**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
        10-K/A**





R
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE****SECURITIES
                EXCHANGE ACT OF 1934****For
                the fiscal year ended December 31, 2006****or**£
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**





**Commission
      file number 001-15751**





**eMAGIN
      CORPORATION**


*(Exact
      name of registrant as specified in its charter* *)*





**Delaware**
            **56-1764501***(State
                or other jurisdiction of*
            *(I.R.S.
                Employer**incorporation
                or organization)*
            *Identification
                No.)*





**10500
      NE 8** **th** **Street, Suite 1400, Bellevue, Washington 98004**


*(Address
      of principal executive offices)*





**(425)
      749-3600**


**(** *Registrant’s
      telephone number, including area code* **)**





**Securities
      registered pursuant to Section 12(b) of the Act: None**





**Securities
      registered pursuant to Section 12(g) of the Act: Common Stock, $.001 Par Value
      Per Share**





Indicate
      by check mark whether the registrant is a well-known seasoned issuer as defined
      in Rule 405 of the Securities Act. Yes £ No R





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act. Yes £ No R





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes R No £





Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. £





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):





.
      Large
      accelerated filer £ Accelerated filer £ Non-accelerated filer R





Indicate
      by check mark whether the registrant is a shell company (as defined by Rule
      12b-2 of the Exchange Act) Yes £ No R





As
      of
      June 30, 2006, the aggregate market value of the issued and outstanding common
      stock held by non-affiliates of the registrant, based upon the closing price
      of
      the common stock as quoted on the American Stock Exchange of $2.90 was
      approximately $27.6 million. For purposes of the above statement only, all
      directors, executive officers and 10% shareholders are assumed to be affiliates.
      This determination of affiliate status is not necessarily a conclusive
      determination for any other purpose.





Number
      of
      shares of common stock outstanding as of March 16, 2007 was
      11,049,164





*Explanatory
        Note* :
        This
        Form 10-K/A for the fiscal year ended December 31, 2006, is being filed in
        order
        to complete Part III of Form 10-K and fully comply with all required information
        pursuant to Regulation S-K and Section 13 or 15(d) of the Securities Exchange
        Act of 1934. This Amendment contains only the sections to the Original Filing
        which are being amended, and those unaffected parts or exhibits are not included
        herein.








**DOCUMENTS
        INCORPORATED BY REFERENCE** -
        None ****





**FORM
        10-K/A**





**FOR
        THE FISCAL YEAR ENDED DECEMBER 31, 2006**





**INDEX**




**PART
                  III**Item
                  10
              Directors,
                  Executive Officers, and Corporate Governance
              3Item
                  11
              Executive
                  Compensation
              6Item
                  12
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              13Item
                  13
              Certain
                  Relationships and Related Transactions, and Director
                  Independence
              13Item
                  14
              Principal
                  Accountant Fees and Services
              14**PART
                  IV**Item
                  15
              Exhibits
              15Signatures
              16







2


**PART
        III**




**ITEM
        10. DIRECTORS, OFFICERS AND CORPORATE GOVERNANCE.**





The
        following table sets forth the names of our directors and executive officers
        as
        of March 31, 2007:





**Name**
              **Age**
              **Position**K.C.
                  Park
              70
              Interim
                  Chief Executive Officer, PresidentJohn
                  Atherly
              48
              Chief
                  Financial OfficerSusan
                  Jones
              55
              Chief
                  Marketing and Strategy Officer, SecretaryAdm.
                  Thomas Paulsen(Ret.) (1)(2)(3*)
              70
              Chairman
                  of the Board, DirectorClaude
                  Charles
              70
              DirectorPaul
                  Cronson
              50
              DirectorIrwin
                  Engelman (1)
              72
              DirectorDr.
                  Jacob Goldman(2)(3)
              83
              DirectorBrig.
                  Gen. Stephen Seay (Ret.)
              60
              Director





Dr.
        K.C.
        Park was appointed Interim CEO and President in January 2007. He served as
        executive vice president of International Operations since 1998 and as president
        of eMagin's subsidiary, Virtual Vision, Inc., from 2002 to 2004. Earlier,
        with
        LG Electronics as an executive vice president and member of the Board, he
        built
        up LG's business in LCDs and PDPs, solidifying their world leadership position
        in flat-panel display products. At IBM, he managed flat panel display and
        semiconductor programs at the Watson Research Center; then served as director
        of
        Display Technology with worldwide responsibility at the IBM Corporate
        Headquarters, setting up technical operations in Korea as senior managing
        director. Dr. Park holds his Ph.D. in Solid-State Chemistry from the University
        of Minnesota and an MBA from New York University.




John
        Atherly has served as Chief Financial Officer since June of 2004. Before
        joining
        eMagin Corporation, Mr. Atherly worked for Click2learn, Inc., a NASDAQ listed
        enterprise Software Company from 1990 to 2004. He held the positions of Vice
        President of Finance and CFO for approximately 8 years and prior to that
        held
        the positions of Director of Finance and Controller. During his 14 years
        with
        Click2learn Mr. Atherly managed the firm's finance and administration, human
        resources, IT and manufacturing organizations. From 1987 to 1990, Mr. Atherly
        was a Finance and Operations Manager at MicroDisk Services, a manufacturing
        firm
        serving the software industry. Mr. Atherly holds a BA in Business Administration
        from the University of Washington.





Susan
        K.
        Jones has served as Executive Vice President and Secretary since 1992, and
        assumed responsibility of Chief Marketing and Strategy Officer in 2001. Ms.
        Jones has 25 years of industrial experience, including senior research,
        management, and marketing assignments at Texas Instruments and Merck, Sharp,
        & Dohme Pharmaceuticals. Ms. Jones serves on the boards or chairs committees
        for industry organizations including IEEE, SPIE, and SID. Ms. Jones served
        as a
        director of eMagin Corporation from 1993 to 2000 and was a director of Virtual
        Vision, Inc. Ms. Jones graduated from Lamar University with a B.S. in chemistry
        and biology, holds more than a dozen patents, and has authored more than
        100
        papers and talks.





Claude
        Charles has served as a director since April of 2000. Mr. Charles has served
        as
        President of Great Tangley Corporation since 1999. From 1996 to 1998 Mr.
        Charles
        was Chairman of Equinox Group Holdings. Prior to 1996, Mr. Charles has also
        served as a director and in senior executive positions at SG Warburg and
        Co.
        Ltd., Peregrine Investment Holdings, Trident International Finance Ltd.,
        and Dow
        Banking Corporation. Mr. Charles holds a B.S. in economics from the Wharton
        School at the University of Pennsylvania and a M.S. in international finance
        from Columbia University.





