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 June 30, 2008

OR

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

For the transition period from ________to _________

Commission file number    0-21221



Microvision, Inc.



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

6222 185th Avenue NE
Redmond, Washington      98052

(425) 936-6847

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



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, 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 July 31, 2008, 68,035,000 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  June 30, 2008 and
December 31, 2007 (unaudited)                                  | 3   
|Consolidated Statements of Operations for the three and six
months ended June 30, 2008 and 2007 (unaudited)         | 4   
|Consolidated Statements of Comprehensive Loss
for the three and six months ended June 30, 2008 and 2007 (unaudited) | 5   
|Consolidated Statements of Cash Flows for the six
months ended June 30, 2008 and 2007 (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                                                 | 20  
|Item 4.  Controls and Procedures                                                                                    | 21  
|                                                                                                                    |     
|Part II: Other Information                                                                                          |     
|Item 1A. Risk Factors                                                                                               | 21  
|Item 4. Submission of Matters to a Vote of Security Holders                                                         | 28  
|Item 6.  Exhibits                                                                                                   | 28  
|Signatures                                                                                                          | 29  
|Exhibit Index                                                                                                       | 30  

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Microvision, Inc.

                    Consolidated Balance Sheet

                  (In thousands, except per share data)

                            (Unaudited)

`June 30,      December 31,
                                                                                       2008           2007
                                                                                   -------------  -------------
Assets                                                                                                         
Current assets
   Cash and cash equivalents                                                      $      10,039  $      13,399
   Investment securities, available-for-sale                                             10,650         22,411
   Accounts receivable, net of allowances of $73 and $123                                   303          1,885
   Costs and estimated earnings in excess of billings on uncompleted contracts              166            443
   Inventory                                                                              1,406            761
   Other current assets                                                                   1,145          1,180
                                                                                   -------------  -------------
   Total current assets                                                                  23,709         40,079

Property and equipment, net                                                               3,759          4,047
Restricted investments                                                                    1,475          1,125
Other assets                                                                                 49             47
                                                                                   -------------  -------------
   Total assets                                                                   $      28,992  $      45,298
                                                                                   =============  =============
                                                                                                               
Liabilities and Shareholders' Equity                                                                           
Current liabilities
   Accounts payable                                                               $       1,848  $       2,146
   Accrued liabilities                                                                    3,175          4,154
   Billings in excess of costs and estimated earnings on uncompleted contracts               91            970
   Liability associated with common stock warrants                                        1,122          2,657
   Current portion of capital lease obligations                                              47             44
   Current portion of long-term debt                                                         68             65
                                                                                   -------------  -------------
   Total current liabilities                                                              6,351         10,036
Capital lease obligations, net of current portion                                            67             88
Long-term debt, net of current portion                                                      358            393
Deferred rent, net of current portion                                                     1,565          1,720
                                                                                   -------------  -------------
   Total liabilities                                                                      8,341         12,237
                                                                                   -------------  -------------
Commitments and contingencies

Shareholders' equity
   Common stock, par value $.001; 125,000 shares authorized;
      56,850 and 56,730 shares issued and outstanding                                        57             57
   Additional paid-in capital                                                           294,307        292,374
   Accumulated other comprehensive income                                                    12             51
   Accumulated deficit                                                                 (273,725)      (259,421)
                                                                                   -------------  -------------
   Total shareholders' equity                                                            20,651         33,061
                                                                                   -------------  -------------
   Total liabilities and shareholders' equity                                     $      28,992  $      45,298
                                                                                   =============  =============`

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

---



Microvision, Inc.

                     Consolidated Statement of Operations

                  (In thousands, except per share data)

                            (Unaudited)

`Three Months Ended       Six Months Ended
                                                                                   June 30,                June 30,
                                                                             ----------------------  ----------------------
                                                                                2008        2007        2008        2007
                                                                             ----------  ----------  ----------  ----------
Contract revenue                                                            $    1,006  $    2,219  $    3,287  $    4,121
Product revenue                                                                    616         443         905         776
                                                                             ----------  ----------  ----------  ----------
    Total revenue                                                                1,622       2,662       4,192       4,897
                                                                             ----------  ----------  ----------  ----------
Cost of contract revenue                                                           374       1,217       1,136       2,227
Cost of product revenue                                                            529         446         868         730
                                                                             ----------  ----------  ----------  ----------
    Total cost of revenue                                                          903       1,663       2,004       2,957
                                                                             ----------  ----------  ----------  ----------
Gross margin                                                                       719         999       2,188       1,940
                                                                             ----------  ----------  ----------  ----------


Research and development expense                                                 5,881       3,208      10,307       6,553
Sales, marketing, general and administrative expense                             4,103       4,087       8,238       7,637
                                                                             ----------  ----------  ----------  ----------
    Total operating expenses                                                     9,984       7,295      18,545      14,190
                                                                             ----------  ----------  ----------  ----------
Loss from operations                                                            (9,265)     (6,296)    (16,357)    (12,250)
Interest income                                                                    279         152         691         334
Interest expense                                                                   (12)        (17)        (25)       (485)
Gain (loss) on derivative instruments, net                                        (254)     (1,940)      1,419      (2,592)
Other expense                                                                      (14)        (17)        (32)        (17)
                                                                             ----------  ----------  ----------  ----------
Net loss before Lumera transactions                                             (9,266)     (8,118)    (14,304)    (15,010)

Gain on sale of investment in Lumera                                                --       5,963          --       5,963
                                                                             ----------  ----------  ----------  ----------
Net loss                                                                    $   (9,266) $   (2,155) $  (14,304) $   (9,047)
                                                                             ==========  ==========  ==========  ==========

Net loss per share - basic and diluted                                      $    (0.16) $    (0.05) $    (0.25) $    (0.21)
                                                                             ==========  ==========  ==========  ==========

Weighted-average shares outstanding - basic and diluted                         56,782      43,572      56,756      43,336
                                                                             ==========  ==========  ==========  ==========`

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

---



Microvision, Inc.

                     Consolidated Statement of Comprehensive Loss

                             (In thousands)

                            (Unaudited)

`Three Months Ended       Six Months Ended
                                                                                   June 30,                June 30,
                                                                             ----------------------  ----------------------
                                                                                2008        2007        2008        2007
                                                                             ----------  ----------  ----------  ----------
Net loss                                                                    $   (9,266) $   (2,155) $  (14,304) $   (9,047)
                                                                             ----------  ----------  ----------  ----------
Other comprehensive gain (loss)
Unrealized gain (loss) on investment securities, available-for-sale                (77)         47         (39)     (1,878)
Less: reclassification adjustment for gains realized in net income                  --      (5,963)         --      (5,963)
                                                                             ----------  ----------  ----------  ----------
Net unrealized loss                                                                (77)     (5,916)        (39)     (7,841)
                                                                             ----------  ----------  ----------  ----------
Comprehensive loss                                                          $   (9,343) $   (8,071) $  (14,343) $  (16,888)
                                                                             ==========  ==========  ==========  ==========`

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

---



Microvision, Inc.

