eMagin Corporation Announces Increased Convertible Note Financing
                  and Begins Rehiring Some Laid-Off Employees

Hopewell Junction, N.Y., January 15, 2002 -- eMagin Corporation (AMEX:EMA) today
announced an increase in its existing bridge  financing in the form of a secured
convertible loan. eMagin obtained an additional $1.0 million of financing from a
private  investor,  increasing  the amount of the  secured  convertible  loan to
$1,625,000,  including  amounts  previously made available to eMagin in December
2001 and after repayments of certain note holders.

The objective of this bridge loan is to permit eMagin to continue operations and
increase  production  to support  orders for its organic  light  emitting  diode
(OLED)  microdisplays,  while  eMagin  continues  to seek  sources of  long-term
financing.

The secured  convertible  notes, which are due August 30, 2002, bear interest at
9.0 percent,  and are  convertible  into common  stock at $0.5264 per share.  In
addition, the secured convertible notes carry with them, 60% warrant coverage to
purchase common stock at $0.5468 per share. Previous investors remaining in this
bridge loan received reset conversion and warrant pricing with the same terms as
the new investor. In addition, holders of $250,000 aggregate principal amount of
convertible secured notes issued in December 2001 were repaid in full out of the
proceeds of the new financing.

eMagin  also  announced  that it is making  return to work offers to some of its
laid-off employees  associated with manufacturing,  engineering,  and marketing.
Gary  Jones,  CEO of  eMagin,  stated  "Much of the  initial  R&D needed for the
company to create its initial  products has been completed and the equipment set
required for initial  production  is in place.  We have been most pleased to see
the potential for increased near term product orders."

Jones continued, "To maintain customer relationships,  create sales revenue, and
provide the value  required  to justify  future  investment,  we must supply our
customers  with  sufficient  quantities  of displays so they can adopt these new
microdisplays  into their new products and can begin fielding products using our
displays. Beginning this month, we plan to begin ramping production with a focus
on cost effectiveness with a smaller management,  administrative, and R&D staff,
carefully  controlling our burn rate going forward.  However, we still expect to
be in a difficult cash position until a larger  financing can occur.  We hope to
be able to make rehiring offers to additional  staff as soon as it is prudent to
do so."

It was further  announced that Edward Flynn has been appointed as the new CFO of
eMagin. Mr. Flynn has been with eMagin in senior management positions for over 8
years, most recently as Treasurer. Previously, Mr. Flynn was employed by the IBM
Corporation for over 29 years in senior financial positions.

About eMagin
A leading developer of virtual imaging  technology,  eMagin combines  integrated
circuits,  microdisplays,  and optics to create a virtual  image  similar to the
real  image  of  a  computer  monitor  or  large  screen  TV.  These  miniature,
high-performance,  modules provide access to  information-rich  text,  data, and
video which can facilitate the opening of new mass markets for wearable personal
computers, wireless Internet appliances, portable DVD-viewers,  digital cameras,
and other emerging applications  including  helmet-mounted  virtual displays for
the US Air Force's Joint Strike Fighter  program as well as other military uses.
Electronic  Products  Magazine  recently named eMagin's SVGA OLED microdisplay a
2001 Product of the Year.  eMagin has received a US Army Quality  Award and last
year was named  Display of the Year by  Society  Information  Display  (SID) and
Information  Display  Magazine.  eMagin's  intellectual  property  portfolio  is
leveraged by key OLED technology licensed from Eastman Kodak. OLEDs are emissive
devices (i.e.,  they create light), as opposed to liquid crystal displays (LCDs)
that  require a  separate  light  source.  OLED  devices  use less power and are
capable of high  brightness  and  color.  Because  the light  they emit  appears
equally  bright  from  all  directions,  they  are  ideal  for  near  to the eye
applications  since a small  movement  in the eye does  not  change  the  image.
According to Stanford Resources,  a leading market research firm focusing on the
global electronic display industry,  the worldwide market for OLED displays will
grow to $1.6 billion in 2007, or 63% a year over that period. eMagin's corporate
headquarters and  microdisplay  operations are co-located with IBM on its campus
in East Fishkill,  N.Y. Further information about eMagin and its virtual imaging
solutions can be accessed at www.emagin.com and www. virtualvision.com.

Forward Looking Statements
This 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.  These  statements  relate to future  events  or our  future  financial
performance.  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.


Note to editors: eMagin is properly spelled beginning with a lower case e.

CONTACT:
Rita Chaires, Corporate Communications
email: info@emagin.com