Paul Campbell - CFO Andrew Sculley - President and CEO

Dennis Van Zelfden - Brazos Research Tom Rath - Davidson Investment Advisors Tom McGuire - Investor

Good day and welcome to the eMagin’s Third Quarter 2014 Conference Call and Webcast. All participants will be in a listen-only mode. (Operator instructions). Please note this event is being recorded. I would now like to turn the conference call over to Mr. Paul Campbell, Chief Financial Officer. Mr. Campbell, the floor is your sir.

Thanks very much, Mike. Welcome everyone and thanks for joining us today for eMagin Corporation’s third quarter 2014 earnings conference call. We are in Hopewell Junction today and we are getting first -- please note that we will be referring to numbers that are part of our quarterly report on Form 10-Q for the fiscal third quarter ended September 30, 2014. During today’s call, we may make forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the company's current expectations, projections, beliefs, and estimates, which are subject to a number of risks and uncertainties. Such statements include references to projections of future revenues, plans for product development and production, the company's ability to ramp up production at its manufacturing facilities, future contracts and commercial arrangements, future product benefits, future operations, liquidity and capital resources, as well as statements containing words like believe, expect, estimate, plan, target, will, intend, could, and other similar expressions. Our risk factors are included in the company's Form 10-K for 2013, which is on file with the Securities and Exchange Commission. Except where required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, and changes in circumstances or any other reasons. Okay. With that said, I would like to turn call over to Andrew Sculley, our President and CEO.

