What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-09-23 compared with 2024-09-30 · 215 added, 199 removed, 499 unchanged (45% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ (Deficiency) Equity

Consolidated Statements of Changes in Stockholders’ Deficiency

Consolidated Statements of Cash Flows

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Report of Independent Registered Public Accounting Firm

To the To the Stockholders and Board of Directors

To the Stockholders and Board of Directors

Palatin Technologies, Inc.:

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We have audited the accompanying consolidated balance sheets of Palatin Technologies, Inc.

and subsidiary (the Company) as of June 30, 2024 and 2023, the related consolidated statements of operations, changes in redeemable convertible preferred stock and stockholders’ (deficiency) equity, and cash flows forthe years then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

and subsidiary (the Company) as of June 30, 2025 and 2024, the related consolidated statements of operations, changes in stockholders’ deficiency, and cash flows for the fiscal years then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for the fiscal years then ended, in conformity with U.S.

generally accepted accounting principles.

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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 hasincurred 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.

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 its 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.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of accrued external research and development expenses

As discussed in Notes 2 and 13 to the consolidated financial statements, the costs of research and development activities are charged to expense as incurred, which includes accrued external research and development expenses incurred under contracts with third parties.

At the end of each quarter, the Company reviews the activities performed under all contracts and accrues expenses based upon the estimated amount of work completed considering milestones achieved.

Accrued external research and development expenses were comprised of accrued clinical/regulatory costs and other research related expenses of $1,509,797 and $65,972, respectively as of June 30, 2024.

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 judgement due to the nature and extent of evidence available.

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

We applied auditor judgment to determine the nature and extent of procedures to be performed over accrued external research and development expenses.

For a sample of accrued external research and development expenses, we evaluated management’s estimate of the amount of work remaining to be completed by comparing it to relevant third-party contracts, invoices, and communications.

For a selection of third-party invoices and communications received after year-end, we compared the amounts to the relevant estimate of costs incurred or estimate of the amount of work completed by third parties as determined by management.

We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

We have served as the Company’s auditor since 2002.

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Consolidated Balance Sheets

June 30, 2025

June 30, 2024

Current assets:

Cash and cash equivalents

Marketable securities

Accounts receivable

Other receivables

Prepaid expenses and other current assets

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Long-term operating lease liabilities

Long-term finance lease liabilities

Other long-term liabilities

Warrant liabilities

Total liabilities

Commitments and contingencies (Note 10)

Contingently redeemable warrants

Stockholders deficiency:

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issued and outstanding 4,030 shares as of June 30, 2025 and June 30, 2024

Series D Convertible:

authorized 3,400 shares as of June 30, 2025:

issued and outstanding 3,400 shares as of June 30, 2025

Common stock of $ 0.01 par value authorized 300,000,000 shares:

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Product revenue, net

License and contract

Total revenues

OPERATING EXPENSES

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Selling, general and administrative

Gain on sale of Vyleesi

Loss (Gain) on sale of Vyleesi

( 3,130,000 )

( 7,781,844 )

Gain on purchase commitment

6 unchanged sentences

Investment income

Foreign currency gain (loss)

Foreign currency transaction (loss) gain

Interest expense

Offering expenses

( 1,115,765 )

Change in fair value of warrant liabilities

2 unchanged sentences

( 7,239,992 )

Loss before income taxes

$ ( 17,307,349 )

$ ( 29,736,113 )

Income tax benefit

$ ( 29,736,113 )

$ ( 24,036,741 )

Basic and diluted net loss per common share

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Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders (Deficiency) Equity

Redeemable Convertible Preferred Stock

Stockholders' Equity

Contigently redeemable

Series A Convertible Preferred Stock

Additional paid-in

Redeemable Convertible Preferred Stock

Balance, June 30, 2023

1 unchanged sentence

( 1,979,871 )

$ ( 387,993,696 )

Stock-based compensation

Withholding taxes related to restricted stock units

Redemption of convertible series B & series C preferred stock

( 8,100,000 )

( 13,500,000 )

( 1,500,000 )

Sale of common stock and warrants, net of costs

Sale of common stock, net of costs

Conversion of liability classified warrants

Conversion of liability classified warrants upon warrant exercise

Warrant exercises

Reverse stock split fractional shares

Shares held in abeyance

Reclassification of contingently redeemable warrants

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$ ( 441,766,550 )

$ ( 111,497 )

Stock-based compensation

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Sale of common stock, net of costs

Conversion of liability classified warrants

Conversion of liability classified warrants upon warrant exercise

Warrant exercises

Shares held in abeyance

Reclassification of contingently redeemable warrants

Shares released from abeyance

( 17,307,349 )

3 unchanged sentences

( 4,777,045 )

$ ( 111,497 )

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

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Decrease in right-of-use asset

Unrealized foreign currency transaction gain (loss)

Unrealized foreign currency transaction loss (gain)

Stock-based compensation

Change in fair value of liability classified warrants

( 4,620,911 )

Gain on sale of Vyleesi

( 3,130,000 )

( 7,781,844 )

Gain on purchase commitment

2 unchanged sentences

Accounts receivable

( 1,135,740 )

Other receivables

Prepaid expenses and other assets

3 unchanged sentences

( 3,303,634 )

( 2,367,651 )

Operating lease liabilities

1 unchanged sentence

( 3,463,797 )

( 2,042,516 )

Net cash used in operating activities

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Maturity of marketable securities

Purchase of marketable securities

( 2,992,890 )

Proceeds from sale of Vyleesi

Purchases of property and equipment

Net cash provided by (used in) investing activities

( 3,426,817 )

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

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Net cash provided by financing activities

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

( 6,963,131 )

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Modulation of these receptors, through use of receptor-specific agonists, which activate receptor function, or receptor-specific antagonists, which block receptor function, can have significant pharmacological effects.

