Basic net loss per share is calculated using the weighted-average number of common shares outstanding during the reporting periods. Diluted net loss per share is calculated using the weighted-average number of common shares outstanding and taking into account the dilutive effect of all potentially dilutive securities, including common stock equivalents and convertible securities outstanding. Potentially dilutive common stock equivalents primarily consist of warrants, employee stock options and nonvested equity shares. Diluted net loss per share for the three and six months ended June 30, 2015 and 2014, is equal to basic net loss per share because the effect of all potential common stock outstanding during the periods, including options, warrants and nonvested equity shares is anti-dilutive.

The components of basic and diluted net loss per share were as follows (in thousands, except loss per share data):

We excluded the following convertible securities from diluted net loss per share, as the effect of including them would have been anti-dilutive:

We enter into arrangements that can include various combinations of product and component sales, services, and licensing activities. In March 2015, we signed a license agreement as part of a multiple-element arrangement with a customer for our PicoP® display technology. The license agreement granted the customer a non-exclusive license to manufacture and sell display modules that incorporate our PicoP display technology.

For multiple-element arrangements, we use a hierarchy to determine the contract consideration to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (VSOE), (ii) third-party evidence of selling price (TPE) and (iii) best estimate of selling price. Because VSOE and TPE do not exist for the March 2015 agreement, we have allocated the contract consideration based on our best estimate.

Under the terms of this multiple-element arrangement, we received an $8.0 million upfront payment in March 2015, and we will receive a per unit royalty for each display module sold by the customer. We expect to recognize revenue on the initial $8.0 million payment over a period of eight years which is the expected time frame that we will provide services under the agreement. Ongoing per unit royalties are reported by our customer quarterly and will be recognized as revenue as they are earned. Products delivered under multiple-element arrangements will be recognized upon acceptance of the deliverables by the customer or the expiration of the contractual acceptance period, after which there are no rights of return.

6

4. CONCENTRATION OF MAJOR CUSTOMERS AND SUPPLIERS

For each of the three and six months ended June 30, 2015, one commercial customer accounted for 99% of our total revenue. One commercial customer accounted for approximately 99% of our net accounts receivable balance at June 30, 2015. For the three and six months ended June 30, 2014, two commercial customers accounted for approximately 90% and 95% of our total revenue, respectively. Three commercial customers accounted for 92% of our net accounts receivable balance at June 30, 2014.

A significant concentration of our components and the products we sell are currently manufactured and obtained from single or limited-source suppliers which are primarily located in foreign countries. The loss of any single or limited source supplier or the disruption in the supply chain of components from these suppliers could subject us to risks and uncertainties regarding, but not limited to, increased cost of sales, possible loss of revenues, or significant delays in product deliveries, any of which could adversely affect our financial condition and operating results.

Inventory consisted of the following:

The inventory at June 30, 2015 and December 31, 2014 consisted of raw materials and finished goods assemblies. Inventory is stated at the lower of cost or market. Management periodically assesses the need to account for obsolescence of inventory and adjusts the carrying value of inventory to its net realizable value when required. In addition, we reduce the value of our inventory to its estimated scrap value when management determines that it is not probable that the inventory will be consumed through the normal course of business during the next twelve months. At June 30, 2015 and December 31, 2014, we had recorded aggregate write-downs of $7.2 million and $6.9 million, respectively, which primarily consisted of outdated product lines. From time to time, we may enter into arrangements to sell the obsolete or scrap inventory, or enter into consignment agreements with third-parties to sell the units, resulting in a gain in the period such transactions are realized.

We use the straight-line attribution method to allocate the fair value of share-based compensation expense over the requisite service period of the related award. The value of restricted or unrestricted shares is determined using the fair value method, which is based on the number of shares granted and the closing price of our common stock on the NASDAQ Global Market on the date of grant. The value of options is determined using the Black-Scholes option pricing model with estimates of option lives, stock price volatility and interest rates, then expensed over the periods of service allowing for pre-vest forfeitures. Changes in the estimated inputs or using other option valuation methods could result in materially different option values and share-based compensation expense.

