(12) COMMITMENTS AND CONTINGENCIES

Inventory Purchases – The Company had certain supply agreements relating to the Vyleesi product with certain manufacturers and suppliers, including Catalent Belgium S.A. (“Catalent”), Ypsomed AG (“Ypsomed”), and Lonza Ltd (“Lonza”), all of which were transferred to Cosette on June 5, 2025, pursuant to the Settlement Agreement with Cosette (see Note 6).

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 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. The Company currently matches a portion of employee contributions to the plan. For the years ended June 30, 2026, and 2025, Company contributions were $272,790 and $265,806, respectively.

Contingencies – The Company accounts for litigation losses in accordance with ASC 450-20, Loss Contingencies. In addition, the Company is subject to other contingencies, such as product liability, arising in the ordinary course of business. Loss contingency provisions are recorded for probable losses when management is able to reasonably estimate the loss. Any outcome upon settlement that deviates from the Company’s best estimate may result in additional expense or in a reduction in expense in a future accounting period. The Company records legal expenses associated with such contingencies as incurred.

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

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: 650878/2025. The complaint named the Company as defendant, asserting three causes of action for breach of contract and seeking monetary damages of approximately $1,000,000 and the award of warrants allegedly due. The breach of contract claims relates to engagement agreements entered into by the Company and Wainwright in 2023 and 2024.

On November 17, 2025, the Company entered into a settlement and release agreement with Wainwright to resolve all outstanding disputes between the parties. Pursuant to the settlement, the Company paid Wainwright $500,000 in cash which was recorded in G&A and issued warrants to purchase 10,000 shares of the Company’s common stock at an exercise price of $10.00 per share, exercisable beginning January 12, 2026, with a two-year term. In addition, the Company repriced 6,007 outstanding Wainwright warrants to an exercise price of $10.00 per share. The parties mutually released all claims, and the Company extinguished all remaining obligations under the prior engagement arrangements.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Notes to Consolidated Financial Statements