UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

---

FORM 10-Q

---

[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ________to _________

Commission file number    0-21221



Microvision, Inc.



|Delaware                                                       | 91-1600822                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

6222 185th Avenue NE
Redmond, Washington      98052

(425) 936-6847

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file reports), and (2) has been subject to such filing
requirements for the past 90 days.  YES    x NO     ̈

Indicate by check mark whether the registrant has submitted electronically and posted
on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).  YES     ̈ NO     ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company"
in Rule 12b-2 of the Exchange Act. (Check one):

|Large accelerated filer      ̈ | Accelerated filer    x | Non-accelerated filer     ̈ (Do not check if a smaller reporting company) | Smaller reporting company     ̈
|----------------------------- | ---------------------- | ------------------------------------------------------------------------ | ------------------------------

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Securities Exchange Act of 1934). YES     ̈ NO    x

As of October 26, 2009, 77,273,000 shares of the Company's common stock, $0.001 par value, were outstanding.






|                                                                                                                          | Page
|------------------------------------------------------------------------------------------------------------------------- | ----
|Part I: Financial Information                                                                                             |     
|Item 1.  Financial Statements:                                                                                            |     
|                                                                                                                          |     
|Consolidated Balance Sheets as of  September 30, 2009 and
December 31, 2008 (unaudited)                                   | 3   
|Consolidated Statements of Operations for the three and nine
months ended September 30, 2009 and 2008 (unaudited)         | 4   
|Consolidated Statements of Comprehensive Loss
for the three and nine months ended September 30, 2009 and 2008 (unaudited) | 5   
|Consolidated Statements of Cash Flows for the nine
months ended September 30, 2009 and 2008 (unaudited)                   | 6   
|Notes to Consolidated Financial Statements
(unaudited)                                                                    | 8   
|                                                                                                                          |     
|Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations                            | 13  
|Item 3.  Quantitative and Qualitative Disclosures About Market
Risk                                                       | 19  
|Item 4.  Controls and Procedures                                                                                          | 19  
|                                                                                                                          |     
|Part II: Other Information                                                                                                |     
|Item 1A. Risk Factors                                                                                                     | 20  
|Item 4. Submission of Matters to a Vote of Security Holders                                                               | 26  
|Item 6.  Exhibits                                                                                                         | 26  
|Signatures                                                                                                                | 27  
|Exhibit Index                                                                                                             | 28  

---



Microvision, Inc.

                    Consolidated Balance Sheet

                  (In thousands, except per share data)

                            (Unaudited)

`September 30,   December 31,
                                                                                       2009           2008
                                                                                   -------------  -------------
Assets                                                                                                         
Current assets
   Cash and cash equivalents                                                      $      17,759  $      25,533
   Investment securities, available-for-sale                                              2,716          2,705
   Accounts receivable, net of allowances of $56 and $57                                    545            537
   Costs and estimated earnings in excess of billings on uncompleted contracts              242            695
   Inventory                                                                                642          1,525
   Other current assets                                                                     568            889
                                                                                   -------------  -------------
   Total current assets                                                                  22,472         31,884

Property and equipment, net                                                               3,895          3,701
Restricted investments                                                                    1,332          1,332
Other assets                                                                                 53             47
                                                                                   -------------  -------------
   Total assets                                                                   $      27,752  $      36,964
                                                                                   =============  =============
                                                                                                               
Liabilities and Shareholders' Equity                                                                           
Current liabilities
   Accounts payable                                                               $       3,390  $       3,487
   Accrued liabilities                                                                    3,289          3,545
   Billings in excess of costs and estimated earnings on uncompleted contracts               47             62
   Liability associated with common stock warrants                                        3,379            331
   Current portion of capital lease obligations                                              71             41
   Current portion of long-term debt                                                         76             71
                                                                                   -------------  -------------
   Total current liabilities                                                             10,252          7,537
Capital lease obligations, net of current portion                                           165             45
Long-term debt, net of current portion                                                      264            322
Deferred rent, net of current portion                                                     1,156          1,409
                                                                                   -------------  -------------
   Total liabilities                                                                     11,837          9,313
                                                                                   -------------  -------------
Commitments and contingencies                                                                --             --

Shareholders' equity
   Common stock, par value $.001; 125,000 shares authorized;
       76,668 and 68,080 shares issued and outstanding                                       77             68
   Additional paid-in capital                                                           338,690        319,662
   Accumulated other comprehensive loss                                                     (27)           (38)
   Accumulated deficit                                                                 (322,825)      (292,041)
                                                                                   -------------  -------------
   Total shareholders' equity                                                            15,915         27,651
                                                                                   -------------  -------------
   Total liabilities and shareholders' equity                                     $      27,752  $      36,964
                                                                                   =============  =============`

The accompanying notes are an integral part of these financial statements.

---



Microvision, Inc.

                     Consolidated Statement of Operations

                  (In thousands, except per share data)

                            (Unaudited)

`Three Months Ended       Nine Months Ended
                                                                                   September 30,           September 30,
                                                                             ----------------------  ----------------------
                                                                                2009        2008        2009        2008
                                                                             ----------  ----------  ----------  ----------
Contract revenue                                                            $      817  $      480  $    2,342  $    3,767
Product revenue                                                                    107         414         520       1,319
                                                                             ----------  ----------  ----------  ----------
    Total revenue                                                                  924         894       2,862       5,086
                                                                             ----------  ----------  ----------  ----------
Cost of contract revenue                                                           379         253       1,289       1,389
Cost of product revenue                                                            720         356       1,504       1,224
                                                                             ----------  ----------  ----------  ----------
    Total cost of revenue                                                        1,099         609       2,793       2,613
                                                                             ----------  ----------  ----------  ----------
Gross margin (loss)                                                               (175)        285          69       2,473
                                                                             ----------  ----------  ----------  ----------


Research and development expense                                                 5,839       5,804      17,165      16,111
Sales, marketing, general and administrative expense                             3,283       3,456      10,764      11,694
                                                                             ----------  ----------  ----------  ----------
    Total operating expenses                                                     9,122       9,260      27,929      27,805
                                                                             ----------  ----------  ----------  ----------
Loss from operations                                                            (9,297)     (8,975)    (27,860)    (25,332)
Interest income                                                                     45         271         188         962
Interest expense                                                                   (19)        (11)        (50)        (36)
Impairment of investment securities, available-for-sale                             --        (300)         --        (300)
Gain (loss) on derivative instruments, net                                      (2,246)        585      (3,048)      2,004
Other expense                                                                       (8)        (13)        (14)        (45)
                                                                             ----------  ----------  ----------  ----------
Net loss                                                                    $  (11,525) $   (8,443) $  (30,784) $  (22,747)
                                                                             ==========  ==========  ==========  ==========

Net loss per share - basic and diluted                                      $    (0.15) $    (0.13) $    (0.43) $    (0.38)
                                                                             ==========  ==========  ==========  ==========

Weighted-average shares outstanding - basic and diluted                         76,265      64,879      71,105      59,483
                                                                             ==========  ==========  ==========  ==========`

The accompanying notes are an integral part of these financial statements.

---



Microvision, Inc.

                     Consolidated Statement of Comprehensive Loss

                             (In thousands)

                            (Unaudited)

`Three Months Ended       Nine Months Ended
                                                                                   September 30,           September 30,
                                                                             ----------------------  ----------------------
                                                                                2009        2008        2009        2008
                                                                             ----------  ----------  ----------  ----------
Net loss                                                                    $  (11,525) $   (8,443) $  (30,784) $  (22,747)

Other comprehensive gain (loss)
Unrealized gain (loss) on investment securities, available-for-sale                  7         (35)         11         (74)
                                                                             ----------  ----------  ----------  ----------
Comprehensive loss                                                          $  (11,518) $   (8,478) $  (30,773) $  (22,821)
                                                                             ==========  ==========  ==========  ==========`

The accompanying notes are an integral part of these financial statements.

---



Microvision, Inc.

                    Consolidated Statement of Cash Flows

                           (In thousands)

                            (Unaudited)

`Nine Months Ended
                                                                                            September 30,
                                                                                        ----------------------
                                                                                           2009        2008
                                                                                        ----------  ----------
Cash flows from operating activities                                                                          
    Net loss                                                                           $  (30,784) $  (22,747)
    Adjustments to reconcile net loss to net cash used in operations:
        Depreciation                                                                          819         746
        Non-cash stock-based compensation expense                                           2,689       2,150
        Loss (gain) on derivative instruments, net                                          3,048      (2,004)
        Impairment of short-term investment securities                                         --         300
        Inventory write-downs                                                                 978          --
        Allowance for receivables from related parties                                         --        (240)
        Net accretion of discount on short-term investments                                    --         (99)
        Non-cash deferred rent                                                               (207)       (206)
        Change in:
            Accounts receivable, net                                                           (8)      1,716
            Costs and estimated earnings in excess of billings on uncompleted contracts       453         434
            Inventory                                                                         (95)     (1,045)
            Other current assets                                                              298          55
            Other assets                                                                       (6)         (1)
            Accounts payable                                                                 (286)        298
            Accrued liabilities                                                              (300)       (754)
            Billings in excess of costs and estimated earnings on uncompleted contracts       (15)       (899)
                                                                                        ----------  ----------
            Net cash used in operating activities                                         (23,416)    (22,296)
                                                                                        ----------  ----------
Cash flows from investing activities                                                                          
    Sales of investment securities                                                             --      16,900
    Purchases of investment securities                                                         --        (986)
    Purchases of restricted investment securities                                              --        (350)
    Collections of receivables from related parties                                            --         240
    Purchases of property and equipment                                                      (729)       (320)
                                                                                        ----------  ----------
            Net cash provided by (used in) investing activities                              (729)     15,484
                                                                                        ----------  ---------- 
Cash flows from financing activities                                                                          
    Principal payments under capital leases                                                   (43)        (32)
    Principal payments under long-term debt                                                   (53)        (49)
    Net proceeds from issuance of common stock and warrants                                16,467      24,485
                                                                                        ----------  ----------
            Net cash provided by financing activities                                      16,371      24,404
                                                                                        ----------  ----------
Change in cash and cash equivalents                                                        (7,774)     17,592
Cash and cash equivalents at beginning of period                                           25,533      13,399
                                                                                        ----------  ----------
Cash and cash equivalents at end of period                                             $   17,759  $   30,991
                                                                                        ==========  ==========  
Supplemental disclosure of cash flow information                                                              
    Cash paid for interest                                                             $       50  $       36
                                                                                        ==========  ==========
Supplemental schedule of non-cash investing and financing activities                                          
    Property and equipment acquired under capital leases                               $       95  $       --
                                                                                        ==========  ==========
    Other non-cash additions to property and equipment                                 $      388  $       11
                                                                                        ==========  ==========`

The accompanying notes are an integral part of these financial statements.

