Revenue Recognition The Company s revenue recognition policies are in compliance with the Revenue Recognition Topic of the Financial Accounting Standards Board ( FASB ) Accounting Standards Codification ( ASC ). Some of the Company s agreements contain multiple elements, including technological and territorial licenses and research and development services. In accordance with these agreements, the Company may be eligible for upfront fees, research and development funding, cost reimbursements, development milestones, commercial milestones, minimum periodic royalty payments and royalty payments. Development revenues include revenues from license fees, research and development funding, development milestones and cost reimbursements. Commercial revenues include revenues from commercial milestones, royalties on sales made by the Company s collaborators of products incorporating the Company s flavor ingredients and minimum periodic royalty payments. Pursuant to the Revenue Recognition   Multiple-Element Arrangements Topic of the FASB ASC, each required deliverable is evaluated to determine if it qualifies as a separate unit of accounting. For the Company this determination is generally based on whether the deliverable has  stand-alone value  to the customer. The arrangement s consideration is then allocated to each separate unit of accounting based on the relative selling price of each deliverable. The estimated selling price of each deliverable is determined using the following hierarchy of values: (i) vendor-specific objective evidence of fair value; (ii) third-party evidence of selling price; and (iii) best estimate of selling price ( BESP ). The BESP reflects the Company s best estimate of what the selling price would be if the deliverable was regularly sold by the Company on a stand-alone basis. The Company expects, in general, to use the BESP for allocating consideration to each deliverable. In general, the consideration allocated to each unit of accounting is then recognized as the related goods or services are