What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-09-28 compared with 2022-09-22 · 155 added, 185 removed, 543 unchanged (39% of the section changed)

2 unchanged sentences

The following consolidated financial statements are filed as part of this Annual Report:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm ID 185

Consolidated Balance Sheets

13 unchanged sentences

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has incurred operating losses and negative cash flows from operations since inception and will need additional funding to complete planned development efforts that raise substantial doubt about its ability to continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has incurred operating losses and negative cash flows from operations since inception and will need additional funding to complete planned product development efforts that raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

23 unchanged sentences

We identified the evaluation of the sufficiency of audit evidence over accrued external research and development expenses as a critical audit matter.

Evaluating the sufficiency of audit evidence obtained over accrued external research and development expenses, including the estimated amount of work completed by third parties, required subjective auditor judgment due to the nature and extent of evidence available.

Evaluating the sufficiency of audit evidence obtained over accrued external research and development expenses, including the estimated amount of work completed by third parties, required subjective auditor judgement due to the nature and extent of evidence available.

The following are the primary procedures we performed to address this critical audit matter.

9 unchanged sentences

Consolidated Balance Sheets

June 30, 2022

June 30, 2021

Current assets:

Cash and cash equivalents

Marketable securities

Accounts receivable

17 unchanged sentences

Series B and Series C Redeemable Convertible Preferred Stock of $ 0.01 par value:

authorized, issued, and outstanding 9,000,000 shares as of June 30, 2022, with a liquidation preference of $ 15,000,000

authorized 9,000,000 shares, 9,000,000 shares issued and outstanding as of June 30, 2022, with a liquidation preference of $ 15,000,000

Escrowed proceeds

1 unchanged sentence

Stockholders’ equity:

Preferred stock of $ 0.01 par value – authorized 10,000,000 shares:

(including amounts authorized for Series B and Series C Redeemable Preferred Stock) shares issued and outstanding designated as follows:

Preferred stock of $ 0.01 par value – authorized 10,000,000 shares (including amounts authorized for Series B and Series C Redeemable Convertible Preferred Stock) :

shares issued and outstanding designated as follows:

Series A Convertible:

15 unchanged sentences

Product revenue, net

$ ( 283,286 )

License and contract

4 unchanged sentences

Selling, general and administrative

Loss on license termination agreement

Gain on purchase commitment

( 1,027,322 )

Total operating expenses

4 unchanged sentences

Investment income

Foreign currency gain (loss)

Foreign currency (loss) gain

Interest expense

Total other income (expense), net

Loss before income taxes

( 32,216,886 )

( 36,198,299 )

Income tax benefit

$ ( 27,541,887 )

$ ( 36,198,299 )

Basic and diluted net loss per common share

11 unchanged sentences

Stock-based compensation

Issuance of Redeemable Convertible Preferred stock and warrants

( 15,000,000 )

Withholding taxes related to restricted stock units

Warrant exercises

Option exercises

( 36,198,299 )

2 unchanged sentences

( 15,000,000 )

Stock-based compensation

Issuance of Redeemable Convertible Preferred stock and warrants

( 387,993,696 )

Stock-based compensation

Withholding taxes related to restricted stock units

Warrant exercises

Option exercises

Redemption of convertible series B & series C preferred stock

( 8,100,000 )

( 13,500,000 )

Balance, June 30, 2022

( 1,500,000 )

Sale of common stock and warrants, net of costs

Warrant excercises

Reverse stock split fractional shares

( 27,541,887 )

Balance, June 30, 2023

$ 415,553,049

$ ( 415,535,583 )

The accompanying notes are an integral part of these consolidated financial statements

8 unchanged sentences

Depreciation and amortization

Cash received in excess of loss on termination agreement

Decrease in right-of-use asset

Unrealized foreign currency transaction (gain) loss

Unrealized foreign currency transaction loss

Non-cash warrant expense

Stock-based compensation

Gain on purchase commitment

( 1,027,322 )

Changes in operating assets and liabilities:

2 unchanged sentences

Prepaid expenses and other assets

( 1,938,130 )

Accounts payable

8 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of marketable securities

( 2,992,890 )

Purchases of property and equipment

Net cash used in investing activities

( 3,426,817 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of withholding taxes related to restricted stock units

Proceeds from the sale of common stock and warrants, net of costs

Payment of finance lease obligations

1 unchanged sentence

Proceeds from exercise of stock options

Net cash provided by (used in) financing activities

Net cash provided by financing activities

NET DECREASE IN CASH AND CASH EQUIVALENTS

14 unchanged sentences

Melanocortin Receptor System.

The melanocortin receptor (“MCr”) system has effects on food intake, metabolism, sexual function, inflammation, and immune system responses.

The melanocortin receptor system has effects on food intake, metabolism, sexual function, inflammation, and immune system responses.

There are five melanocortin receptors, MC1r through MC5r.

1 unchanged sentence

The Company’s commercial product, Vyleesi®, was approved by the U.S.

Food and Drug Administration (“FDA”) in June 2019 and was being marketed in the United States by AMAG Pharmaceuticals, Inc.

(“AMAG”) for the treatment of hypoactive sexual desire disorder (“HSDD”) in premenopausal women pursuant to a license agreement between them for Vyleesi for North America, which was entered into on January 8, 2017 (the “AMAG License Agreement”).

As disclosed in Note 4, the AMAG License Agreement was terminated effective July 24, 2020, and the Company is now marketing Vyleesi in North America.

Food and Drug Administration (“FDA”) in June 2019 for the treatment of hypoactive sexual desire disorder (“HSDD”) in premenopausal women and is being marketed by the Company in North America.