MICROVISION, INC.
                         Notes to Consolidated Financial Statements
                         September 30, 2009
                         (Unaudited)

1.  MANAGEMENT'S STATEMENT AND PRINCIPLES OF CONSOLIDATION

Management's Statement

The Consolidated Balance Sheet as of September 30, 2009, the Consolidated
Statements of Operations and Comprehensive Loss for the three and nine months
ended September 30, 2009 and 2008 and the Consolidated Statements of Cash Flows
for the nine months ended September 30, 2009 and 2008 have been prepared by
Microvision, Inc. (the "Company" or "Microvision") and have
not been audited.  In the opinion of management, all adjustments necessary to
state fairly the financial position at September 30, 2009 and the results of
operations, comprehensive loss and cash flows for all periods presented have
been made and consist of normal recurring adjustments.  Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules of the SEC.  You should read these condensed
financial statements in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2008.  The results of operations for the nine months ended
September 30, 2009 are not necessarily indicative of the operating results that
may be attained for the entire fiscal year.

At September 30, 2009, Microvision
had $20.5 million in cash, cash equivalents and investment securities,
available-for-sale.  Microvision's operating plan for 2009 and 2010 includes the
launch of its first accessory product, further development of its PicoP display
engine for embedded applications and further development of automotive head-up
display (HUD) and eyewear applications.  In order to fully fund the Company's
operating plan for 2010, the Company will require additional capital.  The
Company plans to obtain additional cash through the issuance of equity or debt
securities.  There can be no assurance that additional cash will be available or
that, if available, it will be available on terms acceptable to the Company on a
timely basis.  If adequate funds are not available by January 2010, the Company
intends to consider reducing the scope of its business to extend its operations
as it pursues other financing opportunities and business relationships.  This
reduction in scope could include delaying development projects resulting in
reductions in staff, operating costs, capital expenditures and investment in
research and development.  With these adjustments to its operating plan the
Company believes that it currently has sufficient cash, cash equivalents, and
investment securities to fund operations into June 2010.

2.  NET LOSS PER SHARE

Basic net loss per share is calculated on the basis of the weighted-average
number of common shares outstanding during the reporting periods.  Diluted net
loss per share is calculated on the basis of the weighted-average number of
common shares outstanding and taking into account the dilutive effect of all
potential common stock equivalents outstanding.  Potentially dilutive common
stock equivalents primarily consist of warrants, employee stock options and
nonvested equity shares.  Diluted net loss per share for the three and nine
months ended September 30, 2009 and 2008 is equal to basic net loss per share
because the effect of all potential common stock outstanding during the periods,
including options, warrants and nonvested equity shares is anti-dilutive.  The
components of basic and diluted net loss per share were as follows (in
thousands, except loss per share data):

`Three Months Ended           Nine Months Ended
                                                                                  September 30,              September 30,
                                                                          --------------------------  --------------------------
                                                                              2009          2008          2009          2008
                                                                          ------------  ------------  ------------  ------------
Numerator:
Net loss available for common shareholders - basic and diluted           $    (11,525) $     (8,443) $    (30,784) $    (22,747)
                                                                          ============  ============  ============  ============

Denominator:
Weighted-average common shares outstanding - basic and diluted                 76,265        64,879        71,105        59,483
                                                                          ============  ============  ============  ============

Net loss per share - basic and diluted                                   $      (0.15) $      (0.13) $      (0.43) $      (0.38)
                                                                          ============  ============  ============  ============`

On September 30, 2009 and 2008, the Company excluded the following
convertible securities from diluted net loss per share as the effect of
including them would have been anti-dilutive: options and warrants convertible
into a total of 19,784,000 and 16,464,000 shares of common stock, respectively,
and 410,000 and 125,000 shares of nonvested equity shares, respectively.

3.  CASH EQUIVALENTS, INVESTMENT SECURITIES AVAILABLE-FOR-SALE AND FAIR VALUE
MEASUREMENTS

The Company accounts for cash equivalents and investment securities in
accordance with the provisions of Statement of Financial Accounting Standards
(FAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities (FAS 115) (FASB Accounting Standards Codification -
"ASC" 320)and FAS Board Staff Position (FSP) No. FAS 115-2 and FAS
124-2, Recognition and Presentation of Other-Than-Temporary Impairments(ASC 320).  FAS 115(ASC 320) addresses the accounting and reporting
for investments in equity securities that have readily determinable fair values
and debt securities.  FSP FAS 115-2 and FAS 124-2(ASC 320) provides
guidance on accounting and presentation of investments with other-than-temporary
impairments.  The Company adopted FSP FAS 115-2 and FAS 124-2 (ASC 320)
effective April 1, 2009.  The Company applies guidance in FAS No. 157, Fair
Value Measurements (FAS 157) (ASC 820) and FSP FAS 157-4, Determining Fair
Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That
Are Not Orderly (ASC 820) when
estimating fair values of its cash equivalents, investment securities and
liability associated with common stock warrants.  FAS 157 (ASC 820) and FSP FAS
157-4 (ASC 820) address estimating fair values and related disclosures.  The
Company adopted FAS 157 (ASC 820) on January 1, 2008 for financial assets and liabilities
and for nonfinancial assets and liabilities measured at fair value on a
recurring basis.  It elected to defer the adoption of FAS 157 (ASC 820) for
nonfinancial assets and liabilities accounted for on a nonrecurring basis until
January 1, 2009 as permitted by FSP No. FAS 157-2, Effective Date of FAS
157(ASC 820).  Neither of the two stages of adopting FAS 157 (ASC 820) resulted in a
material impact on the Company's consolidated financial position, results of
operations or cash flows.

As of September 30, 2009, the Company held $3.0 million par value student
loan auction rate securities (SLARS), fair valued at $2.7 million.  The SLARS
owned by the Company are investment grade long-term bonds with variable interest
rate resets, purchases and sales to be determined via a Dutch Auction process
every 28 days.  They were issued to fund U.S. government guaranteed student
loans.  Beginning in February 2008 as global credit markets significantly
deteriorated, insufficient clearing bids have been submitted for the SLARS. In
accordance with the bond terms, the interest rates have been reset to
"maximum rates" instead of "auction rates."  Since that
time, the SLARS have been illiquid through the auction process and secondary
markets.

The valuation inputs hierarchy classification for assets and liabilities
measured at fair value on a recurring basis are summarized below as of September
30, 2009:

`Level 1       Level 2       Level 3        Total
                                               ------------  ------------  ------------  ------------
Assets
    Corporate debt and equity securities      $         --  $     16,000  $         --  $     16,000
    Auction-rate securities                             --            --     2,700,000     2,700,000
                                               ------------  ------------  ------------  ------------
                                              $         --  $     16,000  $  2,700,000  $  2,716,000
                                               ============  ============  ============  ============
Liabilities
    Liability associated with
        common stock warrants                               $  3,379,000                $  3,379,000
                                                             ============                ============`

The corporate debt securities and liability associated with common stock
warrants are classified within Level 2 of the fair value hierarchy because they
are valued using valuation inputs and common methods with sufficient levels of
transparency and observability.  The SLARS are classified in Level 3 of the fair
value hierarchy because of the significance of sufficiently unobservable
assumptions and inputs developed by the Company and used in the valuations.

The following table summarizes the activity for those financial assets where
fair value measurements are estimated utilizing Level 3 inputs:

`Balance, December 31, 2008                      $2,700,000
Transfer to (from) Level 3, September 30, 2009          --
Recognized loss included in earnings                    --
                                                 ----------
Balance, September 30, 2009                     $2,700,000
                                                 ==========`

The Company's investments and liability associated with common stock warrants
are summarized below as of September 30, 2009 and December 31, 2008:

`Classification on Balance Sheet
                                                                                             ----------------------------------------------
                                                                                                                                 Liability
                                                                                                                                Associated
                                                                                                         Investment                With
                                              Cost/       Gross       Gross                              Securities,   Other      Common
                                            Amortized   Unrealized  Unrealized   Estimated      Cash     Available-   Current      Stock
                                              Cost        Gains       Losses    Fair Value   Equivalents  For-Sale    Assets     Warrants
                                           -----------  ----------  ----------  -----------  ----------  ----------  ---------  -----------
As of September 30, 2009:
  Assets
    Corporate debt and equity securities  $    43,000  $       --  $  (27,000) $    16,000  $       --  $   16,000  $      --
    Auction rate securities                 2,700,000          --          --    2,700,000          --   2,700,000         --
                                           -----------  ----------  ----------  -----------  ----------  ----------  ---------
                                          $ 2,743,000  $       --  $  (27,000) $ 2,716,000  $       --  $2,716,000  $      --
                                           ===========  ==========  ==========  ===========  ==========  ==========  =========
  Liabilities
    Liability associated with
       common stock warrants                                                   $ 3,379,000                                     $ 3,379,000
                                                                                ===========                                     ===========


