Company: MVIS
Filing Date: 2025-03-26
Form Type: 10-K
Source: 0001641172-25-000783
Chunk: 349

Company: MICROVISION, INC.
Filing Date: 2025-03-26
Form: 10-K
Item: Item 3
Chunk 349
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, 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 manufacture
of these products. Indirect costs include labor, manufacturing overhead, and other costs associated with manufacturing activities. Manufacturing
overhead includes the costs of procuring, inspecting and storing material, facility and other costs, and is allocated to cost of product
revenue based on the proportion of indirect labor which supported production activities. The cost of product revenue can fluctuate significantly
from period to period, depending on product mix and volume, the level of manufacturing overhead expense and the volume of direct material
purchased.

Cost
of Contract Revenue

Cost
of contract revenue includes both direct and allocated indirect costs of performing work on contracts and producing prototype units and
evaluation kits. Direct costs include labor, materials and other costs incurred directly in producing prototype units and evaluation
kits or performing work on a contract. Indirect costs include labor and other costs associated with research and development and building
technical capabilities and capacity. Cost of contract revenue is determined by the level of direct and indirect costs incurred, which
can fluctuate substantially from period to period.

Manufacturing
overhead, which includes the costs of procuring, inspecting and storing material, and facility and depreciation costs, is allocated to
inventory, cost of product revenue, cost of contract revenue, and research and development expense based on the level of effort supporting
production or research and development activity.

Concentration
of Credit Risk

Financial
instruments that