Thanks, Paul, and thanks everyone for being on the call today. I’ll begin with some corporate highlights, and then Paul will discuss our financial results. Following Paul’s remarks, I’ll update you on new products [Audio Gap]. We took most of the month of July this quarter for maintenance of the OLED machines, having cleanroom maintenance and complete restructuring and cleaning of the packing line. The maintenance in the cleaning room is required periodically to ensure we had a class 10 level, and we did that, it was -- we were audited and it is where it should be. We took advantage of the time for maintenance the cleanroom to handle both OLED machine tools cleaning and to install new equipment that we used for ultra-high brightness display prototypes. We had a few customers comment after the improvements as a part of the normal review, all were impressed with the improvements including the visit from an end-user military customer. Although we lost a month we accomplished a great feel during the time down. the cleanroom now rated a class 10 that’s where we need to be; both tools are clean, we normally wouldn’t have done both tools at same time but this made sense. And the new equipment is in an operational, the packaging area has been greatly improved and this is verified by the customer visits, especially that military customer who was very impressed. So we are happy. With the new equipments that we installed during July we produced prototype ultra-high brightness full color displays. We made a WUXGA display or a number of them and that’s 1920 by 1200 displays, higher resolution than your full HD TV, with the normal 9.6 micron pixel pitch and again just imagine it’s 3.2 microns color set pixels. And we measured these displays at 7,000 nits, that’s 7,000 candelas per meter squared. This is the first group of displays we made with the new equipment and you might remember last time we said we did ultra-high brightness displays that are 28 micron pixel pitch so now we are under 10. So this is where we need to be. We need to refine the process, hope we are impressed with these first prototypes. I have to congratulate the R&D team that did this, that this is amazing. And also the manufacturing team and the product development group for their outstanding efforts and support getting this done. We have customers for deliveries in the first quarter of these displays, so we need to make more. And in fact we are working on it again this week. And as a reminder, just so you know what does 7,000 nits mean. Your smartphone I will use as the example because we all have them now, their maximum brightness is usually quoted at between 400 nits and 500 nits, so this is more than 10 times of that. And I measured a common brand that many of you have in your pockets S450. In recent announcements, we discussed three programs wroth total of about $6.8 million in revenue. The Manufacturing Technology program on ManTech as it’s called was $6.45 million. The idea there is to bring our manufacturing process for ultra-high brightness displays to readiness for volume production. Of course the ManTech funded by the military or interested navy, aviation displays. The next one the enhanced ultra-high brightness program is meant to improve the brightness of these full color displays to above 10,000 nits and you note that we hit 7,000 already with these and now we need to get beyond 10,000, so that’s a large increase. The third program is meant to design and build the new backplane. We think the new backplane will improve the power efficiency by about 30%. So that’s a significant additional improvement. At the end of these development efforts what we’ll have is a full colored display at small pixel pitch, 9.6 microns or a less, we are also aiming that we have done 8, so we are aiming at that as well, with the brightness above 10,000 nits using a good manufacturing process and a backplane that reduces power by an additional 30%. These displays will run at normal luminance will have much lower power and longer life time than displays that exist today. Just sort of have an example. The monochrome green high-brightness display that we make today and they run at more normal luminance use one-fifth the power and that’s with the normal backplane not the reduced power backplane and have 13 times longer life than our typical displays. And again the new backplane will add another power reduction of about 30%. So this is significant technology that we are developing. And its technology is desired in many cases and will talk little bit about that. As far as we know, the other OLED display company can produce ultra-high brightness full color display of 5,000 plus nits and are very small pixel size. To best of our knowledge, the other microdisplay companies don’t a viable direct patterning technique and the companies producing cell phone size or TV size OLED can’t pattern the OLED at our very small pixel pitches. We are uniquely qualified to advance in the markets for ultra-high brightness OLED microdisplays. As a matter of fact, I really think the full color microdisplay that we made is brighter than anybody’s full color microdisplay no matter what size or what pixel pitch. One use for these displays is in avionics, both military and commercial. First of course our monochrome green displays are being integrated today by military customers. We expect to see commercial use of these pilot heads-up displays HMDs as well for example we note that one permanent aviation HMD company has shown a commercial HMD for helicopters at a European Air Show. As the color displays become available, we expect that overtime the military and commercial aviation will adopt that as well. The military market is small for new helmets but we expect the militaries going to retrofit helmets for both fixed wing and rotary aircraft. The bottom-line here is OLED is replacing LCOS in these helmets that exist today. The issue for pilot with LCOS is contrast during the day; these displays have to be turned up very bright to combat the sun. The low contrast for the current LCOS displays lead the pilots to complain about the parts of the visor that should be clear, that is with the LCOS displays they are not clear, they actually show some luminance. And that’s because the LCOS is running bright you can’t turn off the pixel completely, whereas we have an OLED display, where you simply don’t turn the pixel on so you do have true black. The pilots in fact -- the complaint we heard about was, they complained about the green glow from the monochrome green LCOS displays that are in the helmets today. So these HMDs use icons during the day and at night full night vision and these helmets are very high-end augmented reality or AR headsets that exists and used today. And our displays are being adopted today for military. We expect the OLEDs high-contrast, low power, fast speed, which means no motion blur or some would call that a persistence, and their small size will be outstanding for the augmented reality again our AR and virtual reality which call VR uses. There are many companies working on these near-eye applications today. You probably heard at least a few of them; we count about 40 companies working on AR and VR and near-eye headsets today. We have been told that ultra-high brightness color above 5,000 nits is what is needed for the augmented reality wearable applications that will be used outside in some lighter daylight, you don’t need that higher brightness inside. Many of the current AR headsets use LCOS displays. The current wide angle view VR headsets that are prominent today use a cell phone size display. And our color displays without their outstanding contrast, low power and small size have a good advantage in both of those markets. In addition to consumer augmented reality near eye headset applications, there are numerous industrial applications. As examples warehouse port truck operators would want that hands free operation and also be able to see the information on the next order where they have to go, what pallet they have to pick up et cetera, a nurse reading a barcode on a patient’s wrist could use the headset to immediately see the chart in the HMD. This would mean fewer errors than there is doesn’t have to pick up that tablet at the end of the guy’s bed and replace it maybe with the wrong one it’s right there in the headset. There’ve also been surgeons who have used an AR headset to see the patient’s vital signs in the operating room and again our OLED displays fit these applications. Display resolution, size, power efficiency and brightness are also important for virtual reality applications. To put this in perspective a consumer using a VR gaming headset wants to believe he is in the game and viewing a real setting. So the resolution contrast and spear are of paramount importance for the scene to look real and also to avoid getting sick. I am sure you’ve heard about people getting sick with some of the VR HMDs that are out there today. For the HMD design designer, power and size and brightness are also important. In the VR setting an important attribute for the HMD, this isn’t necessarily just the display but you need the optic to enable a large field of view, a bigger of field view gets the feeling of reality. If field of view is small the gamer feels like he is looking at the world through small window or maybe even a diving mask. To get the high field of view some optics have lower efficiency hence our higher brightness displays are attractive both AR and these virtual reality markets. Also the high brightness displays when run at lower luminance will consume less power and have a longer life than typical OLED micro displays. As you know -- I hope you all know we recently announced the development of the new Immersive Head Mounted Display IHMD headset. Our first IHMD prototype will incorporate eMagin’s latest resolution 2000x2000 OLED micro displays and our patented optics rather than a significantly larger and lower resolution cell phone style display and conventional optics. Our headset is a paradigm shift in the look and performance of the recent surgeon VR HMDs being developed by a number of companies I am sure you’ve heard of them. The OLED micro display is the fundamental reason that our Immersive headset is half the weight and size of the virtual reality HMDs that use cell phone size displays. The different approach results in a radically different form factor. The field of view FOV it’s usually called FOV exceeds 100 degrees in our headset. We can use various displays in the headset with resolutions ranging from 1 megapixel per eye to 4 megapixel per eye of course the 2k or 2000x2000s 4 megapixels per eye. The Immersive headset incorporates proprietary features not found on other VR HMDs such as a flip up your capability. The first prototype is expected to be completed at the end of this year and will host the resolution of 4 megapixels per eye, nearly four times that of the other virtual reality HMDs known to us. We believe there are wide range of VR applications for this IHMD from gaming, medical, architectural design and 3D design to education, and military training and simulation. This first prototype will target the high-end gaming market. This is the first HMD in alliance of systems developed by eMagin that began with our Z800 we launched in mid-2005. The Z800 received the Consumer Electronic Show Innovation Award for both best new display and best new gaming device for 2006. Our second generation HMD was for the U.S. Army Telemedicine. They funded that project for us. And the third was for training and simulation in the military. You might know that the military does training and simulation runs before many of the actual runs they do a training and simulation beforehand like I hesitate to mention any of them. Well the Somali pirate incidence for example they would have run that in number of times in training and simulation. This fourth generation is a major leap forward, this fourth generation HMD that we are doing. I met with a software design company who uses one of the prevalent VR HMDs to view his company’s software. The CEO complained to me about seeing the pixels in the current wide field view headsets, and his statement was it makes him think he is looking through a screen door, you have heard this before. I showed him our Telemedicine HMD because we don’t have the new one yet, and that was our second generation HMD, he was very impressed. He told me we should go out and see a few companies that he recommended immediately. Our solution here goes to develop the new one and then use that. During the quarter, we continued to work through the quarter one stop ship event with three customers. For the first customer, shipments have resumed in actually quarter two with no loss of revenue. Shipments for the second customer have resumed with the delivery of parts using a modified manufacturing process for their qualification and test by our customer. The qualification of these displays was successfully completed and production resumed for us. While we expect no loss of overall volume for this customer, some originally -- some volume originally scheduled for this year will slip into next year. For the third customer, we have delivered a product with a different package design that has successfully completed eMagin's internal qualification process. And once this customer completes the qualification with those parts in their system we expect deliveries to continue to or to begin -- again to begin again in 2015. So now I will turn the call over to Paul for taking you through the third quarter financial results.