                                                                                                     Classification on Balance Sheet
                                                                                             ----------------------------------------------
                                                                                                                                 Liability
                                                                                                                                Associated
                                                                                                         Investment                With
                                              Cost/       Gross       Gross                              Securities,   Other      Common
                                            Amortized   Unrealized  Unrealized   Estimated      Cash     Available-   Current      Stock
                                              Cost        Gains       Losses    Fair Value   Equivalents  For-Sale    Assets     Warrants
                                           -----------  ----------  ----------  -----------  ----------  ----------  ---------  -----------
As of December 31, 2008:
  Assets
    Corporate debt and equity securities  $ 5,022,000  $       --  $  (38,000) $ 4,984,000  $4,979,000  $    5,000  $      --
    Auction rate securities                 2,700,000          --          --    2,700,000          --   2,700,000         --
                                           -----------  ----------  ----------  -----------  ----------  ----------  ---------
                                          $ 7,722,000  $       --  $  (38,000) $ 7,684,000  $4,979,000  $2,705,000  $      --
                                           ===========  ==========  ==========  ===========  ==========  ==========  =========
  Liabilities
    Liability associated with
        common stock warrants                                                  $   331,000                                     $   331,000
                                                                                ===========                                     ===========`

As of September 30, 2009, the unrealized losses on the Company's investments
in equity securities were due primarily to declines in the stock prices of the
equity securities.  The realized gains and losses resulting from the liability
associated with common stock warrants were primarily due to changes in the
Microvision stock price and decreasing terms to expiration.  The maturities of
the debt investment securities available-for-sale as of September 30, 2009 are
greater than 5 years.

The guidance in FAS 115-2 (ASC 320) requires that impairments determined to
be other than temporary be classified into one of two categories,
"credit" or "other factors".  Upon adoption, one is to apply
this guidance on an as-if basis to investments currently held.
As of September 30, 2008, based on continuing low market liquidity and
auction failures with significant uncertainty as to when such conditions would
improve, the Company determined that the estimated fair value of the SLARS no
longer approximated par value, and the impairments were other-than-temporary.
An "impairment of investment securities, available-for-sale" of $300,000 was
recorded on the consolidated statement of operations.  The Company used a
discounted cash flow model, with rates adjusted for liquidity, to determine that
the present value of estimated cash collections was less than the adjusted cost.
Upon adopting FAS 115-2 (ASC 320) effective April 1, 2009, the other-than-temporary-impairment
that was recorded during the period ended September 30,
2008 was categorized as credit type and no transition adjustments were recorded.

The Company's significant nonfinancial assets and liabilities that are
subject to consideration for recognition and disclosure at fair value in the
financial statements on a nonrecurring basis primarily include property and
equipment, capital lease obligations, a tenant improvement loan agreement and
deferred rent.  If the Company concludes there has been an event indicating the
potential impairment of a nonfinancial asset or liability, or periodically if no
such indicating event is deemed to have occurred, it utilizes guidance contained
in FAS 157 (ASC 820) to determine the fair value, test for the existence of an
impairment, and record significant impairments in the period of determination.

4.  INVENTORY

Inventory at September 30, 2009 and December 31, 2008 consisted of the
following:

`September 30,  December 31,
                                                                              2009          2008
                                                                          ------------  ------------                            
Raw materials                                                         $        242,000  $     45,000
Finished goods                                                                 400,000     1,480,000
                                                                          ------------  ------------
                                                                      $        642,000  $  1,525,000
                                                                          ============  ============`

The inventory at September 30, 2009 consisted of raw materials and finished
goods for SHOWWX, the Company's accessory projector and ROV, the Company's hand-
held barcode scanner.  The inventory at December 31, 2008 consisted of raw
materials and finished goods for ROV, the Company's hand-held bar code scanner.
Inventory is stated at the lower of cost or market, with cost determined on a
weighted-average basis.  Management periodically assesses the need to provide
for obsolescence of inventory and adjusts the carrying value of inventory to its
net realizable value when required.  In addition, Microvision reduces the value
of its inventory to its estimated scrap value when management determines that it
is not probable that the inventory will be consumed through normal production
during the next twelve months.  As a result of lower than planned ROV revenue
the Company recorded an additional write down of ROV inventory of $638,000
during the quarter ended September 30, 2009 and reduced its investment in ROV
sales and marketing.

5.  SHARE-BASED COMPENSATION

The Company accounts for stock-based employee compensation arrangements in
accordance with the provisions of Statement of FAS No. 123, as revised December
2004 (FAS 123(R)) (ASC 718). The Company accounts for equity instruments issued
to non-employees in accordance with the provisions of Emerging Issues Task Force
Issue No. 96-18 (ASC 505) and FAS No. 123 (ASC 718). The following table shows
the amount of stock-based employee compensation expense included in the
Consolidated Statements of Operations:

`Three Months Ended            Nine Months Ended
                                                                                 September 30,               September 30,
                                                                          --------------------------  --------------------------
                                                                              2009          2008          2009          2008
                                                                          ------------  ------------  ------------  ------------
Cost of contract revenue                                                 $     18,000  $      7,000  $     90,000  $     71,000
Cost of product revenue                                                         2,000         4,000        16,000        16,000
Research and development expense                                              239,000       167,000       950,000       614,000
Sales, marketing, general and administrative expense                          434,000       355,000     1,578,000     1,435,000
                                                                          ------------  ------------  ------------  ------------
Share-based employee compensation cost charged against income            $    693,000  $    533,000  $  2,634,000  $  2,136,000
                                                                          ============  ============  ============  ============`

Options Activity and Positions

The following table summarizes shares, weighted average exercise price,
weighted average remaining contractual term and aggregate intrinsic value of
options outstanding and options exercisable as of September 30, 2009:

`Weighted
                                                                  Average
                                                      Weighted   Remaining
                                                       Average  Contractual   Aggregate
                                                      Exercise      Term      Intrinsic
Options                                  Shares         Price     (years)       Value
---------------------------------------- -----------  --------- ------------  ----------
Outstanding as of September 30, 2009      8,706,000  $    3.55          7.2  $21,910,000

Exercisable as of September 30, 2009      5,074,000  $    4.22          6.3  $11,363,000`

As of September 30, 2009, the Company's unamortized share-based compensation
was $4,385,000.  The Company plans to amortize this share-based compensation
cost over the next 2.5 years.

As of September 30, 2009, the Company's unamortized nonvested equity share-based
compensation was $463,000.  The Company plans to amortize this nonvested
equity share-based compensation cost over the next 2.2 years.

6.  LIABILITY ASSOCIATED WITH COMMON STOCK WARRANTS

In March and December 2005, the Company issued warrants to purchase 2,302,000
shares of common stock.  The warrants met the definition of derivative
instruments that must be accounted for as liabilities under the provisions of
Emerging Issues Task Force Issue No. 00-19, Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock(ASC 815),because the Company cannot engage in certain
corporate transactions affecting the common stock unless it makes a cash payment
to the holders of the warrants.  The Company records changes in the fair values
of the warrants in the statements of operations each period.  In July 2008,
warrants to purchase 750,000 shares of common stock expired unexercised.  The
Company valued the remaining warrants to purchase 1,552,000 shares of common
stock at September 30, 2009 using the Black-Scholes option-pricing model with
the following assumptions: expected volatilities of 78%; expected dividend
yields of 0%; risk free interest rates of from 0.4% to 0.5%; and contractual
lives ranging from .5 year to 1.2 years.  The change in value of the warrants of
$2,246,000 for the three and $3,048,000 for the nine months ended September 30,
2009 was recorded as a non-operating loss and is included in "Gain (loss) on
derivative instruments, net" in the consolidated statements of operations.  The
Company valued the warrants at September 30, 2008 using the Black-Scholes
option-pricing model with the following assumptions:  expected volatilities of
69%; expected dividend yields of 0%; risk free interest rates ranging from 1.9%
to 2.1%; and contractual lives ranging from 1.5 years to 2.2 years.  The changes
in value of the warrants of $599,000 for the three months and $2,134,000 for the
nine months ended September 30, 2008 were recorded as non-operating gains and
are included in "Gain (loss) on derivative instruments, net" in the
consolidated statements of operations.

7.  LONG-TERM NOTES

Tenant Improvement Loan Agreement

During 2006, the Company entered into a loan agreement with the lessor of the
Company's corporate headquarters in Redmond to finance $536,000 in tenant
improvements.  The loan carries a fixed interest rate of 9% per annum, is
repayable over the initial term of the lease, which expires in 2013, and is
secured by a letter of credit.  The balance of the loan was $340,000 at
September 30, 2009.

8.  COMMON STOCK

In June 2009, the Company raised approximately $15,000,000, before issuance
costs of approximately $217,000, from the sale of 8,076,239 shares of common
stock and warrants to purchase 2,019,060 shares of its common stock to Max
Display Enterprises Limited, a subsidiary of Walsin Lihwa.  Walsin Lihwa is the
parent company of Touch Micro-system Technology Corp. (TMT).  Microvision has
worked for a number of years with both Walsin Lihwa and then TMT, as
manufacturers of Microvision's Micro-Electrical Mechanical systems (MEMS) chips.
The warrants have an exercise price of $2.1850 per share, a three year term, and
are exercisable on the date of issuance. The Company can call the warrants after
six months and once the shares are registered if the average closing bid price
of its stock is over $8.74 for any 20 consecutive trading days.  The warrants
were accounted for as permanent equity under the provisions of Emerging Issues
Task Force Issue No. 00-19, Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company's Own Stock(ASC 815).  As
of September 30, 2009, Max Display Enterprises Limited beneficially owned 12.8%
of Microvision's common stock, as determined in accordance with the rules of the
Securities Exchange Commission.