The following table shows the amount of share-based compensation expense included in each line item of the consolidated statements of operations for each period shown:

7

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, 2015:

As of June 30, 2015, our unamortized share-based employee compensation related to stock options was $2.8 million which we plan to amortize over the next 3.2 years and our unamortized share-based compensation related to the restricted stock units was $181,000 which we plan to amortize over the next 1.0 year.

On March 31, 2014, Asia Optical Co., Inc., a supplier pursuant to an agreement entered into in 2008, filed a complaint for arbitration with the American Arbitration Association claiming that we ordered products from them and failed to take delivery of and pay for such products. The relief sought in the complaint is $3.6 million plus attorneys' fees, interest and arbitration costs. We contest the claim and are defending against it. An adverse outcome of these proceedings could materially and adversely affect our financial condition. At this stage, we cannot predict the likelihood of an unfavorable outcome or the range of potential loss.

We are also subject to various claims and pending or threatened lawsuits in the normal course of business. We are not currently party to any other legal proceedings that we believe are reasonably possible to have a material adverse effect on our financial position, results of operations or cash flows.

We have periodically entered into noncancelable purchase contracts in order to ensure the availability of materials to support production of our products. We continuously assess our outstanding commitments and recognize a loss on purchase commitments when required if such commitments are in excess of our product needs or the costs are not expected to be recoverable. As of June 30, 2015 and December 31, 2014, we had $500,000 accrued for commitments to purchase materials for the SHOWWX™ pico projector that were in excess of our estimated future proceeds from the sale of that product.

In May 2015, we entered into an At-the-Market (ATM) agreement with Meyers Associates, L.P. Under the terms of the agreement, we may, from time to time, at our discretion, offer and sell shares of our common stock having an aggregate value of up to $6.0 million. During the three months ended June 30, 2015, we received gross proceeds of $1.8 million before issuance costs of approximately $71,000 from the sale of 555,000 shares of our common stock.

During the six months ended June 30, 2015, we received $3.3 million from the exercise of warrants we issued in connection with earlier financing transactions to purchase 1.5 million shares of our common stock.

8

During the three months ended March 31, 2015, we received gross proceeds of $1.0 million as part of an At-the-Market (ATM) agreement we entered into with Meyers Associates, L.P. in June 2014. We have completed sales under this agreement, having received total proceeds of $4.5 million before issuance costs of approximately $206,000 from the sale of 2.0 million shares of our common stock.

In March 2014, we raised $13.9 million before issuance costs of approximately $1.0 million through an underwritten offering of 7.2 million shares of our common stock and warrants to purchase 2.1 million shares of our common stock.

In February 2014, we issued 3.7 million shares of our common stock under the warrant exchange provisions of our then-outstanding warrants. We recognized a loss of $5.0 million on the exchange as the fair market value of the common stock issued was greater than the obligation recorded due to an increase in our stock price since December 31, 2013 to the date the warrants were exchanged.

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers, an updated standard on revenue recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards and GAAP. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, and improve guidance for multiple-element arrangements. In July 2015, the FASB voted to defer the effective date of this update for one year. ASU 2014-09 will be effective in the first quarter of fiscal 2018 and may be applied on a full retrospective or modified retrospective approach. We are still evaluating the impact of implementation of this standard on our financial statements.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. ASU 2014-15 will be effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. We do not expect the implementation of this standard to have a material effect on our financial 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 those sections. Such statements may include, but are not limited to, projections of revenues, income or loss, capital expenditures, plans for product development and cooperative arrangements, technology development by third parties, future operations, financing needs or plans of MicroVision, Inc., as well as assumptions relating to the foregoing. The words "anticipate," "could," "would," "believe," "estimate," "expect," "goal," "may," "plan," "project," "will," and similar expressions identify forward-looking statements. Factors that could cause actual results to differ materially from those projected in our forward-looking statements include risk factors identified below in Item 1A.

