##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      FORM 10-K
      þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    March 31, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to   Commission File Number: 0-30539
  TVIA, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

94-3175152(State or other jurisdiction of
    
    incorporation or organization)

(IRS Employer 
    Identification No.)4001 Burton Drive,
    Santa Clara, 
    California 95054(Address of principal
    executive offices)

(408) 982-8588(Registrants
    telephone number, including area code)   Securities registered to Section 12(b) of the Act:
    None
  Securities registered pursuant to Section 12(g) of the
    Act:
 Common Stock, par value $0.001 per share
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K þ
  Rule 12b-2
  Rule 12b-2
  o o þ
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 



TVIA, INC. AND
    SUBSIDIARY
  TABLE OF CONTENTS
  2006
    FORM 10-K
  PagePART IItem 1.

Business


3Item 1A.

Risk Factors


8Item 2.

Properties


16Item 3.

Legal Proceedings


16Item 4.

Submission of Matters to a Vote of
    Security Holders


17PART II


17Item 5.

Market for Registrants
    Common Equity and Related Stockholder Matters


17Item 6.

Selected Financial Data


19Item 7.

Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations


20Item 7A.

Quantitative and Qualitative
    Disclosure About Market Risk


27Item 8.

Financial Statements and
    Supplementary Data


29Item 9.

Changes In and Disagreements With
    Accountants on Accounting and Financial Disclosure


55Item 9A.

Controls and Procedures


55Item 9B.

Other Information


56PART III


56Item 10.

Directors and Executive Officers
    of the Registrant


56Item 11.

Executive Compensation


57Item 12.

Security Ownership of Certain
    Beneficial Owners and Management and Related Stockholders
    Matters


57Item 13.

Certain Relationships and Related
    Transactions


58Item 14.

Principal Accountant Fees and
    Services


58PART IV


58Item 15.

Exhibits and Financial Statement
    Schedules


58EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   2




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This document contains forward-looking statements that
    involve risks and uncertainties. Tvias actual results may
    differ materially from the results discussed in such
    forward-looking statements. Factors that might cause such
    differences include, but are not limited to, fluctuations in
    customer demand, risks associated with competition, risks
    associated with product development, reliance on foreign
    manufacturers, foreign business, political and economic risks
    and risks identified in the Companys Securities and
    Exchange Commission, filings, including, but not limited to,
    those discussed elsewhere in this
    Form 10-K
    under the heading Risk Factors located in
    Item 1A.
  All references to Tvia, we,
    us, our or the Company mean
    Tvia, Inc. and its subsidiary, except where it is made clear
    that the term means only the parent company.
  Item 1.
    Business        Available
    Information
  http:// www.tvia.com. Form 10-K, Form 10-Q, Forms 8-K,
  Industry
    Background
    
    Standard Definition TV (SDTV)  SDTV is
    the basic level of quality display and resolution for both
    analog and digital. Transmission of SDTV may be in either the
    traditional (4:3) or widescreen (16:9) format.
    Enhanced Definition TV (EDTV)  EDTV is a
    step up from Analog Television. EDTV comes in 480p widescreen
    (16:9) or traditional (4:3) format and provides better picture
    quality than SDTV, but not as high as HDTV.
    High Definition TV (HDTV)  HDTV in
    widescreen format (16:9) provides the highest resolution and
    picture quality of all digital broadcast formats. Combined with
    digitally enhanced sound technology, HDTV sets new standards for
    sound and picture quality in television. 3




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
    We believe our display processors provide high quality,
    efficient silicon de-interlacing and scaling that allow our
    customers to produce high-quality progressive scan CRT
    television and LCD television at an attractive price.
    We believe our display processors, software, reference design
    kit and design support enable our OEM customers to accelerate
    their time to market by reducing their systems engineering
    development. Our engineers work closely with our customers
    engineers to facilitate systems design. These benefits enable
    our OEM customers to quickly bring products with rich features
    and differentiated systems to market.  Products
   4




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picture-in-picture
    Customers
      Sales and
    Marketing
     5




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on-site
    Research and
    Development
        Manufacturing
       6




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Competition
    
    Functionality;
    Complete solution,
    Performance;
    Time to market;
    Price;
    Conformity to industry standards;
    Product road maps; and
    Technical support.    Intellectual
    Property
          MPEG-2 MPEG-2 MPEG-2 MPEG-2 MPEG-2 MPEG-2
 7




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Backlog
    Seasonality
    Employees
    Item 1A.
    Risk
    Factors  We expect
    continuing losses and may not achieve profitability, which could
    affect our ability to expand our business.
   8




