Company: MVIS
Filing Date: 2025-03-26
Form Type: 10-K
Source: 0001641172-25-000783
Chunk: 53

Company: MICROVISION, INC.
Filing Date: 2025-03-26
Form: 10-K
Item: Item 1A
Chunk 53
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derivatives in accordance with ASC 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted
for as liabilities, the derivative instrument is initially recorded at its fair value on the issuance date and is then re-valued at each
reporting date, with changes in the fair value reported as an unrealized gain or loss in earnings on the consolidated statements of operations.
The Company has elected to classify the entirety of its derivatives in current liabilities.

    41

Revenue
Recognition

The
following is a description of principal activities from which the Company generates revenue. Revenues are recognized when control of
the promised goods or services are transferred to customers, in an amount that reflects the consideration that the Company expects to
receive in exchange for those goods or services.

The
Company evaluates contracts based on the 5-step model as stated in Topic 606 as follows: (i) identify the contract, (ii) identify the
performance obligations, (iii) determine the transaction price, (iv) allocate the transaction price, and (v) recognize revenue when (or
as) performance obligations are satisfied.

A
contract contains a promise (or promises) to transfer goods or services to a customer. A performance obligation is a promise (or a group
of promises) that is distinct, as defined in the revenue standard.

The
transaction price is the amount of consideration an entity expects to be entitled to from a customer in exchange for providing the goods
or services. A number of factors should be considered to determine the transaction price, including whether there is variable consideration,
a significant financing component, noncash consideration, or amounts payable to the customer. The determination of variable consideration
will require a significant amount of judgment. In estimating the transaction price, the Company will use either the expected value method
or the most likely amount method.

The
transaction price is allocated to the separate performance obligations in the contract based on relative standalone selling prices. Determining
the relative standalone selling price can be challenging when goods or services are not sold on a standalone basis. The revenue standard
sets out several methods that can be used to estimate a standalone selling price when one is not directly observable. Allocating discounts
and variable consideration must also be considered. Allocating the transaction price can require significant judgement on the Company’s
part.

Revenue
is recognized when (or as) the customer obtains control of the good or service/performance obligations are satisfied. Topic 606 provides
guidance to help determine if a performance obligation is