Okay, thanks Andrew. I would like to start with the income statement. The revenue for the third quarter was 5.7 million and that’s a decrease from $6.3 million in third quarter last year. The product revenues which is primarily the display sales decreased about 10% from Q3 last year. In the quarter, as Andrew mentioned, we completed the install of the new equipment in the clean room for producing the direct-patterned displays and we also made some important improvements to the clean room and performed the scheduled maintenance. And both of these will improve yield going forward. So those were important accomplishments. But however they did result in fewer production days and that did impact revenues. We also had a couple of customers extend their delivery dates into Q4. In the quarter, average selling price for display increased to 22% over Q3 last year, as very positive. Average selling price is a function of the mix sold, the product mix sold in the quarter and the extent of the volume discounts in the customer mix in our system the more you order the bigger the discount you get. But the higher average price tends to increase revenue and also increases our gross margin. R&D contract revenues were greatly improved from first quarter and second quarter this year and are almost back to level with Q3 last year. We are only down 5% there. R&D contract revenue for the third quarter was $529,000 it was only $62,000 in Q2 and $559,000 in Q3 last year. So as Andrew mentioned and as we released in our press release this is a very positive development for the company. More R&D contract revenue now and so more the outlook for more in the future is better than it has been. So that’s very exciting for us. And most of these contracts do from the U.S. government. And we have reported before that these revenues have been negatively impacted the last three years by our government budget issues and sequestration. And that for years prior to 2013, our R&D contract revenue ranged from about 15% of total revenues up to its highest 22%. We have recorded R&D revenues of less than 1% of revenue for Q2 and now Q3 was 9% of revenue. So we are on our way back. So Q3 was a huge improvement. And Andrew mentioned the ManTech program the big $6.45 million program over the next 30 months and that’s a very exciting development for us. So due to these awards and some others that we think we might get, we expect R&D contract revenues to increase further going forward. Gross margin for Q3 was 31%, down four points from Q3 last year but leveled with last quarter despite lower revenue and lower production volume. So actually 31% for the quarter was not at that number, it was good that we could sustain that. We did that by, we reduced production cost, yield improved in Q3 may be due to the maintenance and the shutdown that we did. And we expect the yield would improve further in upcoming quarters. Our operating expenses are comprised of internal non-funded R&D expenses and selling, general and administrative expenses. R&D expense for the third quarter decreased $325,000 or 25% to $1 million or 17% of revenue and that’s versus $1.2 million or 20% of revenue in third quarter last year. So, we have less non-funded R&D expense which is a good thing. Even though we made great strides in R&D this quarter we incurred less product development expense and we had less stock option expense in Q3 this year than last year so those were the drivers on the lower R&D. We still accomplished a lot of work as Andrew detailed and had a very active R&D quarter. The SG&A expenses for the third quarter were $1.8 million versus $2 million last year, so we also decreased SG&A expenses in the quarter that’s primarily due to a decrease in salary and related expenses. We have fewer people in our structure at the end of the third quarter than we had at the end of the second quarter. So, once again we’ve been effective in keeping our operating expenses under control as we continue to invest in new technologies to growth the business including our new products, our new high brightness technology and our Immersive HMD. So, operating loss for Q3 narrowed to $1 million versus operating loss of $1.1 million for Q3 last year, so we lost less money on less revenue so in that way Q3 was actually a fairly good quarter. Adjusted EBITDA was a loss of $466,000 compared to a loss of approximately $248,000 in Q3 last year. But this was our best EBITDA performance for quarter any quarter since Q3 last year, better than Q4, Q1 or Q2 of 2014. And we did it on less revenue and less production volume. So this actually represents an improvement that we’ve made in our cost structure and that should carry forward into future quarters. Let’s take a look at the balance sheet at September 30, we had cash, cash equivalents and CDs totaling about $6 million actually up a little bit from the end of Q2. During the third quarter, we managed the accounts receivable balance down by about $1.6 million lower than it was at June 30 so that was a good thing. Everything else on the balance sheet is about the same. We’ve continued to run the business with no debt. We haven’t done any equity raises since December of 2008 and so we haven’t suffered any of the associated dilution in the stock in almost six years now. So, all in all, we had a good quarter and accomplished many important things in the quarter. Regarding our guidance, based on everything we know right now, we are affirming our previous guidance that we anticipate the last three quarters of 2014, we’ll have a higher average revenue for quarter than quarter one of 2014. So, with that that, I’ll turn it back over to Andrew. He has some further comments.