                    Consolidated Statement of Cash Flows

                           (In thousands)

                            (Unaudited)

`Six Months Ended
                                                                                               June 30,
                                                                                        ----------------------
                                                                                           2008        2007
                                                                                        ----------  ----------
Cash flows from operating activities                                                                          
    Net loss                                                                           $  (14,304) $   (9,047)
    Adjustments to reconcile net loss to net cash used in operations:
        Depreciation                                                                          481         433
        Non-cash stock-based compensation expense                                           1,604         734
        Non-cash interest expense                                                              --         371
        Loss (gain) on derivative instruments                                              (1,419)      2,592
        Allowance for receivables from related parties                                         --          23
        Gain on sale of investment in Lumera                                                   --      (5,963)
        Net accretion of discount on short-term investments                                   (92)         --
        Non-cash deferred rent                                                               (137)       (139)
        Change in:
            Accounts receivable, net                                                        1,582         (87)
            Costs and estimated earnings in excess of billings on uncompleted contracts       277        (129)
            Inventory                                                                        (645)        157
            Other current assets                                                              (81)        228
            Other assets                                                                       (2)        (11)
            Accounts payable                                                                 (276)       (128)
            Accrued liabilities                                                              (999)       (663)
            Billings in excess of costs and estimated earnings on uncompleted contracts      (879)         96
                                                                                        ----------  ----------
            Net cash used in operating activities                                         (14,890)    (11,533)
                                                                                        ----------  ----------
Cash flows from investing activities                                                                          
    Sales of investment securities                                                         12,800          --
    Purchases of investment securities                                                       (986)         --
    Purchases of restricted investment securities                                            (350)         --
    Collections of receivables from related parties                                            --         227
    Sale of long-term investment - Lumera                                                      --       7,756
    Purchases of property and equipment                                                      (215)       (520)
                                                                                        ----------  ----------
            Net cash provided by investing activities                                      11,249       7,463
                                                                                        ----------  ----------
Cash flows from financing activities                                                                          
    Principal payments under capital leases                                                   (18)        (24)
    Principal payments under long-term debt                                                   (32)        (28)
    Payments on notes payable                                                                  --      (1,400)
    Net proceeds from issuance of common stock and warrants                                   331       7,146
                                                                                        ----------  ----------
            Net cash provided by financing activities                                         281       5,694
                                                                                        ----------  ----------
Net increase (decrease) in cash and cash equivalents                                       (3,360)      1,624
Cash and cash equivalents at beginning of period                                           13,399      14,552
                                                                                        ----------  ----------
Cash and cash equivalents at end of period                                             $   10,039  $   16,176
                                                                                        ==========  ==========
Supplemental disclosure of cash flow information                                                              
    Cash paid for interest                                                             $       25  $       63
                                                                                        ==========  ==========
Supplemental schedule of non-cash investing and financing activities                                          
    Other non-cash additions to property and equipment                                 $       24  $      175
                                                                                        ==========  ==========

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

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


MICROVISION, INC.
                  Notes to Consolidated Financial Statements
                  June 30, 2008
                  (Unaudited)

1.  MANAGEMENT'S STATEMENT AND PRINCIPLES OF CONSOLIDATION

Management's Statement

The Consolidated Balance Sheet as of June 30, 2008, the Consolidated
Statements of Operations, Comprehensive Loss and Cash Flows for the three and
six months ended June 30, 2008 and 2007 have been prepared by Microvision, Inc.
(the "Company" or "Microvision") and have not been audited.
In the opinion of management, all adjustments necessary to state fairly the
financial position at June 30, 2008 and the results of operations, comprehensive
loss and cash flows for all periods presented have been made and consist of
normal recurring adjustments.  Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
rules of the SEC.  You should read these condensed financial statements in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2007.  The results of operations for the six months ended June 30, 2008 are not
necessarily indicative of the operating results that may be attained for the
entire fiscal year.

At June 30, 2008, Microvision had $20.7 million in cash, cash equivalents and
investment securities, available-for-sale.  In July 2008, the Company raised
approximately $26.0 million, before issuance costs of approximately $1.8
million, from the sale of 11,172,000 shares of common stock and warrants to
purchase 6,703,000 shares of its common stock.  Based on its current operating
plan and including the net proceeds from the Company's July financing, the
Company believes that it has sufficient cash to fund operations until late 2009.
Microvision will require additional cash to fund its operating plan past that
time. There can be no assurance that additional cash will be available or that,
if available, it will be available on terms acceptable to Microvision on a
timely basis.  If adequate funds are not available to satisfy either short-term
or long-term capital requirements, Microvision will be required to limit its
operations substantially.  This limitation of operations may include reductions
in staff, operating costs and capital expenditures.

2.  NET LOSS PER SHARE

Basic net loss per share is calculated on the basis of the weighted-average
number of common shares outstanding during the reporting periods.  Diluted net
loss per share is calculated on the basis of the weighted-average number of
common shares outstanding and taking into account the dilutive effect of all
potential common stock equivalents outstanding.  Potentially dilutive common
stock equivalents primarily consist of warrants and employee stock options.
Diluted net loss per share for the three and six months ended June 30, 2008 and
2007 is equal to basic net loss per share because the effect of all potential
common stock outstanding during the periods, including convertible debt,
convertible preferred stock, options and warrants is anti-dilutive.  The
components of basic and diluted net loss per share were as follows (in
thousands, except loss per share data):

`Three Months Ended           Six Months Ended
                                                                                  June 30,                   June 30,
                                                                          --------------------------  --------------------------
                                                                              2008          2007          2008          2007
                                                                          ------------  ------------  ------------  ------------
Numerator:
Net loss available for common shareholders - basic and diluted           $     (9,266) $     (2,155) $    (14,304) $     (9,047)
                                                                          ============  ============  ============  ============

Denominator:
Weighted-average common shares outstanding - basic and diluted                 56,782        43,572        56,756        43,336
                                                                          ============  ============  ============  ============

Net loss per share - basic and diluted                                   $      (0.16) $      (0.05) $      (0.25) $      (0.21)
                                                                          ============  ============  ============  ============`

On June 30, 2008 and 2007, the Company excluded the following convertible
securities from diluted net loss per share as the effect of including them would
have been anti-dilutive: publicly traded warrants convertible into 0 and
10,636,000 shares of common stock, options and private warrants convertible into
a total of 10,992,000 and 10,089,000 shares of common stock and 125,000 and 0
shares of nonvested equity shares, respectively.

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

The Company accounts for investment securities in accordance with the
provisions of Statement of Financial Accounting Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities (FAS 115). FAS 115
addresses the accounting and reporting for investments in equity securities that
have readily determinable fair values and for investments in debt securities.
The Company's investment securities are comprised of commercial paper, U.S.
government and commercial debt securities and auction-rate securities.  The
Company has classified its entire investment portfolio as available-for-sale.
Available-for-sale securities are stated at fair value with unrealized gains and
losses included in other comprehensive loss. Dividend and interest income are
recognized when earned.  Realized gains and losses are presented separately on
the income statement.  The cost of securities sold is based on the specific
identification method.

