporate governance committee will receive an annual fee from us of $8,000; and
●
each non-chairperson member of the audit committee, the compensation committee and the nominating and corporate governance committee
will receive annual fees from us of $7,500, $5,000 and $4,000, respectively.
Each
non-employee director that joins the Board receives an initial option grant to purchase 0.080% of the Company’s fully-diluted outstanding
Common Stock at the closing of the Merger, which shall vest 33% per year over three years, the first vesting date to occur on the one-year
anniversary of the grant date. Each non-employee director also receives an annual option grant to purchase 0.040% of the Company’s
fully-diluted outstanding Common Stock at the closing of the Merger, which shall vest 100% upon the earlier of the one-year anniversary
of the grant date or the next annual stockholder meeting. Upon a change in control, as defined in the Company’s equity incentive
plan, 100% of the shares underlying these options shall become vested and exercisable immediately prior to such change in control.
Except
as set forth in the table below, the non-employee directors did not receive any cash or equity compensation during fiscal year 2022:
DIRECTOR
COMPENSATION
Name |
|
Fees
Earned
or Paid
in
Cash ($) |
|
|
Stock
Awards
($)(1) |
|
|
Option
Awards
($)(1) |
|
|
All
Other
Compensation
($) |
|
|
Total
($) |
|
Nailesh Bhatt(2) |
|
|
54,000 |
|
|
|
6,368 |
|
|
|
- |
|
|
|
- |
|
|
|
60,368 |
|
Albert Dyrness(3) |
|
|
55,500 |
|
|
|
6,368 |
|
|
|
- |
|
|
|
- |
|
|
|
61,868 |
|
Donald Griffith (4) |
|
|
- |
|
|
|
6,750 |
|
|
|
- |
|
|
|
134,634 |
|
|
|
141,384 |
|
Raghu Rao(5) |
|
|
56,500 |
|
|
|
6,368 |
|
|
|
- |
|
|
|
- |
|
|
|
62,868 |
|
Lori McNeill |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
(1) |
Represents the aggregate
grant date fair value for grants made in 2022 computed in accordance with FASB ASC Topic 718. This calculation does not give effect
to any estimate of forfeitures related to service-based vesting, but assumes that the executive will perform the requisite service
for the award to vest in full. |
(2) |
Mr. Bhatt holds an aggregate of 1,010 restricted stock
units, as of September 30, 2022. |
(3) |
Mr. Dyrness holds an aggregate of 1,010 restricted
stock units, as of September 30, 2022. |
(4) |
Mr. Griffith has served
as Sonnet’s Financial Controller since January 1, 2019, and since the Merger serves as our Controller. The amounts in the table
above under “All Other Compensation” represent salary and bonus earned by Mr. Griffith for the fiscal year 2022. See
the description of the employment agreement with Mr. Griffith below. |
(5) |
Mr. Rao holds an aggregate of 1,010 restricted stock
units, as of September 30, 2022. |
(6) |
Ms. McNeill joined the Board on September 25, 2022. |
Other
Agreement with a Director
Sonnet
entered into an employment agreement with Mr. Griffith on January 1, 2019, setting forth the terms of his employment as Financial Controller.
Pursuant to the employment agreement, Mr. Griffith is entitled to, among other things, (i) an annual prorated gross base salary of $150,000
and (ii) eligibility for a target bonus equal to 25% of gross salary earned. The employment agreement has no specific term and constitutes
an at-will employment.
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee of the Board is currently composed of the following two non-employee directors: Mr. Rao (chairman) and Mr. Dyrness.
None of these Compensation Committee members was an officer or employee of the Company during the year. No Compensation Committee interlocks
between the Company and another entity existed.
REPORT
OF THE AUDIT COMMITTEE*
The
undersigned members of the Audit Committee of the Board of Directors of Sonnet BioTherapeutics Holdings, Inc. (the “Company”)
submit this report in connection with the committee’s review of the financial reports of the Company for the fiscal year ended
September 30, 2022 as follows:
1. |
The Audit Committee has reviewed and discussed with
management the audited financial statements for the Company for the fiscal year ended September 30, 2022. |
|
|
2. |
The Audit Committee has
discussed with representatives of KPMG LLP, the Company’s independent public accounting firm, the matters which are required
to be discussed with them under the applicable requirements of the Public Company Accounting Oversight Board and the SEC. |
|
|
3. |
The Audit Committee has
discussed with representatives of KPMG LLP, the independent public accounting firm, the auditors’ independence from management
and the Company has received the written disclosures and the letter from the independent auditors required by applicable requirements
of the Public Company Accounting Oversight Board. |
In
addition, the Audit Committee considered whether the provision of non-audit services by KPMG LLP is compatible with maintaining its independence.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board
of Directors has approved) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the
fiscal year ended September 30, 2022 for filing with the Securities and Exchange Commission.
Audit
Committee,
Nailesh
Bhatt, Chair
Albert
Dyrness
Raghu
Rao
* |
The foregoing report of
the Audit Committee is not to be deemed “soliciting material” or deemed to be “filed” with the Securities
and Exchange Commission (irrespective of any general incorporation language in any document filed with the Securities and Exchange
Commission) or subject to Regulation 14A of the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18
of the Securities Exchange Act of 1934, except to the extent we specifically incorporate it by reference into a document filed with
the Securities and Exchange Commission. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information as of July 27, 2023 with respect to the beneficial ownership of common stock of
the Company by the following: (i) each of the Company’s current directors; (ii) each of the named executive officers; (iii) all
of the current executive officers and directors as a group; and (iv) each person known by the Company to own beneficially more than five
percent (5%) of the outstanding shares of the Company’s common stock.