The Company’s new product development activities focus primarily on MC1r agonists, with potential to treat inflammatory and autoimmune diseases such as dry eye disease, which is also known as keratoconjunctivitis sicca, uveitis, diabetic retinopathy, and inflammatory bowel disease.

1 unchanged sentence

The Company is also developing peptides that are active at more than one melanocortin receptor, and MC4r peptide and small molecule agonists with potential utility in obesity and metabolic-related disorders, including rare disease and orphan indications.

Reverse Stock Split - On August 30, 2022, a reverse stock split of 1-for-25 of issued and outstanding common stock was made effective by the Company.

Retroactive effect for the reverse stock split were made to the Company’s outstanding common stock, stock options, common stock warrants, and preferred stock conversion features, including all share and per-share data, for all periods presented in the consolidated financial statements.

Business Risks and Liquidity – The Company has incurred operating losses and negative cash flows from operations since inception and will need additional funding to complete its planned product development efforts.

2 unchanged sentences

The time required to reach sustained profitability is highly uncertain, and the Company may never be able to achieve profitability on a sustained basis, if at all.

As of June 30, 2022, the Company’s cash and cash equivalents were $ 29,939,154 and current liabilities were $ 16,259,864 .

As of June 30, 2023, the Company’s cash, cash equivalents and marketable securities were $ 10,982,472 and current liabilities were $ 15,131,830 .

Management intends to utilize existing capital resources for general corporate purposes and working capital, including establishing marketing and distribution capabilities for Vyleesi in the United States and preclinical and clinical development of the Company’s MC1r and MC4r programs, and development of other portfolio products.

2 unchanged sentences

As such, under the requirements of ASC 205-40, management may not consider the potential for future funding in their assessment of the Company’s ability to meet its obligations for the next year.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

Based on the Company’s available cash and cash equivalents, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for one year from the date these consolidated financial statements are issued.

Based on the Company’s cash, cash equivalents and marketable securities at June 30, 2023, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for one year from the date these consolidated financial statements are issued.

The Company is evaluating strategies to obtain additional funding for future operations which include but are not limited to obtaining equity financing, issuing debt, or reducing planned expenses.

5 unchanged sentences

The consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

Assuming no additional funding and based on its current operating and development plans, the Company expects that its existing cash and cash equivalents as of the date of this filing will be sufficient to enable the Company to fund its operations into the second half of its fiscal year ending June 30, 2023.

In March 2020, the World Health Organization declared COVID-19, a disease caused by a novel strain of coronavirus, a pandemic.

The Company has taken steps to ensure the safety and well-being of its employees and clinical trial patients to comply with guidance from federal, state, and local authorities, while working to ensure the sustainability of its business operations as this unprecedented situation continues to evolve.

In mid-March 2020, the Company transitioned to a company-wide work from home policy.

Business-critical activities continue to be subject to heightened precautions to ensure safety of employees.

The Company continues to assess its policies, business continuity plans, and employee support.

The Company continues to evaluate the impact of COVID-19 on the healthcare system and work with contract research organizations supporting its clinical, research, and development programs to mitigate risk to patients and its business and community partners, taking into account regulatory, institutional, and government guidance and policies.

Assuming no additional funding and based on its current operating and development plans, the Company expects that existing cash, cash equivalents and marketable securities as of the date of this filing will be sufficient to fund currently anticipated operating expenses through calendar year 2023.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

The Company will receive a royalty on sales of Vyleesi by its licensees.

It has licensed third parties to sell Vyleesi in China and Korea.

The COVID-19 coronavirus could adversely impact the time required to obtain regulatory approvals to sell Vyleesi in China and Korea, which would delay when the Company receives royalty income from sales in those countries.

The Company cannot be certain what the overall impact of the COVID-19 pandemic will be on its business, including manufacturing, distribution, sales, and marketing of Vyleesi, and it has the potential to materially adversely affect its business, financial condition, and results of operations and cashflows during the fiscal year ending June 30, 2023 (“fiscal 2023”) and beyond.

There may be delays in obtaining regulatory approvals to sell Vyleesi in China and Korea, which would delay when the Company receives royalty income from sales in those countries.

Concentrations – Concentrations in the Company’s assets and operations subject it to certain related risks.

Financial instruments that subject the Company to concentrations of credit risk primarily consist of cash, cash equivalents, and accounts receivable.

The Company’s cash and cash equivalents are primarily invested in one money market account sponsored by a large financial institution.

The Company’s cash, cash equivalents, and marketable securities are primarily invested in one investment account sponsored by a large financial institution.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4 unchanged sentences

Actual results could differ from those estimates.

Cash and Cash Equivalents – Cash and cash equivalents include cash on hand, cash in banks, and all highly liquid investments with a purchased maturity of less than three months.

Cash equivalents consist of $ 29,740,565 and $ 59,730,428 in a money market account at June 30, 2022 and 2021, respectively.

Fair Value of Financial Instruments – The Company’s financial instruments consist primarily of cash equivalents, accounts receivable, and accounts payable.

Cash, Cash Equivalents – Cash and cash equivalents include cash on hand, cash in banks, and all highly liquid investments with a purchased maturity of less than three months.

Cash equivalents consist of $ 5,789,218 in money market and treasury bills and $ 29,740,565 in a money market account at June 30, 2023 and 2022, respectively.

Marketable Securities - The Company’s marketable securities consist of its investments in debt securities with original maturities of greater than 90 days that are classified as available for sale securities..

Fair Value of Financial Instruments – The Company’s financial instruments consist primarily of cash equivalents, marketable securities, accounts receivable, and accounts payable.

Management believes that the carrying values of cash equivalents, accounts receivable, and accounts payable are representative of their respective fair values based on the short-term nature of these instruments.

2 unchanged sentences

Currently, product revenues and related accounts receivable are generated primarily from one specialty pharmacy.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

Trade Accounts Receivable - Trade accounts receivable are amounts owed to the Company by its customers for product that has been delivered.

