Company: PTHS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001753926-25-001764
Chunk: 99

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 99
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 obtains control of the Company's product, which typically occurs on delivery.
Revenue from product sales is recorded at the transaction price, net of estimates for variable consideration consisting of prompt-pay
discounts, customer fees, government rebates, co-payment assistance and payor rebates and administration fees for which reserves
are established. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified
as reductions of accounts receivable (if the amount is payable to the customer) or a liability (if the amount is payable to a
party other than the customer).

Variable
consideration is estimated using the expected-value amount method, which is the sum of probability-weighted amounts in a range
of possible consideration amounts. In making these estimates, the Company considers historical data, including patient mix and
inventory sold to customers that has not yet been dispensed. Actual amounts of consideration ultimately received may differ from
the Company’s estimates. If actual results vary materially from the Company’s estimates, the Company will adjust these
estimates, which will affect net product sales and earnings in the period such estimates are adjusted. These items, as applicable
based on current contractual agreements and obligations on behalf of the Company, include prompt pay discounts, customer fees,
co-pay assistance, government rebates, payor rebates and administration fees.

License
and Collaboration Revenues

The
Company has one agreement related to a license of intellectual property to a third party. Per ASC 606 the Company determines if
there are distinct performance obligations identified in the arrangement. The Company recognizes revenues from non-refundable,
upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit
from the license. For licenses that are bundled with other promises, the Company’s management utilizes judgment to assess
the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time
or at a point in time and, if over time, the estimated performance period and the appropriate method of measuring progress during
the performance period for purposes of recognizing revenue.

The
Company re-evaluates the estimated performance period and measure of progress for each reporting period and, if necessary, adjusts
related revenue recognition accordingly. These arrangements often include milestone as well as royalty or profit-share payments,
contingent upon the occurrence of certain future events linked to the success of the asset in development, as well as expense
reimbursements from our payments to the collaboration partner. Because of the