For
purposes of the following table, beneficial ownership is determined in accordance with the applicable SEC rules and the information is
not necessarily indicative of beneficial ownership for any other purpose. Except as otherwise noted in the footnotes to the table, the
Company believes that each person or entity named in the table has sole voting and investment power with respect to all shares of the
Company’s common stock shown as beneficially owned by that person or entity (or shares such power with his or her spouse). Under
the SEC’s rules, shares of the Company’s common stock issuable under options that are exercisable on or within 60 days after
July 27, 2023 (“Presently Exercisable Options”) are deemed outstanding and therefore included in the number of shares
reported as beneficially owned by a person or entity named in the table and are used to compute the percentage of the common stock beneficially
owned by that person or entity. These shares are not, however, deemed outstanding for computing the percentage of the common stock beneficially
owned by any other person or entity.
The
percentage of the common stock beneficially owned by each person or entity named in the following table is based on 38,511,014
shares of common stock issued and outstanding as of July 27, 2023 plus any shares issuable upon exercise of Presently Exercisable
Options held by such person or entity.
Name
and Address of Beneficial Owner* |
|
Number
of Shares Beneficially Owned |
|
|
Percentage
of Shares Beneficially Owned |
|
Named
Executive Officers, Executive Officers and Directors: |
|
|
|
|
|
|
|
|
Pankaj Mohan,
Ph.D. |
|
|
620,382 |
(1) |
|
|
1.6 |
% |
Nailesh Bhatt |
|
|
26,963 |
|
|
|
** |
|
Albert Dyrness |
|
|
25,192 |
|
|
|
** |
|
Donald Griffith |
|
|
7,088 |
|
|
|
** |
|
Raghu Rao |
|
|
1,598 |
|
|
|
** |
|
Lori McNeill |
|
|
- |
|
|
|
- |
|
John K. Cini, Ph.D. |
|
|
40,272 |
|
|
|
** |
|
Jay Cross |
|
|
8,409 |
|
|
|
** |
|
All current executive officers
and directors as a group (10 persons) |
|
|
781,770 |
|
|
|
2.0 |
% |
|
|
|
|
|
|
|
|
|
5% Holders |
|
|
|
|
|
|
|
|
John Markey |
|
|
3,700,000 |
|
|
|
9.6 |
% |
Matthew J. Ruck |
|
|
1,700,000 |
|
|
|
4.4 |
% |
(*) |
Unless otherwise indicated,
the address is c/o Sonnet BioTherapeutics, Inc., 100 Overlook Center, Suite 102, Princeton, New Jersey, 08540. |
|
|
(**) |
Less than 1%. |
|
|
(1) |
Includes (i) 66,478 shares
of common stock held by the Mohan Family Office, over which Dr. Mohan has shared power to vote and dispose with Swati Mohan, his
spouse and (ii) 570 shares of common stock held individually by Pankhuri Mohan, Dr. Mohan’s child, over which Dr. Mohan
has shared power to vote and dispose with Pankhuri Mohan. |
TRANSACTIONS
WITH RELATED PERSONS
Other
than compensation arrangements for named executive officers and directors, the Company describes below each transaction and series of
similar transactions, since the beginning of fiscal year 2020, to which the Company was a party or will be a party, in which:
● |
the amounts involved exceeded
or will exceed the lesser of $120,000 or one percent of the average of the smaller reporting company’s total assets at year-end
for the last two completed fiscal years; and |
|
|
● |
any of the Company’s
directors, nominees for director, executive officers or holders of more than 5% of the Company’s common stock, or any member
of the immediate family of the foregoing persons, had or will have a direct or indirect material interest. |
Compensation
arrangements for the Company’s named executive officers and directors are described in the section entitled “Executive Compensation”.
Indemnification
Agreements
The
Company has entered into indemnification agreements with each of its current directors and executive officers. These agreements will
require the Company to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise
by reason of their service to the Company, and to advance expenses incurred as a result of any proceeding against them as to which they
could be indemnified. The Company also intends to enter into indemnification agreements with its future directors and executive officers.
Policies
and Procedures for Related Party Transactions
Our
Audit Committee has the primary responsibility for the review, approval and oversight of any “related party transaction,”
which is any transaction, arrangement, or relationship (or series of similar transactions, arrangements, or relationships) in which we
are, were, or will be a participant and the amount involved exceeds $120,000, and in which the related person has, had, or will have
a direct or indirect material interest. Under our related party transaction policy, our management will be required to submit any related
person transaction not previously approved or ratified by our Audit Committee to our Audit Committee. In approving or rejecting the proposed
transactions, our Audit Committee will take into account all of the relevant facts and circumstances available. No member of the Audit
Committee will participate in any review, consideration or approval of any related person transaction with respect to which such member
or any of his or her immediate family members is the related person.
Delinquent
Section 16(a) Reports
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive, officers, and persons
who are beneficial owners of more than 10% of a registered class of the Company’s equity securities, to file reports of ownership
and changes in ownership with the SEC. These persons are required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based
solely upon the Company’s review of copies of Forms 3, 4 and 5 furnished to the Company, the Company believes that all of its directors,
executive officers and any other applicable stockholders timely filed all reports required by Section 16(a) of the Exchange Act during
the fiscal year ended September 30, 2022, except for the following: Form 4s for Don Griffith, Nailesh Bhatt, Susan Dexter, Pankaj Mohan,
John Cini, Raghu Rao, Jay Cross and Albert Dyrness which were due on December 17, 2022 and filed on April 8, 2022.
