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

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FORM 10-Q

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

For the quarterly period ended March 31, 2007

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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer      ̈ Accelerated filer    x Non-accelerated filer     ̈

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 May 7, 2007, 43,390,000 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  March 31, 2007 and
December 31, 2006 (unaudited)                                   | 3   
|Consolidated Statements of Operations for the three
months ended March 31, 2007 and 2006 (unaudited)                  | 4   
|Consolidated Statements of Comprehensive Income (Loss)
for the three months ended March 31, 2007 and 2006 (unaudited) | 5   
|Consolidated Statements of Cash Flows for the three
months ended March 31, 2007 and 2006 (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                                                   | 18  
|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                                                                                                     | 27  
|Signatures                                                                                                            | 28  
|Exhibit Index                                                                                                         | 29  

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Microvision, Inc.

                    Consolidated Balance Sheet

                  (In thousands, except per share data)

                            (Unaudited)

`March 31,     December 31,
                                                                                       2007           2006
                                                                                   -------------  -------------
Assets                                                                                                         
Current assets
   Cash and cash equivalents                                                      $       7,305  $      14,552
   Investment securities, available-for-sale                                              8,768             --
   Accounts receivable, net of allowances of $199 and $216                                1,003          1,166
   Costs and estimated earnings in excess of billings on uncompleted contracts              647            565
   Inventory                                                                                969          1,043
   Current restricted investments in Lumera                                                  --         10,693
   Other current assets                                                                   1,434          1,986
                                                                                   -------------  -------------
   Total current assets                                                                  20,126         30,005

Property and equipment, net                                                               3,916          4,011
Restricted investments                                                                    1,268          1,268
Other assets                                                                                 54             41
                                                                                   -------------  -------------
   Total assets                                                                   $      25,364  $      35,325
                                                                                   =============  =============
                                                                                                               
Liabilities and Shareholders' Equity                                                                           
Current liabilities
   Accounts payable                                                               $       1,467  $       1,785
   Accrued liabilities                                                                    3,154          3,698
   Billings in excess of costs and estimated earnings on uncompleted contracts              182            200
   Liability associated with common stock warrants                                        3,132          2,572
   Liability associated with embedded derivative feature                                     --             68
   Current portion of notes payable                                                          --          2,418
   Current portion of capital lease obligations                                              44             45
   Current portion of long-term debt                                                         55             59
                                                                                   -------------  -------------
   Total current liabilities                                                              8,034         10,845
Capital lease obligations, net of current portion                                           122            132
Long-term debt, net of current portion                                                      447            457
Deferred rent, net of current portion                                                     1,955          2,027
                                                                                   -------------  -------------
   Total liabilities                                                                     10,558         13,461
                                                                                   -------------  -------------
Commitments and contingencies                                                                --             --

Shareholders' equity
   Common stock, par value $.001; 125,000 shares authorized;
      43,390 and 42,921 shares issued and outstanding                                        43             43
   Additional paid-in capital                                                           254,845        253,086
   Receivables from related parties, net                                                   (250)          (250)
   Accumulated other comprehensive income                                                 6,694          8,619
   Accumulated deficit                                                                 (246,526)      (239,634)
                                                                                   -------------  -------------
   Total shareholders' equity                                                            14,806         21,864
                                                                                   -------------  -------------
   Total liabilities and shareholders' equity                                     $      25,364  $      35,325
                                                                                   =============  =============`

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
                                                                                   March 31,
                                                                             ----------------------
                                                                                2007        2006
                                                                             ----------  ----------                        
Contract revenue                                                            $    1,902  $    1,781
Product revenue                                                                    333         691
                                                                             ----------  ----------
    Total revenue                                                                2,235       2,472
                                                                             ----------  ----------
Cost of contract revenue                                                         1,010       1,151
Cost of product revenue                                                            284       1,294
                                                                             ----------  ----------
    Total cost of revenue                                                        1,294       2,445
                                                                             ----------  ----------
Gross margin                                                                       941          27
                                                                             ----------  ----------


Research and development expense                                                 3,345       2,154
Sales, marketing, general and administrative expense                             3,550       4,739
Gain on disposal of fixed assets                                                    --        (198)
                                                                             ----------  ----------
    Total operating expenses                                                     6,895       6,695
                                                                             ----------  ----------
Loss from operations                                                            (5,954)     (6,668)
Interest income                                                                    182         129
Interest expense                                                                  (468)     (1,822)
Gain (loss) on derivative instruments, net                                        (652)      1,867
Other expense                                                                       --         (11)
                                                                             ----------  ----------
Net loss before Lumera transactions                                             (6,892)     (6,505)

Equity in losses of Lumera                                                          --        (290)
Gain on sale of investment in Lumera                                                --       7,270
                                                                             ----------  ----------
Net income (loss)                                                               (6,892)        475

Stated dividend on mandatorily redeemable convertible preferred stock               --         (43)
Accretion to par value of preferred stock                                           --        (101)
                                                                             ----------  ----------
Net income (loss) available for common shareholders                         $   (6,892) $      331
                                                                             ==========  ==========

Net income (loss) per share - basic                                         $    (0.16) $     0.01
                                                                             ==========  ==========

Net income (loss) per share - diluted                                       $    (0.16) $     0.01
                                                                             ==========  ==========

Weighted-average shares outstanding - basic                                     43,098      25,218
                                                                             ==========  ==========

Weighted-average shares outstanding - diluted                                   43,098      28,492
                                                                             ==========  ==========`

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

---



Microvision, Inc.

