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, 2010

OR

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

For the transition period from ________to _________

Commission file number    0-21221



Microvision, Inc.



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

6222 185th Avenue NE
Redmond, Washington      98052

(425) 936-6847

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

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

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

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

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

As of May 6, 2010, 88,740,000 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, 2010 and
December 31, 2009 (unaudited)                          | 3   
|Consolidated Statements of Operations for three
months ended March 31, 2010 and 2009 (unaudited)             | 4   
|Consolidated Statements of Comprehensive Loss
for the three months ended March 31, 2010 and 2009 (unaudited) | 5   
|Consolidated Statements of Cash Flows for the three
months ended March 31, 2010 and 2009 (unaudited)         | 6   
|Notes to Consolidated Financial Statements
(unaudited)                                                       | 8   
|                                                                                                             |     
|Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations               | 14  
|Item 3.  Quantitative and Qualitative Disclosures About Market
Risk                                          | 19  
|Item 4.  Controls and Procedures                                                                             | 19  
|                                                                                                             |     
|Part II: Other Information                                                                                   |     
|Item 1A. Risk Factors                                                                                        | 20  
|Item 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,
                                                                                       2010           2009
                                                                                   -------------  -------------
Assets                                                                                                         
Current assets
   Cash and cash equivalents                                                      $      33,027  $      43,025
   Investment securities, available-for-sale                                              2,617          2,710
   Accounts receivable, net of allowances of $67 and $67                                    555            913
   Costs and estimated earnings in excess of billings on uncompleted contracts               30             70
   Inventory                                                                              3,607            926
   Other current assets                                                                     793            751
                                                                                   -------------  -------------
   Total current assets                                                                  40,629         48,395

Property and equipment, net                                                               4,467          3,904
Restricted investments                                                                    1,189          1,189
Other assets                                                                                 48             48
                                                                                   -------------  -------------
   Total assets                                                                   $      46,333  $      53,536
                                                                                   =============  =============
                                                                                                               
Liabilities and Shareholders' Equity                                                                           
Current liabilities
   Accounts payable                                                               $       5,811  $       4,949
   Accrued liabilities                                                                    5,083          4,190
   Billings in excess of costs and estimated earnings on uncompleted contracts               47             55
   Liability associated with common stock warrants                                          447            840
   Current portion of capital lease obligations                                              62             62
   Current portion of long-term debt                                                         81             78
                                                                                   -------------  -------------
   Total current liabilities                                                             11,531         10,174
Capital lease obligations, net of current portion                                           139            157
Long-term debt, net of current portion                                                      222            244
Deferred rent, net of current portion                                                       981          1,070
                                                                                   -------------  -------------
   Total liabilities                                                                     12,873         11,645
                                                                                   -------------  -------------
Commitments and contingencies

Shareholders' equity
   Preferred stock, par value $.001; 25,000 shares authorized;
      0 and 0 shares issued and outstanding                                                  --             --
   Common stock, par value $.001; 200,000 shares authorized;
      88,700 and 88,686 shares issued and outstanding                                        89             89
   Additional paid-in capital                                                           374,083        373,405
   Accumulated other comprehensive loss                                                     (25)           (33)
   Accumulated deficit                                                                 (340,687)      (331,570)
                                                                                   -------------  -------------
   Total shareholders' equity                                                            33,460         41,891
                                                                                   -------------  -------------
   Total liabilities and shareholders' equity                                     $      46,333  $      53,536
                                                                                   =============  =============`

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

---



Microvision, Inc.

                     Consolidated Statements of Operations

                  (In thousands, except per share data)

                            (Unaudited)

`Three Months Ended
                                                                                   March 31,
                                                                             ----------------------
                                                                                2010        2009
                                                                             ----------  ----------                        
Contract revenue                                                            $      298  $      712
Product revenue                                                                    370         239
                                                                             ----------  ----------
    Total revenue                                                                  668         951
                                                                             ----------  ----------
Cost of contract revenue                                                           128         383
Cost of product revenue                                                          1,159         241
                                                                             ----------  ----------
    Total cost of revenue                                                        1,287         624
                                                                             ----------  ----------
Gross margin                                                                      (619)        327
                                                                             ----------  ----------


Research and development expense                                                 4,998       5,610
Sales, marketing, general and administrative expense                             3,888       3,814
                                                                             ----------  ----------
    Total operating expenses                                                     8,886       9,424
                                                                             ----------  ----------
Loss from operations                                                            (9,505)     (9,097)
Interest income                                                                     29          64
Interest expense                                                                   (17)        (11)
Gain on derivative instruments, net                                                395         180
Other expense                                                                      (19)         (1)
                                                                             ----------  ----------
Net loss                                                                    $   (9,117) $   (8,865)
                                                                             ==========  ==========

Net loss per share - basic and diluted                                      $    (0.10) $    (0.13)
                                                                             ==========  ==========

Weighted-average shares outstanding - basic and diluted                         88,693      68,080
                                                                             ==========  ==========`

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

---



Microvision, Inc.