PROPOSAL
2: APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF
INCORPORATION, AS AMENDED (THE “CHARTER”), TO EFFECT A
REVERSE STOCK SPLIT OF OUR ISSUED AND OUTSTANDING SHARES OF
COMMON STOCK, AT A SPECIFIC RATIO, RANGING FROM TWO-FOR-ONE
(2:1) TO THIRTY FIVE-FOR-ONE (35:1), AT ANY TIME PRIOR TO THE ONE-
YEAR ANNIVERSARY DATE OF THE ANNUAL MEETING, WITH THE
EXACT RATIO TO BE DETERMINED BY THE BOARD OF DIRECTORS
Overview
Our
Board has determined that it is advisable and in the best interests of us and our stockholders, for us to amend our Charter (the “Reverse
Split Charter Amendment”), to authorize our Board to effect a reverse stock split of our issued and outstanding shares of Common
Stock at a specific ratio, ranging from two-for-one (2:1) to thirty five-for-one (35:1) (the “Approved Split Ratios”),
to be determined by the Board (the “Reverse Split”). A vote for this Proposal 2 will constitute approval of the Reverse Split
that, once authorized by the Board and affected by filing the Reverse Split Charter Amendment with the Secretary of State of the State
of Delaware, will combine between 2 and 35 shares of our Common Stock into one share of our Common Stock. If implemented, the
Reverse Split will have the effect of decreasing the number of shares of our Common Stock issued and outstanding. Because the number
of authorized shares of our Common Stock will not be reduced in connection with the Reverse Split, the Reverse Split will result in an
effective increase in the authorized number of shares of our Common Stock available for issuance in the future.
Accordingly,
stockholders are asked to approve the Reverse Split Charter Amendment set forth in Appendix A to effect the Reverse Split consistent
with those terms set forth in this Proposal 2, and to grant authorization to the Board to determine, in its sole discretion, whether
or not to implement the Reverse Split, as well as its specific ratio within the range of the Approved Split Ratios. The text of Appendix
A remains subject to modification to include such changes as may be required by the Secretary of State of the State of Delaware and as
our Board deems necessary or advisable to implement the Reverse Split.
If
approved by the majority of the votes cast at the Annual Meeting, the Reverse Split would be applied at an Approved Split Ratio approved
by the Board prior to the one-year anniversary date of the Annual Meeting and would become effective upon the time specified in the Reverse
Split Charter Amendment as filed with the Secretary of State of the State of Delaware. The Board reserves the right to elect to abandon
the Reverse Split if it determines, in its sole discretion, that the Reverse Split is no longer in the best interests of us and our stockholders.
Purpose
and Rationale for the Reverse Split
Avoid
Delisting from the Nasdaq. On March 23, 2023, we received a letter from the Listing Qualifications Department (the “Staff”)
of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of our Common Stock for the prior
30 consecutive business days, we were not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued
listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). We were provided
a compliance period of 180 calendar days from the date of the Minimum Bid Price Requirement notice, or until September 19, 2023, to regain
compliance with the Minimum Bid Price Requirement, pursuant to Nasdaq Listing Rule 5810(c)(3)(A). If we do not regain compliance within
the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that our Common Stock
will be subject to delisting. We would then be entitled to appeal that determination to a Nasdaq hearings panel.
Failure
to approve the Reverse Split may potentially have serious, adverse effects on us and our stockholders. Our Common Stock could be delisted
from Nasdaq because shares of our Common Stock may continue to trade below the requisite $1.00 per share price needed to maintain our
listing in accordance with the Minimum Bid Price Requirement. Our shares may then trade on the OTC Bulletin Board or other small trading
markets, such as the pink sheets. In that event, our Common Stock could trade thinly as a microcap or penny stock, adversely decrease
to nominal levels of trading and may be avoided by retail and institutional investors, resulting in the impaired liquidity of our Common
Stock.
As
of July 27, 2023, our Common Stock closed at $0.36 per share on Nasdaq. The Reverse Split, if effected, would have the
immediate effect of increasing the price of our Common Stock as reported on Nasdaq, therefore reducing the risk that our Common Stock
could be delisted from Nasdaq.
Our
Board strongly believes that the Reverse Split is necessary to maintain our listing on Nasdaq. Accordingly, the Board has approved resolutions
proposing the Reverse Split Charter Amendment to effect the Reverse Split and directed that it be submitted to our stockholders for approval
at the Annual Meeting.
Management
and the Board have considered the potential harm to us and our stockholders should Nasdaq delist our Common Stock from trading. Delisting
could adversely affect the liquidity of our Common Stock since alternatives, such as the OTC Bulletin Board and the pink sheets, are
generally considered to be less efficient markets. An investor likely would find it less convenient to sell, or to obtain accurate quotations
in seeking to buy, our Common Stock on an over-the-counter market. Many investors likely would not buy or sell our Common Stock due to
difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange,
or other reasons.
Other
Effects. The Board also believes that the increased market price of our Common Stock expected as a result of implementing the Reverse
Split could improve the marketability and liquidity of our Common Stock and will encourage interest and trading in our Common Stock.
The Reverse Split, if effected, could allow a broader range of institutions to invest in our Common Stock (namely, funds that are prohibited
from buying stock whose price is below a certain threshold), potentially increasing the trading volume and liquidity of our Common Stock.
The Reverse Split could help increase analyst and broker’s interest in Common Stock, as their policies can discourage them from
following or recommending companies with low stock prices. Because of the trading volatility often associated with low-priced stocks,
many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced
stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and practices
may make the processing of trades in low-priced stocks economically unattractive to brokers. Additionally, because brokers’ commissions
on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, a low average
price per share of our Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of
their total share value than would be the case if the share price were higher.
Our
Board does not intend for this transaction to be the first step in a series of plans or proposals effect a “going private transaction”
within the meaning of Rule 13e-3 of the Exchange Act.
In
addition, because the number of authorized shares of our Common Stock will not be reduced, the Reverse Split will result in an effective
increase in the authorized number of shares of our Common Stock. The effect of the relative increase in the amount of authorized and
unissued shares of our Common Stock would allow us to issue additional shares of Common Stock in connection with future financings, employee
and director benefit programs and other desirable corporate activities, without requiring our stockholders to approve an increase in
the authorized number of shares of Common Stock each time such an action is contemplated.
