3. REVENUE RECOGNITION:
Revenue is recognized for product sales upon shipment and passing of title and risk of loss to the customer and when estimates of
discounts, rebates, promotional adjustments, price adjustments, returns, chargebacks, and other potential adjustments are reasonably determinable, collection is reasonably assured and the Company has no further performance obligations. These
estimates are presented in the financial statements as reductions to net revenues and accounts receivable. Contract research income is recognized as work is completed and as billable costs are incurred. In certain cases, contract research income is
based on attainment of designated milestones. Advance payments may be received to fund certain development costs.
Royalty income is related
to sales of divested products which are sold by third parties. For those agreements, the Company recognizes revenue based on royalties reported by those third parties and earned during the applicable period.