                     Consolidated Statement of Comprehensive Income (Loss)

                             (In thousands)

                            (Unaudited)

`Three Months Ended
                                                                                   March 31,
                                                                             ----------------------
                                                                                2007        2006
                                                                             ----------  ----------                        
Net income (loss)                                                           $   (6,892) $      475
                                                                             ----------  ----------
Other comprehensive gain (loss)
Unrealized gain (loss) on investment securities, available-for-sale             (1,925)     13,207
Less: reclassification adjustment for gains realized in net income                  --      (7,270)
                                                                             ----------  ----------
Net unrealized gain (loss)                                                      (1,925)      5,937
                                                                             ----------  ----------
Comprehensive income (loss)                                                 $   (8,817) $    6,412
                                                                             ==========  ==========`

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

---



Microvision, Inc.

                    Consolidated Statement of Cash Flows

                           (In thousands)

                            (Unaudited)

`Three Months Ended
                                                                                              March 31,
                                                                                        ----------------------
                                                                                           2007        2006
                                                                                        ----------  ----------
Cash flows from operating activities                                                                          
    Net income (loss)                                                                  $   (6,892) $      475
    Adjustments to reconcile net income (loss) to net cash used in operations:
        Depreciation                                                                          214         338
        Gain on disposal of fixed assets                                                       --        (198)
        Non-cash stock-based compensation expense                                             304         416
        Non-cash interest expense                                                             371       1,513
        Loss(gain) on derivative instruments                                                  652      (1,867)
        Equity in losses of Lumera                                                             --         290
        Gain on sale of investment in Lumera                                                   --      (7,270)
        Non-cash deferred rent                                                                (69)        (23)
            Change in:
            Accounts receivable, net                                                          163         (27)
            Costs and estimated earnings in excess of billings on uncompleted contracts       (82)         59
            Inventory                                                                          74          (3)
            Other current assets                                                              431        (783)
            Other assets                                                                      (13)         64
            Accounts payable                                                                 (174)       (571)
            Accrued liabilities                                                              (547)       (904)
            Billings in excess of costs and estimated earnings on uncompleted contracts       (18)         (1)
                                                                                        ----------  ----------
            Net cash used in operating activities                                          (5,586)     (8,492)
                                                                                        ----------  ----------
Cash flows from investing activities                                                                          
    Sales of restricted investment securities                                                  --          79
    Decrease in restricted cash                                                                --         755
    Sale of long-term investment - Lumera                                                      --      10,292
    Proceeds on sale of property and equipment                                                 --         200
    Purchases of property and equipment                                                      (232)     (1,134)
                                                                                        ----------  ----------
            Net cash provided by (used in) investing activities                              (232)     10,192
                                                                                        ----------  ----------
Cash flows from financing activities                                                                          
    Principal payments under capital leases                                                   (11)         (8)
    Principal payments under long-term debt                                                   (14)        (20)
    Increase in long-term debt                                                                 --         536
    Payments on notes payable                                                              (1,400)     (2,567)
    Increase in deferred rent                                                                  --         577
    Payment of preferred dividend                                                              --         (43)
    Net proceeds from issuance of common stock                                                 (4)         --
                                                                                        ----------  ----------
            Net cash used in financing activities                                          (1,429)     (1,525)
                                                                                        ----------  ----------
Net increase (decrease) in cash and cash equivalents                                       (7,247)        175
Cash and cash equivalents at beginning of period                                           14,552       6,860
                                                                                        ----------  ----------
Cash and cash equivalents at end of period                                             $    7,305  $    7,035
                                                                                        ==========  ==========
Supplemental disclosure of cash flow information                                                              
    Cash paid for interest                                                             $       46  $      294
                                                                                        ==========  ==========
Supplemental schedule of non-cash investing and financing activities                                          
    Other non-cash additions to property and equipment                                 $        2  $      474
                                                                                        ==========  ==========

    Issuance of common stock for payment of principal and interest
      on senior secured exchangeable convertible notes                                 $    1,388  $       --
                                                                                        ==========  ==========

    Conversion of convertible debt into common stock                                   $       --         344
                                                                                        ==========  ==========

    Non-cash deferred offering costs                                                   $       --  $      166
                                                                                        ==========  ==========

    Value of warrants to purchase Lumera common stock                                  $       --  $      476
                                                                                        ==========  ==========`

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

---

MICROVISION, INC.

Notes to Consolidated Financial Statements

March 31, 2007

(Unaudited)

1.  MANAGEMENT'S STATEMENT AND PRINCIPLES OF CONSOLIDATION

Management's Statement

The Consolidated Balance Sheet as of March 31, 2007, the Consolidated
Statements of Operations, Comprehensive Income (Loss) and Cash Flows for the
three months ended March 31, 2007 and 2006 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 March 31, 2007 and the results of operations,
comprehensive income (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, 2006.  The results of operations for the three months ended
March 31, 2007 are not necessarily indicative of the operating results that may
be attained for the entire fiscal year.