Risks
of the Proposed Reverse Split
We
cannot assure you that the proposed Reverse Split will increase the price of our Common Stock and have the desired effect of maintaining
compliance with Nasdaq.
If
the Reverse Split is implemented, our Board expects that it will increase the market price of our Common Stock so that we are able to
regain and maintain compliance with the Nasdaq minimum bid price requirement. However, the effect of the Reverse Split upon the market
price of our Common Stock cannot be predicted with any certainty, and the history of similar stock splits for companies in like circumstances
is varied. It is possible that (i) the per share price of our Common Stock after the Reverse Split will not rise in proportion to the
reduction in the number of shares of our Common Stock outstanding resulting from the Reverse Split, (ii) the market price per post-Reverse
Split share may not exceed or remain in excess of the $1.00 minimum bid price for a sustained period of time, or (iii) the Reverse Split
may not result in a per share price that would attract brokers and investors who do not trade in lower priced stocks. Even if the Reverse
Split is implemented, the market price of our Common Stock may decrease due to factors unrelated to the Reverse Split. In any case, the
market price of our Common Stock will be based on other factors which may be unrelated to the number of shares outstanding, including
our future performance. If the Reverse Split is consummated and the trading price of our Common Stock declines, the percentage decline
as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of the
Reverse Split. Even if the market price per post-Reverse Split share of our Common Stock remains in excess of $1.00 per share, we may
be delisted due to a failure to meet other continued listing requirements, including Nasdaq requirements related to the minimum number
of shares that must be in the public float and the minimum market value of the public float.
A
decline in the market price of our Common Stock after the Reverse Split is implemented may result in a greater percentage decline than
would occur in the absence of a reverse stock split.
If
the Reverse Split is implemented and the market price of our Common Stock declines, the percentage decline may be greater than would
occur in the absence of a reverse stock split. The market price of our Common Stock will, however, also be based upon our performance
and other factors, which are unrelated to the number of shares of Common Stock outstanding.
The
proposed Reverse Split may decrease the liquidity of our Common Stock.
The
liquidity of our Common Stock may be harmed by the proposed Reverse Split given the reduced number of shares of Common Stock that would
be outstanding after the Reverse Split, particularly if the stock price does not increase as a result of the Reverse Split.
Determination
of the Ratio for the Reverse Split
If
Proposal 2 is approved by stockholders and the Board determines that it is in the best interests of the Company and its stockholders
to move forward with the Reverse Split, the Approved Split Ratio will be selected by the Board, in its sole discretion. However, the
Approved Split Ratio will not be less than a ratio of two-for-one (2:1) or exceed a ratio of thirty five-for-one (35:1). In determining
which Approved Split Ratio to use, the Board will consider numerous factors, including the historical and projected performance of our
Common Stock, prevailing market conditions and general economic trends, and will place emphasis on the expected closing price of our
Common Stock in the period following the effectiveness of the Reverse Split. The Board will also consider the impact of the Approved
Split Ratios on investor interest. The purpose of selecting a range is to give the Board the flexibility to meet business needs as they
arise, to take advantage of favorable opportunities and to respond to a changing corporate environment. Based on the number of shares
of Common Stock issued and outstanding as of July 27, 2023, after completion of the Reverse Split, we will have between 19,255,507
and 1,100,315 shares of Common Stock issued and outstanding, depending on the Approved Split Ratio selected by the Board.
Principal
Effects of the Reverse Split
After
the effective date of the proposed Reverse Split, each stockholder will own a reduced number of shares of Common Stock. Except for adjustments
that may result from the treatment of fractional shares as described below, the proposed Reverse Split will affect all stockholders uniformly.
The proportionate voting rights and other rights and preferences of the holders of our Common Stock will not be affected by the proposed
Reverse Split (other than as a result of the payment of cash in lieu of fractional shares). For example, a holder of 2% of the voting
power of the outstanding shares of our Common Stock immediately prior to a Reverse Split would continue to hold 2% of the voting power
of the outstanding shares of our Common Stock immediately after such Reverse Split. The number of stockholders of record also will not
be affected by the proposed Reverse Split, except to the extent that any stockholder holds only a fractional share interest and receives
cash for such interest after the Reverse Split.
The
following table contains approximate number of issued and outstanding shares of Common Stock, and the estimated per share trading price
following a 2:1 to 35:1 Reverse Split, without giving effect to any adjustments for fractional shares of Common Stock or the issuance
of any derivative securities, as of July 27, 2023.
After
Each Reverse Split Ratio
| |
Current | | |
2:1 | | |
10:1 | | |
25:1 | | |
35:1 | |
Common Stock Authorized(1) | |
| 125,000,000 | | |
| 125,000,000 | | |
| 125,000,000 | | |
| 125,000,000 | | |
| 125,000,000 | |
Common Stock Issued and Outstanding | |
| 38,511,014 | | |
| 19,255,507 | | |
| 3,851,101 | | |
| 1,540,441 | | |
| 1,100,315 | |
Number of Shares of Common Stock Reserved for Issuance (2) | |
| 16,439,138 | | |
| 8,219,569 | | |
| 1,643,914 | | |
| 657,565 | | |
| 469,689 | |
Number of Shares of Common Stock Authorized but Unissued and Unreserved | |
| 70,049,848 | | |
| 97,524,924 | | |
| 119,504,985 | | |
| 122,801,994 | | |
| 123,429,996 | |
Price per share, based on the closing price of our Common Stock on July 27, 2023 | |
$ | 0.36 | | |
| 0.72 | | |
| 3.60 | | |
| 9.00 | | |
| 12.60 | |
(1)
The Reverse Split will not have any impact in the number of shares of Common Stock we are authorized to issue under our Charter.
