eMagin Corporation (AMEX:EMA), the leader in OLED virtual imaging
technology, announced today financial results for the quarter ended
June 30, 2006. Second quarter selected highlights include the
following: Financial Summary: -- Revenue for the three and six
months ended June 30, 2006 of $1.7 million and $3.3 million
increased 157% and 147% respectively from $0.7 million and $1.3
million at June 30, 2005. The growth in revenue was directly
attributable to increases in microdisplay output from our New York
production facility. -- Approximately 9,800 microdisplays were
produced during the second quarter, up 151% from 3,900 for the
quarter ended June 30, 2005. Over 16,000 displays have been
produced over the past five months with output consistently in line
with target rates based on expected demand. -- Net loss for the
three and six months ended June 30, 2006 was $4.8 million and $10.0
million and included $0.8 million and $1.6 million of non-cash
expense associated with the expensing of stock options. This
compares to a net loss of $4.5 million and $8.0 million during the
three and six months ended June 30, 2005. Stock options were not
expensed prior to 2006. Loss per share was the same for the three
and six months ended June 30, 2006 and June 30, 2005 at $(0.05) and
$(0.10) per share -- On July 21, 2006 eMagin entered into
agreements to sell senior secured convertible notes and warrants
for $6.5 million dollars. The transaction is now closed. Second
Quarter Highlights: -- eMagin received a substantial initial order
and signed a multi-market distribution agreement with Vision 3
International (V3i), Ltd., Korean-based leader in stereo imaging
technologies. eMagin expects to fulfill the initial $1.1 million
order over the next three months. eMagin also plans to bundle V3i's
stereo cameras with its Z800 3DVisors in other markets. -- eMagin's
OLED microdisplays were selected to provide power-efficient
information display for Liteye Systems' new LE-700 and LE-750
head-mounted displays (HMDs). -- Icuiti entered into an agreement
to purchase several thousand eMagin microdisplays for production of
its Tac-Eye(tm) display system. Designed for the U.S. Military with
partial funding from the Air Force Research Lab Human Effectiveness
Directorate (AFRL-HE) and the US Special Operations Command
(USSOCOM), the Tac-Eye display system is designed for maximum
efficiency in today's demanding battlefield environments. The
system can be mounted on a helmet or goggles. -- eMagin and the
University of Michigan's Solid-State Electronics Laboratory (SSEL)
won a Phase 1 Extension of their Small Business Technology Transfer
(STTR) contract from The Office of Naval Research to lay additional
groundwork in encapsulation technologies for small, lightweight
displays, and, potentially, for flexible displays. -- eMagin
announced the first four product offerings of its breakthrough
OLED-XL microdisplay portfolio. The 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. During the quarter, the Company continued to
make major strides in its program to increase production, yield and
uptime at its OLED microdisplay fabrication facility in Hopewell
Junction, New York. Commenting on the results, Gary Jones, eMagin's
chief executive officer and president, said, "Using improved OLED
materials and processes in a device type we call OLED-XL, the
production output and product performance results have been
significant. During the second quarter approximately 10,000
displays were produced. During the same period last year we
produced 3900 units. Uptime and output has continued at our target
rate, determined by expected demand, throughout the third quarter
with more than 16,000 displays having been produced over the past 5
months. Essentially we have tripled uptime and output and continue
to achieve positive results." Jones continued, "Many of the
displays produced last quarter will go toward building Z800 3DVisor
systems for V3i's initial $1 million order. The remaining displays
as well as ongoing production will support the building demand we
see in the military and commercial OEM market segments. Recent OEM
design wins in the first half of 2006 have led to greater
visibility as these design wins convert to contracts. Clearly the
advantages our OLEDs bring to applications have been proven in the
field and now we're starting to see financial results through the
initiation of large production orders." John Atherly, eMagin's
chief financial officer, added, "During the first quarter we
received notification on two key design wins where OEMs selected
our display or subsystem design for inclusion in their programs
which are worth in our estimation approximately $50 million over
the programs' six year lives. Today, the first of these moved to
contract with the signing of a $10 million six year supply
agreement. The initial schedule calls for approximately $100,000 of
product to be shipped over the next few months, $1.2 million in
2007 and $2.7 million in 2008 as the program hits full production.
The second large program is scheduled to move to contract next
month and is also expected to be a six year supply agreement.