At March 31, 2007, Microvision had $7.3 million in cash and cash equivalents
In addition, as of March 31, 2007, the Company owned 1,750,000 shares of Lumera
common stock that were valued at $8,767,500 and were classified as investment
securities available for sale.  Between March 31, 2007 and May 10, 2007, the
Company sold approximately 758,000 shares of Lumera common stock for gross
proceeds of $4,151,000.  The remaining 992,000 shares of Lumera common stock had
a market value of approximately $4.4 million based on Lumera's closing stock price
on May 7, 2007.  Based on its current operating plan, the Company anticipates it
will require additional cash by February 2008.  Microvision plans to raise
additional cash to fund its operating plan past that time.  There can be no
assurance that additional cash will be available or that, if
available, it will be available on terms acceptable to Microvision
on a timely basis.  If adequate funds are not available to satisfy either
short-term or long-term capital requirements, Microvision will be required to limit
its operations substantially.  This limitation of operations may include
reductions in staff, operating costs and capital expenditures.

Principles of Consolidation

Until July 2004, the consolidated financial statements included the accounts
of Microvision, a Delaware corporation, and its majority-owned subsidiary Lumera
Corporation ("Lumera"), a Delaware corporation.  In July 2004,
Microvision's ownership interest in Lumera was reduced to 33% as a result of
Lumera completing an initial public offering of its common stock.  As a result
of the reduction in ownership, Microvision changed to the equity method of
accounting for its investment in Lumera until January 2006.  In January 2006,
Microvision sold 2,550,000 shares of its Lumera common stock.  As a result of
the reduction in ownership, Microvision changed to the cost basis of accounting
for available-for-sale securities for its investment in Lumera in accordance
with Financial Accounting Standards Board No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" ("FAS 115").

2.  NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is calculated on the basis of the weighted-average
number of common shares outstanding during the reporting periods.
Diluted net income (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 convertible debt,
convertible preferred stock, warrants and employee stock options.  Diluted net
loss per share for the three months ended March 31, 2007 is equal to basic net
loss per share because the effect of all potential common stock outstanding
during the periods, including convertible debt, convertible preferred stock,
options and warrants is anti-dilutive.  Basic net income per share for the three
months ended March 31, 2006 is diluted by outstanding convertible securities per
the table below.  The components of basic and diluted net income (loss) per share were as
follows (in thousands, except loss per share data):

`Three Months Ended
                                                                                 March 31,
                                                                          --------------------------
                                                                              2007          2006
                                                                          ------------  ------------                            
Numerator:
Net income (loss) available for common shareholders - basic (A)          $     (6,892) $        331
Dilutive effect of preferred stock                                                              144
Dilutive effect of convertible debt                                                            (151)
                                                                          ------------  ------------
Net income (loss) available for common shareholders - diluted (B)        $     (6,892) $        324
                                                                          ============  ============

Denominator:
Weighted-average common shares outstanding - basic (C)                         43,098        25,218
Dilutive incremental share effect from:
Preferred stock                                                                    --           786
Convertible debt                                                                   --         2,481
Stock options                                                                      --             7
                                                                          ------------  ------------
Weighted-average common shares outstanding - diluted (D)                       43,098        28,492
                                                                          ============  ============

Net income (loss) per share - basic  (A/C)                               $      (0.16) $       0.01
                                                                          ============  ============

Net income (loss) per share - diluted (B/D)                              $      (0.16) $       0.01
                                                                          ============  ============`

On March 31, 2007, the Company excluded the following convertible securities
from diluted net loss per share as the effect of including them would have been
anti-dilutive: publicly traded warrants convertible into 12,363,000 shares of
common stock and options and private warrants convertible into a total of
10,436,000 shares of common stock.

3.  INVENTORY

Inventory at March 31, 2007 and December 31, 2006 consisted of the
following:

`March 31,     December 31,
                                                                              2007          2006
                                                                          ------------  ------------                            
Raw materials                                                            $     51,000  $    146,000
Work-in-process                                                                29,000            --
Finished goods                                                                889,000       897,000
                                                                          ------------  ------------
                                                                         $    969,000  $  1,043,000
                                                                          ============  ============`

The inventory at March 31, 2007 and December 31, 2006 consisted of raw
materials, work-in-process, and finished goods for Flic, 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.

4.  SHARE-BASED COMPENSATION

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

`Three Months Ended
                                                                                 March 31,
                                                                          --------------------------
                                                                              2007          2006
                                                                          ------------  ------------                            
Cost of contract revenue                                                       23,000        21,000
Cost of product revenue                                                         8,000        15,000
Research and development expense                                               82,000        37,000
Sales, marketing, general and administrative expense                          178,000       343,000
                                                                          ------------  ------------
Share-based employee compensation cost charged against income            $    291,000  $    416,000
                                                                          ============  ============`

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 March 31, 2007:

`Weighted
                                                                  Average
                                                      Weighted   Remaining
                                                       Average  Contractual   Aggregate
                                                      Exercise      Term      Intrinsic
Options                                  Shares         Price     (years)       Value
---------------------------------------- -----------  --------- ------------  ----------
Outstanding as of March 31, 2007          5,216,000  $    4.30          7.1  $3,046,000

Exercisable as of March 31, 2007          1,382,000  $    7.53          5.9  $  708,000`

In January 2007, 1,176,000 options held by two former executive officers of
the Company expired unexercised.  These options expired one year following the
date of separation from service of each former executive, pursuant to the
provisions of the former executives' option agreements.