At June 30, 2008, $3.0 million of the Company's marketable securities
portfolio was invested in AAA rated investments in municipal student loan
auction-rate debt securities.  Auction-rate securities are long-term variable
rate bonds tied to short-term interest rates. After the initial issuance of the
securities, the interest rate on the securities is reset periodically, at
intervals established at the time of issuance (generally every seven, twenty-
eight, or thirty-five days), based on market demand at the time of the reset
auction. Auction-rate securities are bought and sold in the marketplace through
a competitive bidding process often referred to as a "Dutch Auction".
If there are insufficient clearing bids for the auction-rate securities held by
the Company at the time of an auction, the auction may not be completed and the
rate is reset to a "maximum rate" according to the provisions of the
security.  Following such a failed auction, the Company would not be able to
sell the auction-rate security through the auction process until a future
successful auction.



Given the current negative liquidity conditions in the global credit markets,
auctions of the Company's auction-rate securities have failed resulting in these
securities being temporarily illiquid through the normal auction process. At the
time of its initial investment and through the date of filing this report, all
of the Company's auction-rate securities remain AAA rated, collateralized by the
Federal Family Education Loan Program ("FFELP") and other federal and
state student loan guarantee programs, and there have been no declines in the
credit ratings of the issuers or material changes in loan collection rates.
AMBAC is the insurer on 50% of the auction-rate securities that the Company
holds.  As of June 30, 2008, AMBAC continued to be rated AAA by Moody's and
Standard and Poor's and AA by Fitch Ratings.  In addition, all of the auction-
rate securities that the Company has sold through June 30, 2008, totaling $5.8
million of which $1.3 million was sold during the quarter-ended June 30, 2008,
have been sold at par value.  Based on the Company's ability to access its cash
and cash equivalents and its other liquid investments, it does not expect to be
required to sell these securities at a loss.  Based on this information, the
Company concluded that the fair value of its auction-rate securities did not
materially differ from par as of June 30, 2008.

In September 2006, the FASB issued Statement of Financial Accounting
Standards 157, Fair Value Measurements ("FAS 157").  FAS 157 defines
fair value, establishes a framework and gives guidance regarding the methods
used for measuring fair value, and expands disclosures about fair value
measurements.  FAS 157 is effective for financial statements issued for fiscal
years beginning after November 15, 2007, and interim periods of those fiscal
years.  The Company adopted FAS 157 effective January 1, 2008.  The adoption of
FAS 157 for financial assets and liabilities did not have a material impact on
the Company's consolidated financial position, consolidated results of
operations or consolidated cash flows.

FAS 157 defines fair value as the exchange price that would be received for
an asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date.  FAS 157 also establishes a
three level fair value inputs hierarchy that requires an entity to maximize the
use of observable inputs and minimize the use of unobservable inputs when
measuring fair value.  It must also utilize market data and assumptions it
believes market participants would use in measuring the fair value of the asset
or liability, including assumptions about risks, the risks inherent in the
inputs and the valuation techniques.   The hierarchy is shown below:

Level 1 - Observable inputs such as quoted prices in active markets for
identical assets or liabilities,

Level 2 - Observable inputs, other than Level 1 prices, such as quoted prices
for similar assets or liabilities, quoted prices in markets that are not
sufficiently active to qualify as level 1, other observable inputs, or inputs
that can be corroborated by observable market data for substantially the full
term of the assets or liabilities.

Level 3 - Unobservable inputs in which there is little or no market data,
which requires the company to develop its own assumptions which are significant
to the measurement of the fair values of the assets or liabilities.

The Company utilizes valuations reported by outside valuation services for
its debt securities.  The valuations are reviewed for reasonableness before
being accepted for financial reporting.  The Company has reviewed the inputs and
methodologies used by the services as a basis for its accounting and disclosures
in accordance with FAS 157.

Prior to the quarter ended June 30, 2008, the market approach was used to
measure fair values of debt and equity securities and the income approach for
derivatives.  The market approach uses prices and other relevant information
generated by market transactions involving identical or comparable assets or
liabilities.  The income approach uses valuation techniques to convert future
amounts to a single present amount.    Due to continuing low liquidity and
variability of valuations and inputs in the market for auction-rate securities
during the quarter ended June 30, 2008, the Company decided the market did not
have sufficient market participant activity to continue using the market
approach to value its auction-rate securities.  The Company, therefore,  changed
from the market approach to the income approach to estimate values for its
auction-rate securities.

The principal markets for the debt securities are dealer markets which have a
relatively high level of price transparency.  The principal market for Lumera
common stock is NASDAQ.  The market participants for debt securities are
typically large money center banks and regional banks, brokers, dealers, pension
funds, and companies with debt investment portfolios.

Assets and liabilities measured at fair value on a recurring basis in
accordance with FAS 157 are summarized below:

`Level 1       Level 2       Level 3        Total
                                               ------------  ------------  ------------  ------------
Assets
    Corporate debt and equity securities      $     36,000  $  3,093,000  $         --  $  3,129,000
    U.S. government and agency securities        4,521,000            --            --     4,521,000
    Auction-rate securities                             --     3,000,000            --     3,000,000
    Warrants in Lumera                                  --        14,000            --        14,000
                                               ------------  ------------  ------------  ------------
                                              $  4,557,000  $  6,107,000  $         --  $ 10,664,000
                                               ============  ============  ============  ============
Liabilities
    Liability associated with
        common stock warrants                               $  1,122,000                $  1,122,000
                                                             ============                ============`

The Company's investments and liability associated with common stock warrants
are classified within level 1 or level 2 of the fair value hierarchy because
they are valued using actual transactions, quoted market prices, broker or
dealer quotations, alternative pricing sources, published forward yield curves
or other inputs with sufficient levels of observability to market participants.
The types of instruments valued based on quoted market prices in active markets
include U.S. government and agency securities and equity investments.  Such
instruments are classified within level 1 of the fair value hierarchy.  The
types of instruments valued based on other observable inputs include investment-
grade corporate bonds, auction-rate securities, Lumera warrants, and liability
associated with common stock warrants.  Such instruments are classified within
level 2 of the fair value hierarchy.  Financial assets and liabilities are
classified in their entirety based on the lowest level of input that is
significant to the fair value measurement.