10 unchanged sentences

Maintenance and repairs are expensed as incurred while expenditures that extend the useful life of an asset are capitalized.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

Impairment of Long-Lived Assets – The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable.

20 unchanged sentences

Amortization of the ROU asset is recognized and presented as an operating expense separately from interest expense on the lease liability.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

The Company has elected not to recognize an ROU asset and obligation for leases with an initial term of twelve months or less.

11 unchanged sentences

Trade accounts receivable due to the Company from contracts with its customers are stated separately in the consolidated balance sheet, net of various allowances as described in the Trade Accounts Receivable policy above.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

Product revenues consist of sales of Vyleesi in the United States.

3 unchanged sentences

Product sales are also subject to return rights, which have not been significant to date.

Gross product sales offset by product sales allowances for the year ended June 30, 2022 and 2021 are as follows:

Gross product sales offset by product sales allowances for the years ended June 30, 2023 and 2022 are as follows:

Year Ended June 30,

Gross product sales

Provision for product sales allowances and accruals

( 4,598,073 )

Product sales allowances and accruals

( 7,609,462 )

7 unchanged sentences

Revenue relating to achievement of these milestones is recognized in the period in which the milestone is achieved.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

Sales-based royalty and milestone payments resulting from customer contracts solely or predominately for the license of intellectual property will only be recognized upon occurrence of the underlying sale or achievement of the sales milestone in the future and such sales-based royalties and milestone payments will be recognized in the same period earned.

9 unchanged sentences

If the Company does not identify services performed for it but not billed by the service-provider, or if it underestimates or overestimates the value of services performed as of a given date, reported expenses will be understated or overstated.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

Stock-Based Compensation – The Company charges to expense the fair value of stock options and other equity awards granted to employees and nonemployees for services.

9 unchanged sentences

Net Loss per Common Share –Basic and diluted loss per common share (“EPS”) are calculated in accordance with the provisions of FASB ASC Topic 260, Earnings per Share .

The Company’s Series B and Series C Redeemable Convertible Preferred Stock and warrants issued during the year ended June 30, 2022 met the definition of a participating security given their rights to participate in dividends if declared on common stock, which requires the Company to apply the two-class method to compute both basic and diluted net income or loss per share.

The Company’s Series B and Series C Redeemable Convertible Preferred Stock and warrants issued during the year ended June 30, 2022 met the definition of a participating security given their rights to participate in dividends if declared on common stock, which required the Company to apply the two-class method to compute both basic and diluted net income or loss per share.

The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders.

In addition, as these securities are participating securities, the Company is required to calculate diluted net income or loss per share under the if-converted and treasury stock method in addition to the two-class method and utilize the most dilutive result.

In periods where there is a net loss, no allocation of undistributed net loss to the Redeemable Convertible Preferred stockholders or warrant holders is performed as the holders of these securities are not contractually obligated to participate in the Company’s losses.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

In addition, as these securities are participating securities, the Company was required to calculate diluted net income or loss per share under the if-converted and treasury stock method in addition to the two-class method and utilize the most dilutive result.

In periods where there is a net loss, no allocation of undistributed net loss to the Redeemable Convertible Preferred stockholders or warrant holders was performed as the holders of these securities were not contractually obligated to participate in the Company’s losses.

For the years ended June 30, 2023 and 2022, no additional common shares were added to the computation of diluted EPS because to do so would have been anti-dilutive.

12 unchanged sentences

The guidance is applicable to the Company beginning July 1, 2022.

The adoption of this standard is not expected have a material impact on the Company’s consolidated financial statements.

The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

In August 2020, the FASB issued ASU No.

7 unchanged sentences

The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve consistent application and simplify U.S.

GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

The guidance is effective for public entities for fiscal years beginning after December 15, 2020, and for interim periods within those fiscal years, with early adoption permitted.

The guidance was applicable to the Company beginning July 1, 2021.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No.

2 unchanged sentences

This is different from the current guidance as this will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets.

The new guidance will be effective for the Company on July 1, 2023 with early adoption permitted.

The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

(4) AGREEMENTS WITH AMAG

On January 8, 2017, the Company entered into the AMAG License Agreement pursuant to which the Company granted AMAG (i) an exclusive license in all countries of North America (the “Territory”), with the right to grant sub-licenses, to research, develop, and commercialize products containing Vyleesi (each a “Product”, and collectively, “Products”), (ii) a non-exclusive license in the Territory, with the right to grant sub-licenses, to manufacture the Products, and (iii) a non-exclusive license in all countries outside the Territory, with the right to grant sub-licenses, to research, develop, and manufacture (but not commercialize) the Products.

Following the satisfaction of certain conditions to closing, the AMAG License Agreement became effective on February 2, 2017.

Under the AMAG License Agreement, in addition to certain initial and milestone payments, AMAG reimbursed the Company for certain reasonable, documented, direct out-of-pocket expenses incurred by the Company following February 2, 2017, in connection with development and regulatory activities necessary to file a New Drug Application (“NDA”) for Vyleesi for HSDD in the United States.

On June 4, 2018, the FDA accepted the Vyleesi NDA for filing and on June 21, 2019, the FDA granted approval of Vyleesi for use in the United States.

Effective July 24, 2020, the Company entered into a termination agreement (the “Termination Agreement”) with AMAG terminating the AMAG License Agreement.

Under the terms of the Termination Agreement, the Company regained all development and commercialization rights for Vyleesi in the Territory.

AMAG made a $ 12,000,000 payment to the Company at closing of the Termination Agreement and a $ 4,300,000 payment to the Company on March 31, 2021.

