Company: MVIS
Filing Date: 2025-03-26
Form Type: 10-K
Source: 0001641172-25-000783
Chunk: 275

Company: MICROVISION, INC.
Filing Date: 2025-03-26
Form: 10-K
Item: Item 2
Chunk 275
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 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.

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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 606). For
contracts which require the input method of revenue recognition, the determination of the total cost expected to complete the performance
obligation(s) involves significant judgment. Management initially estimates the resources required to complete each relevant performance
obligation, and incorporates revisions to hour and cost estimates throughout the course of the contract as necessary.

Cost
of Product Revenue

Cost
of product revenue includes the direct and allocated indirect costs of products sold to customers. Direct costs include labor, materials,
reserves for estimated warranty expenses, and other costs incurred directly, or charged by contract manufacturers in the