                     Consolidated Statements of Comprehensive Income (Loss)

                             (In thousands)

                            (Unaudited)

`Three Months Ended
                                                                                   March 31,
                                                                             ----------------------
                                                                                2010        2009
                                                                             ----------  ----------                        
Net loss                                                                    $   (9,117) $   (8,865)

Other comprehensive gain (loss)
Unrealized gain on investment securities, available-for-sale                         8           1
                                                                             ----------  ----------
Comprehensive loss                                                          $   (9,109) $   (8,864)
                                                                             ==========  ==========`

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

---



Microvision, Inc.

                    Consolidated Statements of Cash Flows

                           (In thousands)

                            (Unaudited)

`Three Months Ended
                                                                                              March 31,
                                                                                        ----------------------
                                                                                           2010        2009
                                                                                        ----------  ----------
Cash flows from operating activities                                                                          
    Net loss                                                                           $   (9,117) $   (8,865)
    Adjustments to reconcile net loss to net cash used in operations:
        Depreciation                                                                          342         245
        Non-cash stock-based compensation expense                                             661         548
        Gain on derivative instruments, net                                                  (395)       (180)
        Inventory write-downs                                                                 756          --
        Non-cash deferred rent                                                                (69)        (69)
            Change in:
            Accounts receivable, net                                                          358          35
            Costs and estimated earnings in excess of billings on uncompleted contracts        40         370
            Inventory                                                                      (3,437)         86
            Other current assets                                                              (41)        118
            Other assets                                                                       --          (7)
            Accounts payable                                                                  469      (1,049)
            Accrued liabilities                                                               867          21
            Billings in excess of costs and estimated earnings on uncompleted contracts        (8)         (7)
                                                                                        ----------  ----------
            Net cash used in operating activities                                          (9,574)     (8,754)
                                                                                        ----------  ----------
Cash flows from investing activities                                                                          
    Sales of investment securities                                                            100          --
    Purchases of property and equipment                                                      (512)       (354)
                                                                                        ----------  ----------
            Net cash used in investing activities                                            (412)       (354)
                                                                                        ----------  ----------
Cash flows from financing activities                                                                          
    Principal payments under capital leases                                                   (18)        (10)
    Principal payments under long-term debt                                                   (19)        (18)
    Net proceeds from issuance of common stock                                                 25          --
                                                                                        ----------  ----------
            Net cash used in financing activities                                             (12)        (28)
                                                                                        ----------  ----------
Net increase (decrease) in cash and cash equivalents                                       (9,998)     (9,136)
Cash and cash equivalents at beginning of period                                           43,025      25,533
                                                                                        ----------  ----------
Cash and cash equivalents at end of period                                             $   33,027  $   16,397
                                                                                        ==========  ==========
Supplemental disclosure of cash flow information                                                              
    Cash paid for interest                                                             $       17  $       11
                                                                                        ==========  ==========
Supplemental schedule of non-cash investing and financing activities                                          
    Other non-cash additions to property and equipment                                 $      478  $       60
                                                                                        ==========  ==========`

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

MICROVISION, INC.
              Notes to Consolidated Financial Statements
              March 31, 2010
              (Unaudited)

1.  MANAGEMENT'S STATEMENT AND PRINCIPLES OF CONSOLIDATION

Management's Statement

The Consolidated Balance Sheet as of March 31, 2010, the Consolidated
Statements of Operations, Comprehensive Loss and Cash Flows for the three months
ended March 31, 2010 and 2009 have been prepared by Microvision, Inc.
("we" or "us") and have not been audited.  In the opinion of
management, all adjustments necessary to state fairly the financial position at
March 31, 2010 and the results of operations, comprehensive loss and cash flows
for all periods presented have been made and consist of normal recurring
adjustments.  Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules of the
Securities and Exchange Commission (the "SEC").  You should read these
condensed financial statements in conjunction with the financial statements and
notes thereto included in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2009.  The results of operations for the three months ended
March 31, 2010 are not necessarily indicative of the operating results that may
be attained for the entire fiscal year.

We have incurred significant losses since inception.  We have funded
operations to date primarily through the sale of common stock, convertible
preferred stock, warrants, the issuance of convertible debt and, to a lesser
extent, from development contract revenues and product sales.  At March 31,
2010, Microvision had $35.6 million in cash, cash equivalents and investment
securities available-for-sale, which included $2.6 million in auction rate
securities (ARS).  There is currently no established primary orderly market for
these ARS.  If we were required to sell them in a short period of time, we might
receive less than their current estimated fair values.  However, based on our
current operating plan and ability to access our $33.0 million held in cash and
cash equivalents as of March 31, 2010, we do not expect to be required to sell
these securities materially below their current estimated fair value.