(2)
Includes (i) warrants to purchase an aggregate of 16,068,478 shares of common stock with a weighted average exercise price of
$5.26 per share, (ii) 52,099 shares of Common Stock underlying unvested restricted stock units and (iii) 318,561 shares of Common
Stock reserved for future issuance under the 2020 Omnibus Equity Incentive Plan.
After
the effective date of the Reverse Split, our Common Stock would have a new committee on uniform securities identification procedures
(CUSIP) number, a number used to identify our Common Stock.
Our
Common Stock is currently registered under Section 12(b) of the Exchange Act, and we are subject to the periodic reporting and other
requirements of the Exchange Act. The proposed Reverse Split will not affect the registration of our Common Stock under the Exchange
Act. Our Common Stock would continue to be reported on Nasdaq under the symbol “SONN”, assuming that we are able to regain
compliance with the minimum bid price requirement, although it is likely that Nasdaq would add the letter “D” to the end
of the trading symbol for a period of twenty trading days after the effective date of the Reverse Split to indicate that the Reverse
Split had occurred.
Effect
on Outstanding Derivative Securities
The
Reverse Split will require that proportionate adjustments be made to the conversion rate, the per share exercise price and the number
of shares issuable upon the vesting, exercise or conversion of the outstanding derivative securities issued by us, in accordance with
the Approved Split Ratio. The adjustments to such securities,
as required by the Reverse Split and in accordance with the Approved Split Ratio, would result in approximately the same aggregate price
being required to be paid under such securities upon exercise, and approximately the same value of shares of Common Stock being delivered
upon such exercise or conversion, immediately following the Reverse Split as was the case immediately preceding the Reverse Split.
Effect
on Stock Option Plans
As
of July 27, 2023, we had 52,099 shares of Common Stock underlying unvested restricted stock units, as well as 318,561 shares of
Common Stock available for issuance under our 2020 Omnibus Equity Incentive Plan (the “2020 Plan”). Pursuant to the terms
of the 2020 Plan, the Board, or a designated committee thereof, as applicable, will adjust the number of shares of Common Stock underlying
outstanding awards, the exercise price per share of outstanding stock options and other terms of outstanding awards issued pursuant to
the 2020 Plan to equitably reflect the effects of the Reverse Split. The number of shares subject to vesting under restricted stock awards
and the number of shares issuable as contingent consideration as part of an acquisition by the Company will be similarly adjusted, subject
to our treatment of fractional shares. Furthermore, the number of shares available for future grant under the 2020 Plan will be similarly
adjusted.
Effective
Date
The
proposed Reverse Split would become effective on the date of filing of the Reverse Split Charter Amendment with the office of the Secretary
of State of the State of Delaware. On the effective date, shares of Common Stock issued and outstanding shares of Common Stock held in
treasury, in each case, immediately prior thereto will be combined and converted, automatically and without any action on the part of
our stockholders, into new shares of Common Stock in accordance with the Approved Split Ratio set forth in this Proposal 2. If the proposed
Reverse Split Charter Amendment is not approved by our stockholders, the Reverse Split will not occur.
Treatment
of Fractional Shares
No
fractional shares of Common Stock will be issued as a result of the Reverse Split. Instead, in lieu of any fractional shares to which
a stockholder of record would otherwise be entitled as a result of the Reverse Split, we will pay cash (without interest) equal to such
fraction multiplied by the average of the closing sales prices of our Common Stock on the Nasdaq during regular trading hours for the
five consecutive trading days immediately preceding the effective date of the Reverse Split (with such average closing sales prices being
adjusted to give effect to the Reverse Split). After the Reverse Split, a stockholder otherwise entitled to a fractional interest will
not have any voting, dividend or other rights with respect to such fractional interest except to receive payment as described above.
Upon
stockholder approval of this Proposal 2, if the Board elects to implement the proposed Reverse Split, stockholders owning fractional
shares will be paid out in cash for such fractional shares. For example, assuming the Board elected to consummate an Approved Split Ratio
of 5:1, if a stockholder held six shares of Common Stock immediately prior to the Reverse Split, then such stockholder would be paid
in cash for the one share of Common Stock but will maintain ownership of the remaining share of Common Stock.
Record
and Beneficial Stockholders
If
the Reverse Split is authorized by our stockholders and our Board elects to implement the Reverse Split, stockholders of record holding
some or all of their shares of Common Stock electronically in book-entry form under the direct registration system for securities will
receive a transaction statement at their address of record indicating the number of shares of Common Stock they hold after the Reverse
Split along with payment in lieu of any fractional shares. Non-registered stockholders holding Common Stock through a bank, broker or
other nominee should note that such banks, brokers or other nominees may have different procedures for processing the consolidation and
making payment for fractional shares than those that would be put in place by us for registered stockholders. If you hold your shares
with such a bank, broker or other nominee and if you have questions in this regard, you are encouraged to contact your nominee.
If
the Reverse Split is authorized by the stockholders and our Board elects to implement the Reverse Split, stockholders of record holding
some or all of their shares in certificate form will receive a letter of transmittal, as soon as practicable after the effective date
of the Reverse Split. Our transfer agent will act as “exchange agent” for the purpose of implementing the exchange of stock
certificates. Holders of pre-Reverse Split shares will be asked to surrender to the exchange agent certificates representing pre-Reverse
Split shares in exchange for post-Reverse Split shares and payment in lieu of fractional shares (if any) in accordance with the procedures
to be set forth in the letter of transmittal. Until surrender, each certificate representing shares before the Reverse Split would continue
to be valid and would represent the adjusted number of whole shares based on the approved exchange ratio of the Reverse Split selected
by the Board. No new post-Reverse Split share certificates will be issued to a stockholder until such stockholder has surrendered such
stockholder’s outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange
agent.