Thanks Paul. Now, I’ll just add a few more highlights. We continue to deliver on our microdisplay products in the third quarter to more than 70 domestic and international customers and worked on funded development for five other customers. Sample displays using our high luminous technologies were delivered and are being added to the system architecture for both commercial and military applications. And remember we have monochrome high brightness technologies as well as a color technology and now I am not talking about the ultra high brightness yet. As a result of further R&D efforts the lifetime of our high brightness color OLED XLS technology was improved by about 25%. The full qualification of these displays is expected to be completed in the first quarter of 2015. The increased interest in our high brightness monochrome and color displays confirms that these displays offer advantages for applications that use low efficiency optical systems or that must provide augmented reality in the day time such as Avionics or commercial data glass applications. eMagin’s R&D team has completed the qualification of the new seal structure so by seal I mean sealing the OLED so it’s not attacked by water vapor. The structure can increase the overall yield of our process and the reliability of our products. The new seal is already being phased into production for certain display types. We expect to expand this improved process to all display types over time. The system was tested by an outside company in 85 degree centigrade which is about 185 Fahrenheit and 85% relative humidity for 1,000 hours with no issues, to any of the people in the OLED community who make displays this is nothing short of amazing for a thin-filming capsulation. And that’s especially true for one that as thin as ours and because our pixels are so small you can’t have that seal structure fit because then with our color filter displays you get the light going through the long color filter. So this is amazing and is very good that we have qualified it. We have also completed production qualification of our new digital SVGA display in the second quarter and began deliveries in the third quarter to two lead customers. This display is targeted for the replacement of the long running SVGA+ product and will provide significant improvements because of its digital technology. So the things like uniformity and much better contrast et cetera are in this new technology as well as some additional improvements in terms of the speed - refreshing speed et cetera. First samples of our SXGA096 and that refers to 9.6 micron pixel, product should be available in the fourth quarter. The SXGA096 is going to provide eMagin's customers with the resolution of an SXGA display but with a smaller form factor and therefore lower cost than the larger pixel SXGA displays we have today. During the quarter, we also received two major follow on orders from two different long standing customers which will have significant deliveries continuing into 2015. This makes us of course feel optimistic about just because the government has been holding back on things like new orders with sequestration sector and this makes us feel, feel very good. So just a small recap, we have produced WUXGA displays with ultra-high brightness at 7,000 nits and that’s microdisplays or real-microdisplays of 9.6 micron color filters and that’s 9.5 micron pixel pitch, that’s with no color filters. And we have thanks to Amal Ghosh and his team. We have gotten the clean room in the tools in much better shape now for the future because we took the opportunity with the clean room done the cleaning. Thanks to Robert Kaizerman and company. We have gotten some qualification of some products. Thanks to [indiscernible]. And we have had a significant development of a new HMD 4 megapixels per eye, we will be using our by 2,000 microdisplays and that’s thanks to Jerry Carollo. So it’s been an outstanding effort. So I am going to leave it that and open the call up for your questions. And then we will give another summary.

