On the Company entered into a license and collaboration agreement (the “License Agreement”) with Ahon Pharmaceutical Co Ltd. (“Ahon Pharma”), which grants Ahon Pharma exclusive rights to develop and commercialize for acute ischemic stroke in mainland China, Taiwan, Hong Kong S.A.R. and Macau S.A.R. Under the terms of the agreement, the Company is entitled to receive a non-refundable upfront payment of due upon signing the License Agreement and an additional non-refundable payment of million upon regulatory clearance to initiate a clinical trial in China. The Company also has the potential to receive up to an additional million in development and sales related milestones and up to approximately royalties on net sales of in the licensed territories. All development, regulatory, sales, marketing, and commercial activities and associated costs in the licensed territories will be the sole responsibility of Ahon Pharma. The License Agreement be terminated at any time by Ahon Pharma by providing days written notice.

 

The Company received the upfront license fee and recorded it as revenue during the year ended The  million payment and the up to million in additional development and sales related milestones were determined to be at-risk substantive performance milestones and were recordable as revenue as they were determined to be fully constrained using the most likely amount method. Revenue will be recognized for these milestones when it is probable that a significant reversal of the cumulative revenue recognized will occur. Under the terms of the License Agreement, the Company is obligated to pay, and Ahon Pharma withhold, approximately of any license fee as income tax due in China. The Company will record this withholding as income tax at the time it records the related license fee revenue. Accordingly, with respect to the license fee, the Company recorded this withholding as income tax at the time it recorded this license fee revenue.

 

Ahon Pharma is a subsidiary of Shanghai Fosun Pharmaceutical (Group) co. Ltd. (“Fosun Pharma”) which, through its partnership with SK Group, a South Korea based company, is an investor in DiaMedica, holding approximately of our common shares as of This investment was made in