9.  WARRANTS

In September 2009, the Company raised $1,475,000 from the
exercise of warrants to purchase 451,795 shares of common stock.

10.  RECEIVABLES FROM RELATED PARTIES

In 2000, 2001 and 2002, the Board of Directors authorized the Company to
provide unsecured lines of credit to each of the Company's three officers. The
lines of credit carry interest rates of 5.4% to 6.2% and were due within one
year of the officer's termination.

In January 2006, one officer left the Company and his outstanding loans
became due in January 2007.  In May 2007, the Company foreclosed on 50,000
shares of Lumera common stock pledged as collateral for the loans.  In October
2009, the Company entered into a settlement agreement with the former officer.
The Company has received total proceeds of $237,000 to date, and the officer has
committed to make additional payments of $30,000 over the next two years.
Pursuant to the settlement agreement, all claims and counterclaims filed in the
collection lawsuit, including the previously disclosed claim by the former
officer against the Company for $15 million have been dismissed.

Another officer with outstanding loans left the Company in August 2007 and
his loans became due in August 2008.  The Company is pursuing collection of the
remaining outstanding balance from the former officer.

As of September 30, 2009 and December 31, 2008, the total amount outstanding
under the lines of credit was $410,000 and $1,851,000, respectfully, and the
balances were fully reserved.

11.  COMMITMENTS AND CONTINGENCIES

Litigation

The Company is subject to various claims and pending or threatened
lawsuits in the normal course of business.  The Company is not currently party
to any such legal proceedings that management believes would have a material
adverse effect on the Company's financial position, results of operations or
cash flows.

12.  NEW ACCOUNTING PRONOUNCEMENTS

In May 2009, the Financial Accounting Standards Board (FASB) issued SFAS
No. 165, Subsequent Events(FAS 165) (ASC 855).  This standard sets forth
the period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements, the circumstances under
which an entity should recognize events or transactions occurring after the
balance sheet date in its financial statements, and the disclosures that an
entity should make about events or transactions that occurred after the balance
sheet date.  FAS 165 is effective for fiscal years and interim periods ended
after June 15, 2009.  The Company adopted this standard during the quarter ended
June 30, 2009 and has evaluated any subsequent events through October 30, 2009,
the date of this filing.

In October 2009, the FASB issued Accounting Standards Update No. 2009-13
Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (ASU
2009-13) (ASC 605).  ASU 2009-13 provides amendments to establish a selling
price hierarchy for determining the selling price of a deliverable and expands
the disclosures required for multiple-deliverable revenue arrangements.  ASU
2009-13 becomes effective for revenue arrangements that are entered into or are
materially modified in fiscal years beginning on or after June 15, 2010, with
early adoption permitted.  The Company is currently evaluating the impact that
ASU 2009-13 will have on its financial statements.

In October 2009, the FASB issued Accounting Standards Update No. 2009-14
Software (Topic 985): Certain Revenue Arrangements That Include Software
Elements (ASU 2009-14) (ASC 985).  ASU 2009-14 excludes software from the scope
of the software revenue recognition guidance if the software is included with
tangible products and is essential to the tangible product's functionality.  ASU
2009-13 becomes effective for revenue arrangements that are entered into or are
materially modified in fiscal years beginning on or after June 15, 2010, with
early adoption permitted.  The Company is currently evaluating the impact that
ASU 2009-14 will have on its financial statements.

13.  SUBSEQUENT EVENTS

In October 2009, the Company raised $2,110,000 from the exercise of warrants
to purchase 587,332 shares of common stock.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The information set forth in this report in Item 2, "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
and Item 3, "Quantitative and Qualitative Disclosure about Market
Risk," includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and is subject to the safe harbor created by
that section.  Such statements may include, but are not limited to, projections
of revenues, income or loss, capital expenditures, plans for product development
and cooperative arrangements, future operations, financing needs or plans of
Microvision, as well as assumptions relating to the foregoing.  The words
"anticipate," "believe," "estimate,"
"expect," "goal," "may," "plan,"
"project," "will," and similar expressions identify forward-looking
statements, which speak only as of the date the statement was made.
Factors that could cause actual results to differ materially from those
projected in our forward-looking statements include the following: our ability
to obtain financing; market acceptance of our technologies and products; our
financial and technical resources relative to those of our competitors; our
ability to keep up with rapid technological change; government regulation of our
technologies; our ability to enforce our intellectual property rights and
protect our proprietary technologies; the ability to obtain additional contract
awards and to develop partnership opportunities; the timing of commercial
product launches; the ability to achieve key technical milestones in key
products; and other risk factors identified in this report under the caption
"Item 1A - Risk Factors."

Overview

We are developing high-resolution miniature display and imaging engines based
upon our technology platform.  Our technology platform utilizes our expertise in
two dimensional Micro-Electrical Mechanical systems (MEMS), lasers, optics and
electronics to create a high quality video or still image from a small form
factor device with lower power needs than conventional display technologies.

Our strategy is to develop and supply a proprietary display engine called
PicoP to potential OEM customers who will embed them into a variety of consumer
and automotive products.  The primary objective for consumer applications is to
provide users of mobile devices with a large screen viewing experience produced
by a small embedded projector. Mobile devices may include cell phones, PDA's,
gaming consoles and other consumer electronics products.  These potential
products would allow users to watch movies, play videos, display images, and
other data onto a variety of flat or curved surfaces.

We recently launched a small accessory projector that is the first commercial
product based on the PicoP display engine.  The accessory projector can display
images from a variety of video sources including cell phones, portable media
players, PDAs, gaming consoles, laptop computers, digital cameras, and other
consumer electronics products.  We are currently shipping the accessory
projector in limited quantity through our Asian based distributor.  We plan to
add distribution channels as the production capacity for our manufacturing
partner, green laser suppliers and other component suppliers increases.

The PicoP with some modification could be embedded into a vehicle or
integrated into a portable standalone aftermarket device to create a high-resolution
head-up display (HUD) that could project point-by-point navigation,
critical operational, safety and other information important to the driver or
pilot. The PicoP could be further modified to be embedded into a pair of glasses
to provide the mobile user with a see-through or occluded personal display to
view movies, play games or access other content.

Results of Operations

Contract revenue.

`% of                  % of
                                                contract              contract
                                       2009      revenue     2008      revenue   $ change  % change
(in thousands)                       ---------  ---------  ---------  ---------  --------- ---------
Three months ended September 30                                                                     
Government revenue                  $     370       45.3  $     376       78.3  $      (6)     (1.6)
Commercial revenue                        447       54.7        104       21.7        343     329.8
                                     ---------             ---------             ---------
Total contract revenue              $     817             $     480             $     337      70.2
                                     =========             =========             =========

Nine months ended September 30
Government revenue                  $   1,412       60.3  $   1,945       51.6  $    (533)    (27.4)
Commercial revenue                        930       39.7      1,822       48.4       (892)    (49.0)
                                     ---------             ---------             ---------
Total contract revenue              $   2,342             $   3,767             $  (1,425)    (37.8)
                                     =========             =========             =========`

We earn contract revenue from performance on development contracts with the
U.S. government and commercial customers and from the sale of prototype units
and evaluation kits based on our PicoP display engine.

Our contract revenue from development contracts in a particular period is
dependent upon when we enter into a contract, the value of the contracts we have
entered into, and the availability of technical resources to perform work on the
contracts.

We recognize contract revenue as work progresses on long-term, cost plus
fixed fee and fixed price contracts using the percentage-of-completion method,
which relies on estimates of total expected contract revenue and costs.  Our
revenue contracts generally include a statement of the work we are to complete
and the total fee we will earn from the contract.  When we begin work on the
contract and at the end of each accounting period, we work with the members of
our technical team to estimate the labor and material and other cost required to
complete the statement of work compared to cost incurred to date.  We use
information provided by project mangers, vendors, outside consultants and others
as we deem necessary to develop our cost estimates.  Since our contracts
generally require some level of technology development to complete, the actual
cost required to complete a statement of work can vary from our estimated cost
to complete.   We have developed processes that allow us to make reasonable
estimates of the cost to complete a contract.  Historically, we have made only
immaterial revisions in the estimates to complete the contract at each reporting
period. Recognized revenues are subject to revisions as the contract progresses
to completion and actual revenue and cost becomes certain.  Revisions in revenue
estimates are reflected in the period in which the facts that give rise to the
revision become known.  In the future, revisions in these estimates could
significantly impact recognized revenue in any one reporting period.  If the
U.S. government cancels a contract, we would receive payment for work performed
and costs committed to prior to the cancellation.

We recognize contract revenue on the sales of prototype units and evaluation
kits upon acceptance of the deliverables by the customer or expiration of the
contractual acceptance period.  While we anticipate future sales of these units,
revenue may vary substantially due to the timing of orders from customers and
potential constraints on resources.  Contract revenue was higher during the
three months ended September 30, 2009 than the same period in 2008 due to an
increase in revenue from contracts for prototype units offsetting a decrease in
development contract revenue.  Contract revenue was lower during the nine months
ended September 30, 2009 than the same period in 2008, due to reduced contract
activity and lower beginning backlog in 2009 compared to the prior year.  We
expect that we will have fewer opportunities to enter into new development
contracts as we commercialize products based on our PicoP display engine.

As long as most of our revenue is earned from performance on development
contracts, we believe there may be a high degree of variability in revenue from
quarter to quarter.

In July 2009, Microvision entered into a 9 month $1.0 million subcontract
with Lockheed Martin Corporation to supply two full-color, daylight readable,
see-through display systems as part of the U.S. government's Urban Leader
Tactical Response, Awareness & Visualization program.  Lockheed Martin holds
a prime contract with the U.S. government for development of the soldier worn
display.

Our backlog of development contracts, including orders for prototype units,
at September 30, 2009 was $103,000 compared to $336,000 at September 30, 2008,
all of which is scheduled for completion during the next twelve months.