Paul
        Cronson has served as a director since July of 2003. Mr. Cronson is Managing
        Director of Larkspur Capital Corporation, which he founded in 1992. Larkspur
        is
        a broker dealer that is a member of the National Association of Securities
        Dealers and advises companies seeking private equity or debt. Mr. Cronson's
        career in finance began in 1979 at Laidlaw, Adams Peck where he worked in
        asset
        management and corporate finance. From 1983 to 1985, Mr. Cronson worked with
        Samuel Montagu Co., Inc. in London, where he marketed eurobond issuers and
        structured transactions. Subsequently from 1985 to 1987, he was employed
        by
        Chase Investment Bank Ltd., where he structured international debt securities
        and he developed "synthetic asset" products using derivatives. Returning
        to the
        U.S., he joined Peter Sharp Co., where he managed a real estate portfolio,
        structured financings and assisted with capital market investments from until
        1992. Mr. Cronson received his BA from Columbia College in 1979, and his
        MBA
        from Columbia University School of Business Administration in 1982. He is
        on the
        Board of Umbanet, in New York City, a private company specializing in email
        based distributed applications and secure messaging.




3


Irwin
        Engelman has served as a director since May of 2005. Irwin Engelman has been
        a
        director of New Plan Excel Realty Trust, Inc., a publicly-traded company
        that is
        one of the nation's largest owners and managers of community and neighborhood
        shopping centers, since 2003. He is currently a consultant to various industrial
        companies. He is currently a director of Sanford Bernstein Mutual Funds, a
        publicly-traded company, and a member of its audit committee. From
        November 1999 until April 2002, he served as Executive Vice President
        and Chief Financial Officer of YouthStream Media Networks, Inc., a media
        and retailing company serving high school and college markets. From 1992
        until
        April 1999, he served as Executive Vice President and Chief Financial
        Officer of MacAndrews and Forbes Holdings, Inc., a privately-held
        financial holding company. From November 1998 until April 1999, he
        also served as Vice Chairman, Chief Administrative Officer and a director
        of
        Revlon, Inc., a publicly-traded consumer products company. From 1978 until
        1992, he served as an executive officer of various public companies including
        International Specialty Products, Inc. (a subsidiary of GAF Holdings Inc.),
        CitiTrust Bancorporation, General Foods Corporation and The Singer Company.
        Mr.
        Engelman received a BBA in Accounting from Baruch College in 1955 and a Juris
        Doctorate from Brooklyn Law School in 1961. He was admitted practice law
        in the
        State of New York in 1962. In addition, he was licensed as a CPA in the State
        of
        New York in 1966.





Dr.
        Jack
        Goldman joined our board of directors in February of 2003. Dr. Goldman is
        the
        retired senior vice-president for R&D and chief technical officer of the
        Xerox Corporation. While at Xerox, he founded and directed the celebrated
        Xerox
        PARC laboratory. Prior to joining Xerox, Dr. Goldman was Director of Ford
        Motor
        Company's Scientific Research Laboratory. He also served as Visiting Edwin
        Webster Professor at MIT. Dr. Goldman presently serves on the Boards of
        Directors of Umbanet Inc. and Medis Technologies Inc., and he has served
        on the
        Boards of Xerox, General Instrument Corp., United Brands, Intermagnetics
        General, GAF and Bank Leumi USA. He has also been active in government and
        professional advisory roles including service on the US Dept. of Commerce
        Technical Advisory Board, chairman of Statutory Visiting Committee of The
        National Bureau of Standards (National Institute of Standards and Technology),
        vice-president of the American Association for the Advancement of Science
        and
        president of the Connecticut Academy of Science and Engineering.





Admiral
        Thomas Paulsen has served as a director since July 2003. Admiral Thomas Paulsen
        served for over 34 years in the US Navy in Command Control, Communications
        and
        Intelligence (C3I), Telecommunications, Network Systems Operations, Computers
        and Computer Systems Operations until his retirement in 1994 as a Rear Admiral.
        He then served as Chief Information Officer for Williams Telecommunications.
        Admiral Paulsen has served as a director of Umbanet, Inc. since 2002. Since
        2000, Admiral Paulsen has served on the Board of Governors of the Institute
        of
        Knowledge Management, George Washington University. Since 1994, he has served
        as
        the Chairman of the Advisory Board and President Emeritus of the Center for
        Advanced Technologies (CAT) and a Managing Partner on the National Knowledge
        and
        Intellectual Property Management Taskforce, a not-for-profit company
        headquartered in Dallas, Texas, and is a member of the Board of Governors
        for
        the Japanese American National Museum, Los Angeles, California.




General
        Stephen Seay was elected to the Board of Directors in January 2006. In his
        33-year Army career, General Stephen Seay held a wide variety of command
        and
        staff positions, most importantly as a soldier's soldier volunteering for
        his
        final assignment with his troops in Iraq. Most recently he was Program Executive
        Officer for Simulation, Training and Instrumentation, and Commanding General,
        Joint Contracting Command-Iraq/Head of Contracting Authority, Operation Iraqi
        Freedom. He has also served as Program Manager for a joint system, headed
        the
        Joint Target Oversight Council and was Commanding General, Simulation, Training
        and Instrumentation Command (STRICOM), Army Materiel Command. Earlier, as
        a
        Field Artillery officer, he commanded at all levels, rising to corps artillery
        commander. He served as Chief of Staff, United States Army, Europe (Forward)
        and
        National Security Element, Taszar, Hungary, during Operation Joint Endeavor.
        He
        held resource management, operations research, and acquisition positions
        during
        three tours on Department of the Army staff. Stephen Seay holds a Bachelor
        of
        Science degree from the University of New Hampshire and a Master of Science
        degree from North Carolina State University.





(1)
              Audit
                  Committee


(2)
              Governance
                  & nominating Committee


(3)
              Compensation
                  Committee


*
        Committee Chair





**CORPORATE
        GOVERNANCE**





**Code
        of Ethics**





We
        have
        adopted a Code of Business Conduct and Ethics that applies to all of our
        directors, officers and employees, including our principal executive officer,
        principal financial officer and principal accounting officer. The Code of
        Business Conduct and Ethics is posted on our website at
        http://www.emagin.com/investors.





We
        intend
        to satisfy the disclosure requirement under Item 10 of Form 8-K regarding
        an
        amendment to, or waiver from, a provision of this Code of Business Conduct
        and
        Ethics by posting such information on our website, at the address and location
        specified above and, to the extent required by the listing standards of the
        American Stock Exchange, by filing a Current Report on Form 8-K with the
        SEC,
        disclosing such information.





4


**Section
        16(a) Beneficial Ownership Reporting Compliance** **





Section 16(a)
        of the Securities Exchange Act of 1934, as amended, requires our directors
        and
        executive officers and persons who own more than 10% of the issued and
        outstanding shares of eMagin common stock to file reports of initial ownership
        of common stock and other equity securities and subsequent changes in that
        ownership with the SEC and the NYSE. Officers, directors and greater than
        ten
        percent stockholders are required by SEC regulation to furnish us with copies
        of
        all Section 16(a) forms they file. To our knowledge, based solely on a
        review of the copies of such reports furnished to us and written representations
        that no other reports were required, during the fiscal year ended December
        31,
        2006 all Section 16(a) filing requirements applicable to our officers, directors
        and greater than 10% beneficial owners were complied with.





