Long-term contracts - Note 3

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Long-term contracts - Note 3

3. LONG-TERM CONTRACTS

In April 2017, we signed a contract with a major technology company to develop an LBS display system. Under this agreement, we would develop a new generation of MEMS, ASICs and related firmware for a high resolution, LBS-based product that the technology company is planning to produce. We would receive up to $24.0 million, including $14.0 million in fees for development work that is expected to span through the first quarter of 2019 and an upfront payment of $10.0 million, which payment has been received. As of December 31, 2017, we have received $4.0 million in fees for development work. The remaining development fees would be paid contingent on completion of milestones in 2018 and the first quarter of 2019. Upon successful completion of the development program, if the company decides to manufacture the product with the MicroVision display components, the $10.0 million upfront payment would be applied as a discount to future component purchases from us. If the contract is terminated by the technology company for our failure to meet milestones, the $10.0 million upfront payment is subject to repayment.

In March 2015, we signed a license agreement with Sony for our PicoP® scanning technology. The license agreement granted Sony a non-exclusive license to our technology to incorporate into display modules it manufactures and sells for up to eight years. As part of the agreement, we received an $8.0 million upfront license fee in March 2015, and we will receive ongoing per unit royalties for each display module it sells.

The following table summarizes the costs incurred on our revenue contracts (in thousands):

		December 31,
		2017		2016
Costs and estimated earnings incurred on uncompleted contracts	$	4,680	$	193
Billings on uncompleted contracts		(4,005)		(236)
	$	675	$	(43)
Included in consolidated balance sheets under the following captions:
Costs and estimated earnings incurred on uncompleted contracts	$	680	$	125
Billings on uncompleted contracts in excess of related costs		(5)		(168)
	$	675	$	(43)