Product revenue.

`% of                  % of
                                                 product               product
                                       2009      revenue     2008      revenue   $ change  % change
(in thousands)                       ---------  ---------  ---------  ---------  --------- ---------
Bar code revenue                                                                                    
Three months ended September 30     $     107      100.0  $     414      100.0  $    (307)    (74.2)
Nine months ended September 30            520      100.0      1,319      100.0  $    (799)    (60.6)`

Our bar code sales generally include acceptance provisions.  We recognize
revenue for bar code shipments upon acceptance of the product by the customer or
expiration of the contractual acceptance period.  Our quarterly bar code revenue
may vary substantially due to the timing of product orders from customers.

Bar code revenue was lower during the three and six months ended September
30, 2009 than the same period in 2008, due to decreased purchasing volume of
small and mid-sized businesses as a result of the global economic conditions.
As a result of this downturn we have reduced our sales and marketing efforts on
the bar code product.  We do not expect to increase our investment in the bar
code product in the future and we are currently evaluating opportunities to sell
our existing bar code inventory, sell or license our bar code production
capability and technology.

The backlog of product orders at September 30, 2009 was approximately
$1,874,000, compared to $311,000 at September 30, 2008, all of which is
scheduled for delivery during the next twelve months.  The backlog at September
30, 2009 included $1,710,000 of orders for our recently introduced PicoP based
accessory product.

Cost of contract revenue.

`% of                  % of
                                                contract              contract
                                       2009      revenue     2008      revenue   $ change  % change
(in thousands)                       ---------  ---------  ---------  ---------  --------- ---------
Three months ended September 30     $     379       46.4  $     253       52.7  $     126      49.8
Nine months ended September 30          1,289       55.0      1,389       36.9       (100)     (7.2)`

Cost of contract revenue includes both the direct and allocated indirect
costs of performing on development contracts.  Direct costs include labor,
materials and other costs incurred directly in performing on a contract.
Indirect costs include labor and other costs associated with operating our
research and development department and building our technical capabilities and
capacity.  Cost of contract revenue is determined both by the level of direct
costs incurred on development contracts and by the level of indirect costs
incurred in operating and building our technical capabilities and capacity.
Both the direct and indirect costs can fluctuate substantially from period to
period.

Cost of contract revenue, as a percentage of contract revenue, was lower
during the three months ended September 30, 2009 than the same period in 2008 as
a result of the cost mix of the contracts during those periods and the sale of
prototype units that have been previously expensed to internally funded
programs.  Cost of contract revenue was lower during the nine months ended
September 30, 2009 than September 30, 2008 as a result of the decreased activity
on development contracts.  The increase in cost of contract revenue as a
percentage of contract revenue during the nine month periods ended September 30,
2009 compared to the same periods in 2008 was also the result of differences in
the cost mix of the contracts during those periods.

The cost of revenue as a percentage of revenue can fluctuate significantly
from period to period, depending on the contract cost mix and the levels of
direct and indirect costs incurred.  However, over longer periods of time we
expect modest fluctuations in the cost of contract revenue, as a percentage of
contract revenue.

Cost of product revenue.

`% of                  % of
                                                 product               product
                                       2009      revenue     2008      revenue   $ change  % change
(in thousands)                       ---------  ---------  ---------  ---------  --------- ---------
Three months ended September 30     $     720      672.9  $     356       86.0  $     364     102.2
Nine months ended September 30          1,504      289.2      1,224       92.8        280      22.9`

Cost of product revenue includes both the direct and allocated indirect costs
of manufacturing products sold to customers.  Direct costs include labor,
materials and other costs incurred directly in the manufacture of these
products.  Indirect costs include labor and other costs associated with
operating our manufacturing capabilities and capacity.

Our overhead, which includes the costs of procuring, inspecting and storing
material, facility and depreciation costs, is allocated to inventory, cost of
product revenue, cost of contract revenue, and research and development expense
based on the proportion of direct material purchased for the respective
activity.  During the three months ending September 30, 2009 and 2008, we
expensed approximately $33,000 and $40,000, respectively, of manufacturing
overhead associated with production capacity in excess of production
requirements.  For the nine months ending September 30, 2009 and 2008, we
expensed approximately $168,000 and $112,000, respectively, of manufacturing
overhead associated with production capacity in excess of production
requirements.

The Company has periodically entered into noncancelable purchase contracts in
order to ensure the availability of materials to support bar code scanner
production.  Management periodically assesses the need to provide for the
impairment on these purchase contracts and records a loss on purchase
commitments when required.  As a result of lower than planned ROV revenue, cost
of product revenue for the three and nine month periods ending September 30,
2009 includes approximately $638,000 and $978,000 of inventory write-downs,
respectively.  In addition, cost of product revenue for the nine months ended
September 30, 2009 included $19,000 for noncancelable purchase contracts that
were in excess of estimated future proceeds from the sale of the ROV
scanners.

The cost of product revenue as a percentage of product revenue can fluctuate
significantly from period to period, depending on the product mix, the level of
overhead expense and the volume of direct materials purchased.

Research and development expense.

`2009       2008     $ change   % change
(in thousands)                       ---------  ---------  ---------  ---------                     
Three months ended September 30     $   5,839  $   5,804  $      35        0.6
Nine months ended September 30         17,165     16,111      1,054        6.5`

Research and development expense consists of:

- Compensation related costs of employees and contractors engaged in internal
research and product development activities,
- Laboratory operations, outsourced development and processing work, and
- Other operating expenses.

We have increased spending in research and development as part of our
strategy to accelerate the time to market for products based on the PicoP.   The
increase in cost during the nine months ended September 30, 2009 as compared to
the nine months ended September 30, 2008 is primarily attributable to increases
in payroll costs and direct materials.

We believe that a substantial level of continuing research and development
expense will be required to develop additional commercial products using the
scanned beam display technology.  Accordingly, we anticipate our level of
research and development spending will continue to be substantial.

Sales, marketing, general and administrative expense.

`2009       2008     $ change   % change
(in thousands)                       ---------  ---------  ---------  ---------                     
Three months ended September 30     $   3,283  $   3,456  $    (173)      (5.0)
Nine months ended September 30         10,764     11,694       (930)      (8.0)`

Sales, marketing, general and administrative expense includes compensation
and support costs for marketing, sales, management and administrative staff, and
for other general and administrative costs, including legal and accounting
services, consultants and other operating expenses.

The decrease in sales, marketing, general and administrative expense for the
three and nine months ended September 30, 2009 compared to the same periods in
2008 was primarily the result of decreased payroll costs due to reductions in
staffing levels.

We continue to aggressively manage these costs as part of our strategy to
accelerate the development of PicoP-based products while controlling our cash
used in operations.

Interest income.

`2009       2008     $ change   % change
(in thousands)                       ---------  ---------  ---------  ---------                     
Three months ended September 30     $      45  $     271  $    (226)     (83.4)
Nine months ended September 30            188        962       (774)     (80.5)`

The decrease in interest income for the three and nine months ended September
30, 2009 compared to the same period in 2008 resulted primarily from lower
average cash, investment securities balances, and interest rates.

Interest expense.

`2009       2008     $ change   % change
(in thousands)                       ---------  ---------  ---------  ---------                     
Three months ended September 30     $      19  $      11  $       8       72.7
Nine months ended September 30             50         36         14       38.9`

Gain (loss) on derivative instruments, net.

`2009       2008     $ change   % change
(in thousands)                       ---------  ---------  ---------  ---------                     
Three months ended September 30     $  (2,246) $     585  $  (2,831)    (483.9)
Nine months ended September 30         (3,048)     2,004     (5,052)    (252.1)`

In March and December 2005, we issued warrants to purchase 2,302,000
shares of common stock.  The warrants met the definition of derivative
instruments that must be accounted for as liabilities under the provisions of
Emerging Issues Task Force Issue No. 00-19, Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock,(ASC 815) because we cannot engage in certain corporate transactions affecting
the common stock unless we make a cash payment to the holders of the warrants.
We record changes in the fair values of the warrants in the statements of
operations each period.  In July 2008, warrants to purchase 750,000 shares of
common stock expired unexercised.  We valued the remaining warrants to purchase
1,552,000 shares of common stock at September 30, 2009 using the Black-Scholes
option-pricing model with the following assumptions: expected volatilities of
78%; expected dividend yields of 0%; risk free interest rates of from 0.4% to
0.5%; and contractual lives ranging from 0.5 year to 1.2 years.  The change in
value of the warrants of $2,246,000 for the three months and $3,048,000 for the
nine months ended September 30, 2009 was recorded as a non-operating loss and is
included in "Gain (loss) on derivative instruments, net" in the consolidated
statements of operations.  The realized losses were primarily due to changes in
the Microvision stock price and decreasing terms to expiration.  We valued the
warrants at September 30, 2008 using the Black-Scholes option-pricing model with
the following assumptions:  expected volatilities of 69%; expected dividend
yields of 0%; risk free interest rates ranging from 1.9% to 2.1%; and
contractual lives ranging from 1.5 years to 2.2 years.  The change in value of
the warrants of $599,000 for the three months and $2,134,000 for the nine months
ended September 30, 2008 were recorded as a non-operating gain and are included
in "Gain (loss) on derivative instruments, net" in the consolidated
statements of operations.

Prior to December 9, 2008, we held warrants to purchase 170,500 shares of
Lumera common stock.  On December 9, 2008, Lumera merged with GigOptix, LLC and
the combined company now conducts business as GigOptix, Inc.  Our Lumera
warrants were exchanged for warrants to purchase shares of the new company's
common stock, after applying a 0.125 exchange ratio and exercise price
escalation.  As of December 31, 2008, the fair value of the warrants was
determined to be zero.  As of September 30, 2008, the warrants were valued using
the Black-Scholes option-pricing model with the following assumptions:  expected
volatility of 127%; expected dividend yields of 0%; risk free interest rates of
2.13%; and contractual lives of 2.5 years.  The change in value of $14,000 for
the three months and $130,000 for the six months ended September 30, 2008 was
recorded as a non-operating loss and is included in "Gain (loss) on
derivative instruments, net" in the consolidated statements of
operations.