The Company’s product development activities focus primarily on use of MC4R agonists for treatment of obesity.

The Company is developing MC4R peptides and small molecule agonists with potential utility in obesity and metabolic-related disorders, rare MC4R pathway diseases, such as hypothalamic obesity, and orphan indications.

The Company is also developing, dependent on resources for development activities, MC1R agonist products, 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.

The Company believes that the MC1R agonist peptides in development have broad anti-inflammatory effects and appear to utilize mechanisms engaged by the endogenous melanocortin system in regulation of the immune system and resolution of inflammatory responses.

The Company is also developing, dependent on resources for development activities, peptides and small molecules that are active at more than one melanocortin receptor, with potential utility in obesity and metabolic-related disorders, rare MC4R pathway diseases, such as hypothalamic obesity, and orphan indications.

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

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As disclosed in Note 4, this product was acquired by Cosette Pharmaceuticals, Inc.

(“Cosette”) on December 19, 2023.

Our new product development activities focus primarily on use of bremelanotide, or other MC4r agonists, with tirzepatide, a GLP-1 agonist for treatment of obesity, which entered Phase 2 in the second quarter of calendar year 2024, and a co-formulation of bremelanotide with a PDE5i for treatment of erectile dysfunction in patients that do not respond to PDE5i monotherapy.

The Company is also developing, dependent on resources for development activities, MC1r agonist products, 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.

The Company believes that the MC1r agonist peptides in development have broad anti-inflammatory effects and appear to utilize mechanisms engaged by the endogenous melanocortin system in regulation of the immune system and resolution of inflammatory responses.

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.

(“Cosette”) on December 19, 2023, including a release and settlement agreement on June 5, 2025.

Reverse Stock Split - On August 11, 2025, a reverse stock split of 1-for-50 of issued and outstanding common stock was made effective by the Company.

Retroactive effect for the reverse stock split was 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.

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Assuming no additional funding and based on its current operating and development plans, the Company expects that existing cash and cash equivalents as of the date of this filing will be sufficient to fund currently anticipated operating expenses through the second half of calendar year 2025.

The Company may receive contingent, sales-based milestone payments of up to $159,000,000 on sales of Vyleesi by Cosette Pharmaceuticals, Inc.

(“Cosette”) and its licensees .

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

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All intercompany accounts and transactions have been eliminated in consolidation.

Revision of Previously Issued Financial Statements - The Company has revised certain prior period amounts on the consolidated financial statements to correct a misstatement with respect to improperly classifying warrants as equity instead of as a warrant liability that is adjusted to the income statement each quarter to reflect changes in the fair value of the warrants, under the guidance of ASC 815-40, Contracts in Entity’s Own Equity .

The Company recorded an adjustment to record a liability for the warrants of $ 1,850,544 million as of June 30, 2023, and adjusted contingently redeemable warrants for $ 263,400 , decreased additional paid-in capital for $ 5,619,090 and increased accumulated deficit for $ 3,505,146 .

The Company also recorded a gain of $ 4,620,911 as a result in the change in fair value of the warrant liabilities for the year ended June 30, 2023.

The Company recorded $ 1,115,765 of offering expenses for the year ended June 30, 2023.

As a result of these adjustments, the cash flow from operations decreased by $ 852,345 and cash flows from financing activities increased by $ 852,345 for the year ended June 30, 2023.

Use of Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

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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 $ 9,089,113 in a money market accounts and $ 5,789,218 in money market and treasury bills at June 30, 2024 and 2023, respectively.

Marketable Securities - The Company’s marketable securities consist of 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.

Credit Risk – Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, and accounts receivable.

Cash equivalents consist of $ 2,286,603 and $ 9,089,113 in money market accounts at June 30, 2025 and 2024, respectively.

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

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

Credit Risk – Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.

Total cash and cash equivalent balances have exceeded balances insured by the Federal Depository Insurance Company.

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

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

The trade accounts receivable is recorded at the invoice amount, less prompt pay and other discounts, chargebacks, and an allowance for credit losses, if any.

Credit losses have not been significant to date.

Inventories – Inventory is stated at the lower of cost or net realizable value, with cost being determined on a first-in, first-out basis.

On a quarterly basis, the Company reviews inventory levels to determine whether any obsolete, expired, or excess inventory exists.

If any inventory is expected to expire prior to being sold, has a cost basis in excess of its net realizable value, is in excess of expected sales requirements as determined by internal sales forecasts, or fails to meet commercial sale specifications, the inventory is written down through a charge to operating expenses.

Inventory consisting of Vyleesi has a shelf-life of three years from the date of manufacture.

Property and Equipment – Property and equipment consists of office and laboratory equipment, office furniture, and leasehold improvements and includes assets acquired under finance leases.

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To the extent a lease arrangement includes both lease and non-lease components, the Company has elected to account for the components as a single lease component.

Revenue Recognition – The Company recognizes product revenues in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers .

Revenue Recognition (prior to the sale of Vyleesi) – The Company recognizes product revenues in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers .

The provisions of ASC Topic 606 require the following steps to determine revenue recognition:

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( 4,385,063 )

( 7,609,462 )

For licenses of intellectual property, the Company assesses at contract inception whether the intellectual property is distinct from other performance obligations identified in the arrangement.

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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 .

For the years ended June 30, 2024 and 2023, no additional common shares were added to the computation of diluted EPS because to do so would have been anti-dilutive.

For the years ended June 30, 2025 and 2024, no additional common shares were added to the computation of diluted EPS because doing so would have been anti-dilutive.

The potential number of common shares excluded from diluted EPS during the year ended June 30, 2025 and June 30, 2024 was 828,978 and 225,553 respectively.

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(3) New and recently Adopted Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

ASU 2024-03 enhances financial reporting by requiring additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.