**General
        Information Concerning the Board of Directors**





The
        Board
        of Directors of eMagin is classified into three classes: Class A, Class B
        and
        Class C. As of March 31, 2007, Irwin Engelman is the only Class A Director,
        and
        will hold office until the 2008 Annual Meeting of our stockholders. Paul
        Cronson, Admiral Thomas Paulsen, and General Stephen Seay are Class B directors
        who will hold office until the 2009 Annual Meeting. Claude Charles, Dr. Jacob
        Goldman, and Dr. KC Park are Class C directors who will hold office until
        the
        2007 Annual Meeting. In each case, each director will hold office until his
        successor is duly elected or appointed and qualified in the manner provided
        in
        our Amended and Restated Certificate of Incorporation and our Amended and
        Restated Bylaws, or as otherwise provided by applicable law.





Our
        Board
        of Directors held 10 meetings during 2006. Our independent directors met
        in
        executive session on a periodic basis in connection with regular meetings,
        as
        well as in their capacity as members of our Audit Committee and Compensation
        Committee.





**Compensation
        of Directors**





Non-management
        directors receive options under the 2003 Stock Option Plan. Under the 2003
        Plan,
        a grant of options to purchase 6,000 shares of common stock will automatically
        be granted on the date a director is first elected or otherwise validly
        appointed to the Board with an exercise price per share equal to 100% of
        the
        market value of one share on the date of grant. Such options granted will
        expire
        ten years after the date of grant and will become exercisable in four equal
        installments commencing on the date of grant and annually thereafter. In
        addition to the options to purchase 6,000 shares of common stock automatically
        granted upon joining the Board, each Director thereafter will receive an
        annual
        grant of options to purchase 1,000 shares of common stock at the fair market
        value as determined on the date of grant, which options will vest on December
        31
        in the year granted. Directors receive an additional 500 upon re-election.
        Directors are also granted options based on committee assignments consisting
        of
        options to purchase 500 shares per year for members of the compensation
        committee, 1,000 shares for the governance committee in 2006 and 1,500 shares
        for the audit committee. Each committee chair will receive 250 additional
        shares. The compensation committee is in the process of redefining Board
        compensation provisions for fiscal year 2006 and 2007. In addition, each
        non-management director is reimbursed for ordinary expenses incurred in
        connection with attendance at such meetings.





***Audit
        Committee*** *.* The
        Audit
        Committee is responsible for determining the adequacy of our internal accounting
        and financial controls, reviewing the results of our audit performed by the
        independent public accountants, and recommending the selection of independent
        public accountants. The Audit Committee has adopted an Audit Charter, which
        is
        posted on our website at http://www.emagin.com/investors .
        During
        the year, the Board examined the composition of the Audit Committee in light
        of
        the adoption by The American Stock Exchange, Inc. (the “Amex”) of new rules
        governing audit committees. Based upon this examination, Board has determined
        that each of the members of the Audit Committee is unrelated, an outside
        member
        with no other affiliation with us and is independent as defined by the American
        Stock Exchange. The Board has determined that Mr. En gelman
        is
        an “audit committee financial expert” as defined by the SEC. During 2006, the
        Audit Committee held 4 meetings.





***Compensation
        Committee*** *.* The
        Compensation Committee determines matters pertaining to the compensation
        and
        expense reporting of certain of our executive officers, and administers our
        stock option, incentive compensation, and employee stock purchase plans.
        During
        2006, the Compensation Committee held 6 meetings.





***Governance
        and Nominating Committee*** .
        The
        Governance and Nominating Committee is responsible for nominating directors
        and
        for all other purposes outlined in the Governance and Nominating Committee
        Charter, which is posted on our website at http://www.emagin.com/investors .
        The
        Board has determined that each of the members of the Governance and Nominating
        Committee is unrelated, an outside member with no other affiliation with
        us and
        is independent as defined by the American Stock Exchange. During 2006, the
        Governance and Nominating Committee held 3 meetings.





5


**Nomination
        of Directors**





As
        provided in its charter and our company’s corporate governance principles, the
        Governance and Nominating Committee is responsible for identifying individuals
        qualified to become directors. The Governance and Nominating Committee seeks
        to
        identify director candidates based on input provided by a number of sources,
        including (1) the Governance and Nominating Committee members, (2) our other
        directors, (3) our stockholders, (4) our Chief Executive Officer or Chairman,
        and (5) third parties such as professional search firms. In evaluating potential
        candidates for director, the Nominating and Corporate Governance Committee
        considers the entirety of each candidate’s credentials.





Qualifications
        for consideration as a director nominee may vary according to the particular
        areas of expertise being sought as a complement to the existing composition
        of
        the Board of Directors. However, at a minimum, candidates for director must
        possess:





•
              
              high
                  personal and professional ethics and integrity;





•
              
              the
                  ability to exercise sound judgment;





•
              
              the
                  ability to make independent analytical inquiries;





•
              
              a
                  willingness and ability to devote adequate time and resources to
                  diligently perform Board and committee duties; and





•
              
              the
                  appropriate and relevant business experience and acumen.





In
        addition to these minimum qualifications, the Governance and Nominating
        Committee also takes into account when considering whether to nominate a
        potential director candidate the following factors:





•
              
              whether
                  the person possesses specific industry expertise and familiarity
                  with
                  general issues affecting our business;





•
              
              whether
                  the person’s nomination and election would enable the Board to have a
                  member that qualifies as an “audit committee financial expert” as such
                  term is defined by the Securities and Exchange Commission (the
“SEC”) in
                  Item 401 of Regulation S-K;





•
              
              whether
                  the person would qualify as an “independent” director under the listing
                  standards of the American Stock Exchange;





•
              
              the
                  importance of continuity of the existing composition of the Board
                  of
                  Directors to provide long term stability and experienced oversight;
                  and





•
              
              the
                  importance of diversified Board membership, in terms of both the
                  individuals involved and their various experiences and areas of
                  expertise.





**ITEM
        11. EXECUTIVE COMPENSATION**





**COMPENSATION
        DISCUSSION AND ANALYSIS**





This
        section describes the compensation program for our executive officers. In
        particular, this section focuses on our 2006 compensation program and related
        decisions.





**Compensation
        Discussion and Analysis**





•
                The
                    objectives of our compensation program are as
                    follows:  •
                Reward
                    performance that drives substantial increases in shareholder
                    value, as
                    evidenced through both future operating profits and increased
                    market price
                    of our common shares; and  •
                Attract,
                    hire and retain well-qualified
                    executives.




