eMagin Reports First Quarter 2006 Results; Revenue Growth of 138%

eMagin Corporation (AMEX:EMA), the leader in OLED
virtual imaging technology, announced today financial results for the
quarter ended March 31, 2006.

   First quarter selected highlights include the following:

   Financial Summary:

   --  Revenue for the three months ended March 31, 2006 of $1.6
        million increased 138% from $690,000 at March 31, 2005.

   --  Net loss and loss per share applicable to common stock for the
        three months ended March 31, 2006 was $5.2 million or $0.05
        per share and included $792,000 of non-cash expense associated
        with the expensing of stock options. This compares to a net
        loss of $3.5 million or $0.04 per share during the three ended
        March 31, 2005. Options were not expensed prior to 2006.

   --  Balance sheet showed $4.7 million in working capital at March
        31, 2006 and total assets of $9.2 million.

   First Quarter Highlights:

   Selected highlights of the first quarter through recent events
include the following:

   --  Major recognition for Z800 3DVisor. At the 2006 Consumer
        Electronics Show in January, the Z800 3DVisor won the coveted
        CEA Innovation of the Year award in the digital display
        category and a Design and Engineering Innovation Award for the
        electronic gaming category. The Z800 3DVisor delivers a
        high-color, high-contrast virtual image equivalent to a
        105-inch screen viewed at twelve feet, in full-color
        stereovision. Its high-speed headtracking provides full
        360-degree viewing, enabling users to look around and move in
        the virtual world much like they do in the real world.

   --  Previewed Eyebud(tm) Personal Display. A preview of the
        upcoming Eyebud 800 monocular personal display garnered
        significant attention at CES. The Eyebud delivers
        high-resolution video from any video-capable iPod or other
        personal video player, and can also be used as the primary
        display or as a private second monitor with a laptop or Pocket
        PC. Weighing only 3.6 ounces, its power-efficient design takes
        full advantage of its OLED display, providing four to six
        hours of use on its rechargeable battery.

   --  Extended sales channels. Direct distributors in Asia, Europe,
        and Canada were announced for personal display products. An
        updated list is provided at http://www.3dvisor.com/buy.php

   --  Announced additional design wins. Major new design wins with
        the United States and international OEMs occurred. For the
        military sector, design wins provide a potential revenue
        stream, if all options are exercised, to over $65M million
        over the next 5-6 years, in thermal imaging, situational
        awareness, simulation and training and other applications
        benefiting from the OLED's low system level power consumption,
        high speed, and rugged temperature characteristics expand
        these markets. In addition, commercial design wins continue.
        For example, NordicNeuroLab selected eMagin OLED displays for
        its new VisualSystem, which provides true 3D visual stimuli
        for fMRI (functional magnetic resonance imaging) applications.
        More recently, Sensics' piSight (TM) seamlessly tiles 12
        microdisplays for each eye with a unique optical system to
        provide a complete and unprecedented panoramic virtual reality
        display with 150 degrees field of view and an effective
        resolution of 2200 x 1200 pixels per eye.

   --  Announced New SDK to expand 3DGaming. eMagin announced
        availability of a new software developer's kit (SDK) for game
        and simulation developers. Developers will also have access to
        all the data provided by the 6-degree of freedom headtracker
        in the Z800 3DVisor to enable capabilities such as looking
        around within a 3D world and walking, crouching, crawling,
        jumping or strafing with instinctual head movements rather
        than just key commands. The new Z800 3DVisor SDK is compatible
        with the Microsoft Windows XP operating systems, and supports
        programming in C, C++, and .net languages. The addition of
        full .Net support, along with hooks for 3D imaging and access
        to the full six-degree motion tracking provided by the
        headtracker lets game developers create even more realistic,
        immersive scenarios.

   --  Won key patent. eMagin received notification of a patent for a
        portable communication device with a virtual image display
        incorporating earphone speakers and microphones. The patent
        covers eMagin products such as the Z800 3DVisor, the upcoming
        Eyebud 800 personal display system, and similar devices that
        would enhance and extend the utility of cell phones, PDAs,
        personal media players, and portable or wearable computers.
        The award of this patent provides eMagin with additional
        important intellectual property for portable imaging products
        with multifunction capabilities.

   --  Announced new breakthrough OLED-XL Displays. eMagin's
        proprietary OLED-XL displays provide a new level of high
        performance imaging, with up to 410,000 hours luminance life,
        the widest temperature range, and the lowest power requirement
        of any commercially available SVGA resolution microdisplay
        system. The new OLED-XL devices typically have 6-10 times
        longer luminance half life and exhibit 3-5 times the
        efficiency, depending on the specific OLED-XL product and
        operating parameters. This large efficiency increase permits
        OLED-XL displays to be capable of much higher luminance
        without any added power consumption. and +185 deg. F (+85 deg.
        C).