Based on our current operating plan, we anticipate that we have sufficient
cash and cash equivalents to fund our operations through the first quarter of
2011.  We will require additional cash to fund our operating plan past that
time.  We plan to obtain additional cash through the issuance of equity or debt
securities.  There can be no assurance that additional cash will be available or
that, if available, it will be available on terms acceptable to us on a timely
basis.  If adequate funds are not available on a timely basis, we may be
required to limit our operations substantially.  This limitation of operations
could include delaying development projects resulting in reductions in staff,
operating costs, capital expenditures and investment in research and
development.

2.  NET LOSS PER SHARE

Basic net loss per share is calculated using the weighted-average number of
common shares outstanding during the reporting periods.  Diluted net loss per
share is calculated using the weighted-average number of common shares
outstanding and taking into account the dilutive effect of all potentially
dilutive securities, including common stock equivalents and convertible
securities outstanding.  Potentially dilutive common stock equivalents primarily
consist of warrants, employee stock options and nonvested equity shares.
Diluted net loss per share for the three months ended March 31, 2010 and 2009 is
equal to basic net loss per share because the effect of all potential common
stock outstanding during the periods, including options, warrants and nonvested
equity shares is anti-dilutive.  The components of basic and diluted net loss
per share were as follows (in thousands, except loss per share data):

`Three Months Ended
                                                                                 March 31,
                                                                          --------------------------
                                                                              2010          2009
                                                                          ------------  ------------                            
Numerator:
Net loss - basic and diluted                                             $     (9,117) $     (8,865)
                                                                          ============  ============
Denominator:
Weighted-average common shares outstanding - basic and diluted                 88,693        68,080
                                                                          ============  ============

Net loss per share - basic and diluted                                   $      (0.10) $      (0.13)
                                                                          ============  ============`

On March 31, 2010 and 2009, we 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 6,025,000 and 6,703,000
shares of common stock, respectively, options and private warrants convertible
into a total of 12,280,000 and 9,686,000 shares of common stock, respectively,
and 402,000 and 125,000 shares of nonvested equity shares, respectively.

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

Fair value is defined as the exchange price that would be received for an
asset or paid to transfer a liability in an orderly transaction between informed
market participants.  The authoritative guidance establishes a three level fair
value inputs hierarchy, and requires us to use observable valuation inputs where
possible.  When estimating fair values, we use market data, assumptions and
risks we believe market participants would use, and we consider the risks
inherent in the assumptions and the valuation techniques.

Our investment securities are principally comprised of auction rate debt
securities issued by student loan financial aid organizations to fund guaranteed
student loans.  These securities are fully collateralized by the associated
funded student loans which, in turn, are guaranteed by the U.S. Government.

The auction rate securities are investment grade variable interest rate long-term
bonds with rate resets, purchases and sales determined via a Dutch auction
process every 28 days.  Beginning in February 2008, deteriorating global banking
and economic conditions led to insufficient investor bids to clear the auctions
and fund the secondary market.  In compliance with the securities' terms, the
issuers began, and continue, to pay interest at "maximum rates",
instead of "auction rates".  In March 2010, one of the issuers
redeemed $100,000 of our auction rate securities at par value through its
voluntary lottery redemption program.

As of March 31, 2010, our assets and liabilities measured at fair value on a
recurring basis are classified within the inputs hierarchy as follows:

`Level 1       Level 2       Level 3        Total
                                               ------------  ------------  ------------  ------------
Assets
    Corporate equity securities               $         --  $     17,000  $         --  $     17,000
    Auction rate debt securities                        --            --     2,600,000     2,600,000
                                               ------------  ------------  ------------  ------------
                                              $         --  $     17,000  $  2,600,000  $  2,617,000
                                               ============  ============  ============  ============
Liabilities
    Liability associated with
        common stock warrants                               $    447,000                $    447,000
                                                             ============                ============`

We valued the auction rate securities using significant unobservable
assumptions and inputs and classified these securities at Level 3 in the inputs
hierarchy.  The corporate equity securities and liability associated with common
stock warrants are valued using inputs and common methods with sufficient levels
of transparency and observability to be classified at Level 2.

We applied various valuation techniques to value the auction rate securities
including discounted cash flow, with liquidity adjustments, market estimates,
and other inputs.  The primary inputs used for adjusted discounted cash flow
analysis are as follows: benchmarked debt security yields from similarly rated
U.S. Treasuries and Agencies, financial industry corporate bonds rated AA and A;
maturity horizons varying from 9 months to 10 years; liquidity premiums on
benchmark yields varying from 15% to 25%; and, coupon payments were estimated
assuming that the current 1.25% - 1.50% premiums to U.S. Treasury yields would
continue for all time horizons.  Due to liquidity issues in this market, the
limited number of market price indications were significantly down-weighted in
the analysis.