The Company's investments, warrants in Lumera, and liability associated with
common stock warrants are summarized below as of June 30, 2008 and December 31,
2007:

`Classification on Balance Sheet
                                                                                           ------------------------------------
                                                                                                                     Liability
                                                                                                                     Associated
                                                                                             Investment                 With
                                              Cost/       Gross       Gross                  Securities,    Other      Common
                                            Amortized   Unrealized  Unrealized   Estimated   Available-    Current     Stock
                                              Cost        Gains       Losses    Fair Value    For-Sale     Assets     Warrants
                                           -----------  ----------  ----------  -----------  -----------  ---------  ----------
As of June 30, 2008:
  Assets
    Corporate debt and equity securities    3,140,000          --     (11,000)   3,129,000    3,129,000         --          --
    U.S. government and agency securities   4,498,000      23,000          --    4,521,000    4,521,000         --          --
    Auction-rate securities                 3,000,000          --          --    3,000,000    3,000,000         --          --
    Warrants in Lumera                             --          --          --       14,000           --     14,000          --
                                           -----------  ----------  ----------  -----------  -----------  ---------  ----------
                                          $10,638,000  $   23,000  $  (11,000) $10,664,000  $10,650,000  $  14,000  $       --
                                           ===========  ==========  ==========  ===========  ===========  =========  ==========
  Liabilities
    Liability associated with
       common stock warrants                                                   $ 1,122,000                          $1,122,000
                                                                                ===========                          ==========


                                                                                             Classification on Balance Sheet
                                                                                           ------------------------------------
                                                                                                                     Liability
                                                                                                                     Associated
                                                                                             Investment                 With
                                              Cost/       Gross       Gross                  Securities,    Other      Common
                                            Amortized   Unrealized  Unrealized   Estimated   Available-    Current     Stock
                                              Cost        Gains       Losses    Fair Value    For-Sale     Assets     Warrants
                                           -----------  ----------  ----------  -----------  -----------  ---------  ----------
As of December 31, 2007:
  Assets
    Corporate debt and equity securities    9,074,000      54,000      (5,000)   9,123,000    9,123,000         --          --
    U.S. government and agency securities   4,486,000       3,000      (1,000)   4,488,000    4,488,000         --          --
    Auction-rate securities                 8,800,000          --          --    8,800,000    8,800,000         --          --
    Warrants in Lumera                             --          --          --      130,000           --    130,000          --
                                           -----------  ----------  ----------  -----------  -----------  ---------  ----------
                                          $22,360,000  $   57,000  $   (6,000) $22,541,000  $22,411,000  $ 130,000  $       --
                                           ===========  ==========  ==========  ===========  ===========  =========  ==========
  Liabilities
    Liability associated with
        common stock warrants                                                  $ 2,657,000                          $2,657,000
                                                                                ===========                          ==========`

Unrealized gains or losses on investments available-for sale are recorded
in accumulated other comprehensive loss (income) at each measurement date.
Changes in the fair values of the warrants in Lumera and the liability
associated with common stock warrants are realized in the period of
remeasurement and recorded in Gain (loss) on derivative instruments, net
in the Consolidated Statement of Operations.

As of June 30, 2008, the unrealized losses on our investments in debt
securities were due primarily to changes in interest rates and credit markets.
The unrealized and realized gains and losses associated investments in Lumera
were primarily due to its stock price changes.

The realized gains and losses associated with the liability associated with
common stock warrants were primarily due to changes in the Microvision stock
price and decreasing terms to expiration.

4.  INVENTORY

Inventory at June 30, 2008 and December 31, 2007 consisted of the
following:

`June 30,     December 31,
                                                                              2008          2007
                                                                          ------------  ------------                            
Raw materials                                                            $    426,000  $    122,000
Work-in-process                                                                    --        10,000
Finished goods                                                                980,000       629,000
                                                                          ------------  ------------
                                                                         $  1,406,000  $    761,000
                                                                          ============  ============`

The inventory at June 30, 2008 and December 31, 2007 consisted of raw
materials, work-in-process, and finished goods for ROV and Flic, the Company's
hand-held bar code scanners.  Inventory is stated at the lower of cost or
market, with cost determined on a weighted-average basis.  Management
periodically assesses the need to provide for obsolescence of inventory and
adjusts the carrying value of inventory to its net realizable value when
required.  In addition, Microvision reduces the value of its inventory to its
estimated scrap value when management determines that it is not probable that
the inventory will be consumed through normal production during the next twelve
months.

5.  SHARE-BASED COMPENSATION

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

`Three Months Ended            Six Months Ended
                                                                                 June 30,                    June 30,
                                                                          --------------------------  --------------------------
                                                                              2008          2007          2008          2007
                                                                          ------------  ------------  ------------  ------------
Cost of contract revenue                                                 $     14,000  $     39,000  $     64,000  $     62,000
Cost of product revenue                                                         1,000            --        12,000         8,000
Research and development expense                                              165,000        67,000       447,000       148,000
Sales, marketing, general and administrative expense                          356,000       300,000     1,081,000       478,000
                                                                          ------------  ------------  ------------  ------------
Share-based employee compensation cost charged against income            $    536,000  $    406,000  $  1,604,000  $    696,000
                                                                          ============  ============  ============  ============`

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 June 30, 2008:

`Weighted
                                                                  Average
                                                      Weighted   Remaining
                                                       Average  Contractual   Aggregate
                                                      Exercise      Term      Intrinsic
Options                                  Shares         Price     (years)       Value
---------------------------------------- -----------  --------- ------------  ----------
Outstanding as of June 30, 2008           7,310,000  $    3.95          7.4  $1,156,000

Exercisable as of June 30, 2008           3,429,000  $    4.93          5.9  $  359,000`

As of June 30, 2008, the Company's unamortized share-based compensation was
$5,755,000.  The Company plans to amortize this share-based compensation cost
over the next 2.8 years.

As of June 30, 2008, the Company's unamortized nonvested equity share-based
compensation was $217,000.  The Company plans to amortize this nonvested equity
share-based compensation cost over the next 2.7 years.

6.  LONG-TERM NOTES

Tenant Improvement Loan Agreement

In February 2006, the Company entered into a loan agreement with the lessor
of the Company's corporate headquarters to finance $536,000 in tenant
improvements.  The loan carries a fixed interest rate of 9% per annum, is
repayable over the initial term of the lease, which expires in 2013, and is
secured by a letter of credit.  The balance of the loan, including interest
added to principal, was $426,000 at June 30, 2008.

7.  RECEIVABLES FROM RELATED PARTIES

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

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

In January 2006, two senior officers with outstanding loans from the Company
left the Company.  Because the lines of credit were not fully secured and
collection was uncertain, the Company increased the allowance by $1,031,000 in
December 2005.   In 2006, the Company increased the allowance by $542,000.  In
accordance with the terms, the loans were due in January 2007.  Neither of the
officers has repaid their loans.  One of the officers pledged 50,000 shares of
Lumera common stock as collateral for the loans.  In May 2007, the Company
foreclosed on the collateral and sold the shares for net proceeds of $227,000.
The Company is pursuing collection of the remaining outstanding balances.  A
third executive with outstanding loans from the Company left the Company in
August 2007 and his loans will be due in August 2008.  As a result of a review
of the financial position of the former executives and the potential difficulty
in collecting loans from former employees, the Company recorded additional
allowances for doubtful accounts for the receivables from senior officers of
$23,000 during 2007.  As of June 30, 2008 and December 31, 2007, the total
amount outstanding under the lines of credit was $2,496,000 and was fully
reserved.

8.  ACCOUNTING FOR LUMERA WARRANTS

The Company owns a warrant to purchase 170,500 shares of Lumera common
stock and records the warrant at fair value in "Other current assets".
On the original transaction date, the warrant was valued using the Black-Scholes
option-pricing model with the following assumptions:  expected volatility of
83%; expected dividend yield of 0%; risk free interest rate of 4.6%; and
contractual life of 5.1 years.