Liquidity and Capital Resources

We have funded our operations to date primarily through the sale of equity
and debt securities and, to a lesser extent, from development contract revenues
and product sales.  At September 30, 2009, we had $20.5 million in cash, cash
equivalents and investment securities, available-for-sale.  In October 2009, we
raised $2,110,000 from the exercise of warrants to purchase 587,332 shares of
common stock. Our operating plan for 2009 and 2010 includes the launch of the
first accessory product, further development of our PicoP display engine for
embedded applications and further development of automotive HUD and eyewear
applications.  In order to fully fund our operating plan for 2010, we will
require additional capital.  We plan to obtain additional cash through the
issuance of equity or debt securities.  There can be no assurance that
additional cash will be available or that, if available, it will be available on
terms acceptable to us on a timely basis.  If adequate funds are not available
by January 2010, we intend to consider reducing the scope of our business to
extend our operations as we pursue other financing opportunities and business
relationships.  This reduction in scope could include delaying development
projects resulting in reductions in staff, operating costs, capital expenditures
and investment in research and development.  With these adjustments to our
operating plan, we believe that we currently have sufficient cash, cash
equivalents, and investment securities to fund operations into June 2010.

Cash used in operating activities totaled $23.5 million during the nine
months ended September 30, 2009, compared to $22.3 million during the same
period in 2008.  During the nine months ended September 30, 2009, the increase
in cash used in operating activities was primarily driven by lower contract
activity and higher research and development costs as we commercialize PicoP
based products.

We had the following material gains and charges, and changes in assets and
liabilities during the nine months ended September 30, 2009:

- "Gain on derivative instruments, net"
- "Inventory write-downs"
- "Accounts payable"

Cash used in investing activities totaled $729,000 for the nine months ended
September 30, 2009 compared to cash provided by investing activities of $15.5
million during the nine months ended September 30, 2008.  During the nine months
ended September 30, 2009, we used cash of $729,000 for capital expenditures,
compared to $320,000 during the same period in 2008.  During the nine months
ended September 30, 2008,

Cash provided by financing activities totaled $16.4 million for the nine
months ended September 30, 2009 compared to $24.4 million during the same period
in 2008.  In June 2009, we raised approximately $15.0 million, before issuance
costs of approximately $217,000, from the sale of 8,076,239 shares of common
stock and warrants to purchase 2,019,060 shares of our common stock. The
warrants have an exercise price of $2.1850 per share, a three year term, and are
exercisable on the date of issuance. We can call the warrants after six months
and once the shares are registered if the average closing bid price of its stock
is over $8.74 for any 20 consecutive trading days.  In addition, in September
2009, we raised $1,475,000 from the exercise of warrants to purchase 451,795
shares of common stock.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate and Market Liquidity Risks

As of September 30, 2009, 87% of our total cash, cash equivalents and
investment securities, available-for-sale have variable interest rates or are
very short-term discount notes traded in active markets.  Therefore, we believe
our exposure to the market and interest rate risk is not material.  The
remaining 13% is composed of $3.0 million par student loan auction-rate
securities (SLARS).  The SLARS owned by the Company are investment grade long-term
bonds, structured with variable interest rate resets, purchases and sales
to be determined via a Dutch Auction process every 28 days.  They were issued to
fund U.S. government guaranteed student loans.  Beginning in February 2008 as
global credit markets significantly deteriorated, insufficient clearing bids
have been submitted for the SLARS.  The auctions have thus failed and the
interest rates have been reset to "maximum rates" instead of
"auction rates".  The SLARS have been illiquid through the auction
process and through inactive secondary ARS markets.

Given the adverse credit market conditions, the fair value of the principal
of these bonds has become affected by changes in interest rates, the spread
between short and long rates, and credit market liquidity.  As a result, at
December 31, 2008, we estimated the fair value of our SLARS to be approximately
$2.7 million.  If market conditions worsen, we may have to further adjust the
estimated fair value of the SLARS, including additional charges to earnings, if
we believe the adjustment is other than temporary.  In the event we need access
to the funds invested in the SLARS, we could be required to sell these
securities at an amount below our carrying value.  Any of these events could
affect our consolidated financial condition, results of operations and cash
flows.  However, based on our current operating plan and ability to access our
$17.8 million held in cash and cash equivalents and other investment securities
available for sale held as of September 30, 2009, we do not expect to be
required to sell these securities materially below their current estimated
values.

Our investment policy generally directs that the investment managers should
select investments to achieve the following goals: principal preservation,
adequate liquidity and return.  As of September 30, 2009, our cash and cash
equivalents and investments available-for-sale securities portfolio are
comprised of short-term highly rated money market funds, corporate bonds and the
SLARS.

`Amount      Percent
                                     ---------  ---------
Cash and cash equivalents           $   5,578      27.24%
Less than one year                     12,197      59.57%
One to two years                           --         --
Greater than five years                 2,700      13.19%
                                     ---------  ---------
                                    $  20,475     100.00%
                                     =========  =========`

Foreign Exchange Rate Risk

All of our development contract payments are made in U.S. dollars.
However, in the future we may enter into additional development contracts in
foreign currencies that may subject us to foreign exchange rate risk.  We intend
to enter into foreign currency hedges to offset material exposure to currency
fluctuations when we can adequately determine the timing and amounts of the
foreign currency exposure.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we have
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by
this report and, based on this evaluation, our principal executive officer and
principal financial officer have concluded that these disclosure controls and
procedures are effective.  There were no changes in our internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) that occurred
during the period covered by this report that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

PART II

OTHER INFORMATION

ITEM 1A — RISK FACTORS

Risk Factors Relating to the Microvision Business

We have a history of operating losses and expect to incur significant
losses in the future.

We have had substantial losses since our inception.  We cannot assure you
that we will ever become or remain profitable.

- As of September 30, 2009, we had an accumulated deficit of $322.8 million.
- We incurred consolidated net losses of $239.6 million from inception through
2006, $19.8 million in 2007, $32.6 million in 2008, and consolidated net loss of
$30.8 million in the nine months ended September 30, 2009.

The likelihood of our success must be considered in light of the expenses,
difficulties and delays frequently encountered by companies formed to develop
and market new technologies.  In particular, our operations to date have focused
primarily on research and development of the scanned beam technology and
development of demonstration units.  We are unable to accurately estimate future
revenues and operating expenses based upon historical performance.

We cannot be certain that we will succeed in obtaining additional development
contracts or that we will be able to obtain substantial customer orders for our
products.  In light of these factors, we expect to continue to incur losses and
negative cash flow at least through 2010 and likely thereafter.  We cannot be
certain that we will achieve positive cash flow at any time in the future.

We will require additional capital to fund our operations and to implement
our business plan.  If we do not obtain additional capital, we may be required
to curtail our operations substantially.  Raising additional capital may dilute
the value of current shareholders' shares.

Our operating plan for 2009 and 2010 includes the launch of our first
accessory product, further development of the PicoP display engine for embedded
applications and further development of automotive HUD and eyewear applications.
In order to fully fund our operating plan for 2010, we will require additional
capital. We plan to obtain additional cash through the issuance of equity or
debt securities. We will require additional capital in the future to fund our
operations, including to:

- Further develop the technology platform and PicoP display engine,
- Develop and protect our intellectual property rights, and
- Fund long-term marketing and business development opportunities.

Our capital requirements will depend on many factors, including, but not
limited to, the rate at which we can, directly or through arrangements with
original equipment manufacturers, introduce products incorporating the PicoP
display engine and image capture technologies, the market acceptance and
competitive position of such products, and the revenues, volumes and margins of
such products.  If the level of revenues or margin are less than anticipated
amounts or if expenses exceed the amounts budgeted, the Company may require
additional capital earlier than expected to further the development of our
technologies, for expenses associated with product development, and to respond
to competitive pressures or to meet unanticipated development difficulties.  In
addition, our operating plan provides for the development of strategic
relationships with systems and equipment manufacturers that may require
additional investments by us.

There can be no assurance that additional capital will be available to us, or
if available, on terms acceptable to us or on a timely basis. Raising additional
capital may involve issuing securities with rights and preferences that are
senior to our common stock and may dilute the value of current shareholders'
shares. If adequate funds are not available by January 2010, we intend to
consider reducing the scope of our business to extend our operations as we
pursue other financing opportunities and business relationships. This reduction
in scope could include reductions in staff and operating costs as well as
reductions in capital expenditures and investment in research and development.
With these adjustments to our operating plan we believe that we currently have
sufficient cash, cash equivalents, and investment securities to fund operations
into June 2010.

If we cannot manufacture products at competitive prices, our financial
results will be adversely affected.

We are currently negotiating component pricing with suppliers for our future
products.  The cost per unit for PicoP based accessory projectors currently
exceeds the level at which we could expect to profitably sell these products.
If we cannot lower our cost of production, we may face increased demands on our
financial resources, possibly requiring additional equity and/or debt financing
to sustain our business operations.

We cannot be certain that our technology platform or products
incorporating our PicoP display engine will achieve market acceptance.  If
products incorporating the PicoP display engine do not achieve market
acceptance, our revenues may not grow.

Our success will depend in part on customer acceptance of the PicoP display
engine.  The PicoP display engine may not be accepted by manufacturers who use
display technologies in their products, by systems integrators who incorporate
our products into their products or by end users of these products.  To be
accepted, the PicoP display engine must meet the expectations of our potential
customers in the consumer, defense and industrial markets.  If our technology
fails to achieve market acceptance, we may not be able to continue to develop
our technology platform.