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A slow down in
    the DTV market could significantly affect our revenue
    growth.
    A significant
    amount of our revenues comes from a few customers and any
    decrease in revenues from these customers could significantly
    impact our financial results.
    Our operating
    expenses may increase as we build our business and these
    increased expenses may impact our ability to become
    profitable.
    Because of our
    long product development process and sales cycle, we incur
    substantial expenses before we generate revenues and may not
    recover our expenditures.
     9




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If we fail to
    successfully develop, introduce and sell new products, we may be
    unable to effectively compete in the future.
    
    our failure to complete new product designs in a timely manner;
    our inability to manufacture our new products according to
    design specifications;
    our inability to deliver our products to our customers in a
    timely manner for any reason, including lack of manufacturing
    capacity or the failure of our contracted foundries to meet
    targeted-manufacturing yields; and
    our sales forces and independent distributors
    inability to create adequate demand for our products.  Our future
    operating results are likely to fluctuate and may fail to meet
    expectations, which could cause our stock price to
    decline.
    
    the general condition of the semiconductor industry market;
    fluctuations in the volume of product sales, changes in product
    mix and pricing concessions on sales;
    the timing, rescheduling or cancellation of significant customer
    orders;
    the timing of investments in, and the results of, research and
    development;
    changes in industry standards;
    introduction of interactive television services by service
    providers;
    availability of manufacturing capacity and raw materials, and
    inventory write-offs;
    product introductions and price changes by our competitors;
    our ability to specify, develop, introduce and market new
    products with smaller geometries, more features and higher
    levels of design integration in accordance with design
    requirements and design cycles;
    the level of orders received that can be shipped in a given
    period;
    changes in earning estimates or investment recommendations by
    analysts; 10




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
    changes in investors perceptions; and
    the effect of the terrorist attacks in the United States and any
    related conflicts or similar events worldwide.  Our industry is
    highly competitive, and we cannot assure you that we will be
    able to effectively compete.
    
    functionality;
    performance;
    time to market;
    price;
    conformity to industry standards;
    product road maps; and
    technical support.      We depend on two
    independent foundries to manufacture our products based on our
    forecasts, which could result in an oversupply or undersupply of
    products.
     11




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We may encounter
    periods of semiconductor oversupply, resulting in pricing
    pressure, as well as undersupply, resulting in a risk that we
    could be unable to fulfill our customers
    requirements.
    If we have to
    qualify new independent foundries for any of our products and do
    not have sufficient supply of our products on hand, we may lose
    revenues and damage our customer relationships.
        Our
    semiconductors are complex to manufacture and may have errors or
    defects, which could be costly to correct.
   12




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Our software is
    complex and may have bugs or defects which could be costly to
    correct.
    We face foreign
    business, political and economic risks because a majority of our
    sales are to customers outside of the United States.
      If the industries
    into which we sell our products experience recession or other
    cyclical effects impacting our customers budgets, our
    operating results could be negatively impacted.
     13




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The rapid growth
    of our business and operations has strained and may continue to
    strain our administrative, operational and financial resources,
    and our failure to manage our future growth could affect our
    operations and our future ability to expand.
    We depend on key
    personnel, the loss of whom would impair or inhibit the growth
    of our business.
    We rely on
    strategic relationships to commercialize our products, and these
    relationships may require that we expend significant resources
    without guarantees that our endeavors will be
    profitable.
    We depend on
    third-party subcontractors for assembly of our semiconductors
    which reduces our control over the delivery, quantity, quality,
    or cost of our products.
   14




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Political
    instability in the Peoples Republic of China or Taiwan
    could harm our manufacturing and research and development
    capabilities and negatively impact our product sales.
    If our
    competitors use our intellectual property and proprietary
    rights, our ability to compete would be impaired.
      We may face
    intellectual property infringement claims that could be costly
    and could result in the loss of proprietary rights which are
    necessary to our business.
   15




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Regulation of our
    customers products may slow the process of introducing new
    products and could impair our ability to compete.
    Item 2.
    Properties      Item 3.
    Legal
    Proceedings       16




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Item 4.
    Submission of
    Matters to a Vote of Security Holders    Executive
    Officers
    Eli Porat
  Diane Bjorkstrom
  David Medin
  Benjamin Silva
 PART II  Item 5.
    Market for
    Registrants Common Equity and Related Stockholder Matters
    and Issuer Purchase of Equity Securities   17




