Company: KWIK
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001683168-25-002055
Chunk: 656

Company: KwikClick, Inc.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 8
Chunk 656
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in which its software platform gets integrated into a customer’s own website. These custom design services are performed over a
specified term for a fixed monthly fee. Revenue under these arrangements are recognized ratably over the contract term as the Company
performs design, monitoring, and on-going maintenance and update services.

Applicable sales commissions paid in connection with
contracts exceeding one year are capitalized and amortized over the contract term. During the years ended December 31, 2024 and 2023 the
Company did not incur material sales commissions.

Return Allowances

The fees earned by the Company are subject to returns
under similar terms as set by the third-party services using the Company’s software platform. The Company does not assume
responsibility for refund or replacement of product costs. Return allowances, which reduce revenue and cost of sales, are estimated
using historical experience. During the years ended December 31, 2024 and 2023, the Company did not incur material returns.

Cost of Sales

Cost of sales primarily consist of commissions paid
to third party influencers and consumers. Payment processing and related transaction costs, including those associated with seller transactions,
are classified in general and administrative expenses on our consolidated statements of operations.

Stock-Based Compensation

Stock-based compensation costs for eligible employees
and non-employees are measured at fair value on the date of grant. Compensation expense is recognized over the award’s requisite
service period on a straight-line basis.

The Company does not estimate forfeitures when determining
the fair value of stock-based awards, rather forfeitures of non-vested awards are recognized in the periods in which they occur.

     F-8 

Fair Value Measurements

US GAAP define fair value as the price that would
be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in
an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires
an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to
measure fair value is defined as follows:

Level 1 – Quoted prices in active markets for
identical assets or liabilities.

Level 2 – Observable inputs, other than Level
1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level