Company Strengthens Balance Sheet to Support the Commercialization of

Its First PicoP Product in 2009

REDMOND, Wash.–(EMWNews)–Microvision, Inc. (NASDAQ:MVIS), a global leader in light scanning

technologies, today reported operating and financial results for the

second quarter of 2008.

Operating Results

“We believe market interest in PicoP™

remains strong. During the second quarter we received letters of intent

from several companies for the PicoP accessory product for a 2009

release,” said Alexander Tokman Microvision

President and CEO. “We are also very pleased

that our initial testing has demonstrated the drop survivability of the

new MEMS scanner, a key component in our PicoP display engine, and that

we raised $26 million to strengthen our balance sheet to support the

PicoP accessory commercialization.”

During the second quarter Microvision received non-binding letters of

intent from several companies for the PicoP accessory product targeted

for a 2009 release. The company expects to commence extended field

trials with OEM companies soon to solicit broader feedback for the final

accessory product requirements. The company expects that successful

completion of these trials would lead to firmer purchase commitments.

Also, during the quarter the company made advancements in its core

technology including:

• Completed internal testing of the new wide-angle MEMS scanner, an

  integral part of the PicoP engine, for shock and drop survivability.

  These results show that Microvision’s MEMS

  scanning mirror exceeds the shock and drop test requirements

  consistent with mobile handset industry standards.

• Reduced the power consumption of the current MEMS scanner by

  approximately 75% over the previous version initially shown in

  mid-2007.

• Progressed its overall PicoP miniaturization and power reduction

  efforts through the advancement of key ASIC subsystems for the

  accessory and embedded products.

In June, the company joined the U.S. small-cap Russell 2000®

and Russell Global Indexes, which are widely used by investment managers

and institutional investors as benchmarks for investment strategies.

According to Russell Investments, an industry leading $4.4 trillion in

assets currently are benchmarked to the Russell indexes.

Subsequent to the end of the quarter, the company raised $26 million

before issuance costs through the sale of common stock and warrants. The

additional cash is expected to support the company’s

overall operating requirements through launch and into volume production

of its PicoP accessory product.

Financial Results

For the six months ended June 30, 2008, the company reported revenue of

$4.2 million compared to $4.9 million for the same period in 2007 and

for the three months ended June 30, 2008, the company reported revenue

of $1.6 million compared to $2.7 million for the same period in 2007. As

of June 30, 2008, the backlog totaled $679,000 compared to $7.7 million

at June 30, 2007. The decrease in backlog from 2007 is primarily

attributed to completion of government and commercial development

contracts in 2007 and early 2008. Many of the company’s

customers are currently using the prototypes that were delivered under

these contracts to market Microvision’s PicoP

technology to their customers with the goal of determining the next

steps in the commercialization process.

The company reported an operating loss for the six months ended June 30,

2008 of $16.4 million compared to $12.3 million for the same period in

2007 and $9.3 million for the quarter ended June 30, 2008 compared to

$6.3 million for the same period in 2007. The increase is primarily

attributable to lower revenue for the quarter and increased development

costs and increased headcount in Strategic Sourcing, and Business

Development associated with the planned introduction of PicoP enabled

products.

The company reported a net loss of $14.3 million for the six months

ended June 30, 2008 compared to $9.0 million for the same period in 2007

and $9.3 million for the quarter ended June 30, 2008 compared to $2.2

million for the same period in 2007. The net loss for the three and six

months ended June 30, 2007 included a gain on the company’s

sale of its investment in Lumera Corporation of $6.0 million. Excluding

this gain, the adjusted net loss for the six months and three months

ended June 30, 2007 was $15.0 million and $8.1 million, respectively.

The net loss per share was $0.25 for the six months ended June 30, 2008

compared to $0.21 for the same period in 2007 and $0.16 for the quarter

ended June 30, 2008 compared to $0.05 for the same period in 2007.

Excluding the gain on the sale of Lumera of $0.14 per share, the

adjusted net loss per share was $0.35 and $0.19, respectively, for the

six months and quarter ended June 30, 2007.

Net cash used in operating activities was $14.9 million for the six

months ended June 30, 2008 compared to $11.5 million for the same period

in 2007. Cash used in operating activities during the second quarter

included a total of approximately $1.8 million from annual payments to a

MEMS development partner and employee bonuses for 2007, as well as

increased investment in operational infrastructure to support the

planned commercial product introduction. The company ended the quarter

with $20.7 million in cash, cash equivalents, and investment securities

and added approximately $24.2 million in net proceeds from its sale of

common stock and warrants in July 2008.

Strategic Outlook

“Since 2006, we have been successfully

executing on the PicoP commercialization strategy against our publicly

communicated operational milestones,” stated

Tokman. “As we get closer to product

introduction, the specific timing of product launch is expected to be

determined by final commercialization of key components by our strategic

supply chain partners and by established commercial product launch

windows of our customers.