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Fiscal
    2006


Fiscal
    2005High


Low


High


LowMarch 31

$
2.85


$
2.68


$
2.19


$
1.32December 31

$
2.20


$
2.11


$
2.30


$
1.07September 30

$
2.27


$
2.16


$
2.04


$
1.27June 30

$
1.80


$
1.62


$
2.73


$
1.59     Securities
    Authorized for Issuance Under Compensation Plans
  Form 10-K.
  Purchase of
    Equity Securities by the Issuer and Affiliated
    Purchasers
     18




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Item 6.
    Selected
    Financial Data    Year
    Ended March 31,2006


2005


2004


2003


2002(In
    thousands, except per share data)Consolidated Statements of
    Operations Data:Revenues:Product sales

$
7,767


$
3,098


$
2,042


$
1,771


$
11,342Development contracts and other


566



183



267



461



498Total revenues


8,333



3,281



2,309



2,232



11,840Cost of revenues:Product sales


3,805



1,587



1,235



1,460



8,522Development contracts and other


5



198



88



83



109Total cost of revenues


3,810



1,785



1,323



1,543



8,631Gross profit


4,523



1,496



986



689



3,209Operating expenses:Research and development


6,065



5,829



6,823



8,983



12,664Sales and marketing


3,301



1,338



838



1,506



2,940General and administrative


3,964



2,365



1,829



2,039



2,116Amortization of deferred stock
    compensation














595



1,572Restructuring costs














950



Total operating expenses


13,330



9,532



9,490



14,073



19,292Operating loss


(8,807
)


(8,036
)


(8,504
)


(13,384
)


(16,083
)Other income (expense), net
    Interest income


606



406



401



703



1,818Interest expense


(204
)


(10
)


(11
)


(14
)


Gain on sale of software business










9,075







Net income (loss) before taxes


(8,405
)


(7,640
)


961



(12,695
)


(14,265
)Income taxes










25Net income (loss)

$
(8,405
)

$
(7,640
)

$
936


$
(12,695
)

$
(14,265
)Basic and diluted net income (loss)
    attributable to common stockholders

$
(0.36
)

$
(0.33
)

$
0.04


$
(0.58
)

$
(0.66
)Shares used in computing basic and
    diluted net income (loss) per share to common stockholders


23,471



22,827



23,982



21,952



21,631     2006


2005


2004


2003


2002(In
    thousands, except per share data)Consolidated Balance Sheet
    Data:Cash and cash equivalents and
    short-term investments

$
12,957


$
21,742


$
27,206


$
24,417


$
35,505Working capital


16,058



21,513



28,000



24,273



35,979Total assets


21,353



25,487



31,403



31,193



43,387Long-term liabilities


211



345







486



Total stockholders equity

$
16,633


$
22,642


$
30,059


$
28,766


$
40,925  19




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion and analysis should be read in
    conjunction with Selected Financial Data and our
    Consolidated Financial Statements and Notes thereto included
    elsewhere in this
    Form 10-K.
    This document contains forward-looking statements that involve
    risks and uncertainties. Tvias actual results may differ
    materially from the results discussed in such forward-looking
    statements. Factors that might cause such differences include,
    but are not limited to, fluctuations in customer demand, risks
    associated with competition, risks associated with product
    development, reliance on foreign manufacturers, foreign
    business, political and economic risks and risks identified in
    the Companys Securities and Exchange Commission, filings,
    including, but not limited to, those discussed elsewhere in this
    Form 10-K
    under the heading Risk Factors located in
    Item 1A, of this
    Form 10-K.
  Overview
           20




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Critical
    Accounting Policies and Estimates
      Revenues.
  Distributor Sales:
          Receivables.
  Inventory. (first-in,
 21




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Impairment of Long-Lived Assets. Accounting for the Impairment or
    Disposal of Long-Lived Assets.
  Stock Based Compensation Expense.
  Accounting for Stock-Based
    Compensation Accounting for Stock-Based Compensation, Transition and
    Disclosure.
   22




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Results of
    Operations
    Year
    Ended March 31,2006


2005


2004Consolidated Statement of
    Operations Data:Revenues:Product sales


93
%


94
%


88
%Development contracts and others


7



6



12Total revenues


100



100



100Cost of revenues:Product sales


46



48



53Development contracts and others






6



4Total cost of revenues


46



54



57Gross profit


54



46



43Operating expenses:Research and development


73



178



295Sales and marketing


40



41



37General and administrative


48



72



79Total operating expenses


161



291



411Operating loss


(107
)


(245
)


(368
)Other income (expense), netInterest income


7



12



17Interest expense


(2
)






Gain on sale of software business










393Other income, net


5



12



410Net income (loss) before taxes


(102
)


(233
)


42Income taxes










1Net income (loss)


(102
)


(233
)