The Company initially recorded a liability related to estimated losses on inventory purchase commitments of $ 18,194,000 as well as accrued expenses for an inventory production run obligation assumed of $ 2,300,000 .

The Company assumed all Vyleesi manufacturing agreements, and AMAG transferred information, data, and assets related exclusively to Vyleesi to the Company, including existing inventory and prepaid expenses with an estimated fair value of $ 5,817,795 as of the date of the Termination Agreement.

As a result, the Company initially recorded a net gain for the Termination Agreement of $ 1,623,795 .

During the three months ended June 30, 2021, the Company reassessed the estimated net realizable value of the inventory, prepaid expenses and losses on the inventory purchase commitments resulting in recording of a loss on the Termination Agreement of $ 4,407,987 for the three months ended June 30, 2021 and a total loss on the Termination Agreement for the year ended June 30, 2021 of $ 2,784,192 .

Under the Termination Agreement, AMAG provided certain transitional services to the Company for a period to ensure continued patient access to Vyleesi during the transition back to the Company.

The Company reimbursed AMAG for the agreed upon costs of the transition services.

The guidance was applicable to the Company beginning July 1, 2023.

The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

(4) MANUFACTURING SUPPLY AGREEMENTS FOR VYLEESI

Pursuant to the Termination Agreement, the Company assumed Vyleesi manufacturing contracts with Catalent Belgium S.A.

(“Catalent”), a subsidiary of Catalent Pharma Solutions, Inc., to manufacture drug product and prefilled syringes and assemble prefilled syringes into an auto-injector device (the “Catalent Agreement”), Ypsomed AG (“Ypsomed”), to manufacture the auto-injector device (the “Ypsomed Agreement”), and Lonza Ltd.

The Company has Vyleesi manufacturing contracts with Catalent Belgium S.A.

Ypsomed AG (“Ypsomed”), to manufacture the auto-injector device (the “Ypsomed Agreement”);

and Lonza Ltd.

(“Lonza”), to manufacture the active pharmaceutical ingredient peptide (the “Lonza Agreement”).

On September 29, 2020, the Company and Catalent entered into an agreement to terminate the Catalent Agreement (the “Catalent Termination Agreement”) in consideration for a one-time payment of six million euros (€6,000,000) which was paid in October 2020 and accrued as part of the estimated losses on inventory purchase commitments assumed as part of the Termination Agreement as discussed in Note 4.

The Company and Catalent then entered into a new Vyleesi manufacturing agreement (the “New Catalent Agreement”) which includes reduced minimum annual purchase requirements (see Note 14) as compared to the original Catalent Agreement and modification of other financial terms.

The New Catalent Agreement provides that Catalent will provide manufacturing and supply services to Palatin related to production of Vyleesi, including that Catalent will supply specified minimums of Palatin’s requirements for Vyleesi during the term of the New Catalent Agreement through August 21, 2025, unless earlier terminated in accordance with the terms of the New Catalent Agreement.

The initial term of the New Catalent Agreement will be automatically extended for one 24-month period unless either party notifies the other of its desire to terminate as of the end of the initial term.

The New Catalent Agreement also includes customary terms and conditions relating to forecasting and minimum commitments, ordering, delivery, inspection and acceptance, and termination, among other matters.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

The Company and Catalent then entered into a new Vyleesi manufacturing agreement (the “Catalent Agreement”) which includes reduced minimum annual purchase requirements (see Note 13) as compared to the original Catalent Agreement and modification of other financial terms.

The Catalent Agreement provides that Catalent will provide manufacturing and supply services to Palatin related to production of Vyleesi, including that Catalent will supply specified minimums of Palatin’s requirements for Vyleesi during the term of the Catalent Agreement through August 21, 2025, unless earlier terminated in accordance with the terms of the Catalent Agreement.

The initial term of the Catalent Agreement will be automatically extended for one 24-month period unless either party notifies the other of its desire to terminate as of the end of the initial term.

The Catalent Agreement also includes customary terms and conditions relating to forecasting and minimum commitments, ordering, delivery, inspection and acceptance, and termination, among other matters (See Note 13).

The initial term of the Ypsomed Agreement is through December 31, 2025, with automatic renewal for successive one-year periods unless either party terminates the Ypsomed Agreement by ten months’ written notice prior to the expiration of the Ypsomed Agreement or any automatic renewal period.

There are specified minimum purchase requirements under the Ypsomed Agreement, and under specified circumstances, termination fees may be payable upon termination of the Ypsomed Agreement by the Company (see Note 13).

The term of the Lonza Agreement is through December 31, 2022, and Lonza has advised the Company that they will not renew the Lonza Agreement, but the Company remains in discussions with Lonza on extending contract peptide manufacturing services.

The Company is actively evaluating potential new contract manufacturers but establishing a new contractual relationship and establishing and validating manufacturing in a manner that complies with FDA regulations is a time-consuming and costly process.

There are specified minimum purchase requirements under the Lonza Agreement (see Note 14).

The term of the Lonza Agreement was set to expire on December 31, 2022.

In November 2022, Lonza and the Company amended the Lonza Agreement to extend contract peptide manufacturing services until June 30, 2024.

The Company intends to seek to extend contract peptide manufacturing services with Lonza past June 30, 2024, and is also actively evaluating potential new contract manufacturers.

Establishing a new contractual relationship and establishing and validating manufacturing in a manner that complies with FDA regulations is a time-consuming and costly process.

The amendment reduced certain minimum purchase commitments that were previously accrued for.

As a result, the Company recorded a gain on the purchase commitment of $ 1,027,322 upon the reversal of the accrual (see Note 13).

(5) AGREEMENT WITH FOSUN

5 unchanged sentences

All development, regulatory, sales, marketing, and commercial activities and associated costs in the licensed territory will be the sole responsibility of Fosun.