STOCKHOLDERS
SHOULD NOT DESTROY ANY PRE-SPLIT STOCK CERTIFICATE AND
SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL THEY ARE REQUESTED TO DO SO.
Accounting
Consequences
The
par value per share of Common Stock would remain unchanged at $0.0001 per share after the Reverse Split. As a result, on the effective
date of the Reverse Split, the stated capital on our balance sheet attributable to the Common Stock will be reduced proportionally, based
on the Approved Split Ratio selected by the Board, from its present amount, and the additional paid-in capital account shall be credited
with the amount by which the stated capital is reduced. The per share Common Stock net income or loss and net book value will be increased
because there will be fewer shares of Common Stock outstanding. The shares of Common Stock held in treasury, if any, will also be reduced
proportionately based on the Approved Split Ratio selected by the Board. Retroactive restatement will be given to all share numbers in
the financial statements, and accordingly all amounts including per share amounts will be shown on a post-split basis. We do not anticipate
that any other accounting consequences would arise as a result of the Reverse Split.
No
Appraisal Rights
Our
stockholders are not entitled to dissenters’ or appraisal rights under the Delaware General Corporation Law with respect to this
Proposal 2 and we will not independently provide our stockholders with any such right if the Reverse Split is implemented.
Material
Federal U.S. Income Tax Consequences of the Reverse Split
The
following is a summary of certain material U.S. federal income tax consequences of a Reverse Split to our stockholders. The summary is
based on the Internal Revenue Code of 1986, as amended (the “Code”), applicable Treasury Regulations promulgated thereunder,
judicial authority and current administrative rulings and practices as in effect on the date of this Proxy Statement. Changes to the
laws could alter the tax consequences described below, possibly with retroactive effect. We have not sought and will not seek an opinion
of counsel or a ruling from the Internal Revenue Service regarding the federal income tax consequences of a Reverse Split. This discussion
only addresses stockholders who hold Common Stock as capital assets. It does not purport to be complete and does not address stockholders
subject to special tax treatment under the Code, including, without limitation, financial institutions, tax-exempt organizations, insurance
companies, dealers in securities, foreign stockholders, stockholders who hold their pre-reverse stock split shares as part of a straddle,
hedge or conversion transaction, and stockholders who acquired their pre-reverse stock split shares pursuant to the exercise of employee
stock options or otherwise as compensation. If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes)
is the beneficial owner of our common stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend
on the status of the partner and the activities of the partnership. Accordingly, partnerships (and other entities treated as partnerships
for U.S. federal income tax purpose) holding our common stock and the partners in such entities should consult their own tax advisors
regarding the U.S. federal income tax consequences of the proposed Reverse Split to them. In addition, the following discussion does
not address the tax consequences of the Reverse Split under state, local and foreign tax laws. Furthermore, the following discussion
does not address any tax consequences of transactions effectuated before, after or at the same time as the Reverse Split, whether or
not they are in connection with the Reverse Split.
In
general, the federal income tax consequences of a Reverse Split will vary among stockholders depending upon whether they receive cash
for fractional shares or solely a reduced number of shares of Common Stock in exchange for their old shares of Common Stock. We believe
that because the Reverse Split is not part of a plan to increase periodically a stockholder’s proportionate interest in our assets
or earnings and profits, the Reverse Split should have the following federal income tax effects. The Reverse Split is expected to constitute
a “recapitalization” for U.S. federal income tax purposes pursuant to Section 368(a)(1)(E) of the Code. A stockholder who
receives solely a reduced number of shares of Common Stock will not recognize gain or loss. In the aggregate, such a stockholder’s
basis in the reduced number of shares of Common Stock will equal the stockholder’s basis in its old shares of Common Stock and
such stockholder’s holding period in the reduced number of shares will include the holding period in its old shares exchanged.
The Treasury Regulations provide detailed rules for allocating the tax basis and holding period of shares of common stock surrendered
in a recapitalization to shares received in the recapitalization. Stockholders of our common stock acquired on different dates and at
different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
A
stockholder that, pursuant to the proposed Reverse Split, receives cash in lieu of a fractional share of our common stock should recognize
capital gain or loss in an amount equal to the difference, if any, between the amount of cash received and the portion of the stockholder’s
aggregate adjusted tax basis in the shares of our common stock surrendered that is allocated to such fractional share. Such capital gain
or loss will be short term if the pre-Reverse Split shares were held for one year or less at the effective time of the Reverse Split
and long term if held for more than one year. Stockholders should consult their own tax advisors regarding the tax consequences to them
of a payment for fractional shares.
We
will not recognize any gain or loss as a result of the proposed Reverse Split.
A
stockholder of our common stock may be subject to information reporting and backup withholding on cash paid in lieu of a fractional share
in connection with the proposed Reverse Split. A stockholder of our common stock will be subject to backup withholding if such stockholder
is not otherwise exempt and such stockholder does not provide its taxpayer identification number in the manner required or otherwise
fails to comply with backup withholding tax rules. Backup withholding is not an additional tax. Any amounts withheld under the backup
withholding rules may be refunded or allowed as a credit against a stockholder’s U.S. federal income tax liability, if any, provided
the required information is timely furnished to the Internal Revenue Service. Stockholders of our common stock should consult their own
tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.
THE
PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL U.S. INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT AND DOES NOT
PURPORT TO BE A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT THERETO. YOU SHOULD CONSULT YOUR OWN TAX ADVISORS
AS TO THE PARTICULAR FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THE REVERSE SPLIT IN LIGHT OF YOUR SPECIFIC CIRCUMSTANCES.
Required
Vote and Recommendation
In
accordance with our Charter and Delaware law, approval and adoption of this Proposal 2 requires the affirmative vote of a majority of
the votes cast at the Annual Meeting. Abstentions and broker non-votes, if any, with respect to this proposal are not counted as votes
cast and will not affect the outcome of this proposal.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF AN AMENDMENT TO THE CHARTER TO EFFECT THE REVERSE SPLIT.
