eMagin Corp Retires $6 Million Debt

BELLEVUE, Wash.--([ BUSINESS WIRE ])--eMagin Corporation (OTCBB:EMAN), a leader in OLED technology, today announced that it has closed a transaction with an investor ("Investor") to raise $4.033 million through the issuance and sale of Series B Convertible Preferred Stock. The proceeds of the sale were used exclusively to fully retire the Company's $6 million outstanding 8% Senior Secured Convertible Notes that were due on December 22, 2008.

Note Holders had the election to (a) be repaid, (b) convert into common stock or (c) convert into Series B Convertible Preferred Stock. Based on the elections from the Note Holders, eMagin Corporation reports (a) $4,012,308 of the Notes were repaid in cash, (b) $250,000 of the Notes plus interest were converted into common stock, and (c) $1,700,000 of the Notes plus interest were exchanged for Series B Convertible Preferred Stock. Accordingly, the Company fully retired the Notes by (a) repaying a total of $4,032,965.44 of outstanding principal and interest from the proceeds of the sale of the Series B Convertible Preferred Stock, (b) issuing a total of 717,620 shares of common stock to Note Holders converting into common stock, and (c) issuing 4,033 shares of Series B Convertible Preferred Stock to the Investors pursuant to the sale and issuing 1,706 shares of Series B Convertible Preferred Stock to Note Holders converting their Notes, for a total issuance of 5,739 shares of Series B Convertible Preferred.

The Series B Convertible Preferred Stock is convertible into shares of common stock of the Company at a conversion price of $0.75 per share, which is the same conversion price as the Notes. The Series B Convertible Preferred Stock has a stated value of $1,000 per share, has no dividend unless one is declared on the common, and has no mandatory redemption date. The Company believes it will be able to include the Series B Preferred Convertible Stock as part of its equity capital for regulatory and other purposes. The conversion price represents a 97% premium over the closing price on Wednesday December 17, 2008.

As part of this transaction, the Investor was issued approximately 1,875,467 warrants to purchase common stock shares. These warrants have an exercise price of $1.03 per share and a life of five years from the closing date of the transaction.

"Over the past two quarters, we have substantially reduced costs, improved profitability and generated nearly $2 million in EBITDA," said Andrew Sculley, eMagin's chief executive officer. "Last quarter we generated net profits. This transaction, which fully retires our convertible note debt, eliminates about $480,000 of annual debt service and leaves us in a much improved financial position as we continue to execute on our plan to sustain profitable growth."

"We believe that our greatly improved and simplified capital structure will allow investors to focus more on actual performance and customers to focus more on our products," Mr. Sculley continued. "We are also pleased on behalf of the shareholders that the retirement of the Notes has occurred at a conversion price reflecting a considerable premium to the current stock price. Finally, we are grateful for the vote of confidence that the Investors and the other converting Note Holders have shown in the Company and its employees."

About eMagin Corporation

A leader in OLED microdisplay technology and personal display systems, eMagin integrates high-resolution OLED microdisplays with magnifying optics to deliver virtual images comparable to large-screen computer and television displays in portable, low-power, lightweight personal displays. eMagin microdisplays provide near-eye imagery in a variety of products from military, industrial, medical and consumer OEMs. The Company's own Z800 3DVisor provides 3D stereovision and headtracking for PC gaming, training and simulation, immersion therapy, and other 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. More information about eMagin and its products is available at [ www.emagin.com ].

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's expectations, intentions, strategies and beliefs pertaining to future events or future financial performance. 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.

The securities that the Company sold in the private placement were not registered under the Securities Act of 1933, as amended (the "Securities Act"), and were sold in reliance upon exemptions from the registration requirements of the Securities Act pursuant to Regulation D promulgated under the Securities Act. Therefore, such securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act of 1933 and any applicable state securities laws. This press release does not constitute an offer to sell any securities or a solicitation of an offer to purchase any securities.

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eMagin Corp Retires $6 Million Debt