Company: MVIS
Filing Date: 2025-03-26
Form Type: 10-K
Source: 0001641172-25-000783
Chunk: 202

Company: MICROVISION, INC.
Filing Date: 2025-03-26
Form: 10-K
Item: Item 1C
Chunk 202
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License
and royalty revenue consists of revenue from the licensing of various software and intellectual property owned by MicroVision, and any
royalties generated from their use in products sold by customers.

Software
licenses sold are either a license to install and use, whether perpetual or fixed-term, or a license to access the software, which is
normally a volume-based license. Revenue from licenses to install is recognized at the point when the customer is granted the ability
to install the software, as these licenses represent functional intellectual property with significant standalone functionality. Revenue
from licenses to access is recognized over the period of time in which the Company has ongoing obligations under the agreement, as these
licenses represent symbolic intellectual property, which exclude significant standalone functionality. Revenue recognized each period
is based on the appropriate measure of progress, typically being the number of usage hours consumed.

Revenue
from sales-based royalties is recognized based on reports provided by customers which identify the number of royalty-bearing products
sold or otherwise distributed. For any customers that fail to provide timely reports, management estimates the number of royalty-bearing
products sold based on historical sales volume and available forecast data.

    42

Contract
Revenue

Contract
revenue in a particular period is dependent upon when the contract is entered into, the value of the contract, and the availability of
technical resources to perform work on the contract. Each performance obligation associated with development contracts is identified
at contract inception. The contracts generally include product development and customization specified by the customer. For contracts
with multiple product development or customization components, each component is evaluated to determine whether it is distinct within
the context of the contract and represents a standalone performance obligation. Components which are deemed not distinct at contract
inception are combined into a single performance obligation.

Development
contracts are primarily fixed-fee contracts. Contract revenue is recognized either at a point in time, or over time, depending upon the
characteristics of the individual contract. If control of the deliverable(s) passes to the customer over time, the revenue is recognized
in proportion to the transfer of control. If control passes to the customer only upon completion and transfer of the asset, revenue is
recognized upon completion of the contract. For contracts which include significant customer acceptance provisions, revenue is recognized
only upon acceptance of the deliverable(s).

If
control of deliverables passes to the customer over time, revenue is recognized based on the proportion of total cost expended to the
total cost expected to complete the contract performance obligation (defined as the ‘input method’ under Topic