We used a Black-Scholes model with the following assumptions to value the warrant
liability from a 2005 financing transaction at $0.41 per warrant share:  expected
volatility of 80%, expected dividend yield of zero, risk free interest rate of
0.32%, and contractual lives of 0.7 years.  The warrant shares are convertible
into common stock at 1:1 and expire in December 2010.  The following table
summarizes the activity of Level 3 assets for the three months ended March 31,
2010:

`Balance, December 31, 2009                       $2,700,000
Par value of redeemed securities                   (100,000)
Recognized gain included in earnings                     --
                                                 -----------
Balance, March 31, 2010                          $2,600,000
                                                 ===========`

4.  INVENTORY

Inventory consists of the following:

`March 31,     December 31,
                                                                              2010          2009
                                                                          ------------  ------------                            
Raw materials                                                            $  2,764,000  $    626,000
Finished goods                                                                843,000       300,000
                                                                          ------------  ------------
                                                                         $  3,607,000  $    926,000
                                                                          ============  ============`

The inventory at March 31, 2010 and December 31, 2009 consisted of raw
materials for our pico projector product, and finished goods of $630,000 for our
accessory pico projector and the remainder for ROV, our hand-held barcode
scanner.  Because our cost is currently higher than our selling price for our
accessory pico projector product, inventory also included write downs of
$756,000 for lower of cost or market adjustments.  Approximately $300,000 of
finished goods had been shipped to customers and were awaiting acceptance as of
March 31, 2010.

Inventory is stated at the lower of cost or market, with cost determined on a
standard cost 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, we reduce the value of our
inventory to our 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.

5.  SHARE-BASED COMPENSATION

We use the straight-line attribution method to allocate the fair value of
share-based compensation awards over the requisite service period for each
award.  The following table shows the amount of stock-based employee
compensation expense included in the Consolidated Statements of Operations:

`Three Months Ended
                                                                                 March 31,
                                                                          --------------------------
                                                                              2010          2009
                                                                          ------------  ------------                            
Cost of contract revenue                                                        5,000        10,000
Cost of product revenue                                                        11,000         6,000
Research and development expense                                              234,000       194,000
Sales, marketing, general and administrative expense                          398,000       365,000
                                                                          ------------  ------------
Share-based employee compensation cost charged against income            $    648,000  $    575,000
                                                                          ============  ============`

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, 2010:

`Weighted
                                                                  Average
                                                      Weighted   Remaining
                                                       Average  Contractual   Aggregate
                                                      Exercise      Term      Intrinsic
Options                                  Shares         Price     (years)       Value
---------------------------------------- -----------  --------- ------------  ----------
Outstanding as of March 31, 2010          8,373,000  $    3.46          6.7  $3,096,000

Exercisable as of March 31, 2010          5,257,000  $    3.97          5.9  $1,364,000`

As of March 31, 2010, our unamortized share-based compensation was $3.2
million which we plan to amortize over the next 2.2 years.

As of March 31, 2010, our unamortized nonvested equity share-based
compensation was $339,000 which we plan to amortize over the next 1.7 years.

6.  LONG-TERM NOTES

Tenant Improvement Loan Agreement

During 2006, we entered into a loan agreement with the lessor of our
corporate headquarters in Redmond, Washington to finance $536,000 in tenant
improvements.  The loan carries a fixed interest rate of 9% per annum, is
repayable over the initial term of the lease, which expires in 2013, and is
secured by a letter of credit.  The balance of the loan was $303,000 at March
31, 2010.

7.  RECEIVABLES FROM RELATED PARTIES

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

In January 2006, one officer left the Company and his outstanding loans
became due in January 2007.  In October 2009, we entered into a settlement
agreement with the former officer.  In addition to payments already received by
us, the officer has committed to make additional payments of $30,000 over the
next two years.

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

As of March 31, 2010 and December 31, 2009, the total amount outstanding
under the lines of credit was $400,000 and the balances were fully reserved.

8.  WARRANTS

In 2005 we issued warrants to purchase 2,302,000 shares of common stock in
connection with certain notes, of which 1,089,000 remained outstanding as of
March 31, 2010.  The warrants meet the definition of derivative instruments that
must be accounted for as liabilities 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 remaining
warrants at March 31, 2010 using the Black-Scholes option pricing model with the
following assumptions: expected volatility of 80%; expected dividend yield of
0%; risk free interest rate of 0.32%; and contractual lives of 0.7 years.  The
change in value of the warrants of $393,000 was recorded as a non-operating loss
and is included in "Gain (loss) on derivative instruments, net" in the
consolidated statement of operations.