Thank you sir. (Operator instructions). The first question we have comes from Dennis Van Zelfden of Brazos Research. Dennis Van Zelfden - Brazos Research: Andrew just wanted to verify that your color ultra-high brightness displays the 7,000 nits and 9.6 pixel, is that the final version of a product that you would sell to a Google Glass type of a manufacturer?

Well if I would look at, the answer is yes with only copy most of the Google Glass type folks are using smaller displays. So WUXGA is a little large but we wanted a display that we make today. And one is one of those customers I talked about in first quarter are interest in as well. Dennis Van Zelfden - Brazos Research: So, there is more development efforts to get it physically smaller is that what you telling me?

No that’s not a concern, really; the tough part about making the display is the size of the sub pixels and pixels. So the fact that we can do with that size is fine, but if you went to a particular customer making an augmented realty glass they might have a specific size in mind. For example, the one that is out there Google Glass was an NHD 640 by 360 that wouldn’t be harder to make an ultra-high brightness display but you would have to make a new resolution. You understand what I mean we don't have an HD display on the shelf right now. If we did, we could put it on a -- put our ultra high brightness color on that. Dennis Van Zelfden - Brazos Research: Okay. What is your -- you mentioned in that same level bullet point that you have orders for prototypes that will be delivered in 2015, what is the production capacity or capability right now?

Well right now, we are still improving the system to make prototypes and this will be really a prototyping into small volume production type right now. Dennis Van Zelfden - Brazos Research: And then my last question is what's it going to take in terms of tooling cost and time to ramp that very early production up to huge quantity.