Depending on when signing occurs approximately $1 million could
ship this year, $4.5 million in 2007 and over $7 million in 2008
when full production is reached. While we are not yet ready to
provide annual guidance our recent success in the fab and business
wins are very favorable and suggest that our second half results
will be the Company's best ever and that 2007 is shaping up very
well." eMagin Corporation also announced that it is changing the
Chairmanship to a non-Executive position with the appointment of
Rear Admiral Thomas Paulsen, USN (ret.) as its Chairman, enabling
CEO and President Gary Jones to focus on nurturing the company's
growth. Admiral Paulsen brings proven leadership to the board,
assures investors and shareholders of the board's independent
oversight, and complements the Company's management. Admiral
Paulsen served for over 34 years in the US Navy with extensive
experience in Command Control, Communications and Intelligence
(C3I), Telecommunications, Network Systems Operations, Computers
and Computer Systems Operations. He holds a B.S. in Maritime and
Electrical Engineering from the US Naval Academy and an M.S. in
Computer Science from the US Navy Post Graduate School, Monterey,
Calif. He also sits on several other Boards as both a Director and
an Advisor. According to Paulsen, "eMagin has decided to follow the
growing trend of progressive companies which are implementing
non-executive Board leadership, which we believe is important for
fulfillment of Sarbanes-Oxley and requirements for Board
independence. Where others have spent billions of dollars and
failed, Gary Jones' leadership and OLED technical knowledge has in
less then nine years brought eMagin OLED manufacturing from R &
D to online production this past year to enable the company to meet
a growing level of demand from both defense and commercial customer
requirements. We also want to make sure that we provide adequate
levels of support for our CEO and President to allow him the
critical time necessary to concentrate on the growth of the
business." Full results are available by referencing the Company's
10Q report for the quarter ended June 30, 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 second 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. -0- *T eMAGIN
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands,
except share data) June 30, December 2006 31, (unaudited) 2005
----------- --------- ASSETS Current assets: Cash and cash
equivalents $ 255 $ 6,727 Investments - held to maturity 124 120
Accounts receivable, net 954 762 Inventory 3,614 3,839 Prepaid
expenses and other current assets 832 1,045 --------- ---------
Total current assets 5,779 12,493 Equipment, furniture and
leasehold improvements, net 983 1,299 Intangible assets, net 56 57
Other assets 233 233 --------- --------- Total assets $ 7,051 $
14,082 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable $ 2,686 $ 562 Accrued
compensation 1,018 1,010 Other accrued expenses 875 1,894 Deferred
revenue 98 96 Current portion of capitalized lease obligations 9 16
Other current liabilities 148 47 --------- --------- Total current
liabilities 4,834 3,625 Capitalized lease obligations 4 6 Long-term
debt 37 50 --------- --------- Total liabilities 4,875 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,
100,422,492 shares as of June 30, 2006 and 99,972,458 shares as of
December 31, 2005 100 100 Additional paid-in capital 177,633
175,860 Accumulated deficit (175,557) (165,559) --------- ---------
Total shareholders' equity 2,176 10,401 --------- --------- Total
liabilities and shareholders' equity $ 7,051 $ 14,082 =========
========= eMAGIN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except share data) (unaudited) Three
Months Ended Six Months Ended June 30, June 30,
-------------------------- -------------------------- 2006 2005
2006 2005 ------------ ----------- ------------ -----------
Revenue: Product revenue $ 1,674 $ 616 $ 3,245 $ 1,307 Contract
revenue --- 36 70 36 ------------ ----------- ------------
----------- Total revenue, net 1,674 652 3,315 1,343 ------------
----------- ------------ ----------- Cost of goods sold 2,965 2,389
5,994 4,346 ------------ ----------- ------------ ----------- Gross
loss (1,291) (1,737) (2,679) (3,003) ------------ -----------
------------ ----------- Operating expenses: Research and
development 1,305 1,130 2,542 2,016 Selling, general and
administrative 2,247 1,760 4,836 3,095 ------------- ------------
------------- ------------ Total operating expenses 3,552 2890
7,378 5,111 ------------ ----------- ------------ ----------- Loss
from operations (4,843) (4,627) (10,057) (8,114) Other income
(expense): Interest expense --- (1) --- (2) Other income, net 5 130
59 149 ------------ ----------- ------------ ----------- Total
other income, net 5 129 59 147 ------------ -----------
------------ ----------- Net loss $ (4,838) $ (4,498) $ (9,998) $
(7,967) ============ =========== ============ =========== Loss per
share, basic and diluted $ (0.05) $ (0.05) $ (0.10) $ (0.10)
============ =========== ============ =========== Weighted average
number of shares outstanding: Basic and diluted 100,114,000
82,445,000 100,076,000 81,955,000 ============ ===========
============ =========== *T
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