9.  COMMITMENTS AND CONTINGENCIES

Litigation

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

10.  NEW ACCOUNTING PRONOUNCEMENTS

In October 2009, the FASB issued guidance which provides amendments to
establish a selling price hierarchy for determining the selling price of a
deliverable and expands the disclosures required for multiple-deliverable
revenue arrangements.  The guidance is effective for revenue arrangements that
are entered into or are materially modified in fiscal years beginning on or
after June 15, 2010, with early adoption permitted.  We are currently evaluating
the impact that implementation of this guidance will have on our financial
statements.

In October 2009, the FASB issued guidance which allows exclusion of software
from the scope of the software revenue recognition guidance if the software is
included with tangible products and is essential to the tangible product's
functionality.  The guidance becomes effective for revenue arrangements that are
entered into or are materially modified in fiscal years beginning on or after
June 15, 2010, with early adoption permitted.  We are currently evaluating the
impact that implementation of this guidance will have on our financial
statements.

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

Forward-Looking Statements

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

Overview

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

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

We recently launched the sale of a small accessory projector that is the
first commercial product based on the PicoP display engine. The accessory
projector can display images from a variety of video sources including cell
phones, portable media players, PDAs, gaming consoles, laptop computers, digital
cameras, and other consumer electronics products. We have been selling the
accessory projector in limited quantity through our Asian and European based
distributors.  In March 2010, we began selling the accessory projector through
our online store to customers in the United States.  We plan to add distribution
channels as the production capacity for our manufacturing partner, green laser
suppliers and other component suppliers increases.

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

Results of Operations

Contract revenue.

`% of                  % of
                                                contract              contract
(in thousands)                         2010      revenue     2009      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------
Three months ended March 31                                                                         
Government revenue                  $      71       23.8  $     420       59.0  $    (349)    (83.1)
Commercial revenue                        227       76.2        292       41.0        (65)    (22.3)
                                     ---------             ---------             ---------
Total contract revenue              $     298             $     712             $    (414)    (58.1)
                                     =========             =========             =========`

We earn contract revenue from performance on development contracts with the
U.S. government and commercial customers and from the sale of prototype units
and evaluation kits based on our PicoP display engine.  Our contract revenue
from development contracts in a particular period is dependent upon when we
enter into a contract, the value of the contracts we have entered into, and the
availability of technical resources to perform work on the contracts.  Our
contract revenue from sales of prototype units and evaluation kits may vary
substantially due to the timing of orders from customers and potential
constraints on resources.

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

We recognize contract revenue on the sale of prototype units and evaluation
kits, upon acceptance of the deliverables by the customer or expiration of the
contractual acceptance period, after which there are no rights of return.  While
we anticipate future sales of these units, revenue may vary substantially due to
the timing of orders from customers and potential constraints on resources.

Contract revenue was substantially lower during the three months ended March
31, 2010 than the same period in 2009, due to reduced contract activity and
lower beginning backlog in 2010 compared to the prior year.  We expect that we
will have fewer opportunities to enter into new development contracts for
engineering services as we continue to focus our resources on commercialization
of our PicoP based products.

Our backlog of development contracts, including orders for prototype units
and evaluation kits, at March 31, 2010 was $59,000 compared to $479,000 at March
31, 2009, all of which is scheduled for completion during the next twelve
months.

Product revenue.

`% of                  % of
                                                 product               product
(in thousands)                         2010      revenue     2009      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------
Three months ended March 31                                                                         
Bar code revenue                    $     106       28.6  $     239      100.0  $    (133)    (55.6)
Pico projector revenue              $     264       71.4  $      --         --  $     264        n/a
                                     ---------             ---------             ---------
Total product revenue               $     370             $     239             $     131      54.8
                                     =========             =========             =========`

Our product sales generally include acceptance provisions.  We recognize
product revenue upon acceptance of the product by the customer or expiration of
the contractual acceptance period, after which there are no rights of return.
Our quarterly revenue may vary substantially due to the timing of product
orders from customers, production constraints and availability of components and
raw materials.

Bar code revenue was lower during the three months ended March 31, 2010 than
the same period in 2009, due to our decreased investment in our bar code product
during 2009.  We do not expect to increase our investment in the bar code
product in the future and we are currently evaluating opportunities to sell our
existing bar code inventory and sell or license our bar code production
capability and technology.

Pico projector revenue includes the sales of our accessory pico projector
product which was launched in September 2009.

In March 2010, we received an $8.5 million purchase order from an OEM
customer for our PicoP based embedded engine.  The customer plans to incorporate
our PicoP engine into a high end media player scheduled for release in 2010.  We
expect to begin supplying this customer with embedded engines later this year.

The backlog of product orders at March 31, 2010 was approximately $16.8
million, which is composed almost exclusively of PicoP based products, compared
to $138,000 at March 31, 2009, which is scheduled for delivery over the next
twelve months.

Cost of contract revenue.