The guidance is effective for public business entities for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently planning to adopt this guidance when effective.

The Company is assessing the impact of the adoption on the Company’s consolidated financial statements and accompanying footnotes but expects the impact will be enhanced disclosures related to income statement expenses.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures.

ASU 2023-09 enhances the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The guidance is effective for public business entities for annual periods beginning after December 15, 2024.

For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025.

Early adoption is permitted.

The Company is currently planning to adopt this guidance when effective.

The Company is assessing the impact of the adoption on the Company’s consolidated financial statements and accompanying footnotes.

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures.

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The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments – Credit Losses:

Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

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 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) ASSET PURCHASE AGREEMENT

On December 19, 2023, the Company entered into an asset purchase agreement (the “Cosette Purchase Agreement”) with Cosette pursuant to which Cosette acquired from the Company worldwide rights to Vyleesi®.

Under the terms of the Cosette Purchase Agreement, the Company sold certain assets (the “Purchased Assets”) to Cosette, comprising the exclusive right to market and sell Vyleesi for treatment of hypoactive sexual desire disorder in women, and contracts relating manufacturing and distribution of Vyleesi.

The Company has adopted this guidance for the year ended June 30, 2025 and has updated its disclosures within its footnotes herein to include the required additional segment disclosures.

(4) ASSET PURCHASE AGREEMENT / RELEASE AND SETTLEMENT AGREEMENT

On December 19, 2023, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Cosette pursuant to which Cosette acquired from the Company worldwide rights to Vyleesi®.

Under the terms of the Purchase Agreement, the Company sold certain assets (the “Purchased Assets”) to Cosette, comprising the exclusive right to market and sell Vyleesi for the treatment of hypoactive sexual desire disorder in women, and transferred or assigned contracts relating to manufacturing and distribution of Vyleesi and transferred or assigned the license agreement entered into on September 6, 2017 with Shanghai Fosun Pharmaceutical Industrial Development Co.

for exclusive rights to commercialize Vyleesi in China and the license agreement entered into on November 21, 2017 with Kwangdong Pharmaceutical Co., Ltd.

for exclusive rights to commercialize Vyleesi in Korea, provided that the Company retains the right to receive a $ 3,000,000 milestone payment based on the first commercial sale in Korea.

The Purchased Assets include applicable intellectual property pertaining to the marketing and sale of Vyleesi, including patents, patent applications, trademarks and copyrights.

In addition, Cosette acquired records pertaining to the historical sales and distribution of Vyleesi, as well as quality control and pharmacovigilance records and other records.

The Company will receive up to $ 171,000,000 , consisting of an upfront purchase price of $ 9,500,000 , $ 2,500,000 payable upon the settlement of certain purchase commitments, and sales-based milestone payments of up to $ 159,000,000 based on annual net sales of from $ 15,000,000 to $ 20,000,000 .

The closing of the transaction took place simultaneously with the signing of the Cosette Purchase Agreement.

As a result of the transaction, the Company recorded gain of $ 7,781,844 on the sale of Vyleesi for the year ended June 30, 2024.

The Cosette Purchase Agreement includes customary representations, warranties and covenants, as well as standard mutual indemnities covering losses arising from any material breach of the Cosette Purchase Agreement or inaccuracy of representations and warranties.

The parties also entered into a transition service agreement pursuant to which the Company provided certain transition services to Cosette for a period time and the Company was reimbursed for the costs of the transition services.

The Company is also eligible to receive regulatory approval milestones associated with the previous licensing of Vyleesi to Fosun for China (see Note 6) and Kwangdong for the Republic of Korea (“Korea”) (see Note 7).

(5) MANUFACTURING SUPPLY AGREEMENTS FOR VYLEESI

The Company has transferred to Cosette its right, title and interest in contracts and agreements to manufacture Vyleesi, including 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;

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”).

(6) AGREEMENT WITH FOSUN

On September 6, 2017, the Company entered into a license agreement with Shanghai Fosun Pharmaceutical Industrial Development Co.

(“Fosun”) for exclusive rights to commercialize Vyleesi in China (the “Fosun License Agreement”).

Under the terms of the Fosun License Agreement, the Company received $ 4,500,000 in October 2017, which consisted of an upfront payment of $ 5,000,000 less $ 500,000 that was withheld in accordance with tax withholding requirements in China and recorded as an expense during the year ended June 30, 2018.

The Company has agreed to assign the Fosun License Agreement to Cosette, provided that the Company retains the right to receive a $ 7,500,000 milestone payment upon regulatory approval in China.

(7) AGREEMENT WITH KWANGDONG

On November 21, 2017, the Company entered into a license agreement with Kwangdong Pharmaceutical Co., Ltd.

(“Kwangdong”) for exclusive rights to commercialize Vyleesi in Korea (the “Kwangdong License Agreement”).

Under the terms of the Kwangdong License Agreement, the Company received $ 417,500 in December 2017, consisting of an upfront payment of $ 500,000 , less $ 82,500 , which was withheld in accordance with tax withholding requirements in Korea and recorded as an expense during the year ended June 30, 2018.

The Company has agreed to assign the Kwangdong License Agreement to Cosette, provided that the Company retains the right to receive a $ 3,000,000 milestone payment based on the first commercial sale in Korea.

The Company received an upfront purchase price of $ 9,500,000 , $ 2,500,000 payable upon the settlement of certain purchase commitments, which was received November 1, 2024, and sales-based milestone payments of up to $ 159,000,000 .

On June 5, 2025, the Company entered into a Release and Settlement Agreement (the “Agreement”) with Cosette pursuant to which the Cosette resolved all outstanding obligations and commercialization covenants related to such sales-based milestone payments and purchase commitments by remitting a single lump sum payment of $ 630,000 and the assumption of outstanding manufacturing and supply purchase commitments, with the Company retaining the right to receive 20% of a $ 3,000,000 milestone payment based on the first commercial sale in Korea,in full satisfaction and release of all such future obligations.