   --  Elected New Director. Brigadier General, U.S. Army (ret.)
        Stephen Seay, joined eMagin's Board of Directors. In his
        33-year Army career, General Stephen Seay held a wide variety
        of command and staff positions, including Program Executive
        Officer for Simulation, Training and Instrumentation, and
        Commanding General, Joint Contracting Command-Iraq/Head of
        Contracting Authority, Operation Iraqi Freedom.

   Full results are available by referencing the Company's 10Q report
for the quarter ended March 31, 2006 to be filed with the SEC.

   About eMagin Corporation

   A leader in OLED microdisplay and virtual imaging technologies,
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 OLED displays have broad market reach and are
incorporated into a variety of near-to-eye imaging products by
military, industrial, medical and consumer OEMs who choose eMagin's
award-winning technology as a core component for their solutions.
eMagin has recently introduced its first direct-to-consumer system,
the Z800 3DVisor, which provides superb 3D stereovision and
headtracking for PC gaming, training and simulation, and business
applications. 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 www.emagin.com and
www.3dvisor.com.

   Note: eMagin is a trademark of eMagin Corporation.

   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.
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                          eMAGIN CORPORATION
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                   (In thousands, except share data)

                                              March 31,   December 31,
                                                 2006         2005
                                             (unaudited)
                                             ------------  -----------

                   ASSETS

Current assets:
Cash and cash equivalents                    $     1,662  $     6,727
Investments - held to maturity                       124          120
Accounts receivable, net                           1,129          762
Inventory                                          3,572        3,839
Prepaid expenses and other current assets          1,285        1,045
                                             ------------  -----------
  Total current assets                             7,772       12,493
Equipment, furniture and leasehold
 improvements, net                                 1,097        1,299
Intangible assets, net                                58           57
Other assets                                         233          233
                                             ------------  -----------
  Total assets                               $     9,160  $    14,082
                                             ============ ============

    LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable                             $     1,325  $       562
Accrued compensation                                 886        1,010
Other accrued expenses                               721        1,894
Deferred revenue                                      39           96
Current portion of capitalized lease
 obligations                                          13           16
Other current liabilities                             46           47
                                             ------------  -----------
  Total current liabilities                        3,030        3,625

Capitalized lease obligations                          4            6
Long-term debt                                        43           50
                                             ------------  -----------
    Total liabilities                              3,077        3,681
                                             ------------  -----------

Commitments and contingencies

Shareholders' equity:
Preferred stock, $.001 par value: authorized
 10,000,000 shares; no shares issued and
 outstanding                                          --           --
Common stock, $.001 par value: authorized
 200,000,000 shares, issued and outstanding,
 100,049,382 shares as of March 31, 2006 and
 99,972,458 shares as of December 31, 2005           100          100
Additional paid-in capital                       176,702      175,860
Accumulated deficit                             (170,719)    (165,559)
                                             ------------  -----------
  Total shareholders' equity                       6,083       10,401
                                             ------------  -----------
  Total liabilities and shareholders' equity $     9,160  $    14,082
                                             ============ ============
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                          eMAGIN CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except share data)
                              (unaudited)


                                               Three Months Ended 
                                                    March 31,
                                         -----------------------------
                                              2006           2005
                                         -------------- --------------
Revenue:

Product revenue                          $       1,629  $         690
Contract revenue                                    70             --
Sales returns and allowances                       (58)            --
                                         -------------- --------------

  Total revenue, net                             1,641            690
                                         -------------- --------------

Cost of goods sold                               3,029          1,956
                                         -------------- --------------

Gross loss                                      (1,388)        (1,266)
                                         -------------- --------------

Operating expenses:

Research and development                         1,238            886
Selling, general and administrative              2,588          1,335

                                         -------------- --------------
  Total operating expenses                       3,826          2,221
                                         -------------- --------------

Loss from operations                            (5,214)        (3,487)

Other income (expense):

  Interest expense                                  --             (1)
  Other income, net                                 54             19
                                         -------------- --------------
    Total other income, net                         54             18
                                         -------------- --------------

Net loss                                 $      (5,160) $      (3,469)
                                         ============== ==============


Loss per share, basic and diluted        $       (0.05) $       (0.04)
                                         ============== ==============

Weighted average number of shares
 outstanding:

Basic and diluted                          100,038,000     81,432,000
                                         ============== ==============
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