| (Mark One)                                                                                     |
|------------------------------------------------------------------------------------------------|
| RQUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934        |
|                                                                                           |
|  For the quarterly period ended March 31, 2010                                            |
|  or                                                                                       |
|                                                                                           |
| £TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|                                                                                           |
|  For the transition period from  to                                             |

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

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|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|-----------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Page   |
| PART I   FINANCIAL INFORMATION |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Item 1                                        | Condensed Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|                                          | Condensed Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 3      |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|                                          | Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2010 and 2009 (unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 4      |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|                                          | Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three Months ended March 31, 2010 (unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 5      |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|                                          | Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2010 and 2009 (unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 6      |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|                                          | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 7      |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| Item 2                                        | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 13     |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| Item 3                                        | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 17     |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| Item 4T                                       | Controls and Procedures                                                                                                                                                        | 17     |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| PART II   OTHER INFORMATION         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Item 1                                        | Legal Proceedings                                                                                                                                                              | 18     |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| Item 1A                                       | Risk Factors                                                                                                                                                                   | 18     |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| Item 2                                        | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                    | 18     |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| Item 3                                        | Defaults Upon Senior Securities                                                                                                                                                | 18     |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| Item 4                                        | Submission of Matters to a Vote of Security Holders                                                                                                                            | 18     |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| Item 5                                        | Other Information                                                                                                                                                              | 18     |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| Item 6                                        | Exhibits                                                                                                                                                                       | 18     |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| SIGNATURES                                    | 19                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| CERTIFICATIONS                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

----

|                                                                                                                                                                                                                                         |   |                      |     |    |              |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|----------|---------|-------------------|--------|
|                                                                                                                                                                                                                                         |   | March 31, 2010(unaudited) |     |    | December 31, 2009 |   |
|                                                                                                                                                                                                                                         |   |                      |     |    |              |   |
| ASSETS                                                                                                                                                                                                                                       |   |                      |     |    |              |   |
|                                                                                                                                                                                                                                         |   |                      |     |    |              |   |
| Current assets:                                                                                                                                                                                                                              |   |                      |     |    |              |   |
| Cash and cash equivalents                                                                                                                                                                                                                    |   | $                         | 5,998    |    |              | $      | 5,295 |   |
| Investments – held to maturity                                                                                                                                                                                                         |   |                      | 100      |    |              |   | 100 |   |
| Accounts receivable, net                                                                                                                                                                                                                     |   |                      | 4,360    |    |              |   | 4,563 |   |
| Inventory                                                                                                                                                                                                                                    |   |                      | 2,193    |    |              |   | 2,179 |   |
| Prepaid expenses and other current assets                                                                                                                                                                                                    |   |                      | 740      |    |              |   | 687 |   |
| Total current assets                                                                                                                                                                                                                         |   |                      | 13,391   |    |              |   | 12,824 |   |
| Equipment, furniture and leasehold improvements, net                                                                                                                                                                                         |   |                      | 1,769    |    |              |   | 1,021 |   |
| Intangible assets, net                                                                                                                                                                                                                       |   |                      | 42       |    |              |   | 43 |   |
| Other assets                                                                                                                                                                                                                                 |   |                      | 92       |    |              |   | 92 |   |
| Total assets                                                                                                                                                                                                                                 |   | $                         | 15,294   |    |              | $      | 13,980 |   |
|                                                                                                                                                                                                                                         |   |                      |     |    |              |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                                                                                   |   |                      |     |    |              |   |   |   |
|                                                                                                                                                                                                                                         |   |                      |     |    |              |   |   |   |
| Current liabilities:                                                                                                                                                                                                                         |   |                      |     |    |              |   |   |   |
| Accounts payable                                                                                                                                                                                                                             |   | $                         | 764      |    |              | $      | 1,122 |   |
| Accrued compensation                                                                                                                                                                                                                         |   |                      | 1,254    |    |              |   | 956 |   |
| Other accrued expenses                                                                                                                                                                                                                       |   |                      | 815      |    |              |   | 791 |   |
| Advance payments                                                                                                                                                                                                                             |   |                      | 153      |    |              |   | 211 |   |
| Deferred revenue                                                                                                                                                                                                                             |   |                      | 366      |    |              |   | 238 |   |
| Other current liabilities                                                                                                                                                                                                                    |   |                      | 858      |    |              |   | 891 |   |
| Total current liabilities                                                                                                                                                                                                                    |   |                      | 4,210    |    |              |   | 4,209 |   |
|                                                                                                                                                                                                                                         |   |                      |     |    |              |   |   |   |
| Commitments and contingencies  (Note 11)                                                                                                                                                                                           |   |                      |     |    |              |   |   |   |
|                                                                                                                                                                                                                                         |   |                      |     |    |              |   |   |   |
| Shareholders’ equity:                                                                                                                                                                                                                  |   |                      |     |    |              |   |   |   |
| Preferred stock, $.001 par value: authorized 10,000,000 shares:                                                                                                                                                                              |   |                      |     |    |              |   |   |   |
| Series B Convertible Preferred stock, (liquidation preference of $5,739,000) stated value $1,000 per share, $.001 par value:  10,000 shares designated and 5,739 issued and outstanding as of March 31, 2010 and December 31, 2009 |   |                      | —  |    |              |   | — |   |
| Common stock, $.001 par value: authorized 200,000,000 shares, issued and outstanding, 17,301,852 shares as of March 31, 2010    and 16,967,244 as of December 31, 2009                                                             |   |                      | 17       |    |              |   | 17 |   |
| Additional paid-in capital                                                                                                                                                                                                                   |   |                      | 207,097  |    |              |   | 206,664 |   |
| Accumulated deficit                                                                                                                                                                                                                          |   |                      | (196,030 | )  |              |   | (196,910 | ) |
| Total shareholders’ equity                                                                                                                                                                                                             |   |                      | 11,084   |    |              |   | 9,771 |   |
| Total liabilities and shareholders’ equity                                                                                                                                                                                             |   | $                         | 15,294   |    |              | $      | 13,980 |   |