The
        compensation level of our Chief Executive Officer (“CEO”) in general is higher
        than other Company executives, and reflects the CEO's unique position and
        incentive to positively affect our future operating performance and shareholder
        value. Part of the compensation of our executives is from equity compensation,
        primarily through stock options grants, to provide a relatively strong personal
        economic incentive for these executives to increase the market price of our
        common shares. Specific salary and bonus levels, as well as the amount and
        timing of equity incentive grants, are determined informally and judgmentally,
        on an individual-case basis, taking into consideration each executive's unique
        talents and experience as they relate to our needs. Specific Company performance
        measures as they may relate to the timing and amount of executive compensation
        have not yet been developed. Executive compensation is paid or granted pursuant
        to each executive's compensation agreement. Compensation adjustments are
        made
        occasionally based on changes in an executive's level of responsibility or
        on
        changed local and specific executive employment market
        conditions.





6


**Summary
        Compensation Table**





The
        following table sets forth information with respect to the compensation for
        the
        year ended December 31, 2006 of our principal executive officers and principal
        financial officers during 2006, and each person who served as an executive
        officer of our Company as of December 31, 2006.





**Name
                  & Principal Position**
              **Year**
              **Salary
                  ($) (a)**
              **Option
                  Awards ($) (b)**
              **Non-Equity
                  Incentive Plan Compensation ($) (c)**
              **All
                  Other Compensation ($) (d)**
              **Total
                  ($)**Gary
                  Jones Chief Executive Officer
              2006
              $368,170
              $788,180
              -----
              $127,928
              $1,268,808John
                  Atherly Chief Financial Officer
              2006
              $242,308
              $244,890
              -----
              -----
              $
                  487,198Susan
                  Jones Chief Strategy and Marketing Officer
              2006
              $289,163
              $538,817
              $81,379
              -----
              $
                  895,188





Column
        notes:





(a)
        The
        amounts in this column represent the dollar value of base salary earned.
        Gary
        Jones and Susan Jones have deferred 10% of their 2006 base salary, all of
        which
        has been included in column (a). See “Narrative Disclosure to Summary
        Compensation Table.” The other officer did not defer any salary in
        2006.





(b)
        The
        amounts in this column represent the dollar amount recognized for financial
        statement reporting purposes for the fiscal year ended December 31, 2006
        in
        accordance with FAS123R disregarding the estimate of forfeitures related
        to
        service-based vesting conditions. The
        fair
        value of each grant is estimated on the date of the grant using the
        Black-Scholes option-pricing model.Assumptions made in the valuation of
        option awards are incorporated by reference from Note 10 in eMagin's financial
        statements included in its Form 10-K for the year ended December 31, 2006.
        Mr.
        Jones resigned from his positions of CEO and President in January of 2007
        and
        agreed to forfeit all options held as part of his severance agreement. The
        detail of outstanding officer options are listed in the following
        section.





(c)
        The
        amount in this column represents the deferred dollar amount earned in sales
        incentive plan by the named executive officer.





(d)
        The
        amount in this column represents the relocation expenses paid by eMagin for
        the
        benefit of the named executive officer.





**Grants
        of Plan-Based Awards**





There
        were no grants of plan-based awards to named executive officers for the year
        ended December 31, 2006.





**Outstanding
        Equity Awards at Fiscal Year-End**





The
        following table sets forth information with respect to the outstanding equity
        awards of our principal executive officers and principal financial officers
        during 2006, and each person who served as an executive officer of eMagin
        Corporation as of December 31, 2006:






7




**Number
                  of Securities Underlying Unexercised Options (#)****Name**
              **Exercisable**
              **Unexercisable
                  (a)**
              **Option
                  Exercise Price ($)**
              **Option
                  Expiration Date**Gary
                  Jones (b)
              
              32,500(1)
              $
                  2.60
              1/19/0744,435
              
              $
                  3.40
              7/14/0715,254(1)
              2.60
              4/24/139,152(1)
              $
                  2.60
              8/30/139,152(1)
              $
                  2.60
              12/1/1378,000(2)
              $
                  2.60
              5/17/0922,750(3)
              $
                  2.60
              3/17/1011,700(4)
              $
                  2.60
              11/30/12John
                  Atherly
              
              32,500(5)
              $
                  2.60
              6/16/1125,000(6)
              $
                  2.60
              6/16/1116,250(7)
              $
                  2.60
              3/17/1211,700(8)
              $
                  2.60
              11/30/12Susan
                  Jones
              
              16,770(1)
              $
                  2.60
              1/11/109,685(1)
              $
                  2.60
              1/11/106,500(1)
              $
                  2.60
              1/2/072,405(1)
              $
                  2.60
              1/14/0719,500(1)
              $
                  2.60
              5/1/0732,458
              -
              $
                  3.40
              7/14/0711,932(1)
              $
                  2.60
              4/24/137,159(1)
              $
                  2.60
              8/30/137,159(1)
              $
                  2.60
              12/1/1348,750(9)
              $
                  2.60
              5/17/0916,250(10)
              $
                  2.60
              3/17/1011,700(11)
              $
                  2.60
              11/30/12




Column
        note:





On
        November 3, 2006, a reverse stock split, ratio of 1-for-10, became effective.
        All stock options presented reflect the stock split.





(a)   
        The options in this column were repriced. On July 21, 2006, certain employees
        agreed to cancel a portion of their existing stock options in return for
        repricing the remaining stock options at $2.60 per share. The repriced unvested
        options continue to vest on the original schedule however will not vest prior
        to
        January 19, 2007. The previously vested repriced options will not vest prior
        to
        January 19, 2007, also.





8


(b)   
        Mr. Jones resigned from his positions of CEO and President in January of
        2007
        and agreed to forfeit all options held as part of his severance agreement.





Footnotes:





(1)
        Options will be fully vested and exercisable after January 19, 2007.


(2)
        69,189 shares subject to the option vest after January 19, 2007 and an
        additional 2,167 shares shall vest monthly until the option is fully
        vested.


(3)
        11,375 shares subject to the option vest after January 19, 2007 and an
        additional 11,375 shares shall vest on March 17, 2007.


(4)
        5,850
        shares subject to the option vest after January 19, 2007 and an additional
        5,850
        shares shall vest on November 30, 2007.


(5)
        17,875 shares subject to the option vest after January 19, 2007 and an
        additional 488 shares shall vest at each subsequent quarter until the option
        is
        fully vested.


(6)
        25,000 shares subject to the option vest when the Company successfully completes
        four consecutive EBITA positive quarters.


(7)
        8,125
        shares subject to the option vest after January 19, 2007 and an additional
        8,125
        shares shall vest on March 17, 2007.


(8)
        5,850
        shares subject to the option vest after January 19, 2007 and an additional
        5,850
        shares shall vest on November 30, 2007.


(9)
        43,243 shares subject to the option vest after January 19, 2007 and an
        additional 1,354 shares shall vest monthly until the option is fully
        vested.


(10)
        8,125 shares subject to the option vest after January 19, 2007 and an additional
        8,125 shares shall vest on March 17, 2007.


(11)
        5,850 shares subject to the option vest after January 19, 2007 and an additional
        5,850 shares shall vest on November 30, 2007.





**Option
        Exercises and Stock Vested**





No
        executive officer identified in the Summary Compensation Table above exercised
        an option in fiscal year 2006. There were no shares of stock awarded or vested
        with respect to any of those executive officers.