For the year ended June 30, 2022, the Company recorded $ 250,000 of license and contract revenue related to the Fosun License Agreement.

the Company recorded $ 3,000 and $ 250,000 of license and contract revenue related to the Fosun License Agreement for the years ended June 30, 2023 and 2022, respectively.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

(6) AGREEMENT WITH KWANGDONG

5 unchanged sentences

All development, regulatory, sales, marketing, and commercial activities and associated costs in the licensed territory will be the sole responsibility of Kwangdong.

For the year ended June 30, 2021, the Company recorded $ 94,689 of license and contract revenue related to the Kwangdong License Agreement.

(7) PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

Prepaid expensesand other current assets consist of the following:

Clinical / regulatory costs

1 unchanged sentence

Vyleesi contractual advances

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

(8) FAIR VALUE MEASUREMENTS

8 unchanged sentences

active markets

quoted/observable

inputs (Level 2)

Other quoted/

inputs (Level 2)

unobservable inputs

June 30, 2023:

Money market account

Cash Equivalents - Money market funds

Cash Equivalents - Treasury bill

Marketable securities - Treasury bill

June 30, 2022:

Money market account

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

(9) INVENTORIES

4 unchanged sentences

The Company has operating leases for office and laboratory space, which expire on June 30, 2025 and October 31, 2026, respectively .

The Company also has operating leases for copier equipment that expire March 31, 2023 and phone equipment that expires on June 30, 2023.

The components of operating lease cost are as follows:

8 unchanged sentences

Total finance lease cost

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

Supplemental lease term and discount rate information related to leases was as follows:

11 unchanged sentences

Right-of-use assets obtained in exchange for new finance lease obligations

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

The following table summarizes the maturity of the Company’s lease liabilities as of June 30, 2023:

5 unchanged sentences

Less imputed interest

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

(11) PROPERTY AND EQUIPMENT, NET

8 unchanged sentences

(12) ACCRUED EXPENSES

Accrued expenses consist of the following:

Accrued expensesconsist of the following:

Clinical / regulatory costs

3 unchanged sentences

Selling expenses

Inventory purchases

(13) COMMITMENTS AND CONTINGENCIES

Inventory Purchases - As a result of the Termination Agreement and subsequent activity, the Company has certain supply agreements with manufacturers and suppliers, including the New Catalent Agreement, Ypsomed Agreement, and Lonza Agreement.

Inventory Purchases –The Company has certain supply agreements with manufacturers and suppliers, including the Catalent Agreement, Ypsomed Agreement, and Lonza Agreement.

The Company is required to make certain payments for the manufacture and supply of Vyleesi.

The term of the Lonza Agreement was set to expire on December 31, 2022.

In November 2022, Lonza and the Company amended the Lonza Agreement to extend contract peptide manufacturing services until June 30, 2024.

The Company intends to seek to extend contract peptide manufacturing services with Lonza past June 30, 2024, and is also actively evaluating potential new contract manufacturers.

Establishing a new contractual relationship and establishing and validating manufacturing in a manner that complies with FDA regulations is a time-consuming and costly process.

The amendment reduced certain minimum purchase commitments that were previously accrued for.

As a result, the Company recorded a gain on the purchase commitment of $ 1,027,322 .

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

The following table summarizes the contractual obligations under the New Catalent Agreement, Yposmed Agreement, and Lonza Agreement as of June 30, 2023:

9 unchanged sentences

Termination following a change in control will result in a lump sum payment of one and one-half to two times the salary then in effect and immediate vesting of all stock options and restricted stock units.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

Employee Retirement Savings Plan – The Company maintains a defined contribution 401(k) plan for the benefit of its employees.

12 unchanged sentences

The investors in the Series B Preferred Stock and Series C Preferred Stock also received warrants to purchase up to 66,666 shares of common stock at an exercise price of $ 12.50 per share, which expire 48 months following issuance.

Total gross proceeds from the offering, before expenses, was $ 15,000,000 which was deposited in and is being held in an escrow account as of June 30, 2022, pending the investors' election to redeem the shares for cash or in notes, or convert the shares to common stock as discussed below.

The escrowed proceeds have been presented as a deduction to the Series B and C Redeemable Convertible Preferred Stock on the Company’s consolidated balance sheet at June 30, 2022.

The Series B Preferred Stock and Series C Preferred Stock is convertible, at the option of the holder from the date of the Company's reverse stock split on August 30, 2022 until 30 days following the reverse stock split, into 1,333,333 shares of common stock, computed by dividing the aggregate stated value of the preferred stock of $15,000,000 by the conversion price of $11.25.

Alternatively, during the period from the date of stockholder approval of the Company's reverse stock split (see below) until 30 days following the reverse stock split the holders of Series B Preferred Stock and Series C Preferred Stock can elect to redeem for cash in an amount equal to the stated value or convert to notes, having an aggregate principal amount equal to the stated value.

The investors will also receive a fee of $750,000, which was paid into the escrow account by the Company.

The Series B Preferred Stock and Series C Preferred Stock are presented outside of stockholders' equity at their aggregate redemption value of $15,000,000 since their redemption is outside control of the Company.

Given that the fee and other costs are not refundable to the Company as of June 30, 2022, regardless of the election selected by the investors, the fee, the fair value of the warrants ($234,443), and other costs of $150,995 were recorded as expenses within selling, general and administrative expenses during the year ended June 30, 2022.

Total gross proceeds from the offering, before expenses, was $ 15,000,000 which was deposited in an escrow account.

The escrowed proceeds were presented as a deduction to the Series B Preferred Stock and Series C Preferred Stock on the Company’s consolidated balance sheet.

In November 2022, the investors provided the Company with Notices of Redemption, electing to have the Series B and Series C Preferred Stock redeemed in cash.

