SecProbe.io

CORRESP
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      November 1, 2005 Corresp for eMagin

                                                                                              November
        2,
        2005

      United
        States Securities and Exchange Commission

      Division
        of Corporation Finance

      450
        Fifth
        Street, N.W.

      Washington,
        DC 20549

      Attention:     Angela
        Crane,
        Branch Chief

      Jay
        Webb,
        Reviewing Accountant

      Eric
        Atallah, Staff Accountant

      Re:    eMagin
        Corporation

      Form
        10-KSB/A for the fiscal year ended December 31, 2004

      Forms
        10-Q for the quarterly reports ended March 31, and June 30, 2005

      Forms
        10-QSB/A for the quarterly periods ended March 31, June 30, and September
        30,
        2004

      File
        No.
        001-15751

      Ladies
        and Gentlemen:

      On
        behalf
        of eMagin Corporation (“eMagin” or the "Company"), please accept this letter as
        the Company’s response to the comments of the reviewing Staff of the Securities
        and Exchange Commission (the “Commission”) as set forth in the comment letter of
        October 19, 2005.

      Form
        10-KSB for the year ended December 31, 2004

                1.

                Please
                  file your response letter dated October 4, 2005 on EDGAR, as required
                  by
                  Regulation S-T. Also, please file all the amendments to your 2004
                  periodic
                  reports you indicate you will file in response to our
                  comments.

      Response:

      We
        have
        filed the response letter and amendments as requested.

      Form
        10-KSB for the year ended December 31, 2004 and Amended Forms 10-QSB for
        the
        Quarterly Periods Ended March 31, June 30, and September 30,
        2004

                2.

                Please
                  refer to prior comment 1. Given your material restatements it remains
                  unclear why you “do not believe that the restatements were in any way
                  attributable to any deficiency in the Company’s compliance with its
                  disclosure controls and procedures and that the [the Company] had
                  appropriate controls and procedures in place…at the times in question”. We
                  note your assertions as to the effectiveness of your controls and
                  procedures are as
                  of the end of each period and
                  also note you indicate the errors were discovered in March 2005,
                  which is
                  after
                  the end of each period restated. Please
                  specifically
                  tell
                  us why you do not believe the timing
                  of
                  the error discoveries impacts the accuracy of your stated internal
                  controls and procedures effectiveness conclusions. We may have
                  further
                  comments after reviewing your
                  response.

      Response:

      As
        a
        result of the restatements due to errors in accounting treatment of the debt
        conversions in the first quarter of 2004, and the repricing of warrants in
        the
        third quarter of 2004, we have revised the controls and procedures section
        in
        the Company’s annual report on Form 10-KSB for the year ended December 31, 2004
        and quarterly reports on Form 10-QSB for the periods ended March 31, June
        30,
        and September 30, 2004, to disclose that the Company’s controls and procedures
        were not effective so as to insure that all of the information required to
        be
        reported in its SEC filings was recorded, processed, and summarized, and
        reported, within the time periods specified in the Commission's rules and
        forms.
        In addition, we have disclosed certain changes in the internal controls
        of
        the Company which management believes has remedied the non-effectiveness
        of the
        Company’s disclosure controls and procedures during 2004.

      Amended
        Forms 10-QSB for the Quarterly Periods Ended March 31, June 30, and September
        30, 2004

      Note
        1-Accounting Policies

      Basis
        of Presentation

                3.

                Please
                  refer to prior comment 4. We note from your response that “the re-pricing
                  of the warrants should have been classified as an equity transaction
                  and
                  therefore no expense recorded in connection with the re-pricing
                  of the
                  warrants [consistent with the guidance in APB Opinion No. 14].” In
                  connection with this transaction, please tell us more about the
                  reason the
                  warrants were initially issued as well as the reason you repriced
                  them in
                  2004. Please tell us the revised terms of the warrants, including
                  whether
                  the revised exercise prices were out of or at the money on the
                  measurement
                  date. Also, tell us how you accounted for their original issuance
                  in
                  January 2004. Finally, it is not clear to us why APB Opinion 14
                  supports
                  your accounting for the reference transaction since it relates
                  to
                  accounting for detachable stock purchase warrants issued in connection
                  with debt and you disclose the warrants in question were issued
                  with an
                  equity transaction in January 2004. Please provide us with references
                  to
                  authoritative literature that supports your revised accounting
                  for the
                  warrant repricing. We may have further comments after reviewing
                  your
                  response.

                Response:

      The
        warrants were initially issued in January 2004 as part of an equity transaction
        pursuant to which the Company sold an aggregate of approximately 3,300,000
        shares of common stock and Class A, B, and C warrants to purchase an aggregate
        of approximately 4,300,000 shares of common stock, for an aggregate purchase
        price of approximately $4,200,000. These warrants were issued to the investors
        based upon arms-length negotiations and accounted for as part of the equity
        transaction. Further, these warrants were repriced in August 2004, as
        consideration for the holders agreeing to limit
        their right of participation with respect to any proposed financing transaction
        of the Company to the maximum number of shares that the American Stock Exchange
        will allow holders to purchase in any subsequent financing without the Company
        being required to seek shareholder approval.
        The
        terms of the warrants were revised so as to allow each investor to reduce
        the
        exercise price of any of their Class A, B, or C warrants from $1.74, $1.74
        and
        $1.90, respectively, to $0.90, under the condition that any warrants repriced
        be
        exercised at the time of repricing. $0.90 was in the money on the measurement
        date.

      Initially,
        the Company inadvertently treated these warrants as if they were originally
        issued in connection with debt, and, as a result, the repricing of the warrants
        was accounted for as interest expense in accordance with APB Opinion
        Number
        14. Upon further review, the Company realized that these warrants were issued
        in
        connection with its January 2004 common stock offering. Accordingly, the
        initial
        interest charge of approximately $594,000 was revised. We believe APB Opinion
        Number 9, Paragraph 28, provides the appropriate accounting treatment.

      The
        Company notes that its prior response to the Commission, which was set forth
        in
        the letter dated October 4, 2005, incorrectly stated that the accounting
        for
        this transaction was compliant with APB Opinion Number 14. The prior response
        should have stated that the Company originally followed guidance under APB
        Opinion Number 14, but upon realizing that the warrants were issued in
        connection with its January 2004 common stock offering, revised the accounting
        treatment of this transaction to follow the guidance under APB Opinion Number
        9,
        Paragraph 28.

      The
        Company hereby acknowledges that:

                ·

                the
                  Company is responsible for the adequacy and accuracy of the disclosure
                  in
                  the filings;

                ·

                staff
                  comments or changes to disclosure in response to staff comments
                  do not
                  foreclose the Commission from taking any action with respect to
                  the
                  filings; and

                ·

                the
                  Company may not assert staff comments as a defense in any proceeding
                  initiated by the Commission or any person under the federal securities
                  laws of the United States.

              Very
                Truly Yours

              /s/ Richard
                A. Friedman

                Richard
                A. Friedman