`% of                  % of
                                                contract              contract
(in thousands)                         2010      revenue     2009      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------
Three months ended March 31         $     128       43.0  $     383       53.8  $    (255)    (66.6)`

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

Cost of contract revenue was lower during the three months ended March 31,
2010 than the same period in 2009 as a result of the decreased activity on
development contracts.  The cost of contract revenue as a percentage of contract
revenue was lower in the first three months of 2010 than in the comparable
period in 2009 as a result of differences in the cost mix of the contracts,
prototype units and evaluation kits produced during those periods.  During the
three months ended March 31, 2010, cost of contract revenue included contracts
with more favorable cost structures and higher gross margins.

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
(in thousands)                         2010      revenue     2009      revenue   $ change  % change
                                     ---------  ---------  ---------  ---------  --------- ---------
Three months ended March 31         $   1,159      313.2  $     241      100.8  $     918     380.9`

Our costs to produce accessory pico projector units during the three months
ended March 31, 2010 were substantially higher than product revenue.
Cost of product revenue includes the direct and allocated indirect cost of
manufacturing products sold to customers.  Direct costs include labor, materials
and other costs incurred directly in the manufacture of these products.
Indirect costs include labor and other costs associated with operating our
manufacturing capabilities and capacity.

During the three months ended March 31, 2010, cost of product revenue
included a lower of cost or market adjustment of $756,000 for inventory in stock
at the end of the quarter.

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 level of effort supporting production or research and development
activities.

The cost of product revenue as a percentage of product revenue can fluctuate
significantly from period to period, depending on the product mix and volume and
the level of overhead expense.  The increase in the cost of product revenue as a
percentage of product revenue in 2010 compared to the same period in 2009 was
primarily attributed to lower of cost or market adjustments.

Research and development expense.

`(in thousands)                         2010       2009     $ change   % change
                                     ---------  ---------  ---------  ---------                     
Three months ended March 31         $   4,998  $   5,610  $    (612)     (10.9)`

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.

In addition, we allocate our research and development resources based on the
business opportunity of the available projects, the skill mix of the resources
available and the contractual commitments we have made to customers.  The
decrease in cost is primarily attributable to decreased material costs.

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

Sales, marketing, general and administrative expense.

`(in thousands)                         2010       2009     $ change   % change
                                     ---------  ---------  ---------  ---------                     
Three months ended March 31         $   3,888  $   3,814  $      74        1.9`

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

Interest income.

`(in thousands)                         2010       2009     $ change   % change
                                     ---------  ---------  ---------  ---------                     
Three months ended March 31         $      29  $      64  $     (35)     (54.7)`

The decrease in interest income for the three months ended March 31, 2010
compared to the same period in 2009 resulted primarily from lower average cash,
investment securities balances, and interest rates.

Interest expense.

`(in thousands)                         2010       2009     $ change   % change
                                     ---------  ---------  ---------  ---------                     
Three months ended March 31         $      17  $      11  $       6       54.5`

Gain on derivative instruments, net.

`(in thousands)                         2010       2009     $ change   % change
                                     ---------  ---------  ---------  ---------                     
Three months ended March 31         $     395  $     180  $     215      119.4`

In 2005 we issued warrants to purchase 2,302,000 shares of common stock in
connection with certain notes.  The warrants meet the definition of derivative
instruments that must be accounted for as liabilities because we cannot engage
in certain corporate transactions affecting the common stock unless we make a
cash payment to the holders of the warrants.  In July 2008, 750,000 warrants
expired unexercised, and an additional 463,000 warrants expired unexercised in
March 2010.  We record changes in the fair values of the warrants in the
statement of operations each period.  We valued the remaining warrants to
purchase 1,089,000 shares of common stock at March 31, 2010 using the Black-Scholes
option pricing model with the following assumptions: expected volatility
of 80%; expected dividend yield of 0%; risk free interest rate of 0.32%; and
contractual life of 0.7 years.  The change in value of the warrants of $393,000
in 2010 was recorded as a non-operating gain and is included in "Gain
(loss) on derivative instruments, net" in the consolidated statement of
operations.

Liquidity and Capital Resources

We have incurred significant losses since inception.  We have funded our
operations to date primarily through the sale of equity and debt securities and,
to a lesser extent, from development contract revenues and product sales.  At
March 31, 2010, we had $35.6 million in cash, cash equivalents and investment
securities, available-for-sale, which included $2.6 million in auction rate
securities (ARS).  There is currently no established primary orderly market for
these ARS.  If we were required to sell them in a short period of time we might
receive less than their current estimated fair values.  However, based on our
current operating plan and ability to access our $33.0 million held in cash and
cash equivalents as of March 31, 2010, we do not expect to be required to sell
these securities materially below their current estimated fair value.