In February 2007, the Company granted a total of 675,000 options to 108
employees in connection with the Company's annual reviews.  The options were
granted at market with an exercise price of $3.42, vest 25% on each annual
anniversary of the date of grant, and expire 10 years from the date of
grant.

As of March 31, 2007, the Company's unamortized share-based compensation was
$4,183,000.  The Company plans to amortize this share-based compensation cost
over the next 2.7 years.

5.  LONG-TERM NOTES

Convertible Notes

The following table summarizes the activity related to the Company's
convertible notes during the three months ended March 31,
2007:

`Embedded    Common
                                                                                            derivative  stock and
                                                                        Notes    Warrants    feature      APIC
                                                                      ---------  ---------  ----------  ---------
Balances at December 31, 2006                                        $   2,418  $   2,572  $       68  $   7,688
Principal payments on notes                                             (2,767)        --          --         --
Discount accretion for the three months ended March 31, 2007               349         --          --         --
Changes in market value for the three months ended March 31, 2007           --        560         (68)        --
                                                                      ---------  ---------  ----------  ---------
Balance of notes at March 31, 2007                                   $      --  $   3,132  $       --  $   7,688
                                                                      =========  =========  ==========  =========`

In March 2007, the Company made the final scheduled payments in connection
with its convertible notes as follows:

- cash payments of $1,400,000 in principal and $28,000 in interest, and
- issued 459,000 shares of its common stock in payment of $1,367,000 in
principal and $21,000 in interest.

The Company issued warrants to purchase 2,302,000 shares of common stock in
connection with the issuance of the convertible notes.  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, because the Company cannot engage in certain corporate
transactions affecting the common stock unless the Company makes a cash payment
to the holders of the warrants.  The Company records changes in the fair values
of the warrants in the statement of operations each period.  The Company valued
the warrants at March 31, 2007 using the Black-Scholes option-pricing model with
the following assumptions:  expected volatilities of 68%; expected dividend
yields of 0%; risk free interest rates ranging from 4.6% to 4.8%; and
contractual lives ranging from 1.3 years to 3.7 years.  The change in value of
the warrants of $560,000 for the three months ended March 31, 2007 was recorded
as a non-operating loss and is included in "Gain (loss) on derivative
instruments, net" in the consolidated statement of operations.

Tenant Improvement Loan Agreement

In February 2006, the Company entered into a loan agreement with the lessor
of the Company's corporate headquarters 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, including interest
added to principal, was $502,000 at March 31, 2007.

6.  RECEIVABLES FROM RELATED PARTIES

In 2000, the Board of Directors authorized the Company to provide
unsecured lines of credit to each of the Company's then three senior officers.
The limit of the line of credit was three times the executives' base salary less
any amounts outstanding under the Executive Option Exercise Note Plan. In 2002
and 2001, the Board of Directors authorized additions totaling $700,000, to the
limit for one senior officer. The lines of credit carry interest rates of 5.4%
to 6.2%. The lines of credit must be repaid within one year of the senior
officer's termination or within thirty days of demand by the Company in the
event of a plan termination, provided that in the event of such a demand the
senior officer may elect to deliver a promissory note with a one-year term in
lieu of payment. At March 31, 2007 and December 31, 2006, a total of $2,723,000
was outstanding under the lines of credit.

In 2002, the Company determined that certain of its senior officers may have
insufficient net worth and short-term earnings potential to repay loans
outstanding under the Company's lines of credit. In 2003 and 2002, the Company
recorded allowances for doubtful accounts for receivables from senior officers
totaling $900,000.

In January 2006, two of the senior officers with outstanding loans left the
Company. Because the lines of credit were not fully secured and collection was
uncertain, the Company recorded an additional allowance of $1,031,000 in
December 2005. In accordance with the terms, the loans were due in January 2007.
Neither of the officers has repaid their loans. One of the officers pledged
50,000 shares of Lumera common stock as collateral for the loans. Based on the
March 31, 2007 closing price of $5.01, the pledged Lumera shares have a market
value of approximately $251,000. The Company is in the process of foreclosing on
the pledged Lumera shares and pursuing collection of the outstanding balances.
As a result of a review of the financial position of the former executives and
the potential difficulty in collecting loans from former employees, the Company
recorded additional allowances for doubtful accounts for the receivables from
senior officers of $542,000 during 2006. As of March 31, 2007, the allowance for
receivables from related parties of $2,473,000 is based on a total receivable
balance of $2,723,000, less the estimated value of the collateral as of March 31, 2007.
No repayments have been made on the outstanding lines of credit.

7.  ACCOUNTING FOR LUMERA

Investment Securities, Available-for-sale

In January 2006, Microvision sold 2,550,000 shares of its Lumera common
stock for $10.3 million.  Microvision recorded a "Gain on sale of
investment in Lumera" of approximately $7.3 million.

As a result of the reduction in ownership, Microvision changed to the cost
basis of accounting for its investment in Lumera in accordance with FAS 115.