----

|                                                  |   | Three Months EndedMarch 31, |       |
|-------------------------------------------------------|--------|-----------------------------|------------|
|                                                  |   | 2010                        |       |   | 2009 |   |
|                                                  |   |                        |       |   |   |   |
| Revenue:                                              |   |                        |       |   |   |   |
| Product revenue                                       |   | $                           | 4,486      |   |   | $ | 4,356 |   |
| Contract revenue                                      |   |                        | 1,441      |   |   |   | 788 |   |
| Total revenue, net                                    |   |                        | 5,927      |   |   |   | 5,144 |   |
|                                                  |   |                        |       |   |   |   |   |   |
| Cost of goods sold:                                   |   |                        |       |   |   |   |   |   |
| Product revenue                                       |   |                        | 1,845      |   |   |   | 2,257 |   |
| Contract revenue                                      |   |                        | 764        |   |   |   | 428 |   |
|     Total cost of goods sold      |   |                        | 2,609      |   |   |   | 2,685 |   |
| Gross profit                                          |   |                        | 3,318      |   |   |   | 2,459 |   |
|                                                  |   |                        |       |   |   |   |   |   |
| Operating expenses:                                   |   |                        |       |   |   |   |   |   |
| Research and development                              |   |                        | 734        |   |   |   | 362 |   |
| Selling, general and administrative                   |   |                        | 1,682      |   |   |   | 1,529 |   |
| Total operating expenses                              |   |                        | 2,416      |   |   |   | 1,891 |   |
| Income from operations                                |   |                        | 902        |   |   |   | 568 |   |
|                                                  |   |                        |       |   |   |   |   |   |
| Other income (expense):                               |   |                        |       |   |   |   |   |   |
| Interest expense, net                                 |   |                        | (28        | ) |   |   | (175 | ) |
| Other income, net                                     |   |                        | 7          |   |   |   | 1 |   |
| Total other expense, net                              |   |                        | (21        | ) |   |   | (174 | ) |
| Income before provision for income taxes              |   |                        | 881        |   |   |   | 394 |   |
| Provision for income taxes                            |   |                        | 1          |   |   |   | — |   |
| Net income                                            |   | $                           | 880        |   |   | $ | 394 |   |
|                                                  |   |                        |       |   |   |   |   |   |
| Income per common share, basic                        |   | $                           | 0.05       |   |   | $ | 0.02 |   |
| Income per common share, diluted                      |   | $                           | 0.03       |   |   | $ | 0.02 |   |
|                                                  |   |                        |       |   |   |   |   |   |
| Weighted average number of common shares outstanding: |   |                        |       |   |   |   |   |   |
| Basic                                                 |   |                        | 17,109,706 |   |   |   | 15,860,517 |   |
| Diluted                                               |   |                        | 29,553,301 |   |   |   | 23,899,255 |   |