Based on our current operating plan, we anticipate that we have sufficient
cash and cash equivalents to fund our operations through the first quarter of
2011.  We will require additional cash to fund our operating plan past that
time.  We plan to obtain additional cash through the issuance of equity or debt
securities.  There can be no assurance that additional cash will be available or
that, if available, it will be available on terms acceptable to us on a timely
basis.  If adequate funds are not available on a timely basis, we may be
required to limit our operations substantially.  This limitation of operations
could include delaying development projects resulting in reductions in staff,
operating costs, capital expenditures and investment in research and
development.

Cash used in operating activities totaled $9.6 million during the three
months ended March 31, 2010, compared to $8.8 million during the same period in
2009.  During the three months ended March 31, 2010, the increase in cash used
in operating activities was primarily driven by lower contract activity and
higher inventory purchases as we move into commercial sales of PicoP based
products.

We had the following material gains and charges, and changes in assets and
liabilities during the three months ended March 31, 2010:

- "Inventory"
- "Accounts Payable"
- "Accrued Liabilities"

Cash used in investing activities totaled $412,000 for the three months ended
March 31, 2010 compared to $354,000 during the three months ended March 31,
2009.  During the three months ended March 31, 2010, we used cash of $512,000
for capital expenditures, compared to $354,000 during the same period in 2009.

Cash generated and used in financing activities during the three months ended
March 31, 2010 and 2009 was not significant.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate and Market Liquidity Risks

As of March 31, 2010, approximately 93% of our total cash, cash
equivalents and investment securities available-for-sale have variable interest
rates or are very short-term discount notes traded in active markets.
Therefore, we believe our exposure to the market and interest rate risk is not
material.  The remainder is composed of $2.9 million par student loan
auction-rate securities (SLARS).  Our SLARS are investment grade variable interest rate
long-term bonds with rate resets, purchases and sales determined via a Dutch
Auction process every 28 days.  They were issued to fund U.S. government
guaranteed student loans.  Beginning in February 2008, deteriorating global
banking conditions led to insufficient investor bids to clear the auctions and
fund the secondary market.  In compliance with the securities' terms, the
issuers then began, and continue, to pay interest at "maximum rates",
instead of "auction rates".

Given the adverse credit market conditions and SLARS short-term
illiquidity, the fair value of the principal became more sensitive to changes in
interest rates and the spread between short and long rates than it was in the
pre-2008 ARS credit marketplace.  As a result, we estimated the fair value of
the SLARS to be approximately $2.7 million at December 31, 2008.  There were no
adjustments to the fair value of the SLARS during 2009 or through March 31,
2010.  In March 2010, one of the issuers redeemed $100,000 of our auction rate
securities at par value through its voluntary lottery redemption program.  If
market conditions worsen, we may have to further adjust the estimated fair value
and record additional charges to earnings if we believe the adjustment is
other-than-temporary.  In the event we need immediate access to the funds invested in
the SLARS, we could be required to sell them at an amount below our current
carrying value.  Any of these events could affect our consolidated financial
condition, results of operations and cash flows.  However, based on recent
market stabilization and strengthening, we do not expect to be required to sell
these securities materially below their current estimated fair values.

Our investment policy generally directs that the investment managers should
select investments to achieve the following goals: principal preservation,
adequate liquidity and return.  As of March 31, 2010, our cash and cash
equivalents and investments available-for-sale securities portfolio are
comprised of short-term highly rated money market funds and the SLARS.

The values of cash equivalents and investment securities, available-for-sale
by maturity date as of March 31, 2010, are as follows:

`Amount      Percent
                                     ---------  ---------
Cash and cash equivalents             $33,027      92.66%
Less than one year                        $17       0.05%
One to two years                           --         --
Greater than five years                $2,600       7.29%
                                     ---------  ---------
                                       35,644     100.00%
                                     =========  =========`

Foreign Exchange Rate Risk

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

ITEM 4.	CONTROLS AND PROCEDURES

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

PART II

OTHER INFORMATION

ITEM 1A - RISK FACTORS

Risk Factors Relating to the Microvision Business

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

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

- As of March 31, 2010, we had an accumulated deficit of $340.7 million.
- We incurred consolidated net losses of $259.5 million from inception through
2007, $32.6 million in 2008, and $39.5 in 2009, and a net loss of $9.1 million
in the three months ended March 31, 2010.

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 our technology platform 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 2010 and likely thereafter.  We
cannot be certain that we will achieve positive cash flow at any time in the
future.

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

Based on our current operating plan, we anticipate that we have sufficient
cash and cash equivalents to fund our operations through the first quarter of
2011.  We will require additional cash to fund our operating plan past that
time.  We plan to obtain additional cash through the issuance of equity or debt
securities.

Our capital requirements will depend on many factors, including, but not
limited to, the rate at which we can, directly or through arrangements with
original equipment manufacturers, introduce products incorporating the PicoP
display engine and image capture technologies and the market acceptance and
competitive position of such products.  If revenues are less than we anticipate,
if the mix of revenues varies from anticipated amounts 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.