Accordingly, the Company and investors directed the escrow agent for the escrow account to release $ 15,750,000 to the investors, comprising the total gross proceeds from the offering of $ 15,000,000 and a fee of $ 750,000 .

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

Given that the fee and other costs were not refundable to the Company as of June 30, 2022, regardless of the election selected by the investors, the $ 750,000 fee, the fair value of the warrants ($ 234,443 ), and other costs of $ 150,995 were recorded as expenses within selling, general and administrative expenses during the year ended June 30, 2022.

The Company called a meeting of stockholders on June 24, 2022 to seek approval of, among other things, an amendment to its certificate of incorporation authorizing a reverse stock split.

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The holders of the Series B Preferred Stock agreed to vote in favor of the reverse stock split, which was approved and ultimately became effective on August 30, 2022.

Subsequent to the reverse stock split, the Series B Preferred Stock and Series C Preferred Stock is also convertible into common stock at the option of the Company subject to the holders having the ability to resell the Company stock, the stock being traded on a national stock exchange or automated inter-dealer quotation system, and other conditions, as defined in the respective purchase agreement.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

To the extent any shares of Series B Preferred Stock or Series C Preferred Stock are converted to common shares or converted to debt, the Company will use such net proceeds from this offering for working capital and general corporate purposes.

The holders of the Series B Preferred Stock and Series C Preferred Stock are entitled to certain registration rights, rights for approval of increases in authorized shares of the respective series, rights to limitation on the Company’s ability to incur indebtedness, and dividends paid on common stock on an as-if converted basis.

In addition, in the event of any liquidation, dissolution, or winding-up of the Company, the holders of the Series B Preferred Stock and Series C Preferred Stock are entitled to receive the preferred stock’s stated value plus any declared but unpaid dividends before any payment is made to holders of common stock or any other class or series of stock ranking junior to the respective Series B Preferred Stock and Series C Preferred Stock.

Series A Convertible Preferred Stock – As of June 30, 2023, 4,030 shares of Series A Convertible Preferred Stock were outstanding.

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Additionally, the Company may not pay a dividend or make any distribution to holders of any class of stock unless the Company first pays a special dividend or distribution of $ 100 per share to holders of the Series A Convertible Preferred Stock.

Financing Transactions – On June 21, 2019, the Company entered into an equity distribution agreement with Canaccord Genuity LLC (“Canaccord”) (the “2019 Equity Distribution Agreement”), pursuant to which the Company may, from time to time, sell shares of the Company’s common stock at market prices by methods deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.

Financing Transactions – On October 31, 2022, the Company entered into a securities purchase agreement with a certain institutional investor to sell, in a registered direct offering (the “Offering”), an aggregate of (i) 1,020,000 shares of the Company’s common stock, (ii) prefunded warrants (the “Pre-Funded Warrants”) to purchase up to 798,182 shares of the Company’s common stock, and (iii) common stock warrants (the “Common Warrants”) to purchase up to 1,818,182 shares of the Company’s common stock.

Each share of common stock was offered with one accompanying Common Warrant with a combined offering price of $5.50.

Each Pre-Funded Warrant was offered with one accompanying Common Warrant with a combined offering price of $5.4999 .

The Offering was completed on November 2, 2022.

The Common Warrants have an exercise price of $ 5.83 per share, are exercisable beginning six months after the date of issuance and will expire five and one-half years from the date of issuance.

The Pre-Funded Warrants have an exercise price of $ 0.0001 per share, are exercisable upon issuance, and will expire when exercised in full.

The Common Warrants will be exercisable for cash, or, solely during any period when a registration statement for the issuance or resale of the shares of common stock issuable upon exercise of the Common Warrants to or by the holder of such Common Warrants is not in effect, on a cashless basis.

During the year ended June 30, 2023, the institutional investor exercised the outstanding Pre-Funded Warrants to purchase 798,182 shares of the Company’s common stock.

The proceeds from the Offering, after deducting the placement agent fees and expenses and other estimated offering expenses, were $ 9,109,117 .

On April 12, 2023, the Company entered into a new equity distribution agreement with Canaccord Genuity LLC (the “2023 Equity Distribution Agreement”), pursuant to which the Company may, from time to time, sell shares of the Company’s common stock at market prices by methods deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.

The 2023 Equity Distribution Agreement and related prospectus is limited to sales of up to an aggregate maximum $50.0 million of shares of the Company’s common stock .

The Company pays Canaccord 3.0% of the gross proceeds as a commission .

No proceeds were raised under the 2019 Equity Distribution Agreement during the years ended June 30, 2022 and 2021.

Proceeds raised under the 2019 Equity Distribution Agreement since its inception are as follows:

Cumulative from inception

Gross proceeds

For the year ended June 30, 2023, a total of 504,034 shares of common stock were sold through Canaccord under the 2023 Equity Distribution Agreement for net proceeds of $ 1,034,035 after payment of commission fees of $ 35,902 and other related expenses of $ 126,801 .

Sale of shares after July 1, 2023 is reported in Note 16, Subsequent events.

PALATIN TECHNOLOGIES, INC.

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Notes to Consolidated Financial Statements

Stock Purchase Warrants – During the year ended June 30, 2022, the Company received $ 280,000 and issued 14,000 shares of common stock upon the exercise provisions of 14,000 previously issued Series J warrants at an exercise price of $ 20.00 per share.

The remaining Series J warrants expired unexercised.

As of June 30, 2023, the Company had outstanding warrants for shares of common stock as follows:

Shares of Common

Exercise Price per

Latest Termination

May 2022 Warrants

Warrants for 33,333 shares of common stock are exercisable immediately and warrants for 33,333 shares of common stock will become exercisable when the holder's of the Series B Preferred Stock and Series C Preferred Stock elect to redeem their shares for cash or convert to notes.