As of March 31, 2007, the Company owned 1,750,000 shares of Lumera common
stock that were valued at $8,767,500 and were classified as "Investment
securities, available-for-sale."  The cost, net unrealized gain and
estimated fair market value of the shares of Lumera common stock as of March 31,
2007, are shown below:

`Net      Estimated
                                                Unrealized     Fair
                                       Cost        Gain       Value
                                     ---------  ----------  ----------             
Lumera common stock                 $   2,074  $    6,694  $    8,768
                                     =========  ==========  ==========`

Warrant

In connection with the change in accounting method in January 2006, the
Company recorded $476,000 in "Other current assets" for the fair value
of a warrant previously received to purchase 170,500 shares of Lumera common
stock.  On the transaction date, the warrant was valued using the Black-Scholes
option-pricing model with the following assumptions:  expected volatility of
83%; expected dividend yield of 0%; risk free interest rate of 4.6%; and
contractual life of 5.1 years.

At March 31, 2007, the warrant was revalued using the Black-Scholes option-
pricing model with the following assumptions; expected volatility of 83%;
expected dividend yield of 0%; risk free interest rate of 4.5%; and contractual
life of 4.0 years.  The fair value of the warrant decreased to $435,000 from
$595,000 at December 31, 2006 and the change in value for the three months ended
March 31, 2007 of $160,000 was recorded as a non-operating loss and is included
in "Gain (loss) on derivative instruments, net" in the consolidated
statement of operations.

8.	INCOME TAXES

On January 1, 2007, the Company adopted Financial Accounting Standards Board
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
(FIN 48).  FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with FASB
Statement No. 109, Accounting for Income Taxes. FIN 48 also prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. The new FASB standard also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition.

Historically, the Company's tax provision for financial statement purposes
and the actual tax returns have been prepared using consistent methodologies.
There were no material unrecognized tax benefits as of December 31, 2006.  Due
to the Company's Net Operating Loss Carryforwards and research and development
credits, any future adjustments to the unrecognized tax benefit will have no
impact on the Company's effective tax rate due to the valuation allowance which
fully offsets all tax benefits.  For the quarter ended March 31, 2007, the
unrecognized tax benefit did not change significantly.  The Company does not
expect the unrecognized tax benefit to change significantly during the next
twelve months. Any interest and penalties incurred on the settlement of
outstanding tax positions would be recorded as a component of interest
expense.

The Company files its tax returns as prescribed by the tax laws of the
jurisdictions in which it operates.  The Company's Federal and state taxes for
the years 2000 through 2006 are subject to examination.  As of March 31, 2007,
the Company believes assessments that may possibly arise will likely be
immaterial to its financial statements.

9.  REPORTING SEGMENTS

Operating segments are defined as components of an enterprise for which
separate financial information is available and evaluated regularly by the chief
operating decision-maker, or decision-making group, in deciding how to allocate
resources and in assessing performance.  Microvision has two reportable
segments: the contract revenue derived from the development of custom prototypes
and products, and the product revenue derived from sales of Microvision
products.  Our chief operating decision-making group evaluates performance based
on financial information presented on a consolidated basis accompanied by
information about revenues and gross margins by segments.  Both segments share
in research and development and marketing, selling and administrative costs that
are not allocated to the segments.  Except for fixed assets associated with
production, the Company's assets are not allocated to the segments.  Therefore,
segment information is presented only for revenue and cost of revenue.

10.  SUBSEQUENT EVENT

Between March 31, 2007 and May 10, 2007, the Company sold 758,000 shares
of Lumera common stock for gross proceeds of $4,151,000.  Microvision will
record a gain of $3,217,000 in "Realized gain on sale of investment in
Lumera" in the second quarter of 2007 as a result of the sales.

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 miniature display and imaging engines based upon our
integrated photonics module (IPM) architecture. The IPM utilizes our expertise
in two dimensional Micro-Electrical Mechanical system ("MEMS") light scanning
technologies, 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.

In 2006, we announced our strategy to develop and supply IPM-based miniature
display engines 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 surfaces. The same display engines with
some modification could be embedded into the dashboard of an automobile or an
airplane to create a heads up display (HUD) that could project point-by-point
navigation, critical operational, safety and other information important to the
driver or pilot. The IPM-based engine 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
                                       2007      revenue     2006      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------
Three months ended March 31                                                                         
Government revenue                  $   1,609       84.6  $   1,475       82.8  $     134       9.1
Commercial revenue                        293       15.4        306       17.2        (13)     (4.2)
                                     ---------             ---------             ---------
Total contract revenue              $   1,902             $   1,781             $     121       6.8
                                     =========             =========             =========`

We earn contract revenue from performance on development contracts with the
United States government and commercial customers.

Our contract revenue 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.  Contract
revenue was higher during the three months ended March 31, 2007 than the same
period in 2006, due to higher beginning contract backlog.

In March 2007, we announced a contract with a leading Tier 1 automotive
supplier to develop projection-based display solutions based on our PicoP(TM).
During the three months ended March 31, 2007, no revenue was recognized on this
development contract.

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.

Our backlog of development contracts at March 31, 2007 was $6.5 million
compared to $1.3 million at March 31, 2006, all of which is scheduled for
completion during the next twelve months.

Product revenue.

`% of                  % of
                                                 product               product
                                       2007      revenue     2006      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------
Three months ended March 31                                                                         
Flic revenue                        $     283       85.0  $     657       95.1  $    (374)    (56.9)
Nomad revenue                              50       15.0         34        4.9         16      47.1
                                     ---------             ---------             ---------
Total product revenue               $     333             $     691             $    (358)    (51.8)
                                     =========             =========             =========`

Our quarterly revenue may vary substantially due to the timing of product
orders from customers, production constraints and raw material availability.