----

|                                       |   | Preferred Stock |   |   | Common Stock |   |    |   |   |   |   |   |   |                       |    |
|--------------------------------------------|--------|-----------------|--------|--------|--------------|--------|---------|--------|--------|--------|--------|--------|--------|----------------------------|---------|
|                                       |   | Shares          |   |   | Amount       |   |    | Shares |   |   | Amount |   |   | Additional Paid-in Capital |    |   | Accumulated Deficit |   |   | Total Shareholders’ Equity |   |
| Balance, December 31, 2009                 |   |            | 6      |   |         | $      | — |   |   |   | 16,967 |   |   | $                          | 17      |   |   | $ | 206,664 |   |   | $ | (196,910 | ) |   | $ | 9,771 |   |
|                                       |   |            |   |   |         |   |    |   |   |   |   |   |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cashless exercise of common stock warrants |   |            |   |   |         |   |    |   |   |   | 335    |   |   |                       | — |   |   |   | — |   |   |   |   |   |   |   | — |   |
| Stock-based compensation                   |   |            |   |   |         |   |    |   |   |   |   |   |   |                       |    |   |   |   | 433 |   |   |   |   |   |   |   | 433 |   |
| Net income                                 |   |            |   |   |         |   |    |   |   |   |   |   |   |                       |    |   |   |   |   |   |   |   | 880 |   |   |   | 880 |   |
| Balance, March 31, 2010                    |   |            | 6      |   |         | $      | — |   |   |   | 17,302 |   |   | $                          | 17      |   |   | $ | 207,097 |   |   | $ | (196,030 | ) |   | $ | 11,084 |   |
|                                       |   |            |   |   |         |   |    |   |   |   |   |   |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   |            |   |   |         |   |    |   |   |   |   |   |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                         |   | Three Months Ended |    |
|----------------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                         |   | March 31,          |    |
|                                                                                         |   | 2010               |    |   | 2009 |   |
|                                                                                         |   | (unaudited)        |    |
| Cash flows from operating activities:                                                        |   |               |    |   |   |   |
| Net income                                                                                   |   | $                  | 880     |   |   | $ | 394 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:            |   |               |    |   |   |   |   |   |
| Depreciation and amortization                                                                |   |               | 16      |   |   |   | 23 |   |
| Amortization of deferred financing and waiver fees                                           |   |               | — |   |   |   | 150 |   |
| Reduction of provision for sales returns and doubtful accounts                               |   |               | (161    | ) |   |   | (114 | ) |
| Stock-based compensation                                                                     |   |               | 433     |   |   |   | 153 |   |
| Amortization of common stock issued for services                                             |   |               | 1       |   |   |   | 76 |   |
| Changes in operating assets and liabilities:                                                 |   |               |    |   |   |   |   |   |
| Accounts receivable                                                                          |   |               | 303     |   |   |   | 807 |   |
| Inventory                                                                                    |   |               | (14     | ) |   |   | 160 |   |
| Prepaid expenses and other current assets                                                    |   |               | (53     | ) |   |   | (398 | )  |
| Deferred revenue                                                                             |   |               | 128     |   |   |   | (44 | ) |
| Accounts payable, accrued compensation, other accrued expenses, and advance payments         |   |               | (94     | ) |   |   | (359 | ) |
| Other current liabilities                                                                    |   |               | 27      |   |   |   | 119 |   |
| Net cash provided by operating activities                                                    |   |               | 1,466   |   |   |   | 967 |   |
| Cash flows from investing activities:                                                        |   |               |    |   |   |   |   |   |
| Purchase of equipment                                                                        |   |               | (763    | ) |   |   | (33 | ) |
|       Net cash used in investing activities                    |   |               | (763    | ) |   |   | (33 | ) |
| Cash flows from financing activities:                                                        |   |               |    |   |   |   |   |   |
| Payments of debt                                                                             |   |               | — |   |   |   | (1,009 | ) |
| Net cash used in financing activities                                                        |   |               | — |   |   |   | (1,009 | ) ) |
| Net increase (decrease) in cash and cash equivalents                                         |   |               | 703     |   |   |   | (75 | ) |
| Cash and cash equivalents, beginning of period                                               |   |               | 5,295   |   |   |   | 2,404 |   |
| Cash and cash equivalents, end of period                                                     |   | $                  | 5,998   |   |   | $ | 2,329 |   |
|                                                                                         |   |               |    |   |   |   |   |   |
| Cash paid for interest                                                                       |   | $                  | 15      |   |   | $ | 38 |   |
| Cash paid for taxes                                                                          |   | $                  | 115     |   |   | $ | 21 |   |
|                                                                                         |   |               |    |   |   |   |   |   |
| Common stock issued for services charged to prepaid expenses                                 |   | $                  | — |   |   | $ | 39 |   |
| Issuance of 334,608 shares of common stock for cashless exercise of 669,717 warrants in 2010 |   | $                  | — |   |   | $ | — |   |
|                                                                                         |   |