Of course when you say huge, it depends on what huge is. Our thought is that for the manufacturing technology program, we have an idea of what capital we need, that's not huge capital but remember that will satisfy the volumes that we need to for relative, reasonable volumes of our current type volume orders to be huge than we -- depends on what huge it is. We have to -- Dennis Van Zelfden - Brazos Research: Well I am talking about when you develop a product that someone wants 500,000 to 1 million per month, what kind of tooling and cost and time will that require.

That would take us more of tooling and time than the first quarter of 2015. I think that usually when new tools like the one we put in takes 18 months, so it's typically a little longer, but we've learned a lot. And so a new tool might take 18 months to develop and get in and then some time to start it up. So when you say huge volumes of 1 million a month let's say, that's your estimate, I think it would take -- some time 2015, 2016 -- into 2016 it would be. Dennis Van Zelfden - Brazos Research: Last quick question. Since you had your downtime in July, can we assume that there will be any in the fourth quarter?

You could assume that absolutely. In fact I will be shocked to have any such thing. Leverage is going to keep that stuff going every day.

(Operator instructions). Next we have Tom Rath of Davidson Investment Advisors. Tom Rath - Davidson Investment Advisors: So I am curious about the announcement you made a couple of days ago about the VR HMV that you are going to develop internally, why -- can you talk a little bit about why you decided to develop that in-house as opposed to potentially partnering with somebody or something our own ones.

We do have partners for this. We are not going to develop everything and make ViOptix and that sort of thing. So we do have partners but we have IP with respect to his and the -- only a correction I will make of your statement is that you said going to develop, actually you are pretty far long on this. So partners is a wise thing for us. Tom Rath - Davidson Investment Advisors: And so that helps also in the trade expense and how much are you investing in this project.

We are actually covering the expense. So the type of partner we are working with we are actually to paying to do the job.

Tom, we have a lot of knowledge in this area so actually the amount of expense is probably more modest than you think we are covering that out of just our normal operations at the moment and we are pretty far along with it. Our idea is to make just the prototype on our own and then get other partners involved as far as production would go. So to develop the prototype, we have a lot of the expertise in that area and we have spent some money around it. We did acquire some patents that will protect the product that we have from being copied to some degree, so we are very happy about that. But as far as we are not going to lay out major dollars on our own for producing volumes of these headsets. Tom Rath - Davidson Investment Advisors.: Okay, so if I understand your goal is to produce prototype by the first quarter of '15. And so can you kind of tell us what happens then, will you go to various shows, you mentioned if travel along with partners at that point, how would that -- what should we expect that to look like?

You should also know that we actually talked of any companies about this and they all say something like show me. So we are going to do that and as Paul says, we don’t want to unnecessarily set at the large manufacturing facility. So we'd like -- and we don’t want to be this end seller of this either we need some help doing that. Tom Rath - Davidson Investment Advisors: Okay. So if I understand that and it sounds like this was sort of a, I don’t know the way you follow it, a proof-of-concept type project?

Well, that’s what this will be a proof-of-concept and we have ideas and we’ve talked to a number of other companies about what the next steps are. But I am not really at liberty to divulge them at this point.

It’s a great opportunity. We saw the opportunity because we saw some of these other headsets that were out there and we knew that we had the expertise to pull together a much better product, a higher resolution, better field of view, OLED displays, better optics. So, we were compelled actually to do this project. And we feel as a result in added value either through a partnership or some kind of structure where we can leverage this prototype that we come up with into licensing fees or joint venture with somebody or things along that line because the product is going to be so good.

The other thing just to mention is that obviously we believe micro displays are the way to go this headset will be about 200 grams which is half the weight of actually better than half so less than half the weight of the ones that you see out there. It will be close to your face and we know this because it’s already designed. It will be close to your face so that if you’re a gamer and you spin your head the thing will stick to your face instead of catching up to you and when you stop moving. So this is going to be an outstanding product and again you wouldn’t have the screen door effect it will be 4 megapixels per eye and that’s what generates no screen door effect. It will have OLED contrast of course power efficiency et cetera. So it’s going to be an outstanding device. The other thing good for us is that we would like to see OLED micro displays been in every VR device virtual reality device not cell phone size displays. So that will also help eMagin on the display side. Tom Rath - Davidson Investment Advisors: Okay, thank you. I am going to try and shift gears a little bit here. You mentioned the HMDs for the military helmets for Avionics and so forth?