9

Overview

We are developing our proprietary PicoP® display technology which can be adopted by our customers to create high-resolution miniature laser display and imaging engines. Our PicoP display technology incorporates our widely patented expertise in two dimensional Micro-Electrical Mechanical Systems (MEMS), lasers, optics, and electronics to specify a small form factor display engine that projects a high quality video or still image with lower power needs than other micro-display technologies. Our ingredient brand strategy is to develop and supply PicoP display technology reference designs and key components directly or through licensing arrangements to ODMs and OEMs in various market segments, including consumer electronics and automotive, for integration into their products.

Our development efforts are focused on enhancing the performance of PicoP display technology through the improvement of the optical system, drive electronics hardware and software design, and the performance of various components of the display engine. We also provide engineering support to our customers as they prepare to manufacture display engines as well as providing support to ODMs and OEMs during the integration and optimization of display engines incorporating PicoP display technology for specific products.

Our primary objective for the consumer electronics market is to enable a large screen viewing experience produced by a small projector for mobile devices such as smartphones, tablets and other consumer electronics products. The projector can either be embedded in the device directly or paired with the device via a standalone companion product. These potential products would allow users to watch digital videos, play games, and display images and other data onto a variety of surfaces, freeing users from the limitations of a small screen.

A display engine based on PicoP display technology could also be combined with other components and systems to be embedded into a vehicle or integrated into a portable standalone aftermarket head-up display (HUD). Vehicle HUD systems allow for important information, such as safety warnings or navigation instructions, to be projected in the driver's field of vision where the information can be accessed without taking one's eyes off the road.

We also see potential for PicoP display technology in other areas that are not currently major areas of focus. PicoP display technology could be combined with other components and systems to be incorporated into a pair of glasses to provide the mobile user with a see-through or occluded personal display to watch digital videos, play games or access other content.

Devices enabled by PicoP display technology could be used in field-based professions such as service repair or sales to view and share information such as schematics for equipment repair, sales data, orders or contact information on a larger, more user-friendly display. We also see potential for embedding PicoP display technology in industrial products such as 3D measuring and digital signage.

A key aspect of our business strategy is the development and procurement of intellectual property rights relating to our technology. We generate intellectual property from our internal research and development activities and our ongoing performance on development contracts. We also have acquired exclusive rights to various technologies under licensing and acquisition agreements.

In March 2015, we signed a license agreement with a customer for our PicoP® display technology. The license agreement granted the customer a non-exclusive license to MicroVision's PicoP display technology for use in display modules it manufactures and sells for up to eight years. As part of the agreement, we received an $8.0 million upfront payment in March 2015 and we will receive ongoing per unit royalties for each display module sold by the customer.

We have incurred substantial losses since inception and expect to incur a substantial loss during the fiscal year ending December 31, 2015.

10

Results of Operations

Product revenue.

Product revenue is revenue from sales of products and components under our ingredient brand business model. Our product sales generally include acceptance provisions. We recognize product revenue upon acceptance of the product by the customer or the expiration of the contractual acceptance period, after which there are no rights of return. Provisions are made for warranties at the time revenue is recognized. Our quarterly product revenue may vary substantially due to the timing of product orders from customers, product shipments, production constraints and availability of components and raw materials.

Product revenue was higher during the three and six months ended June 30, 2015 than the same period in 2014, as a result of component sales to a prominent electronics company. The backlog of product orders at June 30, 2015 was approximately $15.0 million, compared to $147,000 at June 30, 2014, and primarily consisted of orders we received in March 2015 from the same customer. The product backlog is scheduled for delivery within the next twelve months.

Royalty revenue.

Royalty revenue is revenue under license agreements to our PicoP display technology. We recognize revenue on upfront license fees over the expected time frame that we provide services or have ongoing obligations under the agreement. Ongoing per unit royalties are recognized as revenue as they are earned.

During the three and six months ended June 30, 2015, royalty revenue included both a prorated portion of the upfront license fee and ongoing per unit royalties on display modules sold by our customer, a prominent electronics company, under the terms of our license agreement.

Contract revenue.

Contract revenue includes revenue from support service contracts and the sale of prototype units and evaluation kits incorporating our PicoP display technology. 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.

