EMagin Reports Second Quarter 2011 Net Income Of $3.0 Million

eMagin Corporation (NYSE Amex: EMAN), the leader in OLED technology for the design and manufacture of OLED microdisplays for high resolution imaging products, announced today that it has filed its financial results on Form 10-Q for the second quarter ended June 30, 2011, as required to regain compliance with the NYSE/Amex’s continued listing requirements. The Company will have regained compliance once Amex has issued it a letter indicating this. The full 10-Q is expected to be available for viewing on the SEC website on Tuesday, October 11, 2011.

Revenues for the second quarter of 2011 were $7.4 million and operating income was $623,375. Net income for the period was $3.0 million, or $0.01 per diluted share. The gross margin for the second quarter increased to 49%, a significant improvement from the 41% reported in the first quarter of 2011, as revenues increased and production improved.

On August 11, 2011, eMagin announced that due to a change in auditors, it would delay its 10-Q filing in order to address a change in the accounting treatment of certain warrants as well as a change in the method of calculating earnings per share. With respect to the warrants, the Company has only one remaining warrant currently outstanding (which is for one million shares). All other warrants have been exercised or have expired. Regarding the remaining warrant, the Company has, as of September 30, 2011, restructured it through an agreement with the holder in order to ensure that there will be no net income impact beyond the third quarter of 2011. As previously stated in our 8-K filing, the new accounting treatment of warrants resulted in non-cash accounting charges in the form of non-cash, fair market value gain or loss and had no impact on eMagin’s operations, operating income, or cash flow. The Company has submitted for filing its amended 2009, 2010 and 2011 10-Ks and 10-Qs with the revised warrant treatment and earnings per share calculations.

“We are pleased with the improved results for the second quarter,” stated Andrew Sculley, President and CEO. “Our business continues to expand into additional applications. We have begun shipments to our new high-end camera customer. Our new OLED deposition machine, which is expected to arrive at our production facility in Hopewell Junction, New York, in early November, will result in improvements in capacity and yield.”

Mr. Sculley continued, “Our base business remains strong and we continue to be optimistic that we will meet our 2011 revenue guidance of between $29.0 and $33.0 million based on several factors including current market conditions, production capacity, the Company’s backlog under existing contracts, initial shipments to a significant new customer, and other potential new business.”

About eMagin Corporation

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

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including those regarding eMagin Corporation's expectations, intentions, strategies and beliefs pertaining to future events or future financial performance. Actual events or results may differ materially from those in the forward-looking statements as a result of various important factors, including those described in the Company's most recent filings with the SEC. Although we believe that the expectations reflected in the forward-looking statements are reasonable, such statements should not be regarded as a representation by the Company, or any other person, that such forward-looking statements will be achieved. The business and operations of the Company are subject to substantial risks which increase the uncertainty inherent in forward-looking statements. We undertake no duty to update any of the forward-looking statements, whether as a result of new information, future events or otherwise. In light of the foregoing, readers are cautioned not to place undue reliance on such forward-looking statements.
     

eMAGIN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
 
June 30, 2011 December 31,
(unaudited) 2010
 
ASSETS
 
Current assets:
Cash and cash equivalents $ 6,878 $ 7,796
Short-term investments 5,250 3,100
Accounts receivable, net 5,230 5,150
Inventory 2,089 1,905
Prepaid expenses and other current assets   789   777
Total current assets 20,236 18,728
Long-term investments 500 1,500
Equipment, furniture and leasehold improvements, net 4,053 3,287
Intangible assets, net 37 39
Other assets 92 92
Deferred tax asset   9,056   9,056
Total assets $ 33,974 $ 32,702
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 1,078 $ 1,100
Accrued compensation 1,594 1,975
Other accrued expenses 1,225 1,781
Advance payments 108 101
Deferred revenue 140 26
Warrant liability 6,165 7,694
Other current liabilities   210   170
Total current liabilities 10,520 12,847
Warrant liability   4,664   5,158
Total liabilities 15,184 18,005
 
Commitments and contingencies (Note 12)
 
Shareholders’ equity:
Preferred stock, $.001 par value: authorized 10,000,000 shares:
Series B Convertible Preferred stock, (liquidation preference of $5,659,000) stated value $1,000 per share, $.001 par value: 10,000 shares designated and 5,659 issued and outstanding as of June 30, 2011 and 5,679 issued and outstanding as of December 31, 2010
Common stock, $.001 par value: authorized 200,000,000 shares, issued and outstanding, 22,128,858 shares as of June 30, 2011 and 21,210,445 as of December 31, 2010 22 21
Additional paid-in capital 210,757 206,298
Accumulated deficit   (191,989 )   (191,622 )
Total shareholders’ equity   18,790   14,697
Total liabilities and shareholders’ equity $ 33,974 $ 32,702
       

eMAGIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(unaudited)
 
Three Months Ended

June 30,
Six Months Ended

June 30,
2011     2010 2011     2010
Revenue:
 
Product $ 5,948 $ 6,404 $ 10,258 $ 10,890
Contract   1,501   1,908   2,632   3,349
 
Total revenue, net   7,449   8,312   12,890   14,239
 
Cost of goods sold:
 
Product 3,043 2,640 5,652 4,485
Contract   780   933   1,366   1,697
 
Total cost of goods sold   3,823   3,573   7,018   6,182
 
Gross profit   3,626   4,739   5,872   8,057
 
Operating expenses:
 
Research and development 774 643 1,306 1,377
Selling, general and administrative   2,228   3,137   4,369   4,819
Total operating expenses   3,002   3,780   5,675   6,196
 
Income from operations 624 959 197 1,861
 
Other income (expense):
Interest expense (30 ) (30 ) (59 ) (58 )
Interest income 13 1 29 8
Change in fair value of warrant liability   2,577   (846 )   (480 )   (10,343 )
Total other income (expense), net   2,560   (875 )   (510 )   (10,393 )
Income (loss) before provision for income taxes 3,184 84 (313 ) (8,532 )
Provision for income taxes   213   18   54   19
 
Net income (loss) $ 2,971 $ 66 $ (367 ) $ (8,551 )
 
 
Income (loss) per share, basic $ 0.10 $ 0.00 $ (0.02 ) $ (0.47 )
Income (loss) per share, diluted $ 0.01 $ 0.00 $ (0.02 ) $ (0.47 )
 
Weighted average number of shares outstanding:
 
Basic   21,853,631   19,338,241   21,688,174   18,230,129
Diluted   25,717,758   21,401,423   21,688,174   18,230,129
                                       
Non-GAAP Information
 
Three Months Ended Six Months Ended
June 30, June 30,
2011   2010 2011   2010
 
Net (loss) income $ 2,971 $ 66 (368 ) $ (8,551 )
Severance 0     969 10     969  
Adjusted net income 2,971 1,035 (358 ) (7,582 )
Non-cash compensation 505 488 1,361 922
Depreciation and amortization expense 36 20 70 36
Interest expense 29 30 59 58
Change in fair value of warrant liability (2,577 ) 847 480 10,343
(Benefit from) provision for income taxes 213     18 54     19  
Adjusted EBITDA $ 1,177   $ 2,438 1,666   $ 3,796  

Copyright Business Wire 2010

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