As a result, the Company recorded a gain on the sale of Vyleesi of $ 3,130,000 and a gain on purchase commitments of $ 2,117,900 , for the fiscal year ended June 30, 2025.

(5) PREPAID EXPENSES AND OTHER CURRENT ASSETS

2 unchanged sentences

Insurance premiums

Vyleesi contractual advances

(6) FAIR VALUE MEASUREMENTS

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Carrying Value

Quoted prices in

active markets

Other quoted/observable inputs (Level 2)

Other quoted/

observable inputs

Significant unobservable inputs

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Cash equivalents - Money market funds

Cash equivalents - Treasury bill

Marketable securities - Treasury bill

(10) INVENTORIES

Inventories consist of raw materials and finished goods related to Vyleesi.

The following table summarizes the components of inventories:

Raw materials

Finished goods

The fair value of the May 2022, October 2022, and October 2023 warrants was determined using the Black-Scholes option-pricing model and are classified as a Level 2 financial instrument.

The key assumptions used to determine the fair value was the term of the warrants, the risk-free rate and volatility.

The weighted average assumptions used in the Black-Scholes model in estimating the fair value of the warrants issued for the following non-recurring measurement dates presented were as follows.

October 24, 2023 (Issuance date October 2023 warrants)

January 24, 2024 (Final measurement date)

Expected term

Risk free rate

The warrant liabilities were initially measured at fair value at the day of issuance and on a recurring basis.

The change in fair value of warrant liabilities is recognized in the consolidated statement of operations.

A summary of warrant liability activity for the period ended June 30, 2024 is as follows.

Balance June 30, 2023

October 2023 issuance

Change in fair value

Reclassification of warrants to equity

( 11,423,203 )

Conversion of liability classified warrants upon exercise

( 2,366,318 )

Balance June 30, 2024

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

1 unchanged sentence

Operating lease cost

Year ended June 30, 2025

Year ended June 30, 2024

Operating lease cost

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Finance lease cost

Year ended June 30, 2025

Year ended June 30, 2024

Right-of-use asset amortization

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

June 30, 2025

June 30, 2024

Weighted-average remaining lease term (years) operating leases

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Financing cash flows for finance leases

Supplemental non-cash information on lease liabilities arising from obtaining right-of-use assets:

Right-of-use assets obtained in exchange for new operating lease obligation

The following table summarizes the maturity of the Company’s lease liabilities as of June 30, 2025:

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Less imputed interest

Finance leases:

Year Ending June 30, 2025

Less imputed interest

(8) PROPERTY AND EQUIPMENT, NET

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(10) COMMITMENTS AND CONTINGENCIES

Inventory Purchases –The Company had certain supply agreements with manufacturers and suppliers, including the Catalent Agreement, Ypsomed Agreement, and Lonza Agreement, all of which have been transferred to Cosette.

As a result of the sale of Vyleesi to Cosette, the Company is still required to make certain payments for the manufacture and supply of Vyleesi.

The following table summarizes the contractual obligations under the Catalent Agreement, Ypsomed Agreement, and Lonza Agreement as of June 30, 2024:

Inventory purchase commitments

As of June 30, 2024, the Company has $ 944,150 and $ 1,032,300 accrued within other current and long-term liabilities, respectively, in the consolidated balance sheet related to estimated losses for firm commitment contractual obligations under these agreements.

As of June 30, 2023, $ 3,856,800 and $ 2,083,200 was accrued within other current and long-term liabilities, respectively.

Losses on these firm commitment contractual obligations are recognized based upon the terms of the respective agreement and similar factors considered for the write-down of inventory, including expected sales requirements as determined by internal sales forecasts.

The commitment contractual obligation amounts above are denominated in Swiss Francs and Euros and have been translated using period end exchange rates.

The Company may experience a negative impact on future earnings and equity solely as a result of future foreign currency exchange rate fluctuations.

Employment Agreements – The Company has employment agreements with two executive officers which provide a stated annual compensation amount, subject to annual increases, and annual bonus compensation in an amount to be approved by the Company’s board of directors.

Inventory Purchases The Company had certain supply agreements with manufacturers and suppliers, including Catalent Belgium S.A (“Catalent”), Ypsomed AG (the “Ypsomed ”), and Lonza Ltd (“Lonza”), all of which have been transferred to Cosette.

On June 5, 2025, the Company entered into a Release and Settlement Agreement with Cosette pursuant to which Cosette released the Company from all outstanding obligations and commercialization covenants.

As a result, the Company recorded a gain on purchase commitments of $ 2,117,900 which represented the Company’s remaining purchase commitment liabilities.

As of June 30, 2024, the Company had $ 944,150 and $ 1,032,300 accrued within other current and long-term liabilities, respectively, in the consolidated balance sheet related to estimated losses for firm commitment contractual obligations under these agreements.

The commitment contractual obligation amounts above were denominated in Swiss Francs and Euros and have been translated using period end exchange rates.

Employment Agreements – The Company has employment agreements with two executive officers which provides a stated annual compensation amount, subject to annual increases, and annual bonus compensation in an amount to be approved by the Company’s board of directors.

Each agreement allows the Company or the employee to terminate the agreement in certain circumstances.

In some circumstances, early termination by the Company may result in severance pay to the employee for a period of 18 to 24 months at the salary then in effect, continuation of health insurance premiums over the severance period and immediate vesting of all stock options and restricted stock units.

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.

In some circumstances, early termination by the Company may result in severance pay to the employee for a period of 24 months at the salary then in effect, continuation of health insurance premiums over the severance period and immediate vesting of all stock options and restricted stock units.