In October 2014, we entered into a $1.5 million agreement to provide display module support services to a prominent electronics company for the production readiness, initial production and market launch for products incorporating our PicoP® display technology. Because we were unable to estimate costs on the contract, revenue was recognized using the completed-contract method. Under the completed-contract method, revenue and contract costs were deferred and both were recognized when all deliverables and obligations were completed. During the three months ended June 30, 2015, we recognized the full contract value of $1.5 million in revenue having completed all deliverables and obligations under the agreement. Our contract backlog at June 30, 2015 was approximately $14,000 compared to $722,000 at June 30, 2014.

11

Development revenue.

Development revenue is revenue from performance on collaborative research and development agreements with commercial customers researching and developing commercial applications for our technology.

In March 2013, we entered into a $4.6 million collaborative research and development agreement with a prominent electronics company to incorporate our PicoP display technology into a display engine that could enable a variety of new products. Based on the terms of this agreement, we recognized development revenue as work progressed on the agreement and as our customer accepted the deliverables using a proportional method based on the lesser of the cumulative proportion of total planned costs to be incurred under the agreement versus the cash payments received plus outstanding billings for work accepted by the customer. During the six months ended June 30, 2014, we recognized $1.5 million of revenue on this agreement. As of September 30, 2014, we had completed all deliverables and obligations under the collaborative research and development agreement and had recognized the full contract value of $4.6 million.

Development revenue was zero during each of the three and six months ended June 30, 2015. At June 30, 2015, our backlog of collaborative research and development agreements was zero compared to $230,000 at June 30, 2014.

Cost of product revenue.

Cost of product revenue includes the direct and allocated indirect costs of manufacturing products sold to customers. Direct costs include labor, materials and other costs incurred directly, or charged to us by our contract manufacturers, in the manufacture of these products. Indirect costs include labor, manufacturing overhead, and other costs associated with operating our manufacturing capabilities and capacity. Manufacturing overhead includes the costs of procuring, inspecting and storing material, and facility and depreciation costs, and is allocated to cost of product revenue based on the proportion of indirect labor which supported production activities.

Cost of product revenue can fluctuate significantly from period to period, depending on the product mix and volume and the level of overhead expense. The increase in cost of product revenue for the three and six months ended June 30, 2015, compared to 2014, was primarily attributed to the higher costs of direct materials, quality inspections and manufacturing overhead to support an increase in production.

During the three and six months ended June 30, 2015, we expensed approximately $142,000 and $363,000 of manufacturing overhead associated with production capacity in excess of production requirements compared to zero in each of the same periods in 2014. Additionally, during the three and six months ended June 30, 2015, we recorded a provision for scrap of $149,000 and $287,000 compared to $25,000 and $25,000 in each of the same periods in 2014. Cost of product revenue for the same periods in 2014 included a credit of $20,000 related to the expiration of the warranty period on prior period product sales.

Cost of contract revenue.

12

Cost of contract revenue includes both the direct and allocated indirect costs of providing support services and producing prototype units and evaluation kits. Direct costs include labor, materials and other costs incurred directly in producing prototype units and evaluation kits or 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 by the level of direct and indirect costs incurred, which can fluctuate substantially from period to period.

The increase in cost of contract revenue for the three and six months ended June 30, 2015, compared to 2014, was primarily attributed to higher direct and indirect costs recognized in connection with the completion of all deliverables and obligations under the $1.5 million display module support service contract with a prominent electronics company.

Research and development expense.

Research and development expense consists of compensation related costs of employees and contractors engaged in internal research and product development activities, direct material to support development programs, laboratory operations, outsourced development and processing work, and other operating expenses. We assign 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 our customers.

We believe that a substantial level of continuing research and development expense will be required to further develop our technology. Accordingly, we anticipate our level of research and development spending will continue to be substantial.

The decrease in research and development expense during the three and six months ended June 30, 2015, compared to the same period in 2014, was primarily attributable to the allocation of resources to a commercial contract during the period, and these costs were recognized as cost of contract revenue upon completion of all deliverables and obligations under the agreement.

Sales, marketing, general and administrative expense.

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.

Gain on sale of previously reserved inventory includes the sales of excess component inventory for discontinued products which was fully reserved in prior periods.

13

Loss on warrant exchange.