Our planned future products are dependent on advances in technology by
other companies.

We rely on and will continue to rely on technologies, such as light sources,
MEMS and optical components that are developed and produced by other companies.
The commercial success of certain of our planned future products will depend in
part on advances in these and other technologies by other companies.  We may,
from time to time, contract with and support companies developing key
technologies in order to accelerate the development of them for our specific
uses.  There are no guarantees that such activities will result in useful
technologies or components for us.

It may become more difficult to sell our stock in the public market.

Our common stock is listed for quotation on The NASDAQ Global Market.  To
keep our listing on this market, we must meet NASDAQ's listing maintenance
standards.  If we are unable to continue to meet NASDAQ's listing maintenance
standards, our common stock could be delisted from The NASDAQ Global Market.  If
our common stock were delisted, we likely would seek to list the common stock on
the NASDAQ Capital Market, the American Stock Exchange or on a regional stock
exchange.  Listing on such other market or exchange could reduce the liquidity
for our common stock.  If our common stock were not listed on the Capital Market
or an exchange, trading of our common stock would be conducted in the over-the-counter
market on an electronic bulletin board established for unlisted
securities or directly through market makers in our common stock.  If our common
stock were to trade in the over-the-counter market, an investor would find it
more difficult to dispose of, or to obtain accurate quotations for the price of,
the common stock.  A delisting from The NASDAQ Global Market and failure to
obtain listing on such other market or exchange would subject our securities to
so-called penny stock rules that impose additional sales practice and market-making
requirements on broker-dealers who sell or make a market in such
securities.  Consequently, removal from The NASDAQ Global Market and failure to
obtain listing on another market or exchange could affect the ability or
willingness of broker-dealers to sell or make a market in our common stock and
the ability of purchasers of our common stock to sell their securities in the
secondary market.  In addition, when the market price of our common stock is
less than $5.00 per share, we become subject to penny stock rules even if our
common stock is still listed on The NASDAQ Global Market.  While the penny stock
rules should not affect the quotation of our common stock on The NASDAQ Global
Market, these rules may further limit the market liquidity of our common stock
and the ability of investors to sell our common stock in the secondary market.
The market price of our stock has mostly traded below $5.00 per share during
2009 and 2008.  On October 26, 2009, the closing price of our stock was
$3.98.

Our lack of the financial and technical resources relative to our
competitors may limit our revenues, potential profits, overall market share or
value.

Our current products and potential future products will compete with
established manufacturers of existing products and companies developing new
technologies.  Many of our competitors have substantially greater financial,
technical and other resources than we have.  Because of their greater resources,
our competitors may develop products or technologies that are superior to our
own.  The introduction of superior competing products or technologies could
result in reduced revenues, lower margins or loss of market share, any of which
could reduce the value of our business.

We may not be able to keep up with rapid technological change and our
financial results may suffer.

The information display industry has been characterized by rapidly changing
technology, accelerated product obsolescence and continuously evolving industry
standards.  Our success will depend upon our ability to further develop our
technology platform and to cost effectively introduce new products and features
in a timely manner to meet evolving customer requirements and compete with
competitors' product advances.

We may not succeed in these efforts because of:

- delays in product development,
- lack of market acceptance for our products, or
- lack of funds to invest in product development and marketing.

The occurrence of any of the above factors could result in decreased
revenues, market share and value.

We could face lawsuits related to our use of the PicoP display engine or
other technologies.  Defending these suits would be costly and time consuming.
An adverse outcome in any such matter could limit our ability to commercialize
our technology and products, reduce our revenues and increase our operating
expenses.

We are aware of several patents held by third parties that relate to certain
aspects of light scanning displays and image capture products.  These patents
could be used as a basis to challenge the validity, limit the scope or limit our
ability to obtain additional or broader patent rights of our patents or patents
we have licensed.  A successful challenge to the validity of our patents or
patents we have licensed could limit our ability to commercialize our technology
and the PicoP display engine and, consequently, materially reduce our revenues.
Moreover, we cannot be certain that patent holders or other third parties will
not claim infringement by us with respect to current and future technology.
Because U.S. patent applications are held and examined in secrecy, it is also
possible that presently pending U.S. applications will eventually be issued with
claims that will be infringed by our products or our technology.  The defense
and prosecution of a patent suit would be costly and time consuming, even if the
outcome were ultimately favorable to us.  An adverse outcome in the defense of a
patent suit could subject us to significant cost, to require others and us to
cease selling products that incorporate the PicoP display engine, to cease
licensing our technology or to require disputed rights to be licensed from third
parties.  Such licenses, if available, would increase our operating expenses.
Moreover, if claims of infringement are asserted against our future co-
development partners or customers, those partners or customers may seek
indemnification from us for damages or expenses they incur.

Our products may be subject to future health and safety regulations that
could increase our development and production costs.

Products incorporating the PicoP display engine could become subject to new
health and safety regulations that would reduce our ability to commercialize the
PicoP display engine.  Compliance with any such new regulations would likely
increase our cost to develop and produce products using the PicoP display engine
and adversely affect our financial results.

Our dependence on sales to distributors increases the risks of managing
our supply chain and may result in excess inventory or inventory shortages.

We expect that the majority of our distributor relationships for the SHOWWX
and its accessories will involve the distributor taking inventory positions and
reselling to multiple customers.  With these distributor relationships, we would
not recognize revenue until the distributors sell the product through to their
end user customers.  Our distributor relationships would reduce our ability to
forecast sales and increases risks to our business. Since our distributors would
act as intermediaries between us and the end user customers, we would be
required to rely on our distributors to accurately report inventory levels and
production forecasts. This would require us to manage a more complex supply
chain and monitor the financial condition and credit worthiness of our
distributors and the end user customers. Our failure to manage one or more of
these risks could result in excess inventory or shortages that could adversely
impact our operating results and financial condition.

Our future growth will suffer if we do not achieve sufficient market
acceptance of our products to compete effectively.

Our success depends, in part, on our ability to gain acceptance of our
current and future products by a large number of customers.  Achieving market
based acceptance for our products will require marketing efforts and the
expenditure of financial and other resources to create product awareness and
demand by potential customers.  We may be unable to offer products consistently
or at all that compete effectively with products of others on the basis of price
or performance.  Failure to achieve broad acceptance of our products by
potential customers and to effectively compete would have a material adverse
effect on our operating results.

Our operating results may be adversely impacted by worldwide political and
economic uncertainties and

In the recent past, general worldwide economic conditions have
experienced a downturn due to slower economic

Because we plan to continue using foreign contract manufacturers, our
operating results could be harmed by economic, political, regulatory and other
factors in foreign countries.

We currently use a contract manufacturer in Asia to manufacture our SHOWWX
product, and we plan to use foreign manufacturers to manufacture future
products, where appropriate.  These international operations are subject to
inherent risks, which may adversely affect us, including:

- political and economic instability;
- high levels of inflation, historically the case in a number of countries in
Asia;
- burdens and costs of compliance with a variety of foreign laws;
- foreign taxes;
- changes in tariff rates or other trade and monetary policies; and
- changes or volatility in currency exchange rates.

If we have to qualify a new contract manufacturer or foundry for our
products, we may experience delays that result in lost revenues and damaged
customer relationships.

We rely on single suppliers to manufacture our PicoP display engine, our
SHOWWX product and our MEMS chips in wafer form.  The lead time required to
establish a relationship with a new contract manufacturer or foundry is long,
and it takes time to adapt a product's design to a particular manufacturer's
processes.  Accordingly, there is no readily available alternative source of
supply for these products and components in high volumes.  This could cause
significant delays in shipping products if we have to change our source of
supply and manufacture quickly, which may result in lost revenues and damaged
customer relationships.

If we experience delays or failures in developing commercially viable
products, we may have lower revenues.

We have begun sales of units incorporating the PicoP display engine.
However, we must undertake additional research, development and testing before
we are able to develop additional products for commercial sale.  Product
development delays by us or our potential product development partners, or the
inability to enter into relationships with these partners, may delay or prevent
us from introducing products for commercial sale.  We intend to rely on third
party developments or to contract with other companies to continue development
of green laser devices we will need for our products.

Our success will depend, in part, on our ability to secure significant
third party manufacturing resources.

We are developing our capability to manufacture products in commercial
quantities.  Our success depends, in part, on our ability to provide our
components and future products in commercial quantities at competitive prices.
Accordingly, we will be required to obtain access, through business partners or
contract manufacturers, to manufacturing capacity and processes for the
commercial production of our expected future products.  We cannot be certain
that we will successfully obtain access to sufficient manufacturing resources.
Future manufacturing limitations of our suppliers could result in a limitation
on the number of products incorporating our technology that we are able to
produce.

If our licensors and we are unable to obtain effective intellectual
property protection for our products and technology, we may be unable to compete
with other companies.

Intellectual property protection for our products is important and uncertain.
If we do not obtain effective intellectual property protection for our products,
processes and technology, we may be subject to increased competition.  Our
commercial success will depend in part on our ability and the ability of the
University of Washington and our other licensors to maintain the proprietary
nature of the PicoP display and other key technologies by securing valid and
enforceable patents and effectively maintaining unpatented technology as trade
secrets.  We try to protect our proprietary technology by seeking to obtain
United States and foreign patents in our name, or licenses to third-party
patents, related to proprietary technology, inventions, and improvements that
may be important to the development of our business.  However, our patent
position and the patent position of the University of Washington and other
licensors involve complex legal and factual questions.  The standards that the
United States Patent and Trademark Office and its foreign counterparts use to
grant patents are not always applied predictably or uniformly and can change.
Additionally, the scope of patents are subject to interpretation by courts and
their validity can be subject to challenges and defenses, including challenges
and defenses based on the existence of prior art.  Consequently, we cannot be
certain as to the extent to which we will be able to obtain patents for our new
products and technology or the extent to which the patents that we already own
or license from others protect our products and technology.  Reduction in scope
of protection or invalidation of our licensed or owned patents, or our inability
to obtain new patents, may enable other companies to develop products that
compete with ours on the basis of the same or similar technology.