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

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

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The Company is involved, from time to time, in various claims and legal proceedings arising in the ordinary course of its business.

The Company is not currently a party to any such claims or proceedings that, if decided adversely to it, would either individually or in the aggregate have a material adverse effect on its business, financial condition, or results of operations.

(15) REDEEMABLE CONVERTIBLE PREFERRED STOCK, ESCROWED PROCEEDS, AND STOCKHOLDERS’ EQUITY

Series B and C Redeemable Convertible Preferred Stock – On May 11, 2022, Palatin entered into a securities purchase agreement with institutional investors, and on May 12, 2022, Palatin issued and sold 8,100,000 shares of Series B Redeemable Convertible Preferred Stock (“Series B Preferred Stock”) and 900,000 shares of Series C Redeemable Convertible Preferred Stock (“Series C Preferred Stock”).

Each share of Series B Preferred Stock and Series C Preferred Stock had a purchase price of $ 1.67 .

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 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 .

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.

Except as otherwise required by law, holders of the Series B Preferred Stock and Series C Preferred Stock were entitled to vote only on the reverse stock split and any adjournment of the meeting relating to the reverse stock split.

The Company’s common stock, outstanding Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock voted as a single class on an as-if converted basis.

The holders of Series B Preferred Stock had votes equal to the number of shares of common stock into which the Series B Preferred Stock is convertible.

The holders of Series C Preferred Stock were entitled to 20,000 votes per share of common stock into which the Series C Preferred Stock is convertible but could only vote in the same proportion as the shares of common stock, Series A preferred stock, and Series B preferred stock were voted on the reverse stock split or any adjournment of the stockholder meeting relating thereto.

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.

On February 13, 2025, a complaint was filed in the Supreme Court of the State of New York, County of New York, captioned H.C.

Wainwright & Co., LLC (“Wainwright”) v.

Palatin Technologies, Inc., Case No:

The complaint names the Company as defendant, asserting three causes of action for breach of contract and seeking monetary damages and the award of warrants allegedly due under the parties’ agreement.

The breach of contract claims each relate to the engagement agreement entered into by the Company and Wainwright on or about January 29, 2024.

On March 20, 2025, the Company filed its answer in response to the complaint, in which it denied all liability and asserted several affirmative defenses.

The Company plans to vigorously defend against the lawsuit and the action will proceed next to the discovery stage and for further proceedings.

Management has assessed the status of these proceedings and based on consultation with legal counsel, believes that while a loss is reasonably possible, it is not probable and therefore no accrual has been recorded.

At this time, the Company is unable to reasonably estimate the potential loss or range of loss associated with these matters due to the inherent uncertainties of litigation.

The Company will continue to monitor developments and will recognize a liability if and when a loss becomes both probable and estimable.

(11) SEGMENT INFORMATION

The Company views its operations and manages its business in one operating segment:

life science.

The table below summarizes the significant expense categories for the life science segment regularly provided to the Company’s Chief Financial Officer / Chief Operating Officer (the “CFO / COO”), its Chief Operating Decision Maker (the “CODM”).

The accounting policies of the Company’s segment are the same as those described in the summary of significant accounting policies.

The CODM assesses performance for its segment based on net loss, which is reported on the consolidated statements of operations.

The measure of segment assets is reported on the balance sheet as total assets.

The CODM uses cash forecast models in deciding how to invest into the segment.

The CODM analyzes the Company’s net loss and monitors budget versus actual results to assess the performance of the Company.

Year Ended June 30,

Total Revenues

Cost of Product Sales

Program Spend

Personnel Costs

Administrative Costs (a)

Gain on Sale of Vyleesi

( 3,130,000 )

( 7,781,844 )

Gain on Purchase Commitment

( 2,117,900 )

Offering expenses

Change in fair value of warrant liabilities

( 6,962,562 )

Other Segment Items (b)

Segment net loss

$ ( 17,307,349 )

(a) Contains depreciation and amortization which is disclosed in the consolidated financial statements

(b) Other segement items include investment income, interest expense and foreign currency (gain)loss, which are disclosed in the consolidated financial statements.

(12) STOCKHOLDERS’ DEFICIENCY

Series D Convertible Preferred Stock - On June 10, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain accredited investors (the “Purchasers”), pursuant to which the Company agreed to sell and issue, in a private placement (the “Private Placement”), (i) an aggregate of 3,400 shares of the Company’s newly designated Series D Convertible Preferred Stock, par value $0.01, with a stated value of $100 per share (the “Series D Preferred Stock”), initially convertible into up to 61,816 shares of the Company’s common stock (such shares underlying the Preferred Stock, the “Conversion Shares”), par value $0.01 per share (the “Common Stock”) at an initial conversion price of $ 5.50 , and (ii) Series I common stock purchase warrants (the “Warrants”) to purchase up to an aggregate of 123,636 shares of Common Stock (such shares underlying the Warrants, the “Warrant Shares”).

The Series D Preferred Stock and Warrants were sold at a combined offering price of $ 5.50 per share of Preferred Stock and accompanying Warrants.

The Purchasers in the Private Placement consisted of Carl Spana, the Company’s President and Chief Executive Officer, Stephen T.

Wills, the Company’s Executive Vice President, Chief Financial Officer, and Chief Operating Officer, John K.A.

Prendergast, a director on and Chairperson of the Company’s board of directors, and Alan W.

Dunton, a director on the Company’s board of directors, who are all related parties of the Company.

The Series D Preferred Stock has a dividend rate of 8 % per annum, which when declared may, at the option of the Company, be paid in cash or can accrete and be added to the stated value of the Series D Preferred Stock.