In February 2014, we issued 3.7 million shares of our common stock under the warrant exchange provisions of our then-outstanding warrants. We recorded a loss of $5.0 million on the exchange as the fair market value of the common stock issued was greater than the obligation recorded due to an increase in our stock price since December 31, 2013 to the date the warrants were exchanged.

We have incurred significant losses since inception. We have funded operations to date primarily through the sale of common stock, convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, licensing activities and product and component sales. At June 30, 2015, we had $15.1 million in cash and cash equivalents.

Based on our current operating plan, we anticipate that we have sufficient cash and cash equivalents to fund our operations through June 2016. We will require additional cash to fund our operating plan past that time. We plan to obtain additional cash through product sales and licensing activities and/or the issuance of equity or debt securities. There can be no assurance that additional cash will be available or that, if available, it will be available on terms acceptable to us or on a timely basis. If adequate funds are not available on a timely basis, we intend to consider limiting our operations substantially. This limitation of operations could include reducing our planned investment in our production capabilities or research and development projects, resulting in reductions in staff, operating costs, and capital expenditures.

We received a report from our independent registered public accounting firm regarding the consolidated financial statements for the year ended December 31, 2014 that includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. These financial statements are prepared assuming we will continue as a going concern.

Cash provided by operating activities totaled $1.5 million during the six months ended June 30, 2015, compared to cash used in operating activities of $6.7 million during the same period in 2014. The change in cash flows from operating activities primarily reflects an $8.0 million upfront payment we received in March 2015 under the terms of the license agreement with a customer for our PicoP® display technology.

Net cash used in investing activities totaled $719,000 for the six months ended June 30, 2015 compared to net cash used in investing activities of $81,000 during the six months ended June 30, 2014. Investing activities was comprised of capital expenditures in property and equipment during the periods.

Net cash provided by financing activities totaled $6.0 million for the six months ended June 30, 2015 compared to net cash provided by financing activities of $13.8 million during the same period in 2014.

In May 2015, we entered into an At-the-Market (ATM) agreement with Meyers Associates, L.P. Under the terms of the agreement, we may, from time to time, at our discretion, offer and sell shares of our common stock having an aggregate value of up to $6.0 million. During the three months ended June 30, 2015, we received gross proceeds of $1.8 million before issuance costs of approximately $71,000 from the sale of 555,000 shares of our common stock.

During the six months ended June 30, 2015, we received $3.3 million from the exercise of warrants we issued in connection with earlier financing transactions to purchase 1.5 million shares of our common stock.

During the three months ended March 31, 2015, we received gross proceeds of $1.0 million as part of an At-the-Market (ATM) agreement we entered into with Meyers Associates, L.P. in June 2014. We have completed sales under this agreement, having received total proceeds of $4.5 million before issuance costs of approximately $206,000 from the sale of 2.0 million shares of our common stock.

In March 2014, we raised $13.9 million before issuance costs of approximately $1.0 million through an underwritten offering of 7.2 million shares of our common stock and warrants to purchase 2.1 million shares of our common stock.

14

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of June 30, 2015, all of our cash and cash equivalents have variable interest rates. Therefore, we believe our exposure to market and interest rate risks is not material.

Our investment policy generally directs that the investment manager should select investments to achieve the following goals: principal preservation, adequate liquidity and return. As of June 30, 2015, our cash and cash equivalents are comprised of short-term highly rated money market savings accounts.

Our success will depend, in part, on our ability to provide our components and future products in commercial quantities at competitive prices and on schedule. 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. Additionally, we have made significant capital investments in manufacturing process equipment, much of which is held at our foreign contract manufacturer's facility. While this arrangement helps to ensure the supply of components and finished goods assemblies, our foreign contract manufacturer could experience severe financial difficulties or other disruptions in their business, and such continued supply could be significantly reduced or terminated, and the net realizable value of these assets could be negatively affected. We cannot be certain that we will successfully obtain access to needed manufacturing resources concurrent with a significant increase in our planned production levels. Future manufacturing limitations of our suppliers could constrain the number of products incorporating our technology that we are able to develop and produce.