Company: MVIS
Filing Date: 2025-03-26
Form Type: 10-K
Source: 0001641172-25-000783
Chunk: 603

Company: MICROVISION, INC.
Filing Date: 2025-03-26
Form: 10-K
Item: Item 8
Chunk 603
---

Company evaluates all conversion, redemption, and put features contained in its debt instruments to determine if there are any embedded
features that require bifurcation as a derivative. The Company accounts for debt as a long-term liability, with the current portion classified
as a short-term liability, equal to the amount repayable at maturity, net of any debt discount and issuance costs, within notes payable
on the consolidated balance sheets. The debt discount and issuance costs are amortized over the term of the Note, using the effective
interest method, as interest expense in the accompanying consolidated statements of operations. Conversions of principal are accounted
for in accordance with ASC 470-20, “Debt with Conversion and Other Options,” with immediate expense of the unamortized discount
associated with the converted principal.

Derivative
Liability

The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded
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