Subject to the rights of any class or series of stock senior to or equivalent to the Series D Preferred Stock , the Series D Preferred Stock shall be entitled to be paid in the event of liquidation, dissolution or winding up of the Company, out of available funds and assets, prior and in preference to any distribution on any junior stock, an amount per share equal to the then stated value of the Series D Preferred Stock and declared but unpaid dividends.

Each share of Series D Preferred Stock is convertible at any time, at the option of the holder, and such conversion could dilute the value of our common stock to current stockholders and could adversely affect the market price of our common stock.

The conversion price decreases if we sell common stock (or equivalents) for a price per share less than the conversion price or less than the market price of the common stock and is also subject to adjustment upon the occurrence of a merger, reorganization, consolidation, reclassification, stock dividend or stock split which results in an increase or decrease in the number of shares of common stock outstanding.

The Private Placement closed on June 13, 2025.

The gross proceeds from the Private Placement, before deducting offering expenses, were $ 340,000 .

The Company intends to use the net proceeds received from the Private Placement for general working capital purposes.

Series A Convertible Preferred Stock – As of June 30, 2025, 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 January 29, 2024, the Company entered into a securities purchase agreement (the “January 2024 Purchase Agreement”) to sell in a registered direct offering (the “January 2024 RD Offering”), an aggregate of 1,831,503 shares of common stock, of the Company.

Financing Transactions – On May 7, 2025, the Company announced the closing of a reduced previously announced public offering with participation from institutional and accredited investors consisting of 146,479 shares of common stock together with Series F warrants to purchase up to 146,479 shares of common stock (the “Series F Warrants“), Series G warrants to purchase up to 146,479 shares of common stock (the “Series G Warrants“), and Series H warrants to purchase up to 146,479 shares of common stock (the “Series H Warrants“), at a combined public offering price of $ 7.50 per share of common stock and accompanying warrants (the “May 2025 Offering“).

The Series F Warrants have an exercise price of $ 15.00 per share, are immediately exercisable and expire on the five-year anniversary of the original issuance date, subject to the certain terms as defined in such warrant.

The Series G Warrants have an exercise price of $ 7.50 per share, are immediately exercisable and expire on the earlier of (i) the 24-month anniversary of the original issuance date or (ii) the expiration of the FDA Exercise Period (as such term is defined in the Series G Warrant).

The Series H Warrants will be issuable to the holder upon their exercise of the Series G Warrants, will have an exercise price of $ 11.25 per share, will be immediately exercisable upon issuance and will expire on the 24-month anniversary of its issuance date.

The Company received aggregate gross proceeds from the May 2025 Offering of approximately $ 1.1 million.

The Company intends to use the net proceeds from the Offering primarily for working capital and general corporate purposes.

On February 10, 2025, the Company entered into definitive agreements with a single healthcare focused institutional investor for the purchase and sale of 93,760 shares of its common stock (or common stock equivalents in lieu thereof) in a registered direct offering (the “February 2025 RD Offering”) at a purchase price of $ 50.00 per share.

The Company also agreed to issue to the same investor in a concurrent private placement warrants to purchase up to an aggregate of 93,760 shares of common stock (the “February 2025 Private Placement” and, together with the February 2025 RD Offering, the “February 2025 Offering”).

The warrants issued in the concurrent February 2025 Private Placement will have an exercise price of $ 50.00 per share, will be exercisable 181 days after their issuance and will expire approximately five and a half years from the date of issuance.

The gross proceeds from the February 2025 Offering totaled $ 4,687,786 with net proceeds after deducting the placement agent fees and offering expenses, amounting to $ 4,309,641 .

The Company is using the net proceeds from the Offering for general corporate purposes.

The Company paid the placement agents a cash fee equal to 7.0 % of the aggregate gross proceeds of the February 2025 Offering.

On January 29, 2024, the Company entered into a securities purchase agreement (the “January 2024 Purchase Agreement”) to sell in a registered direct offering (the “January 2024 RD Offering”), an aggregate of 36,630 shares of common stock, of the Company.

Pursuant to the January 2024 Purchase Agreement, the Company issued to the investors in the January 2024 RD Offering unregistered warrants (the “January 2024 Private Warrants”) to purchase up to 36,630 shares of the Company’s common stock (the “January 2024 Private Warrant Shares”) in a concurrent private placement (the “January 2024 Private Offering” and together with the January 2024 RD Offering, the “January 2024 Offering”).

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The gross proceeds from the January 2024 Offering totaled $ 10,000,006 , with net proceeds from the January 2024 Offering, after deducting the placement agent fees and offering expenses, amounting to $ 9,224,056 .

The Company intends to use the net proceeds received from the January 2024 Offering for general working capital purposes.

The Company used the net proceeds received from the January 2024 Offering for general working capital purposes.

On October 20, 2023, the Company entered into a securities purchase agreement (the “October 2023 Purchase Agreement”) with a certain institutional investor, to sell in a registered direct offering (the “October 2023 RD Offering”), an aggregate of (i) 26,500 shares of common stock (the “October 2023 Shares”), of the Company and (ii) pre-funded warrants (the “October 2023 Pre-Funded Warrants”) to purchase up to 20,670 shares of the Company’s common stock (the “October 2023 Pre-Funded Warrant Shares”).

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The net proceeds from the October 2023 Offering, after deducting the placement agent fees and offering expenses, were $ 4,573,948 .

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 “October 2022 RD Offering”), an aggregate of (i) 1,020,000 shares of the Company’s common stock, (ii) prefunded warrants (the “October 2022 Pre-Funded Warrants”) to purchase up to 798,182 shares of the Company’s common stock, and (iii) common stock warrants (the “October 2022 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 October 2022 Common Warrant with a combined offering price of $5.50.

Each October 2022 Pre-Funded Warrant was offered with one accompanying October 2022 Common Warrant with a combined offering price of $5.4999 .