Changes in the fair value of the warrants are recorded in the statement of
operations each period.  At June 30, 2008, the warrant was revalued using the
Black-Scholes option-pricing model with the following assumptions; expected
volatility of 107%; expected dividend yield of 0%; risk free interest rate of
2.8%; and contractual life of 2.7 years.  The fair value of the warrant
decreased to $14,000 from $130,000 at December 31, 2007 and the changes in value
for the three and six months ended June 30, 2008 of $52,000 and $116,000,
respectively, were recorded as non-operating losses and are included in
"Gain (loss) on derivative instruments, net" in the consolidated
statement of operations.

9.  COMMITMENTS AND CONTINGENCIES

Litigation

The Company has sued its former CEO and President Richard Rutkowski and
his spouse to collect $1,733,000 in outstanding loans from the Company that were
due in January 2007 and remain unpaid. Counterclaims were filed by Mr. Rutkowski
and his spouse, seeking to recover damages in an amount in excess of
$15,000,000. The Company believes these claims are without merit and intends to
defend them vigorously. However, an adverse outcome could have a material
adverse affect on its financial condition.

The Company is subject to other various claims and pending or threatened
lawsuits in the normal course of business. The Company is not currently party to
any such other 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 February 2008, the FASB released a FASB Staff Position, FSP FAS 157-2-
Effective Date of FASB Statement No. 157, which delays the effective date of FAS
157 for all nonfinancial assets and liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually) to fiscal years beginning after November 15, 2008.
The Company is currently assessing the financial impact of FSP FAS 157-2 on its
financial statements.

In June 2007, the Emerging Issues Task Force (EITF) reached a final consensus
on EITF Issue No. 07-1, Accounting for Collaborative Arrangements (EITF 07-1).
EITF 07-1 discusses how to determine whether an arrangement constitutes a
collaborative arrangement, how costs incurred and revenue generated on sales to
third parties should be reported by the participants, how an entity should
characterize payments made between participants and what participants should
disclose in the notes to the financial statements about a collaborative
arrangement. EITF 07-1 is effective for financial statements issued for fiscal
years beginning after December 15, 2008 and interim periods within those fiscal
years. The Company is currently assessing the financial impact of EITF 07-1 on
its financial statements.

11.  SUBSEQUENT EVENT

In July 2008, the Company raised approximately $26.0 million, before
issuance costs of approximately $1.8 million, from the sale of 11,172,000 shares
of common stock and warrants to purchase 6,703,000 shares of its common stock.
The warrants have an exercise price of $3.60 per share, a five year term, and
are not exercisable for one year from the date of issuance. The Company can call
the warrants after one year from the date of issuance if the average closing bid
price of its stock is over $7.20 (200% of exercise price) for any 20 consecutive
trading days.

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."

We are developing compact, low power, high-resolution displays and imaging
systems based on silicon micro-mirror technology. Our technology has potential
applications for a broad range of consumer, automotive, medical, industrial, and
military products.  Our proprietary technology platform combines bi-axial Micro-
Electrical Mechanical system ("MEMS") light scanning technologies,
lasers, optics, electronics, with our system controls expertise to produce
compact display or imaging solutions that we anticipate will lead to
introduction of new applications and products in the consumer and automotive
markets.  Historically, we have entered into development agreements with
commercial and U.S. government customers to develop advanced prototype and
demonstration units based on our light scanning technologies.

In 2006, we announced our new strategy to design, develop and supply a
proprietary display engine called PicoPTM and we changed the company's
business model and go-to-market strategy and principally rely on original
equipment manufacturers (OEMs) to commercialize products based on the PicoP
engine.  The PicoP display engine is an ultra-miniature video projector capable
of producing large, color rich, high resolution images, but it is also small and
low power enough to be embedded directly into mobile devices, such as cell
phones.   PicoP-based miniature projection engines are being marketed to OEMs to
be embedded into a variety of consumer products.  The primary goal for consumer
display applications is to provide mobile device users with a large screen, high
resolution viewing experience from their mobile devices.



We are currently developing a small accessory projector that would be the
first commercial product based on our PicoP display engine. The accessory
projector is expected to display images from a variety of video sources
including cell phones, portable media players (PMPs), PDAs, gaming consoles,
laptop computers, digital cameras, and other consumer electronics products.  It
would allow users to watch movies, play videos, and display photos and other
data onto a variety of flat or curved surfaces.   We expect that the accessory
product will be commercially available during the first half of 2009.

The PicoP display engine, with some modification, could be embedded into
a vehicle to create a heads up display (HUD) that could project point-by-point
navigation, critical operational, safety and other information important to the
vehicle operator.  In working with Tier 1 suppliers, we have produced prototypes
that demonstrate the PicoP's ability to project onto the windscreen of an
automobile a high-resolution image readable during day or night.



We believe that the PicoP display engine could also be modified to be
embedded into a pair of glasses to provide a mobile user with a see-through or
occluded personal display to view movies, play games or access other content.
We are working with the US Air Force to further develop the optical design and
integration of the PicoP display engine for military applications such as helmet
mounted displays and full color see-through eyewear.

Results of Operations

Contract revenue.

`% of                  % of
                                                contract              contract
                                       2008      revenue     2007      revenue   $ change  % change
(in thousands)                       ---------  ---------  ---------  ---------  --------- ---------
Three months ended June 30                                                                       
Government revenue                  $     661       65.7  $   1,370       61.7  $    (709)    (51.8)
Commercial revenue                        345       34.3        849       38.3       (504)    (59.4)
                                     ---------             ---------             ---------
Total contract revenue              $   1,006             $   2,219             $  (1,213)    (54.7)
                                     =========             =========             =========

Six months ended June 30
Government revenue                  $   1,569       47.7  $   2,979       72.3  $  (1,410)    (47.3)
Commercial revenue                      1,718       52.3      1,142       27.7        576      50.4
                                     ---------             ---------             ---------
Total contract revenue              $   3,287             $   4,121             $    (834)    (20.2)
                                     =========             =========             =========`

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

We recognize contract revenue as work progresses on long-term, cost plus
fixed fee and fixed price contracts using the percentage-of-completion method,
which relies on estimates of total expected contract revenue and costs.  Our
revenue contracts generally include a statement of the work we are to complete
and the total fee we will earn from the contract.  When we begin work on the
contract and at the end of each accounting period, we work with the members of
our technical team to estimate the labor and material and other cost required to
complete the statement of work compared to cost incurred to date.  We use
information provided by project mangers, vendors, outside consultants and others
as we deem necessary to develop our cost estimates.  Since our contracts
generally require some level of technology development to complete, the actual
cost required to complete a statement of work can vary from our estimated cost
to complete.   We have developed processes that allow us to make reasonable
estimates of the cost to complete a contract.  Historically, we have made only
immaterial revisions in the estimates to complete the contract at each reporting
period. Recognized revenues are subject to revisions as the contract progresses
to completion and actual revenue and cost 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.

Our contract revenue in a particular period is dependent upon when we enter
into a contract, the value of the contracts we have entered into, and the
availability of technical resources to perform work on the contracts.  Contract
revenue was lower during the three and six months ended June 30, 2008 than the
same periods in 2007, due to the lower beginning contract backlog.