The outstanding warrants are entitled to dividends and participation in subsequent equity offerings as if they were exercised for common shares.

Stock Plan – The Company’s 2011 Stock Incentive Plan (“2011 Stock Plan”) was approved by the Company’s stockholders at the annual meeting of stockholders held in May 2011 and amended at the annual meeting of stockholders held on June 8, 2017, June 26, 2018, June 25, 2020 and again at the annual meeting of stockholders held on June 24, 2022.

November 2022 Common Warrants

November 2022 Placement Agent Warrants

October 31, 2027

Stock Plan – The Company’s 2011 Stock Incentive Plan (“2011 Stock Plan”) was approved by the Company’s stockholders at the annual meeting of stockholders held in May 2011 and amended at the annual meeting of stockholders held on June 8, 2017, June 26, 2018, June 25, 2020, June 24, 2022 and again at the annual meeting of stockholders held on June 20, 2023.

The 2011 Stock Incentive Plan, as amended, provides for incentive and nonqualified stock option grants, restricted stock unit awards and other stock-based awards to employees, non-employee directors and consultants for up to 3,300,000 shares of common stock.

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The following table summarizes option activity and related information for the years ended June 30, 2023 and 2022:

Number of Shares

Weighted Average

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Weighted Average Remaining

Term in Years

Intrinsic Value

Outstanding - June 30, 2021

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Notes to Consolidated Financial Statements

On December 16, 2022, Carl Spana, President and CEO of the Company, and Stephen T.

Wills, CFO, COO and Executive Vice President of the Company, voluntarily contributed stock options previously issued to them to purchase 143,360 and 124,220 shares, respectively, of the Company’s common stock to the 2011 Stock Incentive Plan.

The stock options were forfeited and cancelled without payment of any consideration by the Company.

Stock options granted to the Company’s executive officers and employees generally vest over a 48-month period, while stock options granted to its non-employee directors vest over a 12-month period.

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The performance-based stock options vest on annual performance criteria through the fiscal years ending June 30, 2027 relating to advancement of MC1r programs, including initiation of clinical trials and licensing of Vyleesi in additional countries or regions.

Also included in the table above are 43,000 and 4,700 performance-based options granted in December 2017 to executive officers and employees, respectively, which were eligible to vest during a performance period ended on December 31, 2020, if and upon either i) as to 100% of the target number of shares upon achievement of a closing price for the Company’s common stock equal to or greater than $1.50 per share for 20 consecutive trading days, which is considered a market condition;

or ii) as to thirty percent (30%) of the target number of shares, upon the acceptance for filing by the FDA of an NDA for Vyleesi for HSDD in premenopausal women during the performance period, which is considered a performance condition;

iii) as to fifty percent (50%) of the target number of shares, upon the approval by the FDA of an NDA for Vyleesi for HSDD in premenopausal women during the performance period, which is also considered a performance condition;

iv) as to twenty percent (20%) of the target number of shares, upon entry into a licensing agreement during the performance period for the commercialization of Vyleesi for Female Sexual Dysfunction (“FSD”) in at least two of the following geographic areas (a) four or more countries in Europe, (b) Japan, (c) two or more countries in Central and/or South America, (d) two or more countries in Asia, excluding Japan and China, and (e) Australia, which is also considered a performance condition.

The fair value of these options was $ 602,760 .

The Company amortized the fair value over the derived service period of 1.1 years or upon the attainment of the performance condition.

Pursuant to the FDA acceptance of the NDA filing of Vyleesi, 30% of the target number of options vested in June 2018 and 50% of the target number of options vested in June 2019 upon FDA approval of Vyleesi.

During the year ended June 30, 2021, the performance period ended for the remaining performance-based stock options.

As a result, 9,600 unearned stock options were forfeited and added back to the 2011 Stock Plan and available for future grant.

For the years ended June 30, 2023 and 2022, the fair value of option grants was estimated at the grant date using the Black-Scholes model.

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As of June 30, 2023, there was $ 1,670,986 of unrecognized compensation cost related to unvested options, which is expected to be recognized over a weighted-average period of 2.6 years.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

Restricted Stock Units – The following table summarizes restricted stock award activity for the years ended June 30, 2023 and 2022.

Outstanding at beginning of year

Fractional shares

Outstanding at end of year

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Time-based restricted stock units granted to the Company’s executive officers, employees and non-employee directors generally vest over 48 months, 48 months, and 12 months, respectively.

Included in the outstanding restricted stock units in the table above are 61,556 and 13,751 unvested performance-based restricted stock units granted to executive officers and other employees, respectively, which were granted in June 2019, 2020, 2021, and 2022.

Grants in June 2019, 2020, 2021 and 2022 were 24,829 , 52,679 , 22,343 , and 40,707 respectively.

The performance-based restricted stock units vest on annual performance criteria through the fiscal years ending June 30, 2026 relating to advancement of MC1r programs, including initiation of clinical trials and licensing of Vyleesi in additional countries or regions.

In June 2021, the Company granted 18,000 performance-based restricted stock units to its executive officers which vest if, prior to June 22, 2023, the price per share of the Company’s common stock, as traded on the NYSE American, was at least $ 50.00 for at least twenty consecutive trading days.

In December 2017, the Company granted 43,000 performance-based restricted stock units to its executive officers and 26,800 performance-based restricted stock units to other employees which were eligible to vest during a performance period, ended on December 31, 2020, if and upon either i) as to 100% of the target number of shares upon achievement of a closing price for the Company’s common stock equal to or greater than $37.50 per share for 20 consecutive trading days, which is considered a market condition;

iv) as to twenty percent (20%) of the target number of shares, upon entry into a licensing agreement during the performance period for the commercialization of Vyleesi for FSD in at least two of the following geographic areas (a) four or more countries in Europe, (b) Japan, (c) two or more countries in Central and/or South America, (d) two or more countries in Asia, excluding Japan and China, and (e) Australia, which is also considered a performance condition.