The October 2022 RD Offering was completed on November 2, 2022.

The October 2022 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 October 2022 Pre-Funded Warrants had an exercise price of $ 0.0001 per share and were exercisable upon issuance.

During the year ended June 30, 2023, the institutional investor exercised the outstanding October 2022 Pre-Funded Warrants to purchase 798,182 shares of the Company’s common stock.

The October 2022 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 October 2022 Common Warrants to or by the holder of such October 2022 Common Warrants is not in effect, on a cashless basis.

The proceeds from the October RD 2022 Offering, after deducting the placement agent fees and expenses and other estimated offering expenses, were $ 9,109,117 .

The private warrants and common warrants related to the October 2022 and October 2023 financings met the definition of a derivative instrument under ASC Subtopic 815-40 and were reported as liabilities as of June 30, 2023 since the warrants did not meet the criteria for equity classification.

The Company recorded the warrants at fair value on its balance sheet with changes in the fair value of the warrants recorded as a non-cash charge or gain in the consolidated statements of operations.

The January 2024 Placement Agent Warrants were issued to non-employees in exchange for services related to the offering are accounting for in accordance ASC 718 which requires the fair value of the warrants to be recognized as an offering expense.

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As a result, all liability classified warrants were reclassified to additional paid-in capital.

On February 11, 2025, the Company entered into a sales agreement (the “2025 Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”), 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 “Securities Act”).

The 2025 Sales Agreement and related prospectus is limited to sales of up to an aggregate maximum of $6.0 million of shares of the Company’s common stock.

The Company pays A.G.P.

3.0% of the gross proceeds as a commission .

For the year ended June 30, 2025, a total of 220,238 shares of common stock were sold through A.G.P.

under the 2025 Sales Agreement for net proceeds of $ 2,567,569 after payment of commission fees of $ 88,684 and other related expenses of $ 186,556 .

On April 12, 2023, the Company entered into a new equity distribution agreement (the “2023 Equity Distribution Agreement”) with Canaccord Genuity LLC (“Canaccord”), 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.

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Year Ended June 30, 2024

Year Ended June 30, 2023

Gross proceeds

Stock Warrants - On June 20, 2024, the Company entered into a letter agreement (the “Inducement Letter”) with a holder (the “Exercising Holder”) of outstanding common stock purchase warrants that the Company issued on November 2, 2022, and October 24, 2023 (the “Existing Warrants”).

Pursuant to the Inducement Letter, the Exercising Holder agreed to exercise, for cash, Existing Warrants to purchase, in the aggregate, 3,233,277 shares of common stock in exchange for the Company’s agreement to (i) lower the exercise price to $1.88 per share for the 3,233,277 Existing Warrants being exercised pursuant to the Inducement Letter and (ii) issue to the Exercising Holder an aggregate of 4,849,915 warrants to purchase shares of common stock, comprised of Series A common stock purchase warrants to purchase 2,727,273 shares of common stock (the “Series A Warrants”) and Series B common stock purchase warrants to purchase 2,122,642 (of which 1,624,201 shares of common stock are subject to stockholder approval) shares of common stock (the “Series B Warrants” and together with the Series A Warrants, the “Inducement Warrants”).

The Company received aggregate gross proceeds of $ 6,078,561 from the exercise of the Existing Warrants by the Exercising Holder (the “Warrant Inducement”).

As part of the agreement, 1,443,277 shares were held in abeyance on behalf of the Exercising Holder.

The Company intends to use the net proceeds for working capital and general corporate purposes.

The incremental value of the Warrant Inducement was recorded as an offering expense against the proceeds received in additional paid-in capital.

No proceeds were raised under the 2023 Equity Distribution Agreement during year ended June 30, 2025.

Stock Warrants - On December 13, 2024, the Company entered into a letter agreement (the “December 2024 Inducement Letter”) with a holder (the “December 2024 Exercising Holder”) of outstanding common stock purchase warrants that the Company issued on June 24, 2024, with an initial exercise price of $ 94.00 , and October 24, 2023, with an initial exercise price of $ 106.00 (the “December 2024 Existing Warrants”).

To induce the exercise of a portion of the December 2024 Existing Warrants by the December 2024 Exercising Holder, the Company agreed to adjust the exercise price of such portion of the December 2024 Existing Warrants to $43.75.

Pursuant to the December 2024 Inducement Letter, the December 2024 Exercising Holder agreed to exercise, for cash, the December 2024 Existing Warrants to purchase an aggregate of 78,153 shares of common stock at the adjusted exercise price in exchange for the Company’s agreement to issue to the December 2024 Exercising Holder Series C common stock purchase warrants to purchase 78,153 shares of common stock (the “Series C Warrants”) and Series D common stock purchase warrants to purchase 39,076 shares of common stock (the “Series D Warrants” and together with the Series C Warrants, the “December 2024 Inducement Warrants,” and the shares issuable upon exercise of the December 2024 Inducement Warrants, the “December 2024 Inducement Warrant Shares”) .

The Company received aggregate gross proceeds of $ 3,419,219 from the exercise of the December 2024 Existing Warrants by the December 2024 Exercising Holder (the “December 2024 Warrant Inducement”).

The incremental value of the December 2024 Warrant Inducement was recorded as an offering expense against the proceeds received in additional paid-in capital.

On June 20, 2024, the Company entered into a letter agreement (the “June 2024 Inducement Letter”) with a holder (the “June 2024 Exercising Holder”) of outstanding common stock purchase warrants that the Company issued on November 2, 2022, and October 24, 2023 (the “June 2024 Existing Warrants”).

