eMagin Announces Preliminary 2Q Results.

HOPEWELL JUNCTION, N.Y. -- eMagin Corporation (AMEX:EMA), the leading developer of active matrix organic light emitting diode (OLED) microdisplays, today announced preliminary financial results for the second quarter ended June 30, 2004.

Revenues for the second quarter are estimated to exceed $1.3 million, up over 300% from $307,000 in the second quarter 2003 and more than double sequentially from the quarter ended March 31, 2004. Net loss for the quarter is expected to be less than $1.6 million, as compared to net income of $516,000 during the quarter ended June 30, 2003. Net income in the second quarter of 2003 included $1.9 million of non recurring gain from payable forgiveness.

"The second quarter's revenue represents a new record for the Company," commented Gary Jones, president and chief executive officer of eMagin. "I'm pleased that we have begun to deliver on larger quantity orders for clients and that we've made steady improvements to our manufacturing progresses supporting these increased production levels and we anticipate continued solid revenue growth for the foreseeable future."

"We are receiving increasing CMOS wafer supplies and the incoming quality of the wafers improved substantially in the later part of the second quarter," said Jones. "Though we are currently running well below our current line's equipment capacity, our supplier expects additional CMOS wafer start capacity to become available later this year which will enable us to push for higher production levels in the months ahead."

Mr. Jones continued, "Recent announcements of products employing our displays represent additional opportunities for sales in the defense and security sector as each customer expands their product suite and marketing efforts. Such announcements affirm our contention that eMagin's OLED displays are optimal technology for almost all near-eye virtual imaging applications."

"As we continue to work with defense and security developers, we are also working with many developers of consumer products to launch new products. We have made good progress on developing and providing optics, additional electronics, and system-related hardware and design services to help these companies bring their products to market faster. New optics, OLED materials, and interface products should provide significantly enhanced capabilities for our virtual imaging OEM and ODM customers later this year. These new full virtual imaging modules will allow many more customers to rapidly field new products and ramp production as well as open up exciting new revenue opportunities for eMagin."

The Company's balance sheet showed $4.4 million in cash on hand on June 30, 2004. Complete financial details for the quarter will be provided with the filing of the company's 10QSB in early to mid August. Further information on the Company's activities in the period up to the release will be provided in the formal announcement of earnings and the ensuing conference call.

Quarter Highlights

The second quarter saw several prominent equipment manufacturers announcing their use or intent to use eMagin displays or modules:

--Thales-Angenieux - the ELVIR thermal uncooled camera for night vision application in security and defense

--Nivisys - 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--the Hand-Held Thermal Imager for border protection, force protection, physical security, and search and rescue

--NA-OR, a division of International Technologies Lasers - the Advanced Integrated Soldier System, which incorporates eMagin displays in the helmet-mounted sighting and information communication system

In addition, eMagin's technologists delivered talks at the SPIE Security and Defense Symposium and at the Society for Information Display (SID) Conference. The papers described eMagin's highly successful efforts to improve luminance half-life and their results - more than 60,000 hours for monochrome displays and more than 15,000 for full-color, depending on the application.

Finally, the company announced John Atherly as its new Chief Financial Officer on June 23. Atherly had been CFO for Click2learn, Inc.

About eMagin Corporation

An innovative leader in virtual imaging technologies and products, eMagin integrates high-resolution OLED microdisplays, magnifying optics, and systems technologies to create a virtual image that appears comparable to that of a computer monitor or a large-screen television. eMagin's microdisplay systems are expected to enable new mass markets for wearable personal computers, wireless Internet appliances, portable DVD-viewers, digital cameras, and other emerging applications for consumer, industrial, military, and homeland defense. The company has developed unique technology for producing high-performance OLED-on-silicon microdisplays and related optical systems. eMagin is the only company to announce, show, and sell full-color active matrix OLED-on-silicon microdisplays, licensing OLED technology from Eastman Kodak Company. The company supplies these displays in commercial quantities to OEMs. In addition, the company sells integrated modules to military, industrial and medical customers. eMagin's corporate headquarters and microdisplay operations are co-located with IBM on its campus in East Fishkill, N.Y. Optics and system design facilities are located at its wholly owned subsidiary, Virtual Vision, Inc., in Redmond, Wash. For more information, visit http://www.emagin.com.

Forward Looking Statements

Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties or other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those detailed in the company's periodic filings with the Securities and Exchange Commission. We undertake no duty to update any of the forward-looking statements, whether as a result of new information, future events or otherwise.