Yes. Tom Rath - Davidson Investment Advisors: Can you share with us have you made any deliveries or when would you be making deliveries on that under that contract?

What happens there we are working with companies to put our displays in their helmets these things -- and this is helmet with a visor in the front display shine light on the visor which is reflected back into your eyes so that we’re actually working on this and this would be going into new helmets and then into helmets in the past. Now these has to be qualified and note this is starting with military so it’s not going to be immediately it will take some time but still it’s a big market. We estimated that if I count all of the retrofitting maybe it’s take about 10 years but it’s $90 million in total that’s a big deal and the commercial markets going to be bigger than that -- these are again it’s going to take some time to put in like all military programs. Tom Rath - Davidson Investment Advisors: Okay. And then a couple other details you’ve mentioned orders that pushed out into the Q4 are those delivered since the quarter the end?

We don’t really comment on that. There is always some of this type of activity and the way we operate with purchase orders non-binding in most cases where customers sometimes people around their delivery dates. We mentioned at this quarter because there was a tad more of that going on. But it’s sort of a routine item. And we don’t want to really get into the habit of reporting on. We had excellent number of those and now we’ve delivered X number of them so far this quarter. So, we mentioned it because we thought it was important. But we really don’t want to comment further on. Tom Rath - Davidson Investment Advisors: Okay, thanks. And then my last question is how should we think about cash flow breakeven? Can you share with us a revenue level you need to receive to be cash flow neutral on [report]?

I can give you an idea. We made a lot of progress on that meaning I think we lowered our break even quite a bit in the last several months. We trimmed down our structure a little bit and we’ve also made some improvements in manufacturing costs, some improvement in the yield. And so when you combine all that together we have made some good stride and lowering our breakeven from what it would have been in the first half of this year for example. So I am very happy about that. We really have made some accomplishments there. As far as a particular number, what I would point you to is some of these improvements were still going on in Q3. So I would expect Q4 our cost would be equal or better than they were in Q3. And if you look at our EBITDA for Q3 the minus 466,000 on revenue of 5.7, if you do a little math there you could probably come up with real close range on what our breakeven point might be and that actually might be a little lower than calculated due to the improvement having a full quarter in Q4 the some of the cost streamlining we did and improvements that we did. So I don’t want to give you a number but will see it in Q4. I am really interested to see what our P&L looks like at the end of this quarter.

At this time I am showing no further questions. We will go head and conclude our question-and-answer session. I would now like to -- it looks like we do have a question and it comes from Tom McGuire, Investor. Tom McGuire - Investor: Hey good afternoon Andrew and Paul. I just was hoping maybe you could ballpark for me your capital needs that you see going forward. Now you mentioned earlier Paul how eMagin hasn’t issued any equity in six years and that’s really commendable that’s great. And also I really like to see in the cost cutting and as you just talked about getting your breakeven point down. But I remember back in June I think eMagin field a self registration for $80 million in equity type securities and I know you did this for corporate flexibility purpose and you have no intention to brazing $80 million in equity. But in reality how much cash do you think you really need to be able to maybe go a bit faster, if you maybe go a bit faster in terms of development or if you need new tooling or whatever. Can you just give me a general direction on what you feel your capital need to be and just talk about that.

In this case it depends on what the volume requirements are. We have small volume on direct patterning or ultra-high brightness color than the capital needs are low numbers. And we have thought about $5 million something like that. Other than that if we leave that a side what we have been doing is handling everything internally before that including we spent $4 million on the SNU OLED deposition tool. So we are not taking about anything large, unless there is a need for very large capacity and in that case the answer is a little different.