**Pension
        Benefits**





eMagin
        does not have any plan which provides for payments or other benefits at,
        following, or in connection with retirement.





**Non-qualified
        Deferred Compensation**





eMagin
        does not have any defined contribution or other plan which provides for the
        deferral of compensation on a basis that is not
        tax-qualified.





**Employment
        Agreements**





Gary.
        Jones entered into a revised executive employment agreement to conform to
        the
        recently established Sarbanes-Oxley requirements, in connection with his
        service
        as the Company’s Chief Executive Officer. The agreement is effective for an
        initial term of three years, effective January 1, 2006. The agreement provides
        for an annual salary, benefits made available by the Company to its employees
        and eligibility for an incentive bonus pursuant to one or more incentive
        compensation plans established by the Company from time to time. The Company
        may
        terminate the employment of Mr. Jones at any time with or without notice
        and
        with or without cause (as such term is defined in the agreements). If Mr.
        Jones’ employment is terminated without cause, or if Mr. Jones resigns with good
        reason (as such term is defined in the agreements), or Mr. Jones’ position is
        terminated or significantly changed as result of change of control (as such
        term
        is defined in the agreements), Mr. Jones shall be entitled to receive salary
        until the end of the agreement’s full term or twelve months, whichever is
        greater, payment for accrued vacation, and bonuses which would have been
        accrued
        during the term of the agreement. If Mr. Jones voluntarily terminates employment
        with the Company, other than for good reason or is terminated with cause
        (as
        such term is defined in the agreement), she shall cease to accrue salary,
        vacation, benefits, and other compensation on the date of the voluntary or
        with
        cause termination. The Executive Employment Agreement includes other
        conventional terms and also contains invention assignment, non-competition,
        non-solicitation and non-disclosure provisions. On April 17, 2006, the parties
        entered into amendments to the employment agreements pursuant to which the
        parties clarified that the Company has agreed to pay for health benefits
        equivalent to medical and dental benefits provided during Mr. Jones’ full time
        employment until the end of the agreement’s full term or twenty-four (24)
        months, whichever is greater.





Susan.
        Jones entered into a revised executive employment agreement to conform to
        the
        recently established Sarbanes-Oxley requirements, in connection with her
        service
        as the Company’s Chief Marketing and Strategy Officer. The agreement is
        effective for an initial term of three years, effective January 1, 2006.
        The
        agreement provides for an annual salary, benefits made available by the Company
        to its employees and eligibility for an incentive bonus pursuant to one or
        more
        incentive compensation plans established by the Company from time to time.
        The
        Company may terminate the employment of Mrs. Jones at any time with or without
        notice and with or without cause (as such term is defined in the
        agreements). If Mrs. Jones’ employment is terminated without cause, or if
        Mrs. Jones resigns with good reason (as such term is defined in the agreements),
        or Mrs. Jones’ position is terminated or significantly changed as result of
        change of control (as such term is defined in the agreements), Mrs. Jones
        shall
        be entitled to receive salary until the end of the agreement’s full term or
        twelve months, whichever is greater, payment for accrued vacation, and bonuses
        which would have been accrued during the term of the agreement. If Mrs. Jones
        voluntarily terminates employment with the Company, other than for good reason
        or is terminated with cause (as such term is defined in the agreement), she
        shall cease to accrue salary, vacation, benefits, and other compensation
        on the
        date of the voluntary or with cause termination. The Executive Employment
        Agreement include other conventional terms and also contains invention
        assignment, non-competition, non-solicitation and non-disclosure provisions.
        On
        April 17, 2006, the parties entered into amendments to the employment agreements
        pursuant to which the parties clarified that the Company has agreed to pay
        for
        health benefits equivalent to medical and dental benefits provided during
        Mrs.
        Jones’ full time employment until the end of the agreement’s full term or
        twenty-four (24) months, whichever is greater.





9


On
        January 11, 2007, Dr. K.C. Park was appointed Interim Chief Executive Office,
        President, and a Director of the Company. On February 12, 2007, the Company
        entered in a Compensation Agreement (“the Agreement”) with Dr. Park. Under the
        Agreement, the Company has agreed to pay Dr. Park an annual base salary equal
        to
        $300 thousand plus a quarterly increase in his base salary in the amount
        of
        $12.5 thousand per fiscal quarter through December 31, 2007. The Company
        agreed
        to issue Dr. Park an aggregate of 250 thousand restricted shares of common
        stock
        within 10 business days of the completion of a change of control of the Company.
        In addition, if a change of control transaction is completed and Dr. Park
        is not
        offered a senior executive position in the new organization, the Company
        has
        agreed to pay Dr. Park three month’s salary.





**Potential
        Payments Upon Termination or Change-in-Control**





The
        following table sets forth information regarding potential payments and benefits
        Mr. Jones and Mrs. Jones would receive upon termination of employment under
        specified circumstances, assuming that the triggering event in question occurred
        on December 29, 2006, the last business day of the fiscal year:





**Name**
              
              **Voluntary
                  Resignation w/o Good Reason**
              
              **Voluntary
                  Resignation for Good Reason**
              
              **Involuntary
                  Termination without Cause**
              
              **Involuntary
                  Termination with Cause**
              
              **Involuntary
                  Termination with a Change in Control**Gary
                  Jones:Cash
                  severance
              
              $
              -----
              
              $
              631,800
                  (1
              )
              $
              631,800
                  (1
              )
              $
              -----
              
              $
              631,800
                  (1
              )Post-termination
                  health and welfare
              
              $
              -----
              
              $
              -----
              
              $
              11,663
                  (2
              )
              $
              -----
              
              $
              -----Vesting
                  of stock options
              
              $
              -----
              
              $
              -----(3
              )
              $
              -----
              
              $
              -----
              
              $
              -----(3
              )Susan
                  JonesCash
                  severance
              
              $
              -----
              
              $
              510,172
                  (4
              )
              $
              510,172
                  (4
              )
              $
              -----
              
              $
              510,172
                  (4
              )Post-termination
                  health and welfare
              
              $
              -----
              
              $
              -----
              
              $
              11,663
                  (5
              )
              $
              -----
              
              $
              -----Vesting
                  of stock options
              
              $
              -----
              
              $
              -----(6
              )
              $
              -----
              
              $
              -----
              
              $
              -----(6
              )





(1)  
        This amount reflects the lump sum that is payable within thirty days of the
        triggering event to the named executive. All calculations were made as of
        December 31, 2006 using then current salary figures for each named executive
        as
        detailed for each executive in the discussion below.





(2)  
        This amount reflects the COBRA payments for health and dental benefits that
        eMagin would make on behalf of the named executive.





(3)  
        This amount reflects the value of the stock option awards that were unvested
        as
        of December 31, 2006 which would accelerate and vest under the terms of eMagin’s
        option plans following a triggering event. The calculation was based on the
        closing market price of eMagin stock as of December 31, 2006 which was $1.04.
        All stock options had a grant price higher than the closing market price
        at
        December 31, 2006.





