Company: MVIS
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001641172-25-009765
Chunk: 139

Company: MICROVISION, INC.
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 1
Chunk 139
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6.
NOTES PAYABLE AND DERIVATIVE LIABILITY

Background

On
October 14, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) for the purchase of
senior secured convertible notes (the “Note”) with an institutional investor (the “Holder”). The principal amount
for the initial note is $45.0 million (the “Initial Principal Amount”), with an option for the Company to issue additional
principal in the amount of $30.0 million (the “Additional Principal Amount” and, together with the Initial Principal Amount,
the “Principal Amount”) of convertible notes to the Holder, subject to certain limitations. On October 23, 2024, the Purchase
Agreement closed and the Note was issued for net proceeds of approximately $38.1 million, inclusive of all discounts, fees, and expenses
related to the transaction.

On
December 30, 2024, pursuant to the terms of the Note, the Holder elected to convert $1.8 million of outstanding principal into 2,345,068
shares of the Company’s common stock.

On
February 3, 2025, the Company entered into a Letter Agreement with the Holder related to the Note. As a result of the Letter Agreement,
the Holder elected to early convert $8.8 million of outstanding principal into 11,725,337 shares of the Company’s common stock.
Additionally, as a result of the Letter Agreement, the Holder agreed to defer $11.6 million of principal repayments to seven monthly payments
of $1.7 million beginning on September 1, 2025 and concluding on March 1, 2026. The Letter Agreement represents a modification requiring
extinguishment accounting in accordance with ASC 470. As a result of the modification, a realized loss on debt modification of $4.7 million
and interest expense of $2.1 million were recorded on the condensed consolidated statement of operations.

    13

Components

The
Note is a convertible debt instrument with multiple redemption, conversion, and put features. Certain features qualify as embedded
derivatives requiring bifurcation. Therefore, the bifurcated features are accounted for separately as a compound embedded derivative
in accordance with ASC 815, “Derivatives and Hedging” and