Our strategy on the shelf was that we would like to file this shelf one time in our life time, however you want to look at one shelf for all future needs and so that we have made the number, there was no downside smaller number of larger number. So we decided to go with the larger number 80 million. It doesn’t mean we have any intention of issuing anywhere near that much equity. And I don’t know what we do so much equity. There is way we feel we need that much that we can foresee at the moment. The last machine we bought that the new SNU tool was about $4 million. those are the types of numbers, that actually increased our capacity 10 fold, and we still have a lot of that capacity left to use. So Andrew mentioned a new direct patterning tool, should we have high volume need for that. So that would probably be the most likely thing that we would need. And again that number could vary depending on a million a month is a awful lot of units. I don’t even know about company that would ask us for that much really going to sale that many headset devices. But if they did obviously then the number would go up a little bit. But when we look out there we haven’t released a number on capital and we are not going to do that here, but it’s much more modest than these large numbers. It would be more in line with what we spent on the last tool plus most likely. Tom McGuire - Investor: So what I am hearing is that you feel okay for now but if you were -- by the grace of god did get some big orders you might need some capital to help deliver on those orders but that's a good problem. And who knows how you arrange a deal to get that capital.

Yes, that's a good problem and we have this shelf out there in case we need to draw that down and that's one of the reasons we set it up but there is no tool that we can envision, no manufacturing client actually that would use anywhere near that entire amount.

Well I can envision one.

Not for us.

And again in the order of magnitude and you too will remember is 4 million is what we paid to last time and I just brand [ph] that off to 5 million at this time. So that would give us a significant volume in direct patenting. The other thing to think about as you know that if some company wants to start a new type or program, they might invest in the tool itself and you know that happens in the past. Tom McGuire - Investor: We'll get the revenues up and continue to get the cost down and get the cash flow breakeven and I will be real happy.

We will be sir. That is the goal.

And we have a follow up from Dennis Van Zelfden of Brazos Research. Dennis Van Zelfden - Brazos Research: Following up on Tom's question. I guess given the length of time it would require to get a new machine in there, i.e. more tooling to really ramp up your production to hundreds and hundreds and hundreds of thousand units a month. I am guessing that any big benefit from a consumer type product is years away?

:

Could I give you an example that's not direct patterning? Dennis Van Zelfden - Brazos Research: Sure.

We did some research and you can too and we noted that there was a company that did research on gaining head-mounted display type applications. So now the ones that are prevalent in the outside now or those white field, the blue ones that use a cellphone size display in the front. But they said that in the year 2018, they said 23 million of these units was what they were projecting. Now if we are good enough in our effort to make the micro display headset like we talked about and everyone sees that micro displays are the way to go which I think they will certainly than 23 million even if that's half right that's a lot of displays and remember with a micro display you need two for a virtual reality headset. So that's a lot of displays and that those we can make today and if we were facing with a problem of more volume than we had capacity again that would be a nice problem to have and these don't require direct patterning on current displays we work in these headsets. Dennis Van Zelfden - Brazos Research: Okay, thanks for the clarification, I understand it? Dennis Van Zelfden - Brazos Research: Yes, no problem, it's a complicated business so please just ask the questions, and that's helpful to us too.

At this time we will go ahead to conclude the question-and-answer session. I would now like to turn the conference back over to management for any closing remarks.

Thank you. I just want to thank all of you, thank you for asking the questions. It's a complicated business, so it's good to have the clarification come out. We see the future is bright for us and it's because we have a group of people here including Paul and Dianne and their team as well as the people I mentioned before, we have the technology in this company to get the where we need to go on both sides making a headset with these micro displays in those headsets that are outstanding and also for the ultrahigh brightness needs in an avionic helmets for example, avionics helmet. So this team has done an outstanding job and I just want to say that's one of the best teams I've ever worked with maybe the best team, let me say it that way. Production is working like mad to do what they need to do. And so everybody here in Hopewell Junction I want to thank them for their great effort. It’s an outstanding [indiscernible] what we have and it’s very bright for us. And again just to remind you virtual reality doesn’t need direct patterning we can do that today. And we have ultra high brightness displays today, monochrome green going into military helmets. So we are covering both sides of this and the volume this potentially is a great thing for us. So I want to thank you all on the phone for asking the questions. And please don’t hesitate to ask questions and give us your ideas. We thank you very much.

Mr. Campbell, Mr. Sculley we thank you for your time today gentlemen. And the conference call is now concluded. At this time, you may disconnect your lines. Thank you and take care everyone.