PROPOSAL
3: RATIFICATION OF THE APPOINTMENT OF OUR
REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit Committee has reappointed KPMG LLP as our independent registered public accounting firm to audit the financial statements of Sonnet
for the fiscal year ending September 30, 2023, and has further directed that management submit their selection of independent registered
public accounting firm for ratification by our stockholders at the Annual Meeting. Neither the accounting firm nor any of its members
has any direct or indirect financial interest in or any connection with us in any capacity other than as a public registered accounting
firm.
Principal
Accountant Fees and Services
The
following table summarizes the fees paid for professional services rendered by KPMG LLP, our independent registered public accounting
firm, for each of the last two fiscal years:
Fee
Category |
|
2022 |
|
|
2021 |
|
Audit Fees |
|
$ |
435,000 |
|
|
$ |
509,500 |
|
Audit-Related Fees |
|
$ |
— |
|
|
$ |
— |
|
Tax Fees |
|
$ |
33,500 |
|
|
$ |
34,000 |
|
All Other Fees |
|
$ |
— |
|
|
$ |
— |
|
Total Fees |
|
$ |
468,500 |
|
|
$ |
543,500 |
|
Audit
Fees
Represents
fees for professional services provided in connection with the audit of the Company’s annual consolidated financial statements
and reviews of the Company’s quarterly interim consolidated financial statements.
Audit-Related
Fees
Fees
related to review of registration statements, acquisition due diligence and statutory audits.
Tax
Fees
Tax
fees are associated with tax compliance, tax advice, tax planning and tax preparation services.
Pre-Approval
Policy and Procedures
The
Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent auditors. The Audit Committee
is required to review and approve the proposed retention of independent auditors to perform any proposed auditing and non-auditing services
as outlined in its charter. The Audit Committee has not established policies and procedures separate from its charter concerning the
pre-approval of auditing and non-auditing related services. As required by Section 10A of the Exchange Act, our Audit Committee has authorized
all auditing and non-auditing services provided by KPMG LLP during 2022 and 2021 and the fees paid for such services. However, the pre-approval
requirement may be waived with respect to the provision of non-audit services for the Company if the “de minimis” provisions
of Section 10A(i)(1)(B) of the Exchange Act are satisfied.
The
Audit Committee has considered whether the provision of Audit-Related Fees, Tax Fees, and all other fees as described above is compatible
with maintaining KPMG LLP’s independence and has determined that such services for fiscal years 2022 and 2021 were compatible.
All such services were approved by the Audit Committee pursuant to Rule 2-01 of Regulation S-X under the Exchange Act to the extent that
rule was applicable.
Review
of Financial Statements
The
Audit Committee is responsible for reviewing and discussing the audited consolidated financial statements with management, discussing
with the independent registered public accountants the matters required by Public Company Accounting Oversight Board Auditing Standard
No. 1301 Communications with Audit Committees, receiving written disclosures from the independent registered public accountants
required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public
accountants’ communications with the Audit Committee concerning independence and discussing with the independent registered public
accountants their independence, and recommending to the Board that the audited consolidated financial statements be included in the Company’s
Annual Report on Form 10-K.
Attendance
at Annual Meeting
Representatives
of KPMG LLP will be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions from stockholders.
Approval
Required
In
accordance with our bylaws and Delaware law, approval and adoption of this Proposal 3 requires the affirmative vote of the votes cast
at the Annual Meeting. Abstentions and broker non-votes, if any, with respect to this proposal are not counted as votes cast and will
not affect the outcome of this proposal.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE
COMPANY’S INDEPENDENT REGISTERED ACCOUNTING FIRM FOR THE
YEAR ENDING SEPTEMBER 30, 2023.
STOCKHOLDER
PROPOSALS
Stockholder
Proposals for 2024 Annual Meeting
Any
stockholder desiring to present a proposal for inclusion in the Proxy Statement to be acted upon at our 2024 Annual Meeting of Stockholders
in accordance with Exchange Act Rule 14a-8 must ensure that the proposal is received by us at our principal executive office no later
than April 9, 2024, which is 120 calendar days before August 7, 2024, the anniversary date of this proxy statement’s
release to stockholders in connection with the Annual Meeting. Such proposal must also comply with the requirements as to form and substance
established by the SEC if such proposals are to be included in the proxy statement and form of proxy. Any such proposal shall be mailed
to: Sonnet BioTherapeutics Holdings, Inc., 100 Overlook Center, Suite 102, Princeton, New Jersey 08540, Attn.: Secretary.
Our
bylaws state that a stockholder must provide timely written notice of any nominations of persons for election to our Board or any other
proposal to be brought before the meeting together with supporting documentation. For our 2024 Annual Meeting of Stockholders, a stockholder’s
notice shall be timely received by us at our principal executive office if received no later than June 2, 2024, and no earlier than May
3, 2024, provided, however, in the event the date of the 2024 Annual Meeting of Stockholders is more than 30 days prior to or more than
70 days after the one-year anniversary of the date of the Annual Meeting, then, for the notice to be timely, it must be so received by
the Secretary not earlier than the close of business on the 120th day prior to the 2024 Annual Meeting of Stockholders and not later
than the close of business on the later of (A) the 90th day prior to the 2024 Annual Meeting of Stockholders, or (B) the tenth day following
the day on which public announcement of the date of 2024 Annual Meeting of Stockholders. Proxies solicited by our Board will confer discretionary
voting authority with respect to these proposals, subject to the SEC’s rules and regulations governing the exercise of this authority.
Any such proposal shall be mailed to: Sonnet BioTherapeutics Holdings, Inc., 100 Overlook Center, Suite 102, Princeton, New Jersey 08540,
Attn.: Secretary.
