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AGREEMENT WITH KWANGDONG	6 Months Ended
Dec. 31, 2017
Notes to Financial Statements
AGREEMENT WITH KWANGDONG	On November 21, 2017, the Company entered into the License Agreement with Kwangdong for exclusive rights to commercialize bremelanotide in the Republic of Korea. Under the terms of the 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 will be recorded as an expense during the fiscal year ending June 30, 2018. Based upon certain refund provisions, the upfront payment has been recorded as non-current deferred revenue at December 31, 2017. For the three and six months ended December 31, 2017, the Company incurred $46,168 in income tax expense utilizing an estimated effective annual income tax rate applied to income for the three and six months ended December 31, 2017 and the remaining balance of $36,332 was included in prepaid expenses and other current assets at December 31, 2017. The Company will receive a $3,000,000 milestone payment based on the first commercial sale in Korea. Palatin has the potential to receive up to $37,500,000 in additional sales related milestone payments and mid-single-digit to low double-digit royalties on net sales in the licensed territory. All development, regulatory, sales, marketing, and commercial activities and associated costs in the licensed territory will be the sole responsibility of Kwangdong.

AGREEMENT WITH KWANGDONG

6 Months Ended

Dec. 31, 2017

On November 21, 2017, the Company entered into the License Agreement with Kwangdong for exclusive rights to commercialize bremelanotide in the Republic of Korea.

Under the terms of the 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 will be recorded as an expense during the fiscal year ending June 30, 2018. Based upon certain refund provisions, the upfront payment has been recorded as non-current deferred revenue at December 31, 2017. For the three and six months ended December 31, 2017, the Company incurred $46,168 in income tax expense utilizing an estimated effective annual income tax rate applied to income for the three and six months ended December 31, 2017 and the remaining balance of $36,332 was included in prepaid expenses and other current assets at December 31, 2017. The Company will receive a $3,000,000 milestone payment based on the first commercial sale in Korea. Palatin has the potential to receive up to $37,500,000 in additional sales related milestone payments and mid-single-digit to low double-digit royalties on net sales in the licensed territory. All development, regulatory, sales, marketing, and commercial activities and associated costs in the licensed territory will be the sole responsibility of Kwangdong.