----

----

|                                 |   | March 31,2010 (unaudited) |   |   | December 31, 2009 |   |
|--------------------------------------|--------|--------------------------------|--------|--------|-------------------|--------|
| Accounts receivable                  |   | $                              | 4,844  |   |              | $      | 5,147 |   |
| Less allowance for doubtful accounts |   |                           | (484   | )      |              |   | (584 | ) |
| Net receivables                 |   | $                              | 4,360  |   |              | $      | 4,563 |   |

|                                                                      |   | Three Months EndedMarch 31, |       |
|---------------------------------------------------------------------------|--------|-----------------------------|------------|
|                                                                      |   | 2010                        |       |   | 2009 |   |
| Numerator:                                                                |   |                        |       |   |   |   |
|                                                                      |   |                        |       |   |   |   |
| Net income                                                                |   | $                           | 880        |   |   | $ | 394 |   |
|                                                                      |   |                        |       |   |   |   |   |   |
| Denominator:                                                              |   |                        |       |   |   |   |   |   |
|                                                                      |   |                        |       |   |   |   |   |   |
| Weighted average shares outstanding for basic earnings per share          |   |                        | 17,109,706 |   |   |   | 15,860,517 |   |
| Effective of dilutive shares:                                             |   |                        |       |   |   |   |   |   |
|     Dilution from stock options and warrants          |   |                        | 4,791,595  |   |   |   | 120,540 |   |
|     Redeemable stock                                  |   |                        | —    |   |   |   | 266,198 |   |
| Convertible preferred stock                                               |   |                        | 7,652,000  |   |   |   | 7,652,000 |   |
| Dilutive potential common shares                                          |   |                        | 12,443,595 |   |   |   | 8,038,738 |   |
| Weighted –average shares outstanding for diluted earnings per share |   |                        | 29,553,301 |   |   |   | 23,899,255 |   |

----

|                 |   | March 31,2010 (unaudited) |   |   | December 31, 2009 |   |
|----------------------|--------|--------------------------------|--------|--------|-------------------|--------|
| Raw materials   |   | $                              | 746    |   |              | $      | 806 |   |
| Work in process      |   |                           | 256    |   |              |   | 709 |   |
| Finished goods  |   |                           | 1,191  |   |              |   | 664 |   |
| Total inventory      |   | $                              | 2,193  |   |              | $      | 2,179 |   |

|                                            |   | March 31,2010 (unaudited) |   |   | December 31, 2009 |   |
|-------------------------------------------------|--------|--------------------------------|--------|--------|-------------------|--------|
| Vendor prepayments                              |   | $                              | 256    |   |              | $      | 266 |   |
| Other prepaid expenses *                        |   |                           | 483    |   |              |   | 421 |   |
| Other assets                                    |   |                           | 1      |   |              |   | — |   |
| Total prepaid expenses and other current assets |   | $                              | 740    |   |              | $      | 687 |   |

----

|                                |   | Three Months Ended March 31, |   |
|-------------------------------------|--------|------------------------------|--------|
|                                |   | 2010                         |   |   | 2009 |   |
| Cost of revenue                     |   | $                            | 97     |   |   | $ | 24 |   |
| Research and development            |   |                         | 102    |   |   |   | 58 |   |
| Selling, general and administrative |   |                         | 234    |   |   |   | 71 |   |
| Total stock compensation expense    |   | $                            | 433    |   |   | $ | 153 |   |

|                           |   | For the Three Months Ended March 31, 2010 |              |
|--------------------------------|--------|-------------------------------------------|-------------------|
| Dividend yield                 |   |                                      | 0                 | % |
| Risk free interest rates       |   |                                      | 1.34 – 2.07 | % |
| Expected  volatility |   |                                      | 80.6 – 86.9 | % |
| Expected term (in years)       |   |                                      | 3.5-4             |   |