10


**Director
        Compensation Arrangements**





The
        following table sets forth with respect to the named director, compensation
        information inclusive of equity awards and payments made in the year ended
        December 31, 2006. The
        Compensation Committee is in the process of redefining Board compensation
        provisions for fiscal year 2006 and 2007.








Name
                  (a)
              
              Fees
                  Earned or Paid in Cash
                ($)
                  (b)
              
              Option
                Awards
                  ($)
                (c)
              
              Total
                ($)Charles
                  Claude
              
              $
              --------
              
              $
              2,509
              
              $
              2,509Paul
                  Cronson
              
              $
              --------
              
              $
              38
              
              $
              38Irwin
                  Engelman
              
              $
              --------
              
              $
              25,592
              
              $
              25,592Jack
                  Goldman
              
              $
              --------
              
              $
              842
              
              $
              842Thomas
                  Paulsen
              
              $
              20,835
              
              $
              -------
              
              $
              20,835Stephen
                  Seay
              
              $
              --------
              
              $
              5,759
              
              $
              5,759





Column
        notes:





(a)
        This
        column includes only directors that are not employees of eMagin Corporation. Any
        director who is also an executive officer is included in the Summary
        Compensation Table.





(b)
        This
        column includes the dollar amount of all fees earned or paid in cash for
        services as a director.





(c) The
        amounts in this column represent the dollar amount recognized for financial
        statement reporting purposes for the fiscal year ended December 31, 2006
        in
        accordance with FAS123R disregarding the estimate of forfeitures related
        to
        service-based vesting conditions.The
        fair
        value of each grant is estimated on the date of the grant using the
        Black-Scholes option-pricing model. Assumptions made in the valuation of
        option awards are incorporated by reference from Note 10 in eMagin's financial
        statements included in its Form 10-K for the year ended December 31, 2006.
        The
        following table sets forth information with respect to the outstanding equity
        awards of our non-employee directors as of December 31, 2006:





11


**Number
                  of Securities Underlying Unexercised Options (#)****Name**
              **Exercisable**
              **Unexercisable
                  (a)**
              **Option
                  Exercise Price ($)**Charles
                  Claude18,200(1)
              $2.6010,000
              
              $2.101,000
              
              $3.50Paul
                  Cronson10,400(1)
              $2.60Irwin
                  Engelman5,038(2)
              $2.60Jack
                  Goldman12,026(1)
              $2.60Thomas
                  Paulsen11,213(1)
              $2.60Stephen
                  Seay3,900(3)
              $2.60




Column
        note:





On
        November 3, 2006, a reverse stock split, ratio of 1-for-10, became effective.
        All stock options presented reflect the stock split.





(a)  
        The options in this column were repriced. On July 21, 2006, certain employees
        agreed to cancel a portion of their existing stock options in return for
        repricing the remaining stock options at $2.60 per share. The repriced unvested
        options continue to vest on the original schedule however will not vest prior
        to
        January 19, 2007. The previously vested repriced options will not vest prior
        to
        January 19, 2007, also.





Footnotes:





(1)
        Options will be fully vested and exercisable after January 19, 2007.


(2)
        1,788
        shares subject to the option vest after January 19, 2007 and an additional
        1,083
        shares shall vest annually until the option is fully vested.


(3)
        975
        shares subject to the option vest after January 19, 2007 and an additional
        975
        shares shall vest annually until the option is fully vested.





**Compensation
        Committee Interlocks and Insider Participation**





None
        of
        the members of our Compensation Committee is or has been an officer or employee
        of eMagin.  In addition, during the most recent fiscal year, no eMagin
        executive officer served on the Compensation Committee (or equivalent), or
        the
        Board, of another entity whose executive officer(s) served on our Compensation
        Committee or Board.




**Compensation
        Committee Report**




The
        Committee has reviewed the Compensation Discussion and Analysis and discussed
        that analysis with management.  Based on its review and discussions with
        management, the Committee recommended to the Board that the Compensation
        Discussion and Analysis be included in eMagin’s Annual Report on Form 10-K/A for
        2006.  This report is provided by the following independent directors, who
        comprise the Committee:




Jacob
        Goldman


Thomas
        Paulsen




12




**ITEM
        12.** **EQUITY
        COMPENSATION PLAN INFORM AND** **SECURITY
        OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
        MATTERS**





**Equity
        Compensation Plan Information**




The
        following table sets forth the aggregate information of our equity compensation
        plans in effect as of December 31, 2006:




**Plan**
              
              **Number of**
                **securities to be**
                **issued upon exercise**
                **of outstanding options,**
                **warrants and rights**
              
              **Weighted-average**
                **exercise price of**
                **outstanding options,**
                **warrants and rights**
              
              **Number of securities**
                **remaining available for**
                **future issuance under**
                **equity compensation plans**
                **(excluding securities reflected**
                **in first column**Equity
                  compensation plans approved by security holders
              
              
              657,288
              
              $
              2.78
              
              
              1,001,546Equity
                  compensation plans not approved by security holders
              
              
              408,457
              
              $
              3.24





**Security
        Ownership of Certain Beneficial Owners and Management and Related Stockholder
        Matters** ****




The
          following table sets forth the number of shares known to be owned by all
          persons
          who own at least 5% of eMagin's outstanding common stock, the Company's
          directors, the executive officers, and the directors and executive officers
          as a
          group as of April 15, 2007, unless otherwise noted. Unless otherwise indicated,
          the stockholders listed in the table have sole voting and investment power
          with
          respect to the shares indicated.
  **Name
                    of Beneficial Owner**
                
                **Common
                    Stock Beneficially Owned**
                
                **Percentage
                    of Common Stock**Stillwater
                    LLC (1)
                
                4,075,650
                
                20.1%Alexandra
                    Global Master Fund Ltd (2)
                
                2,012,799
                
                9.9%Ginola
                    Limited(3)
                
                1,910,087
                
                9.4%Gary
                    W. Jones (4)
                
                1,158,641
                
                5.7%Susan
                    K Jones (4)
                
                1,158,641
                
                5.7%Rainbow
                    Gate Corporation (5)
                
                804,621
                
                4.0%Paul
                    Cronson (6)
                
                181,935
                
                *K.
                    C. Park (7)
                
                108,004
                
                *John
                    Atherly (8)
                
                66.539
                
                *Claude
                    Charles (9)
                
                29,200
                
                *Jack
                    Goldman (10)
                
                12,026
                
                *Thomas
                    Paulsen (11)
                
                11,213
                
                *Irwin
                    Engelman (12)
                
                3,088
                
                *Stephen
                    Seay (13)
                
                1,950
                
                *All
                    executive officers and directors as a group (consisting of 9
                    individuals)
                    (14)
                
                1,441,826
                
                7.1%
 
  *Less
          than 1*% of the outstanding common stock
 
 **
          Beneficial Ownership is determined in accordance with the rules of the
          Securities and Exchange Commission and generally includes voting or investment
          power with respect to securities. Shares of common stock subject to options,
          warrants, or convertible debt currently exercisable or convertible, or
          exercisable or convertible within 60 days of April 15, 2007 are deemed
          outstanding for computing the percentage of the person holding such option
          or
          warrant but are not deemed outstanding for computing the percentage of
          any other
          person. Percentages are based on a total of 20,254,382 shares of common
          stock
          outstanding on April 15, 2007, and the shares issuable upon the exercise
          of
          options, warrants exercisable, and debt convertible on or within 60 days
          of
          April 15, 2007, as described below.
 