We also rely on the law of trade secrets to protect unpatented know-how and
technology to maintain our competitive position.  We try to protect this know-
how and technology by limiting access to the trade secrets to those of our
employees, contractors and partners with a need to know such information and by
entering into confidentiality agreements with parties that have access to it,
such as our employees, consultants and business partners.  Any of these parties
could breach the agreements and disclose our trade secrets or confidential
information, or our competitors might learn of the information in some other
way.  If any trade secret not protected by a patent were to be disclosed to or
independently developed by a competitor, our competitive position could be
materially harmed.

We could be exposed to significant product liability claims that could be
time-consuming and costly, divert management attention and adversely affect our
ability to obtain and maintain insurance coverage.

We may be subject to product liability claims if any of our product
applications are alleged to be defective or cause harmful effects.  For example,
because some of our PicoP displays are designed to scan a low power beam of
colored light into the user's eye, the testing, manufacture, marketing and sale
of these products involve an inherent risk that product liability claims will be
asserted against us.  Product liability claims or other claims related to our
products, regardless of their outcome, could require us to spend significant
time and money in litigation, divert management time and attention, require us
to pay significant damages, harm our reputation or hinder acceptance of our
products.  Any successful product liability claim may prevent us from obtaining
adequate product liability insurance in the future on commercially desirable or
reasonable terms.  An inability to obtain sufficient insurance coverage at an
acceptable cost or otherwise to protect against potential product liability
claims could prevent or inhibit the commercialization of our products.

We rely heavily on a limited number of development contracts with the U.S.
government, which are subject to immediate termination by the government for
convenience at any time, and the termination of one or more of these contracts
could have a material adverse impact on our operations.

During the first nine months of 2009 and the full year of 2008, 49% and 34%,
respectively, of our revenue was derived from performance on a limited number of
development contracts with the U.S. government.  Therefore, any significant
disruption or deterioration of our relationship with the U.S. government would
significantly reduce our revenues.  Our government programs must compete with
programs managed by other contractors for limited amounts and uncertain levels
of funding.  The total amount and levels of funding are susceptible to
significant fluctuations on a year-to-year basis.  Our competitors continuously
engage in efforts to expand their business relationships with the government and
are likely to continue these efforts in the future.  Our contracts with the
government are subject to immediate termination by the government for
convenience at any time.  The government may choose to use contractors with
competing display technologies or it may decide to discontinue any of our
programs altogether.  In addition, those development contracts that we do obtain
require ongoing compliance with applicable government regulations.  Termination
of our development contracts, a shift in government spending to other programs
in which we are not involved, a reduction in government spending generally, or
our failure to meet applicable government regulations could have severe
consequences for our results of operations.

Our development agreements have long sales cycles, which make it difficult
to plan our expenses and forecast our revenues.

Our development agreements have lengthy sales cycles that involve numerous
steps including determination of a product application, exploring the technical
feasibility of a proposed product, evaluating the costs of manufacturing a
product and manufacturing or contracting out the manufacturing of the product.
Our long sales cycle, which can last several years, makes it difficult to
predict the quarter in which contract signing and revenue recognition will
occur.  Delays in entering into development agreements could cause significant
variability in our revenues and operating results for any particular quarterly
period.

Our development contracts may not lead to products that will be
profitable.

Our development contracts, including without limitation those discussed in
this document are exploratory in nature and are intended to develop new types of
products for new applications.  These efforts may prove unsuccessful and these
relationships may not result in the development of products that will be
profitable.

Our revenues are highly sensitive to developments in the defense
industry.

Our revenues to date have been derived principally from product development
research relating to defense applications of our technology.  We believe that
development programs and sales of potential products in this market will
represent a significant portion of our future revenues.  Developments that
adversely affect the defense sector, including delays in government funding and
a general economic downturn, could cause our revenues to decline
substantially.

If we lose our rights under our third party technology licenses, our
operations will be adversely affected.

Our business depends in part on technology rights licensed from third
parties.  We could lose our exclusivity or other rights to use the technology
under our licenses if we fail to comply with the terms and performance
requirements of the licenses.    In addition, certain licensors may terminate a
license upon our breach and have the right to consent to sublicense
arrangements.  If we were to lose our rights under any of these licenses, or if
we were unable to obtain required consents to future sublicenses, we would lose
a competitive advantage in the market, and may even lose the ability to
commercialize our products completely.  Either of these results could
substantially decrease our revenues.

We are dependent on third parties in order to develop, manufacture, sell
and market our products.

Our strategy for commercializing our technology and products incorporating
the PicoP display engine includes entering into cooperative development,
manufacturing, sales and marketing arrangements with corporate partners,
original equipment manufacturers and other third parties.  We cannot be certain
that we will be able to negotiate arrangements on acceptable terms, if at all,
or that these arrangements will be successful in yielding commercially viable
products.  If we cannot establish these arrangements, we would require
additional capital to undertake such activities on our own and would require
extensive manufacturing, sales and marketing expertise that we do not currently
possess and that may be difficult to obtain.  In addition, we could encounter
significant delays in introducing the PicoP display engine or find that the
development, manufacture or sale of products incorporating the PicoP display
engine would not be feasible.  To the extent that we enter into cooperative
development, sales and marketing or other joint venture arrangements, our
revenues will depend upon the performance of third parties.  We cannot be
certain that any such arrangements will be successful.

Loss of any of our key personnel could have a negative effect on the
operation of our business.

Our success depends on our executive officers and other key personnel and on
the ability to attract and retain qualified new personnel.  Achievement of our
business objectives will require substantial additional expertise in the areas
of sales and marketing, research and product development and manufacturing.
Competition for qualified personnel in these fields is intense, and the
inability to attract and retain additional highly skilled personnel, or the loss
of key personnel, could reduce our revenues and adversely affect our
business.

We are dependent on a small number of customers for our revenue.  Our
quarterly performance may vary substantially and this variance, as well as
general market conditions, may cause our stock price to fluctuate greatly and
potentially expose us to litigation.

Our revenues to date have been generated primarily from a limited number of
development contracts with U.S. government entities and commercial partners.
Our quarterly operating results may vary significantly based on:

- reductions or delays in funding of development programs involving new
information display technologies by the U.S. government or our current or
prospective commercial partners;
- changes in evaluations and recommendations by any securities analysts
following our stock or our industry generally;
- announcements by other companies in our industry;
- changes in business or regulatory conditions;
- announcements or implementation by our competitors of technological
innovations or new products;
- the status of particular development programs and the timing of performance
under specific development agreements;
- economic and stock market conditions; or
- other factors unrelated to our company or industry.

In one or more future quarters, our results of operations may fall below the
expectations of securities analysts and investors and the trading price of our
common stock may decline as a consequence.  In addition, following periods of
volatility in the market price of a company's securities, shareholders often
have instituted securities class action litigation against that company.  If we
become involved in a class action suit, it could divert the attention of
management, and, if adversely determined, could require us to pay substantial
damages.

If we fail to manage expansion effectively, our revenue and expenses could
be adversely affected.

Our ability to successfully offer products and implement our business plan in
a rapidly evolving market requires an effective planning and management process.
The growth in business and relationships with customers and other third parties
has placed, and will continue to place, a significant strain on our management
systems and resources.  We will need to continue to improve our financial and
managerial controls, reporting systems and procedures and will need to continue
to train and manage our work force.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company's Annual Shareholder's Meeting was held on September 15,
2009. The following proposals were introduced and voted on:

Proposal No. 1 - Election of Directors

|Name              | Votes For  | Votes Withheld
|----------------- | ---------- | --------------
|Alexander Tokman  | 63,711,265 | 814,277       
|Richard A. Cowell | 63,616,510 | 909,032       
|Slade Gorton      | 62,925,058 | 1,600,484     
|Jeanette Horan    | 62,592,795 | 1,932,747     
|Brian Turner      | 63,637,049 | 888,493       
|                  |            |               

Proposal No. 2 - Ratification of the Selection of Independent
Registered Public Accounting Firm

|For        | Against | Abstain
|---------- | ------- | -------
|54,928,815 | 590,646 | 910,426

Proposal No. 3 - Amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares

|For        | Against   | Abstain  
|---------- | --------- | ---------
|47,035,739 | 8,275,724 | 1,118,424

ITEM 6. Exhibits

|3.1  | Amended and Restated Certificate of Incorporation                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 | Chief Executive Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002      
|31.2 | Chief Financial Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002      
|32.1 | Chief Executive Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
|32.2 | Chief Financial Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
|     |                                                                                                                                                                                 
|     |                                                                                                                                                                                 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

| | MICROVISION, INC.
| | -----------------

|October 30, 2009 | BY: | /s/ Alexander Y. Tokman                                 
|---------------- | --- | --------------------------------------------------------
|                 |     | Alexander Y. Tokman                                     
|                 |     | Chief Executive Officer
   (Principal Executive Officer)



|October 30, 2009 | BY: | /s/ Jeff Wilson                                         
|---------------- | --- | --------------------------------------------------------
|                 |     | Jeff Wilson                                             
|                 |     | Chief Financial Officer
   (Principal Financial Officer)



EXHIBIT INDEX

The following documents are filed.

|Exhibit Number | Description                                                                                                                                                                     
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            | Amended and Restated Certificate of Incorporation                                                                                                                               
|31.1           | Chief Executive Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002      
|31.2           | Chief Financial Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002      
|32.1           | Chief Executive Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
|32.2           | Chief Financial Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
|               |                                                                                                                                                                                 
|               |