In May 2007, we announce the launch of Rov, our new bar code scanner product.
The Rov is based on our proprietary MEMS technology. We expect Rov
to be manufactured by our contract manufacturing partner in Malaysia.

The backlog of product orders at March 31, 2007 was approximately $410,000,
compared to $92,000 at March 31, 2006, all of which is scheduled for delivery
during the next twelve months.  We have not yet taken orders for the Rov
product.

Cost of contract revenue.

`% of                  % of
                                                contract              contract
                                       2007      revenue     2006      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------
Three months ended March 31         $   1,010       53.1  $   1,151       64.6  $    (141)    (12.3)`

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.  The
cost of contract revenue can fluctuate substantially from period to period
depending on the level of both the direct costs incurred in the performance of
projects and the level of indirect costs incurred.

We expect that cost of contract revenue on an absolute dollar basis may
increase in the future.  This increase will likely result from additional
development contract work that we expect to perform.  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
                                       2007      revenue     2006      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------
Three months ended March 31         $     284       85.3  $   1,294      187.3  $  (1,010)    (78.1)`

Cost of product revenue includes both the direct and allocated indirect costs
of manufacturing Flics sold to customers.  Direct costs include labor, materials
and other costs incurred directly in the manufacture of Flic.  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 March 31, 2007 and 2006, we expensed
approximately $73,000 and $272,000, respectively, of manufacturing overhead
associated with production capacity in excess of production requirements.

The decline in cost of product revenue as a percentage of product revenue for
the three months ended March 31, 2007 compared to the previous year is
attributable to the following factors:

- The decision in June 2006 to no longer support the Nomad product line
resulting in a savings of approximately $553,000 for the three months ended
March 31, 2007 compared to the same period in 2006.

- Reduced direct cost and overhead on the Flic product line resulting in a
saving of approximately 12% for the three months ended March 31, 2007 compared
to the same period in 2006.

We expect that cost of product revenue on an absolute dollar basis will
increase in the future.  This increase will likely result from expected sales of
commercial products.  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.

`2007       2006     $ change   % change
                                     ---------  ---------  ---------  ---------                     
Three months ended March 31         $   3,345  $   2,154  $   1,191       55.3`

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 integrated
photonics module.   The increase in cost is primarily attributable to increases
in payroll costs and contracted services.

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.

`2007       2006     $ change   % change
                                     ---------  ---------  ---------  ---------                     
Three months ended March 31         $   3,550  $   4,739  $  (1,189)     (25.1)`

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.

In early 2006, we announced our plan to reduce spending in sales, marketing,
general and administrative expenses.  We continue to aggressively manage these
costs as part of our strategy of accelerating the development of products based
on the integrated photonics module while controlling the cash burn.  We do not
expect sales, marketing, general and administrative expense to grow considerably
during 2007.

Interest expense.

`2007       2006     $ change   % change
                                     ---------  ---------  ---------  ---------                     
Three months ended March 31         $     468  $   1,822  $  (1,354)     (74.3)`

In March 2005, we raised $10 million before issuance costs of $423,000 from
the issuance of convertible notes ("March Notes") and warrants to purchase an
aggregate of 462,000 shares of Microvision common stock. In December 2005, we
raised $10 million before issuance costs of $134,000 from the issuance of
convertible notes ("December Notes"), 838,000 shares of Microvision common stock
and warrants to purchase an aggregate of 1,089,000 shares of Microvision common
stock.  The decrease in interest expense from the prior year relates to the
lower outstanding balance of our March and December notes in 2007 than in
2006.

Gain (loss) on derivative instruments, net.

`2007       2006     $ change   % change
                                     ---------  ---------  ---------  ---------                     
Three months ended March 31         $    (652) $   1,867  $  (2,519)    (134.9)`

In connection with the issuance of our Notes, we concluded that the note
holders' right to convert all or a portion of the Notes into our common stock is
an embedded derivative instrument as defined by FAS 133, Accounting for
Derivative Instruments and Hedging Activities.  We determine the value of
the derivative features at each balance sheet date using the Black-Scholes
option-pricing model.  Due to the retirement of our Notes, the value of the
derivative feature decreased to zero during the three months ended March 31,
2007.  The change in value of $68,000 for the three months ended March 31, 2007
was recorded as a non-operating gain and is included in "Gain (loss) on
derivative instruments, net" in the consolidated statement of operations.

We issued warrants to purchase 2,302,000 shares of common stock in connection
with the issuance of the Notes.  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,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 statement of
operations each period.  We valued the warrants at March 31, 2007 using the
Black-Scholes option-pricing model with the following assumptions:  expected
volatilities of 68%; expected dividend yields of 0%; risk free interest rates
ranging from 4.6% to 4.8%; and contractual lives ranging from 1.3 years to 3.7
years.  The change in value of the warrants of $560,000 for the three months
ended March 31, 2007 was recorded as a non-operating loss and is included in
"Gain (loss) on derivative instruments, net" in the consolidated statement of
operations.