 (1)
          This
          figure represents: (i) 1,023,324 shares owned by Stillwater LLC, which
          includes
          262,642 shares owned by Rainbow Gate Corporation, in which the sole member
          of
          Stillwater LLC is the investment manager of Rainbow Gate Corporation; (ii)
          warrants held by Stillwater LLC to purchase 1,354,525 shares, which includes
          warrants to purchase 272,749 shares held by Rainbow Gate Corporation, in
          which
          the sole member of Stillwater LLC is the investment manager of Rainbow
          Gate
          Corporation; and (iii)  1,697,802 shares
          of
          common stock underlying a 6% senior convertible note which
          includes 269,231 shares
          of
          common stock underlying a 6% senior convertible note held by
          Rainbow Gate Corporation, which the sole member of Stillwater LLC is the
          investment manager of Rainbow Gate Corporation.
 
 (2)
          This
          figure represents: (1) 363,636 shares owned by Alexandra Global Master
          Fund;
          (ii) warrants held to purchase 775,874 shares; and (iii) 873,289
          shares of common stock underlying a 6% senior convertible note .
  (3)
          This
          figure represents: (i) 738,824 shares owned by Ginola Limited, which include
          262,642 shares held indirectly by Rainbow Gate Corporation, 65,080 shares
          owned
          by Ogier Trustee(Jersey) Limited, as trustee, 57,371 shares owned by Chelsea
          Trust Company Limited, as trustee, and 39,622 shares owned by Crestflower
          Corporation. Ginola Limited disclaims beneficial ownership of the shares
          owned
          by Crestflower Corporation, Ogier Trustee (Jersey) Limited, as trustee,
          and
          Chelsea Trust Company Limited, as trustee; and (ii) warrants held by Ginola
          Limited to purchase 594,340 common shares, which includes warrants to purchase
          272,749 shares held by Rainbow Gate Corporation, in which the sole shareholder
          of Ginola Limited is also the sole shareholder of Rainbow Gate Corporation,
          and
          warrants to purchase 32,540 shares owned by Ogier Trustee (Jersey) Limited,
          as
          trustee and 27,273 shares of common stock issuable upon exercise of a common
          stock purchase warrant held indirectly by Chelsea Trust Company Limited,
          as
          trustee. Ginola Limited disclaims beneficial ownership of the shares owned
          by
          Ogier Trustee (Jersey) Limited, as trustee and
          Chelsea Trust Company Limited, as trustee; and (iii) 576,923 shares of
          common
          stock underlying a 6% senior convertible note, which includes 269,231 shares
          of
          common stock underlying a 6% senior convertible note held by Rainbow Gate
          Corporation, in which the sole shareholder of Ginola Limited is also the
          sole
          shareholder of Rainbow Gate Corporation .
 
 (4)
          This
          figure represents shares owned by Gary Jones and Susan Jones who are married
          to
          each other, including (i) 841,106 shares owned by Gary Jones and 158,792
          shares
          owned by Susan Jones; and (ii) 158,743 shares of common stock issuable
          upon
          exercise of stock options held by Susan Jones. This does not include 5,850
          shares underlying options owned by Susan Jones which are not exercisable
          within
          60 days of April 17, 2007.
 
 (5)
          This
          figure represents: (1) 262,642 shares owned by Rainbow Gate Corporation;
          (ii)
          warrants held by to purchase 272,749 shares; and (iii) 269,231
          shares of common stock underlying a 6% senior convertible note .
 
 (6)
          This
          figure represents 19,198 shares owned by Mr. Cronson, 75,413 shares underlying
          warrants, 10,400 shares underlying options, and 76,923
          shares of common stock underlying a 6% senior convertible note held
          directly and indirectly by Paul Cronson. This includes (i) 12,097 common
          stock
          shares and 4,286 shares underlying warrants held indirectly by a family
          member
          of Paul Cronson; (ii) 4,365 shares underlying warrants held indirectly
          by
          Larkspur Corporation of which he is the Managing Director and (iii) 53,846
          shares underlying warrants and 76,923
          shares of common stock underlying a 6% senior convertible note held
          indirectly by Navacorp III, LLC.
 
 (7)
          This
          figure represents: (i) 950 shares owned by Mr. Park; and
          (ii)
          107,054 shares
          of common stock issuable upon exercise of stock options. This does not
          include
          45,475 shares underlying options which are not exercisable within 60 days
          of
          April 17, 2007.
 
 (8)
          This
          figure represents: (i) 410 shares owned by Mr. Atherly; (ii) warrants held
          to
          purchase 10,769 shares; (iii) 15,385
          shares of common stock underlying a 6% senior convertible note and (iv)
          39,975 shares
          of common stock issuable upon exercise of stock options. This does not
          include
          1,625 shares underlying options which are not exercisable within 60 days
          of
          April 17, 2007.
 
 (9)
          This
          figure represents shares underlying options.
 
 (10)
          This
          figure represents shares underlying options.
 
 (11)
          This
          figure represents shares underlying options.
 
 (12)
          This
          figure represents shares underlying options.
 
 (13)
          This
          figure represents shares underlying options.
 
 (13)
          This
          figure represents shares underlying options.
 
 (14)
          This
          figure represents: (i) warrants held to purchase 32,337 shares; (ii) 373,649 shares
          of common stock issuable upon exercise of stock options.


**ITEM
        13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE**




On
        January 11, 2007, Gary Jones resigned as the President, Chief Executive Officer,
        and as a Director of the Company. Mr. Jones and the Company entered into
        an
        Executive Separation and Consulting. Under the Agreement, the Company made
        a
        payment to Mr. Jones in an amount equal to: all accrued salary as of the
        date of
        the Agreement plus an additional 30 days of salary (approximately
        $47,000); 360 hours of unused vacation (approximately $55,000); advance for
        legal and accounting fees associated with 2004 stock options ($30 ,000);
        and an
        advance for future travel expenditures ($5,000). Mr. Jones also received
        500,000
        shares of registered shares of common stock of the Company valued at $430,000.
        In his consulting relationship, Mr. Jones will be paid $460,000 upon the
        consummation of a strategic transaction. The Company will provide up to $7.5
        thousand for reasonable moving expenses of personal property from the New
        York
        office. In addition, the Company will pay up to an additional $30,000 to
        Mr.
        Jones related to personal legal fees.





