Revenue Recognition  In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (ASC Topic 606), which, along with amendments from 2015 and 2016 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASC Topic 606 replaced most existing revenue recognition guidance in U.S. GAAP when it became effective. On July 1, 2018, the Company adopted ASC Topic 606 using the modified retrospective approach, a practical expedient permitted under ASC Topic 606, and applied this approach only to contracts that were not completed as of July 1, 2018. The Company calculated a one-time cumulative transition adjustment of $500,000 which was recorded on July 1, 2018 to the opening balance of accumulated deficit related to its license agreement with Kwangdong (the Kwangdong License Agreement) as the Company determined a significant revenue reversal would not occur in a future period. The one-time adjustment consisted of the recognition of $500,000 of deferred revenue. Revenue Recognition for Periods Prior to July 1, 2018 The Company has generated revenue solely through license and collaboration agreements. Prior to July 1, 2018, the Company recognized revenue in accordance with FASB ASC Topic 605-25, Revenue Recognition for Arrangements with Multiple Elements , which addressed the determination of whether an arrangement involving multiple deliverables contained more than one unit of accounting. A delivered item within an arrangement was considered a separate unit of accounting only if both of the following criteria were met: ? the delivered item had value to the customer on a stand-alone basis; and ? if the arrangement included a general right of return relative to the delivered item, delivery or performance of the undelivered item was considered probable and substantially in control of the vendor. Under FASB ASC Topic 605-25, if both of the criteria above were not met, then separate accounting for the individual deliverables was not appropriate. The Company determined that it was appropriate to recognize such revenue using the input-based proportional method during the period of Palatins development obligations as defined in the AMAG License Agreement. Refer to Note 5 for additional information. Under the Fosun License Agreement (Note 6), the Company received consideration in the form of an upfront license fee payment and determined that it was appropriate to recognize such consideration as revenue in the first quarter of fiscal year 2018, which was the quarter in which the license was granted, since the license had stand-alone value and the upfront payment received by the Company was non-refundable. Under the Kwangdong License Agreement (Note 7), the Company received consideration in the form of an upfront license fee payment and determined that it was appropriate to record such consideration as deferred revenue because the upfront payment received by the Company is subject to certain refund provisions. Revenue resulting from the achievement of development milestones was recorded in accordance with the accounting guidance for the milestone method of revenue recognition. Amounts received prior to satisfying the revenue recognition criteria were recorded as deferred revenue on the Companys consolidated balance sheet. Revenue Recognition for Periods Commencing July 1, 2018 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. If the licensing of intellectual property is determined to be distinct, revenue is recognized for nonrefundable, upfront license fees when the license is transferred to the customer and the customer can use and benefit from the license. If the licensing of intellectual property is determined not to be distinct, then the license will be bundled with other promises in the arrangement into one performance obligation. The Company needs to determine if the bundled performance obligation is satisfied over time or at a point in time. If the Company concludes that the nonrefundable, upfront license fees will be recognized over time, the Company will need to assess the appropriate method of measuring proportional performance. Regulatory milestone payments are excluded from the transaction price due to the inability to estimate the probability of reversal. Revenue relating to achievement of these milestones will be recognized in the period in which the milestone is achieved. 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. The Company recognizes revenue for reimbursements of research and development costs under collaboration agreements as the services are performed. The Company records these reimbursements as revenue and not as a reduction of research and development expenses as the Company is the principal in the research and development activities based upon its control of such activities, which is considered part of its ordinary activities. Development milestone payments are generally due 30 business days after the milestone is achieved. Sales milestone payments are generally due 45 business days after the calendar year in which the sales milestone is achieved. Royalty payments are generally due on a quarterly basis 20 business days after being invoiced. The cumulative effect of applying ASC Topic 606 to the Companys consolidated balance sheet was as follows: Balance at June 30, 2018 Net Adjustment Balance at July 1, 2018 Deferred revenue $ 500,000 $ (500,000 ) $ - Accumulated deficit (332,045,906 ) 500,000 (331,545,906 ) The impact of adoption of ASC Topic 606 on the Companys consolidated balance sheet as of March 31, 2019 is as follows: As reported March 31, 2019 Adjustments As reported without adoption of ASC Topic 606 ASSETS Current assets: Cash and cash equivalents $ 19,813,349 $ - $ 19,813,349 Prepaid expenses and other current assets 697,178 - 697,178 Total current assets 20,510,527 - 20,510,527 - Property and equipment, net 156,648 - 156,648 Other assets 338,916 - 338,916 Total assets $ 21,006,091 $ - $ 21,006,091 - LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Accounts payable $ 474,773 $ - $ 474,773 Accrued expenses 2,640,208 - 2,640,208 Notes payable, net of discount 1,328,973 - 1,328,973 Other current liabilities 495,169 - 495,169 Total current liabilities 4,939,123 - 4,939,123 - Notes payable, net of discount - - - Deferred revenue - 500,000 500,000 Other non-current liabilities - - - Total liabilities 4,939,123 500,000 5,439,123 Stockholders equity: Preferred stock 40 - 40 Common stock 2,030,634 - 2,030,634 Additional paid-in capital 362,033,736 - 362,033,736 Accumulated deficit (347,997,442 ) (500,000 ) (348,497,442 ) Total stockholders equity 16,066,968 (500,000 ) 15,566,968 Total liabilities and stockholders equity $ 21,006,091 $ - $ 21,006,091 ASC Topic 606 did not have an impact on the Companys consolidated statements of operations or cash flows.