The fair value of these awards was $ 913,750 and $ 569,500 , respectively.

The Company amortized the fair value over the derived service period of 1.1 years or upon the attainment of the performance condition.

Pursuant to the FDA acceptance of the NDA filing for Vyleesi, 30% of the target number of shares vested in June 2018.

Pursuant to the FDA approval of Vyleesi, 50 % of the target number of shares vested in June 2019.

During the year ended June 30, 2021, the performance period ended for the remaining performance based restricted stock units.

As a result, 12,780 unearned restricted stock units were forfeited and added back to the 2011 Stock Plan and available for future grant.

In connection with the vesting of restricted share units during the years ended June 30, 2022 and 2021, the Company withheld 16,191 and 6,671 , shares, respectively, with aggregate values of $ 221,311 and $ 93,638 , respectively, in satisfaction of minimum tax withholding obligations.

PALATIN TECHNOLOGIES, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

Included in the outstanding restricted stock units in the table above are 217,833 and 37,116 unvested performance-based restricted stock units granted to executive officers and other employees, respectively, which were granted in June 2020, 2021, 2022, and 2023.

Grants in June 2020, 2021, 2022 and 2023 were 52,679 , 22,343 , 40,707 , and 152,432 restricted stock units, respectively.

The performance-based restricted stock units vest on annual performance criteria through the fiscal years ending June 30, 2026 relating to advancement of MC1r programs, including initiation of clinical trials, and licensing of Vyleesi in additional countries or regions.

In connection with the vesting of restricted share units during the years ended June 30, 2023 and 2022, the Company withheld 20,468 and 16,191 , shares, respectively, with aggregate values of $ 146,062 and $ 221,311 , respectively, in satisfaction of minimum tax withholding obligations.

(15) INCOME TAXES

The Company has participated in the State of New Jersey’s Technology Business Tax Certificate Transfer Program (the “Program”) sponsored by The New Jersey Economic Development Authority.

The Program enables approved biotechnology companies with unused Net Operating Losses (“NOLs”) and unused research and development credits (“R&D credits”) to sell these tax benefits for at least 80 % of the value of the tax benefits to unaffiliated, profitable corporate taxpayers in the State of New Jersey.

The Company received final approval in December 2022 for the sale of NOLs and R&D credits that resulted in the receipt of $ 4,674,999 in January 2023.

As a result, the Company recorded an income tax benefit for the year ended June 30, 2023.

For fiscal 2023 and 2022, the Company recorded no income tax expense as a result of the generation of operating losses that were subject to a full valuation allowance.

Deferred tax assets and liabilities are determined based on the estimated future tax effect of differences between the financial statement and tax reporting basis of assets and liabilities, as well as for, net operating loss carryforwards and research and development credit carryforwards, given the provisions of existing tax laws.

As of June 30, 2022, the Company had state net operating loss carryforwards of approximately $ 164,000,000 , which will expire, if not utilized, between 2034 and 2042, federal net operating loss carryforwards of approximately $ 112,800,000 and federal research and development and Alternative Minimum Tax (“AMT”) credits of approximately $ 7,200,000 , which expire, if not utilized, between 2035 and 2042, and foreign tax credits of $ 582,500 , which expire, if not utilized, in 2028.

As of June 30, 2023, the Company had state NOL carryforwards of approximately $ 155,000,000 , which will expire, if not utilized, between 2036 and 2043, federal NOL carryforwards of approximately $ 138,000,000 and federal R&D and Alternative Minimum Tax (“AMT”) credits of approximately $ 8,100,000 , which expire, if not utilized, between 2035 and 2043, and foreign tax credits of $ 582,500 , which expire, if not utilized, in 2028.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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The Company also considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax‑planning strategies in making this assessment.

Based on a history of losses incurred, the Company has recognized a full valuation allowance against its net deferred tax assets during the years ended June 30, 2022 and 2021.

Based on a history of losses incurred, the Company has recognized a full valuation allowance against its deferred tax assets during the years ended June 30, 2023 and 2022.

The Company’s valuation allowance increased by $ 5,653,000 and $ 3,927,000 for the years ended June 30, 2023 and 2022, respectively.

A sustained period of profitability in the Company’s operations is required before it would change its judgment regarding the need for a full valuation allowance against its net deferred tax assets.

Until such time, the use of net operating loss carryforwards and tax credits to offset profits, if any, will reduce the overall level of deferred tax assets subject to valuation allowance.

Until such time, the use of NOL carryforwards and tax credits to offset profits, if any, will reduce the overall level of deferred tax assets subject to valuation allowance.

The Tax Reform Act of 1986 (the “Act”) provides for limitation on the use of the Company’s net operating loss and research and development tax credit carryforwards following certain ownership changes (as defined by the Act) that could limit the Company’s ability to utilize these carryforwards.

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If the Company undergoes a future ownership change or as it completes its Section 382 limitation assessments, any unutilized carryforwards that were not previously subject to a Section 382 limitation may become subject to limitation which may result in a significant limitation and loss of net operating loss carryforwards and research and development credits.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements

Additionally, U.S.

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As of June 30, 2023 and 2022, the Company had no liabilities for uncertain income tax matters.

(16) SUBSEQUENT EVENTS

Between July 1, 2023 and September 27, 2023, a total of 217,027 shares of common stock were sold through Canaccord under the 2023 Equity Distribution Agreement for net proceeds of $ 531,369 after payment of commission fees of $ 16,434 .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data