Further,
if you intend to nominate a director and solicit proxies in support of such director nominee(s) at the 2024 Annual Meeting of Stockholders,
you must also provide the notice and additional information required by Rule 14a-19 to: Sonnet BioTherapeutics Holdings, Inc., 100 Overlook
Center, Suite 102, Princeton, New Jersey 08540, Attn.: Secretary, no later than July 2, 2024. This deadline under Rule 14a-19 does not
supersede any of the timing requirements for advance notice under our bylaws. The supplemental notice and information required under
Rule 14a-19 is in addition to the applicable advance notice requirements under our bylaws as described in this section and it shall not
extend any such deadline set forth under our bylaws.
ANNUAL
REPORT
A
copy of our Annual Report on Form 10-K (including our audited financial statements) filed with the SEC is enclosed herewith. Upon written
request to the Company, the exhibits set forth on the exhibit index of our Annual Report on Form 10-K may be made available at reasonable
charge (which will be limited to our reasonable expenses in furnishing such exhibits). Additional copies of our Annual Report on Form
10-K (including our audited financial statements) may be obtained without charge by writing to Sonnet BioTherapeutics Holdings, Inc.,
100 Overlook Center, Suite 102, Princeton, New Jersey 08540, Attn.: Secretary.
HOUSEHOLDING
OF ANNUAL MEETING MATERIALS
Some
banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements.
This means that only one copy of this Proxy Statement may have been sent to multiple stockholders in the same household. We will promptly
deliver a separate copy of this Proxy Statement to any stockholder upon written or oral request to: Sonnet BioTherapeutics Holdings,
Inc., 100 Overlook Center, Suite 102, Princeton, New Jersey 08540, Attn.: Secretary or by phone at (609) 375-2227. Any stockholder who
wants to receive a separate copy of this proxy statement, or of our proxy statements or annual reports in the future, or any stockholder
who is receiving multiple copies and would like to receive only one copy per household, should contact the stockholder’s bank,
broker, or other nominee record holder, or the stockholder may contact us at the address and phone number above.
OTHER
MATTERS
As
of the date of this proxy statement, the Board does not intend to present at the Annual Meeting of Stockholders any matters other than
those described herein and does not presently know of any matters that will be presented by other parties at the Annual Meeting. If any
other matter requiring a vote of the stockholders should come before the meeting, it is the intention of the persons named in the proxy
to vote with respect to any such matter in accordance with the recommendation of the Board or, in the absence of such a recommendation,
in accordance with the best judgment of the proxy holder.
|
By Order of the Board of Directors |
|
|
|
/s/ Pankaj Mohan,
Ph.D. |
|
Chief Executive Officer and Chairman of the Board |
August
7, 2023
Princeton,
New Jersey
Appendix
A
CERTIFICATE
OF AMENDMENT TO THE
CERTIFICATE
OF INCORPORATION
OF
SONNET
BIOTHERAPEUTICS HOLDINGS, INC.
Sonnet
BioTherapeutics Holdings, Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
FIRST:
That a resolution was duly adopted on __, 2023, by the Board of Directors of the Corporation pursuant to Section 242 of the General
Corporation Law of the State of Delaware setting forth an amendment to the Certificate of Incorporation of the Corporation and declaring
said amendment to be advisable. The stockholders of the Corporation duly approved said proposed amendment at an annual meeting of stockholders
held on August 31, 2023, in accordance with Section 242 of the General Corporation Law of the State of Delaware. The proposed amendment
set forth as follows:
Article
FOURTH of the Certificate of Incorporation of the Corporation, as amended to date, be and hereby is further amended by inserting the
following at the end of Article FOURTH:
Upon
effectiveness (“Effective Time”) of this amendment to the Certificate of Incorporation of the Corporation, a __-for-one reverse
stock split (the “Reverse Split”) of the Corporation’s Common Stock shall become effective, pursuant to which each
__ shares of Common Stock outstanding and held of record by each stockholder of the Corporation (including treasury shares) immediately
prior to the Effective Time (“Old Common Stock”) shall be reclassified and split into one share of Common Stock automatically
and without any action by the holder thereof upon the Effective Time and shall represent one share of Common Stock from and after the
Effective Time (“New Common Stock”), with no corresponding reduction in the number of authorized shares of our Common Stock.
No
fractional shares of Common Stock will be issued in connection with the Reverse Split. Stockholders of record who otherwise would be
entitled to receive fractional shares, will be entitled to receive cash (without interest) in lieu of fractional shares, equal to such
fraction multiplied by the average of the closing sales prices of our Common Stock on the exchange the Corporation is currently trading
during regular trading hours for the five consecutive trading days immediately preceding the effective date of the Reverse Split (with
such average closing sales prices being adjusted to give effect to the Reverse Split).
Each
holder of record of a certificate or certificates for one or more shares of the Old Common Stock shall be entitled to receive as soon
as practicable, upon surrender of such certificate, a certificate or certificates representing the largest whole number of shares of
New Common Stock to which such holder shall be entitled pursuant to the provisions of the immediately preceding paragraphs. Any certificate
for one or more shares of the Old Common Stock not so surrendered shall be deemed to represent one share of the New Common Stock for
each five shares of the Old Common Stock previously represented by such certificate.
SECOND:
That said amendment will have an Effective Time of 5:00 P.M., Eastern Time, on the filing date of this Certificate of Amendment to
the Certificate of Incorporation.
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its President and Chief Executive Officer this
__ day of , 2023.
Pankaj Mohan |
|
|
|
|
|
President and Chief Executive Officer |
|
Sonnet BioTherapeutics (NASDAQ:SONN)
Historical Stock Chart
From May 2024 to Jun 2024
Sonnet BioTherapeutics (NASDAQ:SONN)
Historical Stock Chart
From Jun 2023 to Jun 2024