Company: MVIS
Filing Date: 2025-03-26
Form Type: 10-K
Source: 0001641172-25-000783
Chunk: 29

Company: MICROVISION, INC.
Filing Date: 2025-03-26
Form: 10-K
Item: Item 1A
Chunk 29
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 offset by the sale of sensors to an existing industrial customer for agricultural equipment and
service parts, an increase in shipments of MOVIA L sensors to Daimler Truck North America and affiliates as part of their RFQ evaluation
process, and increased sales to a second industrial customer.

25

Cost
of revenue

    2024  
    %
    of revenue  
    2023  
    %
    of revenue  
    $
    change  
    %
    change 
  
    (In thousands) 

    Cost of revenue 
    $7,530  
     160.3  
    $2,772  
     38.2  
    $4,758  
     171.6 

Cost
of revenue includes the 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.
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 increase in cost of revenue for the year ended December 31, 2024 compared to the same
period in 2023 was primarily due to inventory write-downs primarily associated with older configurations of the MOVIA L sensors.

Research
and development expense

    2024  
    2023  
    $
    change  
    %
    change 
  
    (In thousands) 

    Research and development expense 
    $49,015  
    $56,707  
    $(7,692) 
     (13.6)

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