|                                             |   | Number of Shares |      |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Contractual Life (In Years) |   |   | Aggregate Intrinsic Value |   |
|--------------------------------------------------|--------|------------------|-----------|--------|---------------------------------|--------|--------|--------------------------------------------------------|--------|--------|---------------------------|--------|
| Outstanding at December 31, 2009                 |   |             | 2,817,574 |   |                            | $      | 1.33   |                                                   |   |   |                      |   |   |   |
| Options granted                                  |   |             | 448,185   |   |                            |   | 1.95   |                                                   |   |   |                      |   |   |   |
| Options exercised                                |   |             | —   |   |                            |   |   |                                                   |   |   |                      |   |   |   |
| Options forfeited                                |   |             | —   |   |                            |   |   |                                                   |   |   |                      |   |   |   |
| Options cancelled                                |   |             | (52,113   | )      |                            |   | 2.62   |                                                   |   |   |                      |   |   |   |
| Outstanding at March 31, 2010                    |   |             | 3,213,646 |   |                            | $      | 1.40   |                                                   |   |   | 6.11                      |   |   | $ | 7,818,813 |   |
| Vested or expected to vest at March 31, 2010 (1) |   |             | 3,150,652 |   |                            | $      | 1.37   |                                                   |   |   | 6.11                      |   |   | $ | 5,604,831 |   |
| Exercisable at March 31, 2010                    |   |             | 2,313,721 |   |                            | $      | 1.43   |                                                   |   |   | 6.54                      |   |   | $ | 5,604,831 |   |

----

|   |          |   |                |   |      |                                                   |   |   |                            |   |   |               |   |   |                               |   |
|--------|---------------|--------|---------------------|--------|-----------|--------------------------------------------------------|--------|--------|---------------------------------|--------|--------|--------------------|--------|--------|------------------------------------|--------|
|   |          |   | Options Outstanding |   |      | Options Exercisable                                    |   |
|   |          |   | Number Outstanding  |   |      | Weighted Average Remaining Contractual Life (In Years) |   |   | Weighted Average Exercise Price |   |   | Number Exercisable |   |   | Weighted Average Exercisable Price |   |
| $      | 0.34 - $0.98  |   |                |   | 1,221,451 |                                                   |   |   | 6.07                            |   |   | $                  | 0.83   |   |                               |   | 893,385 |   |   | $ | 0.81 |   |
| $      | 1.00 - $1.51  |   |                |   | 1,191,177 |                                                   |   |   | 6.92                            |   |   |               | 1.20   |   |                               |   | 893,390 |   |   |   | 1.24 |   |
| $      | 1.80 - $1.94  |   |                |   | 452,635   |                                                   |   |   | 6.83                            |   |   |               | 1.94   |   |                               |   | 216,568 |   |   |   | 1.94 |   |
| $      | 2.60 - $2.70  |   |                |   | 312,183   |                                                   |   |   | 2.63                            |   |   |               | 2.62   |   |                               |   | 275,678 |   |   |   | 2.61 |   |
| $      | 5.80 - $22.50 |   |                |   | 36,200    |                                                   |   |   | 1.58                            |   |   |               | 9.92   |   |                               |   | 34,700 |   |   |   | 9.82 |   |
|   |          |   |                |   | 3,213,646 |                                                   |   |   | 6.11                            |   |   | $                  | 1.40   |   |                               |   | 2,313,721 |   |   | $ | 1.43 |   |

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|                          |    | Three months endedMarch 31, |   |
|-------------------------------|--------------|---------------------------------------|--------|
|                          |    | 2010                                  |   |   | 2009 |   |
|                          |    | (unaudited)                           |   |
| Product revenue gross profit  |    | $                                     | 2,641  |    |   | $ | 2,099 |    |
| Product revenue gross margin  |    |                                  | 59     | % |   |   | 48 | %  |
| Contract revenue gross profit |    | $                                     | 677    |    |   | $ | 360 |    |
| Contract revenue gross margin |    |                                  | 47     | % |   |   | 46 | %  |
| Total gross profit            |    | $                                     | 3,318  |    |   | $ | 2,459 |    |
| Total gross margin            |    |                                  | 56     | % |   |   | 48 | %  |
|                          |    |                                  |   |   |   |   |   |   |

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| 31.1                    | Certification by Chief Executive Officer pursuant to Sarbanes Oxley Section 302 (1)         |
|------------------------------|-------------------------------------------------------------------------------------------------------|
|                         |                                                                                                  |
| 31.2               | Certification by Chief Financial Officer pursuant to Sarbanes Oxley Section 302 (1)    |
|                         |                                                                                                  |
| 32.1     | Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (1)                       |
|               |                                                                                                  |
| 32.2                         | Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (1)                       |

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|   | eMAGIN CORPORATION |                        |
|--------|--------------------|-----------------------------|
|   |               |                        |   |
|   | By:                | /s/ Andrew G. Sculley  |   |
|   |               | Andrew G. Sculley           |   |
|   |               | Chief Executive Officer     |   |
|   |               | Principal Executive Officer |   |

|   |   |                                       |   |
|--------|--------|--------------------------------------------|--------|
|   | By:    | /s/ Paul Campbell                     |   |
|   |   | Paul Campbell                              |   |
|   |   | Chief Financial Officer                    |   |
|   |   | Principal Accounting and Financial Officer |   |