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eMagin Reports 371% Increase over 2Q 2003

HOPEWELL JUNCTION, N.Y., August 17, 2004 – eMagin Corporation (AMEX:EMA), the leader in active matrix organic light-emitting diode (OLED) microdisplays, announced financial results for the second quarter ended June 30, 2004 at its earnings conference call on August 16.

Revenues for the second quarter were $1.44 million compared to $0.31 million for the same period in 2003, a 371% increase. Net loss applicable to common stock for the quarter was $1.40 million, or $0.02 per share, compared to a $0.52 million gain of $0.02 per share for the same period in 2003. The 2003 gain was primarily the result of one-time positive effects of a debt restructuring in the 2nd quarter of 2003.

The Company's balance sheet showed $4.4 million in cash on-hand, up from approximately $1.1 million on December 31, 2003. Net equity was $6.5 million on June 30, 2004, up from a negative $4.8 million at the end of 2003, reflecting the additional financing the company accomplished in early 2004, exercises of warrants, and the conversion of all of its outstanding senior debt to equity.

“I'm very pleased to report that we achieved record product revenues,” said Gary Jones, chief executive officer and president of eMagin. “We also continued to improve operations efficiency by decreasing our net loss from $4.9 million first quarter to $1.4 million in the second quarter, slightly better than estimated. Our supply of wafers has been significantly improved, but remains a constraint. Improvements in the wafer supply are anticipated. eMagin needs to continue to be extremely efficient in its use of capital as it addresses these issues, its targeted large ramp in supplies and inventory, new optics and subsystems solutions, and builds new markets. Still, the ratchet in sales revenues we demonstrated in the second quarter only bolsters our convictions that our products have tremendous potential and are gaining additional traction in the market. We believe that the fundamentals of our business continue to be strong and we remain confident in our corporate strategy.”

Second Quarter Highlights Selected highlights from eMagin's earnings call include the following:

Revenue - Revenue for the first six months of 2004 was $2.0 million, up 168% over $772,000 for the first half of 2003. The second quarter mix of revenue was approximately 80% displays and 20% for subsystems both of which are shipped to customers for integration into their products. This fully transitions the company into the production phase for our OLED microdisplays.

2003's revenue consisted primarily of test kits, initial quantity production, and services which were purchased by most clients while they went through their product design, evaluation, and initial product introduction phase. Today different clients are at many different stages - from just starting evaluations to starting to ramp production.

Customers -- Developer and interface kits and first samples of our displays have been shipped to over 150 customers. Presently, about 120 of these customers are active in their product development or initial production efforts. At least 60 are now in late stage product development or have commercial or military products already in the field, some of which have not been announced.

Customer announcements generally reflect clients who have recently completed the typical 18 to 24 month evaluation, prototyping and test cycle for commercial products or military programs. New domestic and international product announcements since the end of the first quarter 2004 include the following.

• Thales-Angenieux (France) is selling the ELVIR thermal uncooled camera for night vision application in security and defense

• Nivisys (USA) introduced and began selling the TAM-14 thermal acquisition monocular, which can be adapted for use with head gear. The Nivisys TAM-14 is based on a core that uses Raytheon's thermal imager. • DRS Technologies (USA) is making and selling its

About eMagin Corporation: A leader in OLED technology and personal display systems, eMagin manufactures and integrates high-resolution OLED microdisplays, magnifying optics, and systems technologies to create a virtual image comparable to that of a large computer monitor or a large-screen television. eMagin's OLED displays have been incorporated into a variety of near-eye imaging products for military, industrial, medical, and consumer markets that choose eMagin's award-winning technology as a core component for their solutions. eMagin's first personal display system, the Z800 3DVisor, provides superb 3D stereovision and headtracking for PC gaming, training and simulation, and other applications. It won the CEA's Best of Innovations award in the digital display category and won additional recognition in the electronic gaming category. eMagin's microdisplay manufacturing and R&D operations are co-located with IBM on its campus in East Fishkill, New York. System design facilities and sales and marketing are located in Bellevue, Washington. A sales office is located in Tokyo, Japan. For additional information, please visit and

Forward Looking Statements: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including those regarding eMagin Corporation and its subsidiaries' expectations, intentions, strategies and beliefs pertaining to future events or future financial performance. All statements contained herein are based upon information available to eMagin's management as of the date hereof, and actual results may vary based upon future events, both within and without eMagin management's control. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms, or other comparable terminology. These statements are only predictions. Actual events or results may differ materially from those in the forward-looking statements as a result of various important factors, including those described in the Company's most recent filings with the SEC. Although we believe that the expectations reflected in the forward-looking statements are reasonable, such statements should not be regarded as a representation by the Company, or any other person, that such forward-looking statements will be achieved. The business and operations of the Company are subject to substantial risks which increase the uncertainty inherent in forward-looking statements. We undertake no duty to update any of the forward-looking statements, whether as a result of new information, future events or otherwise. In light of the foregoing, readers are cautioned not to place undue reliance on such forward-looking statements.

Note:eMagin, Eyebud, 3DVisor, X800 and Z800 are trademarks of eMagin Corporation.


Contact: Joe Runde
Phone: 425.882.7878