Additional capital may not 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 on a timely basis we may be required limit our
operations substantially. This limitation of operations may include delaying
development projects resulting in reductions in staff and operating costs as
well as reductions in capital expenditures and investment in research and
development.

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

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

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

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

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

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

We or our customers may fail to perform under open purchase orders, which
could adversely affect our operating results and cash flows.

Our backlog of open purchase orders reported from us from time to time may be
significant and totaled $16.7 million as of March 31, 2010.  We may be
unable to meet the performance requirements, including performance
specifications or delivery dates, required by such purchase orders. 
Further, our customers may be unable or unwilling to perform their
obligations thereunder if, among other reasons, our products and technologies do
not achieve market acceptance, our customers' products and technologies do
not achieve market acceptance or our customers otherwise fail to achieve their
operating goals.  To the extent we are unable to perform under such
purchase orders or to the extent customers are unable or unwilling to perform,
our operating results and cash flows could be adversely affected.

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
of our common stock.  If our common stock were not listed on the NASDAQ Capital
Market or an exchange, trading of our common stock would be conducted in the
over-the-counter market on an electronic bulletin board established for unlisted
securities or directly through market makers in our common stock.  If our common
stock were to trade in the over-the-counter market, an investor would find it
more difficult to dispose of, or to obtain accurate quotations for the price of,
the common stock.  A delisting from The NASDAQ Global Market and failure to
obtain listing on such other market or exchange would subject our securities to
so-called penny stock rules that impose additional sales practice and market-
making requirements on broker-dealers who sell or make a market in such
securities.  Consequently, removal from The NASDAQ Global Market and failure to
obtain listing on another market or exchange could affect the ability or
willingness of broker-dealers to sell or make a market in our common stock and
the ability of purchasers of our common stock to sell their securities in the
secondary market.  In addition, when the market price of our common stock is
less than $5.00 per share, we become subject to penny stock rules even if our
common stock is still listed on The NASDAQ Global Market.  While the penny stock
rules should not affect the quotation of our common stock on The NASDAQ Global
Market, these rules may further limit the market liquidity of our common stock
and the ability of investors to sell our common stock in the secondary market.
The market price of our stock has mostly traded below $5.00 per share during
2009, 2008, and 2007.  On May 6,  2010, the closing price of our stock was
$2.67.

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

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

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

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

We may not succeed in these efforts because of:

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

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

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

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

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

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

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

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

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

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

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

In the recent past,
general worldwide economic conditions have experienced a downturn due to slower
economic activity, concerns about inflation, increased energy costs, decreased
consumer confidence, reduced corporate profits and capital spending, and adverse
business conditions. Any continuation or

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 accessory
pico projector product, and we plan to use foreign manufacturers to manufacture
future products, where appropriate.  These international operations are subject
to inherent risks, which may adversely affect us, including:

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

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

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

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

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

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

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

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

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

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

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

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

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

During the first quarter of 2010 and the full year of 2009, 11% and 43%,
respectively, of our revenue was derived from performance on a limited number of
development contracts with the U.S. government.  Therefore, any significant
disruption or deterioration of our relationship with the U.S. government would
significantly reduce our revenues.  Our government programs must compete with
programs managed by other contractors for limited amounts and uncertain levels
of funding.  The total amount and levels of funding are susceptible to
significant fluctuations on a year-to-year basis.  Our competitors continuously
engage in efforts to expand their business relationships with the government and
are likely to continue these efforts in the future.  Our contracts with the
government are subject to immediate termination by the government for
convenience at any time.  The government may choose to use contractors with
competing display technologies or it may decide to discontinue any of our
programs altogether.  In addition, those development contracts that we do obtain
require ongoing compliance with applicable government regulations.  Termination
of our development contracts, a shift in government spending to other programs
in which we are not involved, a reduction in government spending generally, or
our failure to meet applicable government regulations could have severe
consequences for our results of operations.

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

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

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

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

If we lose our rights under our third-party technology licenses, our
operations could 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 could lose
a competitive advantage in the market, and may even lose the ability to
commercialize certain products completely.  Either of these results could
substantially decrease our revenues.

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

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

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

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

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

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

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

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

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

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

ITEM 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, 2010 | BY: | /s/ Alexander Y. Tokman                                 
|------------------- | --- | --------------------------------------------------------
|                    |     | Alexander Y. Tokman                                     
|                    |     | Chief Executive Officer
   (Principal Executive Officer)



|Date:  May 10, 2010 | BY: | /s/ Jeff Wilson                                         
|------------------- | --- | --------------------------------------------------------
|                    |     | Jeff Wilson                                             
|                    |     | Chief Financial Officer
   (Principal Financial Officer)





EXHIBIT INDEX

The following documents are filed herewith.

|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

---