In January 2006, we sold 2.6 million shares of our Lumera common stock for
$10.3 million.  As a result of the reduction in ownership, we changed to the
cost basis of accounting for our investment in Lumera in accordance with FAS
115.  In connection with the change in accounting method, we recorded $476,000
in "Other current assets" for the fair value of warrants previously received to
purchase 170,500 shares of Lumera common stock.  On the transaction date, the
warrants were valued using the Black-Scholes option-pricing model with the
following assumptions:  expected volatility of 83%; expected dividend yield of
0%; risk free interest rate of 4.55%; and contractual life of 5.1 years.
Changes in the fair value of the warrants are recorded in the statement of
operations each period.  As of March 31, 2007, the warrants were valued using
the Black-Scholes option-pricing model with the following assumptions:  expected
volatilities of 83%; expected dividend yields of 0%; risk free interest rates of
4.5%; and contractual lives of 4.0 years.  As of March 31, 2007, the fair value
of the warrants decreased to $435,000 from $595,000 at December 31, 2006 and the
change in value of $160,000 was recorded as a non-operating loss and is included
in "Gain (loss) on derivative instruments, net" in the consolidated
statement of operations.



Equity in losses of Lumera and Gain on sale of investment in
Lumera.

Equity in losses of Lumera:

`2007       2006     $ change   % change
                                     ---------  ---------  ---------  ---------                     
Three months ended March 31         $      --  $    (290) $     290     (100.0)`

Gain on sale of investment in Lumera:

`2007       2006     $ change   % change
                                     ---------  ---------  ---------  ---------                     
Three months ended March 31         $      --  $   7,270  $  (7,270)    (100.0)`

As discussed above, in January 2006, we sold 2.6 million shares of our Lumera
common stock for $10.3 million.  We recorded a "Gain on sale of investment
in Lumera" of approximately $7.3 million. As a result of the reduction in
ownership, we changed to the cost basis of accounting for our investment in
Lumera in accordance with FAS 115.  We recorded our proportionate share of
Lumera losses prior to the sale in January 2006.  We recorded a charge of
$290,000 for our proportion of Lumera net loss for the period preceding the sale
and change in accounting method.

Liquidity and Capital Resources

We have funded our operations to date primarily through the sale of common
stock, convertible preferred stock, convertible debt, warrants and, to a lesser
extent, from development contract revenues and product sales.  At March 31,
2007, we had $7.3 million in cash and cash equivalents and owned 1,750,000
shares of Lumera common stock that were valued at $8,767,500 and were classified
as investment securities available for sale.  Between March 31, 2007 and May 10,
2007, we sold 758,000 shares of Lumera common stock for gross proceeds of
$4,151,000.  The remaining 992,000 shares of Lumera common stock had a market
value of approximately $4.4 million based on Lumera's closing stock price on May
7, 2007.  Based on our

Cash used in operating activities totaled $5.6 million during the three
months ended March 31, 2007, compared to $8.5 million during the same period in
2006.  In both periods, cash used in operating activities for both periods
resulted primarily from the loss from operations.

Cash used in investing activities totaled $232,000 during the three months
ended March 31, 2007, compared to cash provided by investing activities of $10.2
million during the same period of 2006.  In January 2006, we sold 2.6 million
shares of our Lumera common stock for $10.3 million. In addition, we used cash
of $232,000 for capital expenditures during the three months ended March 31,
2007, compared to $1.1 million during the same period in 2006.  Capital
expenditures include leasehold improvements to leased office space and computer
hardware and software, laboratory equipment and furniture and fixtures to
support operations.  The decrease is due to the absence of expenditures for
leasehold improvements to our new facility in 2006.

Cash used in financing activities totaled $1.4 million during the three
months ended March 31, 2007, compared to cash used in financing activities of
$1.5 million during the same period in 2006.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Substantially all of our cash equivalents and investment securities have
variable interest rates and, as such, the fair values of the principal of these
instruments are not affected by changes in market interest rates.  Due to the
generally short-term maturities of these investment securities, we believe that
the market risk arising from its holdings of these financial instruments is not
material.

Our investment policy restricts investments to ensure principal preservation
and liquidity.  We invest cash that we expect to use within approximately sixty
days primarily in U.S. Treasury-backed instruments.  We invest cash in excess of
this time period in high quality investment securities.  The investment
securities portfolio is limited to U.S. government and U.S. government agency
debt securities and other high-grade securities generally with maturities of
three years or less.

Cash and cash equivalents were $7.3 million as of March 31, 2007.

As of March 31, 2007, we owned 1,750,000 shares of Lumera common stock.
Between March 31, 2007 and May 10, 2007, we sold 758,000 shares of Lumera common
stock for gross proceeds of $4,151,000.  Based on the May 7, 2007 closing price
of $4.46, the remaining 992,000 Lumera shares have a market value of
approximately $4.4 million.  The market price of Lumera's common stock is
subject to fluctuations based on Lumera's financial performance, published
accomplishments and overall market conditions.  During the 90 calendar day
period ended May 7, 2007, Lumera common stock has traded between $3.61 and
$6.48.

Presently, all of our development contract payments are denominated in U.S.
dollars and, consequently, we believe we have no material foreign currency
exchange rate risk.  However, in the future we may enter into development
contracts or product sales in foreign currencies that may subject us to foreign
exchange rate risk.

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 March 31, 2007, we had an accumulated deficit of $246.5 million.
- We incurred consolidated net losses of $187.4 million from inception through
2004, $28.2 million in 2005, $24.0 million in 2006, and consolidated net loss of
$6.9 million in the three months ended March 31, 2007.

