1046995--4/2/2007--EMAGIN

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RISKS RELATED TO OUR FINANCIAL RESULTS We have a history of losses since our inception and may incur losses for the foreseeable future We may not be able to execute our business plan and may not generate cash from operations. Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing. microdisplays have not been produced in significant quantities. We are dependent on a single manufacturing line. We could experience manufacturing interruptions, delays, or inefficiencies if we are unable to timely and reliably procure components from single-sourced suppliers. We expect to depend on semiconductor contract manufacturers to supply our silicon integrated circuits and other suppliers of key components, materials and services. RISKS RELATED TO OUR INTELLECTUAL PROPERTY We rely on our license agreement with Eastman Kodak for the development of our products. We may not be successful in protecting our intellectual property and proprietary rights. RISKS RELATED TO THE MICRODISPLAY INDUSTRY The commercial success of the microdisplay industry depends on the widespread market acceptance of microdisplay systems products. The microdisplay systems business is intensely competitive. The display industry is cyclical Competing products may get to market sooner than ours. Our competitors have many advantages over us. Our products are subject to lengthy OEM development periods. Our products will likely experience rapidly declining unit prices. RISKS RELATED TO OUR BUSINESS Our success depends on attracting and retaining highly skilled and qualified technical and consulting personnel. Our success depends in a large part on the continuing service of key personnel. Our business depends on new products and technologies. We generally do not have long-term contracts with our customers. Our business strategy may fail if we cannot continue to form strategic relationships with companies that manufacture and use products that could incorporate our OLED-on-silicon technology. Our business depends to some extent on international transactions. Our business may expose us to product liability claims. Our business is subject to environmental regulations and possible liability arising from potential employee claims of exposure to harmful substances used in the development and manufacture of our products. RISKS RELATED TO OUR STOCK The substantial number of shares that are or will be eligible for sale could cause our common stock price to decline even if eMagin is successful. We have a staggered board of directors and other anti-takeover provisions, which could inhibit potential investors or delay or prevent a change of control that may favor you.

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1046995--4/2/2007--EMAGIN_CORP