Company: MVIS
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0001641172-25-022632
Chunk: 135

Company: MICROVISION, INC.
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 2
Chunk 135
---
.1  
     (1,565) 
     (55.3)

Cost
of revenue includes both direct and allocated indirect costs of products and services sold to customers. Direct costs include labor,
materials, reserves for estimated warranty expenses, and other costs incurred directly, or charged to us by our contract manufacturers,
in the manufacture of these products. Indirect costs include labor, overhead, and other costs associated with operating our manufacturing
capabilities and our research and development department. Overhead includes the costs of procuring, inspecting and storing material,
facility and other costs, and is allocated to cost of revenue based on the proportion of indirect labor which supported revenue activities.

Cost
of revenue can fluctuate significantly from period to period, depending on the product mix and volume, the level of overhead expense
and the volume of direct material purchased. The decrease in cost of revenue for the three and six months ended June 30, 2025 compared
to the same periods in 2024 was primarily due to decreased revenue and the revenue mix.

Research
and Development Expense

    (in thousands) 
    2025  
    2024  
    $
    change  
    %
    change 
  
    Three Months Ended June 30, 
    $7,658  
    $14,204  
    $(6,546) 
     (46.1)
  
    Six Months Ended June 30, 
     15,061  
     31,515  
     (16,454) 
     (52.2)

Research
and development expense consists of compensation related costs of employees and contractors engaged in internal research and product
development activities, direct material to support development programs, laboratory operations, outsourced development and processing
work, and other operating expenses. We assign our research and development resources based on the business opportunity of the available
projects, the skill mix of the resources available and the contractual commitments we have made to our customers. We believe that a substantial
level of continuing research and development expense will be required to further develop our scanning technology.

The
decrease in research and development expense during the three months ended June 30, 2025 compared to the same period in 2024 was primarily
due to lower salary and benefits expense of $2.7 million, lower restructuring charges of $2.6 million, lower purchased services of $0.5
million, lower direct materials and equipment costs of $0.3 million,