Company: HCWB
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0000950170-25-046724
Chunk: 97

Company: HCW Biologics Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 8
Chunk 97
---
 event. When the Company updates the transaction price for milestone and contingent payments, the Company allocates the changes in the total transaction price to each performance obligation in the agreement on the same basis as the initial allocation. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment, which may result in recognizing revenue for previously satisfied performance obligations in such period. The Company’s licensees will generally pay milestones payments subsequent to achievement of the triggering event. 

108

Materials Supply:  The Company provides clinical and research grade materials so that licensees may develop products based on the licensed molecules.  The amounts billed are recognized as revenue as the performance obligations are satisfied by the Company, once the Company determines that a contract exists.   On June 18, 2021, the Company entered into a master services agreement (“MSA”) with Wugen for the supply of materials for clinical development of licensed products. Each of these transactions represents a single performance obligation that is satisfied over time. The Company recognizes revenue using an input method based on the costs incurred relative to the total expected cost, which determines the extent of the Company’s progress toward completion. As part of the accounting for these arrangements, the Company must develop estimates and assumptions that require judgement to determine the progress towards completion. The Company reviews its estimate of the progress toward completion based on the best information available to recognize the cumulative progress toward completion as of the end of each reporting period, and makes revisions to such estimates, if facts and circumstances change during each reporting period. Any such revisions are recorded on a cumulative catch-up basis, noting no material revisions during the years ended December 31, 2023 and 2024.  For each in process SOW, amounts are billed in the same quarter the costs are incurred.   For the years ended December 31, 2023 and 2024, the Company recognized revenues related to sale of development supply materials to Wugen of $2.8 million and $2.6 million, respectively. Accounts Receivable, Net Accounts receivable is presented in accordance the current expected credit losses (“CECL”) impairment model as required under Topic 326.  The Company estimates a reserve for expected credit losses based on existing contractual payment terms, actual payment patterns of its customers, current and future economic and market conditions and individual customer circumstances. As of December 31, 2023 or December 31, 2024, the Company determined that a reserve for expected credit losses was not required. No accounts were written off