On
        July
        21, 2006, the Company entered into several Note Purchase Agreements for the
        sale
        of approximately $5.99 million of senior secured debentures (the “Notes”) and
        warrants to purchase approximately 1.8 million shares of common stock, par
        value
        $.001 per share. The investors purchased $5.99 million principal amount of
        Notes
        with conversion prices of $2.60 per share that may convert into approximately
        2.3 million shares of common stock and 5 year warrants exercisable at $3.60
        per
        share into approximately 1.6 million shares of common stock. If the Notes
        are
        not converted, 50% of the principal amount will be due on July 21, 2007 and
        the
        remaining 50% will be due on January 21, 2008. Commencing September 1, 2006,
        6%
        interest is payable in quarterly installments on outstanding notes.





In
        the
        Note Purchase transaction, two employees and two board members participated.
        Olivier Prache, Senior VP of Display Operations, purchased a $30 thousand
        promissory note which may be converted into 11,539 shares and received 8,077
        warrants which are exercisable at $3.60 per share. Mr. Prache converted $20
        thousand of his promissory note and received 7,693 shares. John Atherly,
        CFO,
        purchased a $40 thousand promissory note which may be converted into 15,385
        shares and received 10,770 warrants exercisable at $3.60 per share. David
        Gottfried, board member, purchased a $250 thousand promissory note which
        may be
        converted into 96,154 shares and received 67,308 warrants exercisable at
        $3.60
        per share. Paul Cronson, board member, through Navacorp III, LLC purchased
        a
        $200 thousand promissory note which may be converted into 76,923 shares and
        received 53,847 warrants exercisable at $3.60 per share.





13


Stillwater
        is a beneficial owner of more than 5% of the Company’s common stock. Rainbow
        Gate Corporation, a corporation in which its investment manager is the sole
        member of Stillwater LLC and its controlling shareholder is the same as Ginola
        Limited, purchased a $700 thousand promissory note which may be converted
        into
        269,231 shares and received 188,462 warrants exercisable at $3.60 per share.
        Ginola Limited purchased an $800 thousand promissory note which may be converted
        into 307,693 shares and received 215,385 warrants exercisable at $3.60 per
        share. Stillwater LLC disclaims beneficial ownership of shares owned by Rainbow
        Gate Corporation.





A
        family
        member of an outside director of eMagin is the holder of a Series A warrant
        to
        purchase an aggregate of 4,286 shares of common stock. As a result of the
        Note
        Purchase transaction, the exercise price of all Series A warrants was reduced
        from $5.50 to $2.60 per share. Family members of an outside director of eMagin
        are holders of Series F warrants to purchase an aggregate of 10 thousand
        shares
        of common stock. As a result of the Note Purchase transaction, the exercise
        price of all Series F warrants was reduced from $10.90 to $8.60 per
        share.





eMagin
        has entered into a financial advisory agreement with Larkspur Capital
        Corporation. Paul Cronson, a director of eMagin, is a founder and shareholder
        of
        Larkspur Capital Corporation. The Company has agreed to pay a minimum fee
        of
        $500 thousand to Larkspur Capital Corporation in the event certain transactions
        occur, i.e. sale of the Company’s assets or change of control.





**Director
        Independence**





Board
        of
        Directors has determined that Messrs. Thomas Paulsen, Jacob Goldman, Claude
        Charles, Jacob Goldman, Irwin Engelman, and Stephen Seay are
        each independent directors.




The
        Board
        of Directors has  established a compensation  committee which is
        currently comprised of Thomas Paulsen and Jacob Goldman each of whom 
is  independent.





The Board 
        of  Directors  has  established  a  corporate 
governance  and nominating committee, which is comprised of Thomas Paulsen
        and Jacob Goldman, each of whom is independent.





The 
        Board  of  Directors  has a  separately 
designated  audit  committee established in accordance  with
        Section  3(a)(58)(A) of the Securities  Exchange Act of 1934, which is
        currently comprised of Claude Charles, Irwin Engelman, and Steve Seay. The
        members of the Audit Committee are independent.





**ITEM
        14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





Eisner
        LLP has served as eMagin’s independent auditors for the years ended December 31,
        2005 and 2006. The following table sets for the aggregate fees billed by
        eMagin’s independent registered public accounting firm for audit services
        rendered in connection with the financial statement and reports for 2005
        and
        2006, and for other services normally rendered by such independent registered
        public accounting firm during 2005 and 2006 on behalf of eMagin. The information
        in the table reflects services provided by Eisner. The Audit Committee
        pre-approves all audit and non-audit services performed by the Company’s auditor
        and the fees to be paid in connection with such services in order to assure
        that
        the provision of such services does not impair the auditor’s independence.




**2005**
              
              **2006**Audit
                  Fees (1)
              
              $
              175,484
              
              $
              186,450Audit-Related
                  Fees (2)
              
              
              24,268
              
              
              23,030Total
              
              $
              200,122
              
              $
              202,980





(1)  
        Represents the aggregate fees billed by Eisner LLP for professional services
        provided in connection with the audit of our financial statements and review
        of
        our quarterly financial statements.





(2)  
        Represents the aggregate fees billed by Eisner LLP for professional services
        provided in connection with other statutory or regulatory
        filings.








14


**ITEM
        15. EXHIBITS**




**Exhibit
                  Number**
              **Description**31.1
              Certification
                  by Chief Executive Officer pursuant to Sarbanes OxleySection
                  302.31.2
              Certification
                  by Chief Financial Officer pursuant to Sarbanes Oxley Section
                  302.32.1
              Certification
                  by Chief Executive Officer pursuant to 18 U.S.C. Section
                  1350.32.2
              Certification
                  by Chief Financial Officer pursuant to 18 U.S.C. Section
                  1350.







15


**SIGNATURES**





In
        accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
        this report to be signed on its behalf by the undersigned, thereunto duly
        authorized on this 30th day of April, 2007.






**eMAGIN
                CORPORATION**By:
              /s/ K.
                C.
                ParkK.
                C. ParkInterim
                Chief
                Executive Officer




In
        accordance with the Exchange Act, this report has been signed below by the
        following persons on April 30th, 2007, on behalf of the registrant and in
        the
        capacities Indicated.





**Signature**
              **Title**/s/K.C.
                  Park
                
                K.C.
                  Park
              Interim
                  President and Chief Executive Officer, Director
                
                (Principal
                  Executive Officer)/s/
                  John Atherly
                John
                    Atherly
              Chief
                  Financial Officer
                
                (Principal
                  Financial and Accounting Officer)/s/
                  Adm. Thomas Paulsen
                Adm.
                    Thomas Paulsen
              Chairman
                  of the Board, Director/s/
                  Claude Charles
                Claude
                    Charles
              Director/s/
                  Paul Cronson
                Paul
                    Cronson
              Director/s/
                  Irwin Engelman
                Irwin
                    Engelman
              Director/s/
                  Dr. Jacob E. Goldman
                Dr.
                    Jacob E. Goldman
              Director/s/
                  Brig. Gen. Stephen Seay
                Brig.
                    Gen. Stephen Seay
              Director