“With respect to key components, most of our

strategic suppliers continue to meet original product development

timelines. Some have experienced longer development and

commercialization cycles than were originally anticipated. This is not

unusual for bringing new technologies to market. The good news is that

in the instances where progress has been delayed, these companies have

invested millions of dollars and continue to communicate their

commitment to bring their components to market because of the large

market opportunity. In addition, we have been pursuing dual supply chain

capabilities in several key areas and consequently remain optimistic

about getting the PicoP display engine to market in 2009.

“Based on what we know today about critical

component availability and consumer electronics sales cycles, we can

provide the following update about the introduction timing of PicoP

based products:

Consumer Accessory and Embedded PicoP Offerings

“As we have discussed in the past we require

red, blue, and green lasers to build our full color pico projector. Red

and blue lasers have been successfully commercialized and adopted by

various industries in the past, while green laser technology is

currently being commercialized. The green laser development has

experienced longer development cycles than originally anticipated. Based

on the ongoing discussions with our green laser suppliers, we believe

that we will be in a position to introduce initial quantities of the

accessory PicoP in the first half of 2009 and move to higher volumes in

the second half of 2009. Based on our communications with prospective

customers we anticipate that an embedded PicoP product will be

commercialized approximately nine to twelve months after introduction of

the accessory product.

Automotive PicoP Offerings

“We have provided vehicle display samples to

all three of our tier one automotive integrators which are marketing

them to their OEM customers. Typical automobile design cycles take

approximately 3 years. In response to global economic changes and 3 year

automotive design cycles, we are focusing more attention on after-market

HUD opportunities because the commercialization timelines are shorter.

We have developed and demonstrated a proof of concept after-market HUD

that could be installed in existing vehicles. We are marketing this

concept to segments where the safety need is greatest with a target

product introduction in 2010.

Eyewear PicoP Offerings

“In addition to the progress we’ve

made on the PicoP display engine which is expected to be an integral

part of Microvision’s eyewear solution, we

made important progress in creating a lightweight, thin optical design

that could be incorporated into fashionable eyeglasses. We believe that

market pull factors for our wearable display products are the same as

they are for pico projectors: the proliferation of broadband mobile

devices and content and the tiny display bottleneck that minimizes

usability and enjoyment of mobile media. We expect the demand for

wearable displays to increase over the next few years. We are targeting

to meet this demand with a wearable display product in 2011.

“We remain confident about our PicoP

commercialization strategy despite the delays in some supply chain

components. We are excited about the opportunity to fundamentally change

the way people view and share information with their friends, family,

colleagues and customers,” concluded Tokman.

Conference Call

Microvision will host a conference call to discuss its second quarter

2008 results and current business operations at 4:30 p.m. ET on August

5, 2008. Participants may join the conference call by dialing

888-680-0869 (for U.S. participants) or 617-213-4854 (for International

participants) ten minutes prior to the start of the conference. The

conference pass-code number is 23845046. Additionally, the call will be

broadcast over the Internet and can be accessed from the Company’s

web site at www.microvision.com/investors.

The web cast and information needed to access the telephone replay will

be available through the same link following the conference call.

About Microvision (www.microvision.com)

Microvision is creating a display technology platform which is expected

to enable next-generation display and imaging products for pico

projectors, vehicles displays, and wearable displays that interface to

mobile devices. The company also manufactures and sells its bar code

scanner product line which features the company’s proprietary MEMS

technology.

Forward Looking Statement

Certain statements contained in this release, including those relating

to future product introductions, applications, business partnering

expectations, sales, growth and business prospects, as well as

statements containing words like “intend,”

“expect,” “target,”

“plan,” “believe,”

and other similar expressions, are forward-looking statements that

involve a number of risks and uncertainties. Factors that could cause

actual results to differ materially from those projected in the

Company’s forward-looking statements include the following: our ability

to raise additional capital when needed; the risk of market acceptance

of our technology and products, our financial and technical resources

relative to those of our competitors; our ability to keep up with rapid

technological change; our ability to enforce our intellectual property

rights and protect our proprietary technologies; the timing of

commercial product launches and delays in product development; the

ability to achieve key technical milestones in key products; our ability

to secure needed third party manufacturing and sales resources,

dependence on third parties to develop, manufacture, sell and market our

products; potential product liability claims and other risk factors

identified from time to time in the Company’s SEC reports, including the

Company’s Annual Report on Form 10-K filed with the SEC. Except as

expressly required by the federal securities laws, we undertake no

obligation to publicly update or revise any forward-looking statements,

whether as a result of new information, future events, changes in

circumstances or any other reason.

Microvision, Inc.
Statement of Operations
(In thousands, except earnings per share data)
(Unaudited)
		Three months ended June 30,								Six months ended 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

Microvision, Inc.
Balance Sheet
(In thousands)
(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			Microvision, Inc. Matt Nichols (media), 425-882-6657 or Tiffany Bradford (investors), 425-936-6847 Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89 Get Unlimited Organic Website Traffic to your Website  TheNFG.com now offers Organic Lead Generation & Traffic Solutions