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 substantial
losses and negative cash flow at least through 2007 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.

Based on our

- Further develop the scanned beam technology,
- Develop and protect our intellectual property rights, and
- Fund long-term marketing and business development opportunities.

We own 1,750,000 shares of Lumera common stock as of March 31, 2007.  Between
March 31, 2007 and May 10, 2006, we sold 758,000 shares of Lumera common stock
for gross proceeds of $4,151,000.  Based on the May 7, 2007 closing price of
$4.46, the remaining 992,000 Lumera shares have a market value of approximately
$4.4 million.  The market price of Lumera's common stock is subject to
fluctuations based on Lumera's financial performance, published accomplishments
and overall market conditions.  During the 90 calendar day period ended May 7,
2007, Lumera common stock has traded between $3.61 and $6.48.  The immediate
sale of Lumera stock in the public market could have a negative impact on the
Lumera stock price.

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 light
scanning and image capture technologies and the market acceptance and
competitive position of such products. If revenues are less than we anticipate,
if the level and mix of revenues vary from anticipated amounts and allocations
or if expenses exceed the amounts budgeted, we 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 such cash 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 to satisfy either short-term or
long-term capital requirements, we may be required to limit our operations
substantially. This limitation of operations may include reductions in staff and
operating costs as well as reductions in capital expenditures and investment in
research and development.

The value of our investment in Lumera may decrease.

Lumera's stock price is subject to fluctuation and may decrease, lowering the
value of our investment.  We own approximately 4.9% of Lumera's common stock.
Since we hold a significant percentage of Lumera's common stock, if an active
market does not develop or is not sustained, it may be difficult for us to sell
our shares of Lumera's common stock at an attractive price or at all.  The
likelihood of Lumera's success, and the value of the common stock we hold, must
be considered in light of the risks frequently encountered by early stage
companies, especially those formed to develop and market new technologies.
These risks include Lumera's potential inability to establish product sales and
marketing capabilities to establish and maintain markets for their potential
products; and to continue to develop and upgrade their technologies to keep pace
with changes in technology and the growth of markets using polymer materials.
If Lumera is unsuccessful in meeting these challenges, its stock price, and the
value of our investment, could decrease.

We cannot be certain that the scanned beam technology or products
incorporating this technology will achieve market acceptance.  If the scanned
beam technology does not achieve market acceptance, our revenues may not
grow.

Our success will depend in part on customer acceptance of the scanned beam
technology.  The scanned beam technology 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 scanned beam technology must meet the expectations of our
potential customers in the defense, industrial, medical and consumer markets.
If our technology fails to achieve market acceptance, we may not be able to
continue to develop the scanned beam technology.

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.
During the first and second quarter of 2003, the third quarter of 2004, the
second quarter and fourth quarter of 2005, all four quarters of 2006, and the
first quarter of 2007, the market price of our stock traded below $5.00 per
share.  On May 7, 2007, the closing price of our stock was $4.12.

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 us.  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 the
scanned beam technology 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 scanned beam technology
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 scanned beam 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 the scanned
beam technology and other technologies 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 the scanned beam
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 scanned beam
technology, to cease licensing scanned beam 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 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.

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

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

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

To date, we have produced limited quantities of our Flic products and
demonstration units for research, development and demonstration purposes.  The
cost per unit for these units 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.

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.  In addition, our efforts to improve the quality and utility of
our existing Flic products may not result in improved sales.  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.

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 Flic
product and plan to use a contract manufacturer for our new Rov product, and we
plan to continue using foreign manufacturers to manufacture some of our other
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; and
- changes in tariff rates or other trade and monetary policies.

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

We have developed demonstration units incorporating the light scanning
technology. 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.

If we cannot supply products in commercial quantities, we will not achieve
commercial success.

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 scanned beam 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 our scanned beam 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 three months of 2007 and the full year of 2006, 72% and 51%,
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 developmental 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 the scanned beam display
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 the scanned beam technology and products
incorporating the scanned beam technology 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 scanned beam technology or
find that the development, manufacture or sale of products incorporating the
scanned beam technology 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.
We have significantly expanded the scope of our operations.  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

At a special meeting of shareholders of Microvision, Inc. on January 18,
2007, shareholders approved an amendment to our Certificate of Incorporation to
increase the number of authorized shares of common stock from 73.0 million
shares to 125.0 million shares. The newly authorized shares or common stock have
the same rights as the previously authorized shares, including the right to cast
one vote per share of common stock.  The result of the vote was as follows:

`For               Against           Abstain
        ---------           ---------         ---------                     
       37,705,522           1,787,162          276,610`

ITEM 6.  Exhibits

|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.
| | -----------------

|Date:  May 10, 2007 | BY: | /s/  Alexander Y. Tokman                             
|------------------- | --- | -----------------------------------------------------
|                    |     | Alexander Y. Tokman                                  
|                    |     | Chief Executive Officer
(Principal Executive Officer)



|Date:  May 10, 2007 | BY: | /s/  Jeff Wilson                                     
|------------------- | --- | -----------------------------------------------------
|                    |     | Jeff Wilson                                          
|                    |     | Chief Financial Officer
(Principal Financial Officer)



EXHIBIT INDEX

The following documents are filed.

|Exhibit Number | Description                                                                                                                                                                     
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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

---