Pursuant to the June 2024 Inducement Letter, the June 2024 Exercising Holder agreed to exercise, for cash, June 2024 Existing Warrants to purchase, in the aggregate, 64,666 shares of common stock in exchange for the Company’s agreement to (i) lower the exercise price to $94.00 per share for the 64,666 June 2024 Existing Warrants being exercised pursuant to the June 2024 Inducement Letter and (ii) issue to the June 2024 Exercising Holder an aggregate of 96,998 warrants to purchase shares of common stock, comprised of Series A common stock purchase warrants to purchase 54,545 shares of common stock (the “June 2024 Series A Warrants”) and Series B common stock purchase warrants to purchase 42,453 (of which 32,484 shares of common stock were approved July 25, 2025) shares of common stock (the “June 2024 Series B Warrants” and together with the June 2024 Series A Warrants, the “June 2024 Inducement Warrants”).

The Company received aggregate gross proceeds of $6,078,561 from the exercise of the June 2024 Existing Warrants by the June 2024 Exercising Holder (the “Warrant Inducement”) .

As part of the agreement, 28,866 shares of common stock were held in abeyance on behalf of the June 2024 Exercising Holder.

During the year ended June 30, 2025, at the request of the June 2024 Exercising Holder, 28,866 shares were released from abeyance.

The incremental value of the June 2024 Warrant Inducement was recorded as an offering expense against the proceeds received in additional paid-in capital.

As of June 30, 2025, the Company had outstanding warrants for shares of common stock as follows:

Shares of Common

Exercise Price per

Latest Expiration

May 2022 Warrants

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October 31, 2027

October 2023 Private Warrants

April 24, 2029

October 2023 Placement Agent Warrants

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February 1, 2028

June 2024 Series A Warrants

June 24, 2029

June 2024 Series B Warrants

* 1,624,201 shares expire on the five year anniversary following stockholder approval

Stock Plan – The Company’s 2011 Stock Incentive Plan (“2011 Stock Incentive 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, June 20, 2023 and again at the annual meeting of stockholders held on June 27, 2024.

June 24, 2029

December 2024 Series C Warrants

December 17, 2029

December 2024 Series D Warrants

July 25, 2030

February 2025 Series E Warrants

August 12, 2030

May 2025 Series F Warrants

May 2025 Series G Warrants

May 2025 Series I Warrants

July 25, 2030

* 32,484 shares expire on the five year anniversary following stockholder approval of the warrant issuance and the balance expire on June 24, 2029.

Stock Plan – The Company’s 2011 Stock Incentive Plan (“2011 Stock Incentive 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, June 20, 2023, June 27, 2024 and again at the annual meeting of stockholders held on July 25, 2025.

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 146,000 shares of common stock.

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The following table summarizes option activity and related information for the years ended June 30, 2025 and 2024:

Number of Shares

Weighted Average Exercise Price

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Expected to vest at June 30, 2025

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, 2028 relating to advancement of MC1R programs, including initiation of clinical trials and licensing of Vyleesi in additional countries or regions.

For the years ended June 30, 2024 and 2023, the fair value of option grants was estimated at the grant date using the Black-Scholes model.

The Company did not grant stock options for the year ended June 30, 2025.

For the year ended June 30, 2024, the fair value of option grants was estimated at the grant date using the Black-Scholes model.

The Company’s weighted average assumptions for the years ended June 30, 2024 and 2023 were as follows:

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Restricted Stock Units – The following table summarizes restricted stock award activity for the years ended June 30, 2025 and 2024.

Year Ended June 30,

Outstanding at beginning of year

Fractional shares

Outstanding at end of year

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(13) 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 2025 and 2024, 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, NOL carryforwards and R&D credit carryforwards, given the provisions of existing tax laws.

As of June 30, 2024, the Company had state NOL carryforwards of approximately $ 181,000,000 , which will expire, if not utilized, between 2036 and 2043, federal NOL carryforwards of approximately $ 130,000,000 and federal R&D and Alternative Minimum Tax (“AMT”) credits of approximately $ 9,500,000 , which expire, if not utilized, between 2035 and 2043, and foreign tax credits of $ 582,500 , which expire, if not utilized, in 2028.

As of June 30, 2025, the Company had state NOL carryforwards of approximately $ 202,000,000 , which will expire, if not utilized, between 2036 and 2045, federal NOL carryforwards of approximately $ 151,000,000 and federal R&D credits of approximately $ 10,000,000 , which expire, if not utilized, between 2035 and 2045, 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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As of June 30, 2025 and 2024, the Company had no liabilities for uncertain income tax matters.

(14) SUBSEQUENT EVENTS

During August 2025, investors exercised 43,759 Series G warrants at an exercise price of $ 7.50 per share.

As a result, the company received $ 328,199 , and the investors received 43,759 Series H warrants at an exercise price of $ 11.25 per share.

On August 14, 2025, the Company entered into a Research Collaboration, License and Patent Assignment Agreement (the “Agreement”) with Boehringer Ingelheim International GmbH (“Boehringer Ingelheim”) to research, develop and commercialize first-in-class melanocortin receptor-targeted peptides developed by the Company for the treatment of retinal diseases, including diabetic retinopathy.

Under the terms of the Agreement, the Company assigned certain patent rights to Boehringer Ingelheim (the “Assigned Patents”), and the Company will conduct collaborative research with Boehringer Ingelheim at Boehringer Ingelheim’s expense focused on development during a two-year period, which Boehringer Ingelheim has the right to extend by up to 6 months.

Under the terms of the Agreement, Palatin received an upfront payment of $2,300,000 (received September 2025), and may receive up to $21,200,000 in near-term research milestone payments and up to $307,000,000 in success-based development, regulatory, and commercial milestone payments, plus tiered royalties on net commercial sales of Products .

On September 22, 2025, the Company announced the achievement of a research milestone under its collaboration with Boehringer Ingelheim.

This milestone triggers a payment to the Company of approximately $ 6,500,000 .

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