Irvine Sensors, a 51% share holder of Silicon Film, has today announced that it is suspending operations at Silicon Film. What started as a rumour, grew into vapour ware, became a product which was demonstrated at PMA 2001 but was simply never attractive and always crippled by storage, battery, environment and sensor size limitations has now turned into vaporized-ware. "The Silicon Film Board has retained special counsel in contemplation of liquidation through bankruptcy proceedings, if immediate financing alternatives are not secured."

History:

Press release:

SILICON FILM SUSPENDS OPERATIONS

COSTA MESA, CALIFORNIA - September 15, 2001 - Irvine Sensors Corporation (NASDAQ: IRSN, Boston Stock Exchange: ISC), announced that Silicon Film Technologies, Inc., an independent and consolidated subsidiary, has suspended operations. The Silicon Film Board has retained special counsel in contemplation of liquidation through bankruptcy proceedings, if immediate financing alternatives are not secured.

Irvine Sensors, a fifty-one percent (51%) owner of Silicon Film, stated that it is also Silicon Film's largest creditor. Robert G. Richards, Irvine Sensors' President and Chief Executive Officer, said "The failure of certification tests in the summer delayed Silicon Film's anticipated revenues, but development expenses continued. They worked hard on the certification issues ,and a little over a week ago re-tested in compliance with the FCC's emission standards, but are still falling short with respect to stricter European standards. We believe at least some of those stricter standards must be met for a successful product launch. This has prolonged the schedule uncertainty. We have loaned Silicon Film substantial funds to support their product development because of our belief in the fundamental appeal of the Electronic Film System™ concept. However, we have reluctantly concluded that further loans in light of present market circumstances and remaining schedule uncertainty would not be in the best interests of Irvine Sensors' stockholders. We will consider any reasonable workout or alternative financing proposals that might emerge, but we have retained our own special counsel to vigorously pursue our position as their largest secured creditor should the contemplated liquidation ensue."

Irvine Sensors Corporation, headquartered in Costa Mesa, California, is primarily engaged in the development of high density electronics, MicroElectroMechanical sensors (MEMS) and readout circuits, miniature cameras and image capture systems, electro-optical and optical switches, image processing devices and software, electronic image stabilization, wireless infrared communications products, and low-power analog and mixed-signal integrated circuits for diverse systems applications. It primarily seeks to commercialize its technologies through independently financed and managed subsidiaries.