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

Our backlog of development contracts at June 30, 2008 was $526,000 compared
to $7.4 million at June 30, 2007, all of which is scheduled for completion
during the next twelve months.  The decrease in backlog from 2007 is primarily
attributed to completion of government and commercial development contracts in
2007 and early 2008.

Product revenue.

`% of                  % of
                                                 product               product
                                       2008      revenue     2007      revenue   $ change  % change
(in thousands)                       ---------  ---------  ---------  ---------  --------- ---------
Three months ended June 30                                                                          
Bar code revenue                    $     616      100.0  $     443      100.0  $     173      39.1
Nomad revenue                              --         --         --         --         --        n/a
                                     ---------             ---------             ---------
Total product revenue               $     616             $     443             $     173      39.1
                                     =========             =========             =========

Six months ended June 30
Bar code revenue                    $     905      100.0  $     726       93.6  $     179      24.7
Nomad revenue                              --         --         50        6.4        (50)   (100.0)
                                     ---------             ---------             ---------
Total product revenue               $     905             $     776             $     129      16.6
                                     =========             =========             =========`

Our quarterly product revenue may vary substantially due to the timing of
product orders from customers, production constraints and raw material
availability.  The increase in bar code revenue for the three and six months
ended June 30, 2008 compared to the same periods in 2007 was due to the
increased sales activity surrounding the ROV product line.

The backlog of product orders at June 30, 2008 was approximately $153,000,
compared to $292,000 at June 30, 2007, all of which is scheduled for delivery
during the next twelve months.

Cost of contract revenue.

`% of                  % of
                                                contract              contract
                                       2008      revenue     2007      revenue   $ change  % change
(in thousands)                       ---------  ---------  ---------  ---------  --------- ---------
Three months ended June 30          $     374       37.2  $   1,217       54.8  $    (843)    (69.3)
Six months ended June 30                1,136       34.6      2,227       54.0     (1,091)    (49.0)`

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

The cost of contract revenue as a percentage of revenue was lower during the
three and six months ended June 30, 2008 than June 30, 2007 as a result of
negotiating better terms on contracts entered into in late 2007.  We target a
gross margin for each contract of at least 40%; however, the gross margin can
vary based on the technical challenges encountered in completing the
contract.

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
                                       2008      revenue     2007      revenue   $ change  % change
(in thousands)                       ---------  ---------  ---------  ---------  --------- ---------
Three months ended June 30          $     529       85.9  $     446      100.7  $      83      18.6
Six months ended June 30                  868       95.9        730       94.1        138      18.9`

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

Our overhead, which includes the costs of procuring, inspecting and storing
material, facility and depreciation costs, is allocated to inventory, cost of
product revenue, cost of contract revenue, and research and development expense
based on the proportion of direct material purchased for the respective
activity.  During the three months ending June 30, 2008 and 2007, we expensed
approximately $72,000 and $57,000, respectively, of manufacturing overhead
associated with production capacity in excess of production requirements.

We expect that cost of product revenue on an absolute dollar basis will
increase in the future.  This increase will likely result from expected sales of
commercial products.  The cost of product revenue as a percentage of product
revenue can fluctuate significantly from period to period, depending on the
product mix, the level of overhead expense and the volume of direct materials
purchased.

Research and development expense.

`2008       2007     $ change   % change
(in thousands)                       ---------  ---------  ---------  ---------                     
Three months ended June 30          $   5,881  $   3,208  $   2,673       83.3
Six months ended June 30               10,307      6,553      3,754       57.3`

Research and development expense consists of:

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

We have increased spending in research and development as part of our
strategy to accelerate the time to market for products based on the PicoP.   The
increase in cost is primarily attributable to increases in payroll costs and
contracted services.

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.  Because
contract revenue was lower for the three and six months ended June 30, 2008
compared to the same periods in 2007, we directed more of our research and
development work to internally funded projects compared to the same period last
year.

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

Sales, marketing, general and administrative expense.

`2008       2007     $ change   % change
(in thousands)                       ---------  ---------  ---------  ---------                     
Three months ended June 30          $   4,103  $   4,087  $      16        0.4
Six months ended June 30                8,238      7,637        601        7.9`

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.

The increase in sales, marketing, general and administrative expense for the
three and six months ended June 30, 2008 compared to the same period in 2007 was
the result of increased payroll costs and marketing costs associated with our
commercial products.

Interest income.

`2008       2007     $ change   % change
(in thousands)                       ---------  ---------  ---------  ---------                     
Three months ended June 30          $     279  $     152  $     127       83.6
Six months ended June 30                  691        334        357      106.9`

The increase in interest income for the three and six months ended June 30,
2008 compared to the same period in 2007 resulted primarily from higher average
cash and investment securities balances.

Interest expense.

`2008       2007     $ change   % change
(in thousands)                       ---------  ---------  ---------  ---------                     
Three months ended June 30          $      12  $      17  $      (5)     (29.4)
Six months ended June 30                   25        485       (460)     (94.8)`

In March and December 2005, we issued convertible notes (the
"Notes") with an aggregate principal amount of $20 million.  The last
payment on the Notes was made in March 2007, resulting in a decrease in interest
expense for the six months ended June 30, 2008 compared to the same period in
2007.

Gain (loss) on derivative instruments, net.

`2008       2007     $ change   % change
(in thousands)                       ---------  ---------  ---------  ---------                     
Three months ended June 30          $    (254) $  (1,940) $   1,686      (86.9)
Six months ended June 30                1,419     (2,592)     4,011     (154.7)`

We issued warrants to purchase 2,302,000 shares of common stock in
connection with the issuance of the Notes.  The warrants met the definition of
derivative instruments that must be accounted for as liabilities under the
provisions of Emerging Issues Task Force Issue No. 00-19, Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock,because we cannot engage in certain corporate
transactions affecting the common stock unless we make a cash payment to the
holders of the warrants.  We record changes in the fair values of the warrants
in the statement of operations each period.  We valued the warrants at June 30, 2008 using the Black-Scholes
option-pricing model with the following assumptions:  expected volatilities
ranging from 65% to 68%; expected dividend yields of 0%; risk free interest
rates ranging from 1.3% to 2.8%; and contractual lives ranging from 0.1 years to
2.4 years.  The change in value of the warrants of $202,000 for the three months
ended June 30, 2008 was recorded as a non-operating loss and is included in
"Gain (loss) on derivative instruments, net" in the consolidated statement of
operations.  The change in value of the warrants of $1,535,000 for the six
months ended June 30, 2008 was recorded as a non-operating gain and is included
in "Gain (loss) on derivative instruments, net" in the consolidated statement of
operations.  We valued the warrants at June 30, 2007 using the Black-
Scholes option-pricing model with the following assumptions:  expected
volatilities of 68%; expected dividend yields of 0%; risk free interest rates of
4.9%; and contractual lives ranging from 1.1 years to 3.4 years.  The changes in
value of the warrants of $1,860,000 and $2,420,000 for the three and six months
ended June 30, 2007, respectively, were recorded as non-operating losses and are
included in "Gain (loss) on derivative instruments, net" in the consolidated
statement of operations.

In January 2006, we acquired warrants to purchase 170,500 shares of Lumera
common stock.  The warrants were valued using the Black-Scholes option-pricing
model with the following assumptions:  expected volatility of 83%; expected
dividend yield of 0%; risk free interest rate of 4.55%; and contractual life of
5.1 years.  Changes in the fair value of the warrants are recorded in the
statement of operations each period.  As of June 30, 2008, the warrants were
valued using the Black-Scholes option-pricing model with the following
assumptions:  expected volatilities of 107%; expected dividend yields of 0%;
risk free interest rates of 2.83%; and contractual lives of 2.7 years.  As of
June 30, 2008, the fair value of the warrants decreased to $14,000 from $130,000
at December 31, 2007 and the changes in value of $52,000 and $116,000 for the
three and six months ended June 30, 2008, respectively, were recorded as non-
operating losses and are included in "Gain (loss) on derivative
instruments, net" in the consolidated statement of operations.  As of June
30, 2007, the warrants were valued using the Black-Scholes option-pricing model
with the following assumptions:  expected volatility of 83%; expected dividend
yields of 0%; risk free interest rates of 4.9%; and contractual lives of 3.7
years.  The changes in value of $80,000 and $240,000 for the three and six
months ended June 30, 2007, respectively, were recorded as non-operating losses
and are included in "Gain (loss) on derivative instruments, net" in
the consolidated statement of operations.

Liquidity and Capital
Resources

We have funded our operations to date primarily through the sale of equity
and debt securities and, to a lesser extent, from development contract revenues
and product sales.  At June 30, 2008, we had $20.7 million in cash, cash
equivalents and investment securities, available-for-sale.  In July 2008, we
raised approximately $26.0 million, before issuance costs of approximately $1.8
million, from the sale of 11.2 million shares of common stock and warrants to
purchase 6.7 million shares of our common stock.  The warrants have an exercise
price of $3.60 per share, a five year term, and are not exercisable for one year
from the date of issuance. We can call the warrants after one year from the date
of issuance if the average closing bid price of our stock is over $7.20 (200% of
exercise price) for any 20 consecutive trading days.  Based on ourcurrent operating plan and including
the net proceeds from our July financing, we believe we have sufficient cash to
fund operations until late 2009.  We will require additional cash to fund our
operating plan past that time.  There can be no assurance that additional
financing will be available to us or that, if available, it will be available on
terms acceptable to us on a timely basis.  If adequate funds are not available
to satisfy either short-term or long-term capital requirements, we will be
required to limit our operations substantially.  This limitation of operations
may include reductions in staff, operating costs and capital
expenditures.

Cash used in operating activities totaled $14.9 million during the six months
ended June 30, 2008, compared to $11.5 million during the same period in 2007.
In both periods, cash used in operating activities for both periods resulted
primarily from the loss from operations.

We had the following material gains and charges, and changes in assets during
the six months ended June 30, 2008:

- "Non-cash stock-based compensation expense"
- "Loss (gain) on derivative instruments"
- "Accounts receivable"
- "Accruals"

Cash provided by investing activities totaled $11.2 million during the six
months ended June 30, 2008, compared to $7.5 million during the same period of
2007.  During the six months ended June, 2008, we had net sales of investment
securities totaling $11.8 million.  In addition, we used cash of $215,000 for
capital expenditures during the six months ended June 30, 2008, compared to
$520,000 during the same period in 2007.

Cash provided by financing activities totaled $281,000 during the six months
ended June 30, 2008, compared to $5.7 million during the same period in 2007.
The last scheduled payment on our December Notes of $1.4 million was made in
March of 2007.  In addition, in June 2007, we exercised our right to call our
publicly traded warrants.   Our June 30, 2007 cash balance included $6.0 million
in gross proceeds from the exercise of 2,264,000 warrants.

ITEM 3.  QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

Of our total cash equivalents and investment securities available-for-sale
balance, 40% have variable interest rates and, as such, the fair values of the
principal of these instruments are not affected by changes in market interest
rates.  The remaining 60% of our cash equivalents and investment securities
available-for-sale balance are at fixed interest rates and, as such, the fair
values of these instruments are affected by changes in market interest rates.
Due to the generally short-term maturities of these investment securities, we
believe that the market risk arising from our holdings of these financial
instruments is not material.

Our investment policy restricts investments to ensure principal preservation
and liquidity.  The investment securities portfolio is comprised of short-term
highly rated commercial paper, U.S. government agency notes and auction-rate
securities.

At June 30, 2008, $3.0 million of our marketable securities portfolio was
invested in AAA rated investments in municipal student loan auction-rate debt
securities.  Auction-rate securities are long-term variable rate bonds tied to
short-term interest rates.  After the initial issuance of the securities, the
interest rate on the securities is reset periodically, at intervals established
at the time of issuance (generally every seven, twenty-eight or thirty-five
days), based on market demand at the time of the reset auction. Auction-rate
securities are bought and sold in the marketplace through a competitive bidding
process often referred to as a "Dutch Auction". If there are
insufficient clearing bids for the auction-rate securities held by us at the
time of an auction, the auction may not be completed and the rate is reset to a
"maximum rate" according to the provisions of the security. Following
such a failed auction, we would not be able to sell the auction-rate security
through the auction process until a future successful auction.

At the time of our initial investment and through the date of the filing of
this report, all of our auction-rate securities remain AAA rated, collateralized
by the Federal Family Education Loan Program ("FFELP") and other
federal and state student loan guarantee programs, and there have been no
declines in the credit ratings of the issuers or material changes in loan
collection rates.  Our $3.0 million of auction-rate securities have been subject
to failed auctions in 2008 as a result of the current negative liquidity
conditions in the global credit markets.  The failed auctions have rendered
these securities temporarily illiquid through the normal auction process.
AMBAC is the insurer on 50% of the auction-rate securities that we hold.   As of
June 30, 2008, AMBAC continued to be rated AAA by Moody's and Standard and
Poor's and AA by Fitch Ratings.  In addition, all of the auction-rate securities
that we have sold through June 30, 2008, totaling $5.8 million of which $1.3
million was sold during the quarter ended June 30, 2008, have been sold at par
value.  Based on our ability to access our cash and cash equivalents and our
other liquid investments, we do not expect to be required to sell these
securities at a loss.

The values of cash equivalents and investment securities, available-for-sale,
by maturity date as of June 30, 2008, are as follows (in thousands):

`Amount      Percent
                                     ---------  ---------
Cash                                     $674       3.26%
Less than one year                    $13,508      65.29%
One to two years                       $3,507      16.95%
Greater than five years                 3,000      14.50%
                                     ---------  ---------
                                       20,689     100.00%
                                     =========  =========`

All of the Company's development contract payments are made in U.S. dollars.
However, in the future the Company may enter into additional development
contracts in foreign currencies that may subject the Company to foreign exchange
rate risk.  The Company intends to enter into foreign currency hedges to offset
the exposure to currency fluctuations when it can 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

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 June 30, 2008, we had an accumulated deficit of $273.7 million.
- We incurred consolidated net losses of $215.6 million from inception through
2005, $24.0 million in 2006, $19.8 million in 2007, and consolidated net loss of
$14.3 million in the six months ended June 30, 2008.

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

We cannot be certain that we will succeed in obtaining additional development
contracts or that we will be able to obtain substantial customer orders for our
products.  In light of these factors, we expect to continue to incur substantial
losses and negative cash flow at least through 2008 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 and including the net proceeds of our
July financing, we believe we have sufficient cash to fund operations until late
2009.  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. We will require additional capital in the future to fund our
operations, including to:

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

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

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 to satisfy long-term capital requirements, we may be
required to limit our operations substantially.  This limitation of operations
may include reductions in staff and operating costs as well as reductions in
capital expenditures and investment in research and development.

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 defense, industrial, medical and consumer markets.  If our
technology fails to achieve market acceptance, we may not be able to continue to
develop our technology platform.

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

Our common stock is listed for quotation on The NASDAQ Global Market.  To
keep our listing on this market, we must meet NASDAQ's listing maintenance
standards.  If we are unable to continue to meet NASDAQ's listing maintenance
standards, our common stock could be delisted from The NASDAQ Global Market.  If
our common stock were delisted, we likely would seek to list the common stock on
the NASDAQ Capital Market, the American Stock Exchange or on a regional stock
exchange.  Listing on such other market or exchange could reduce the liquidity
for our common stock.  If our common stock were not listed on the Capital Market
or an exchange, trading of our common stock would be conducted in the over-the-
counter market on an electronic bulletin board established for unlisted
securities or directly through market makers in our common stock.  If our common
stock were to trade in the over-the-counter market, an investor would find it
more difficult to dispose of, or to obtain accurate quotations for the price of,
the common stock.  A delisting from The NASDAQ Global Market and failure to
obtain listing on such other market or exchange would subject our securities to
so-called penny stock rules that impose additional sales practice and market-
making requirements on broker-dealers who sell or make a market in such
securities.  Consequently, removal from The NASDAQ Global Market and failure to
obtain listing on another market or exchange could affect the ability or
willingness of broker-dealers to sell or make a market in our common stock and
the ability of purchasers of our common stock to sell their securities in the
secondary market.  In addition, when the market price of our common stock is
less than $5.00 per share, we become subject to penny stock rules even if our
common stock is still listed on The NASDAQ Global Market.  While the penny stock
rules should not affect the quotation of our common stock on The NASDAQ Global
Market, these rules may further limit the market liquidity of our common stock
and the ability of investors to sell our common stock in the secondary market.
At some point during all four quarters of 2006 and 2007 and the first two
quarters of 2008, the market price of our stock traded below $5.00 per share.
On July 31, 2008, the closing price of our stock was $2.51.

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

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

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

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

We may not succeed in these efforts because of:

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

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

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

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

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

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

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

Products incorporating 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.

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

To date, we have produced limited quantities of our ROV and Flic products for
commercial sale and demonstration units for research, development and
demonstration purposes.  The cost per unit for these units currently exceeds the
level at which we could expect to profitably sell these products.  If we cannot
lower our cost of production, we may face increased demands on our financial
resources, possibly requiring additional equity and/or debt financing to sustain
our business operations.

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

Currently, the majority of our distributor relationships for the ROV Scanner
and its accessories involve the distributor taking inventory positions and
reselling to multiple customers.  With these distributor relationships, we do
not recognize revenue until the distributors sell the product through to their
end user customers.  Our distributor relationships do reduce our ability to
forecast sales and increases risks to our business. Since our distributors act
as intermediaries between us and the end user customers, we must rely on our
distributors to accurately report inventory levels and production forecasts.
This requires 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.

We do not have long-term commitments from our ROV customers, and plan
purchases based upon our estimates of customer demand, which may require us to
contract for the manufacture of our products based on inaccurate estimates.

Our ROV sales are made on the basis of purchase orders rather than long-term
commitments.  Our customers may cancel or defer purchases at any time.  This
requires us to forecast demand based upon assumptions that may not be correct.
If our customers or we overestimate demand, we may create inventory that we may
not be able to sell or use, resulting in excess inventory, which could become
obsolete or negatively affect our operating results.  Conversely, if our
customers or we underestimate demand, or if sufficient manufacturing capacity is
not available, we may lose revenue opportunities, damage customer relationships,
and we may not achieve expected revenues.

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

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

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

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

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

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

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

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

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

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

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

During the first six months of 2008 and the full year of 2007, 37% and 61%,
respectively, of our revenue was derived from performance on a limited number of
development contracts with the U.S. government.  Therefore, any significant
disruption or deterioration of our relationship with the U.S. government would
significantly reduce our revenues.  Our government programs must compete with
programs managed by other contractors for limited amounts and uncertain levels
of funding.  The total amount and levels of funding are susceptible to
significant fluctuations on a year-to-year basis.  Our competitors continuously
engage in efforts to expand their business relationships with the government and
are likely to continue these efforts in the future.  Our contracts with the
government are subject to immediate termination by the government for
convenience at any time.  The government may choose to use contractors with
competing display technologies or it may decide to discontinue any of our
programs altogether.  In addition, those development contracts that we do obtain
require ongoing compliance with applicable government regulations.  Termination
of our development contracts, a shift in government spending to other programs
in which we are not involved, a reduction in government spending generally, or
our failure to meet applicable government regulations could have severe
consequences for our results of operations.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Company's Annual Shareholder's Meeting was held on June 25, 2008. The
following proposals were introduced and voted on:

Proposal No. 1 - Election of Directors

|Name              | Votes For  | Votes Withheld
|----------------- | ---------- | --------------
|Alexander Tokman  | 49,456,462 | 971,500       
|Richard A. Cowell | 49,037,301 | 1,390,661     
|Slade Gorton      | 49,029,574 | 1,398,388     
|Mark Onetto       | 49,362,129 | 1,065,833     
|Jeanette Horan    | 49,297,320 | 1,130,642     
|Brian Turner      | 49,382,433 | 1,045,529     

Proposal No. 2 - Amendment to the 2006 Microvision, Inc. Incentive Plan

|For        | Against   | Abstain
|---------- | --------- | -------
|11,845,465 | 5,922,672 | 268,105

Proposal No. 3 - Ratification of the Selection of Independent Registered
Public Accounting Firm

|For        | Against | Abstain
|---------- | ------- | -------
|49,036,580 | 986,569 | 404,812

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:  August 7, 2008 | BY: | /s/  Alexander Y. Tokman                             
|--------------------- | --- | -----------------------------------------------------
|                      |     | Alexander Y. Tokman                                  
|                      |     | Chief Executive Officer
(Principal Executive Officer)



|Date:  August 7, 2008 | BY: | /s/  Jeff Wilson                                     
|--------------------- | --- | -----------------------------------------------------
|                      |     | Jeff Wilson                                          
|                      |     | Chief Financial Officer
(Principal Financial Officer)



The following documents are filed.

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