41   Results of
    Operations for the Fiscal Years Ended March 31, 2006, 2005
    and 2004
  Revenues.
   23




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##### Table of Contents



Gross margin.
  Research and development. SFAS No. 123(R) Form 10-K.
  Sales and marketing. SFAS No. 123(R) Form 10-K.
  General and administrative.
 24




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##### Table of Contents



SFAS No. 123(R) Form 10-K.
  Gain on Sale of Software Unit.
  Restructuring Charges.
  Other income (expense), net.
  Provision for income taxes.
  Liquidity and
    Capital Resources
   25




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Off-Balance
    Sheet Arrangements
    Contractual
    Obligations
      Payments
    Due by PeriodContractual
    Obligations

Total


Less
    Than 1 Year


1-3 Years


3-5 Years


More
    Than 5 YearsNotes Payable


775



550



225







Operating Lease Obligations

$
555


$
320


$
235







Total

$
1,330


$
870


$
460







    26




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Recently Issued
    Accounting Pronouncements
        Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Quantitative and
    Qualitative Discussion of Market Interest Rate Risk
   27




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Foreign Currency
    Exchange Risk
   28




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Item 8.
    Financial
    Statements and Supplementary Data  Index to
    Consolidated Financial Statements
  PageConsolidated Financial
    Statements of Tvia, Inc.Report of
    Independent Registered Public Accounting Firm for the fiscal
    year ended March 31, 2006


30Report of
    Independent Registered Public Accounting Firm for the fiscal
    years ended March 31, 2005 and 2004


31Consolidated
    Balance Sheets


32Consolidated
    Statements of Operations


33Consolidated
    Statements of Stockholders Equity


34Consolidated
    Statements of Cash Flows


35Notes to
    Consolidated Financial Statements


36  29




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Report of
    Independent Registered Public Accounting Firm          ,
        30




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Report of
    Independent Registered Public Accounting Firm          31




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TVIA, INC. AND
    SUBSIDIARY
  CONSOLIDATED
    BALANCE SHEETS  March 31,2006


2005(In
    thousands, except per share data)ASSETSCurrent assets:Cash and cash equivalents

$
8,455


$
4,078Investments


4,502



17,664Accounts receivable, net


3,662



792Inventories, net


2,601



598Other current assets and prepaid
    expenses


902



881Total current assets


20,122



24,013Property and equipment, net


928



1,088Other assets


303



386Total assets

$
21,353


$
25,487LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
802


$
302Accrued liabilities and other


2,600



1,709Short-term portion of notes payable


541



460Cash settled stock appreciation
    rights (Note 8)


566



29Total current liabilities


4,509



2,500Long-term portion of notes payable


211



345Total liabilities


4,720



2,845Commitments and contingencies
    (Note 11)Stockholders equityCommon stock, $0.001 par
    value: 125,000 shares authorized; 23,866 and
    23,171 shares outstanding, respectively


24



23Additional
    paid-in-capital


95,395



93,118Accumulated other comprehensive
    income (loss)


28



(89
)Accumulated deficit


(78,064
)


(69,660
)Treasury stock: 204,400 shares


(750
)


(750
)Total stockholders equity


16,633



22,642Total liabilities and
    stockholders equity

$
21,353


$
25,487    32




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##### Table of Contents



TVIA, INC. AND
    SUBSIDIARY
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  Year
    Ended March 31,2006


2005


2004(In
    thousands, except per share amounts)Revenues:Product sales

$
7,767


$
3,098


$
2,042Non-recurring
    charges/reimbursements


566



183



267Total revenues


8,333



3,281



2,309Cost of revenues:Product sales


3,805



1,587



1,235Non-recurring
    charges/reimbursements


5



198



88Total cost of revenues


3,810



1,785



1,323Gross profit


4,523



1,496



986Operating expenses:Research and development


6,065



5,829



6,823Sales and marketing


3,301



1,338



838General and administrative


3,964



2,365



1,829Total operating expenses


13,330



9,532



9,490Operating loss


(8,807
)


(8,036
)


(8,504
)Other income (expense), net:Interest income


606



406



401Interest expense


(204
)


(10
)


(11
)Sale of software business










9,075Other income (expense), net


402



396



9,465Income (loss) before taxes


(8,405
)


(7,640
)


961Income taxes










25Net income (loss) after taxes

$
(8,405
)

$
(7,640
)

$
936Basic and diluted net income
    (loss) per share:

$
(0.36
)

$
(0.33
)

$
0.04Shares used in computing basic net
    income (loss) per share


23,471



22,827



22,323Shares used in computing diluted
    net income (loss) per share


23,471



22,827



23,982    33




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TVIA, INC. AND
    SUBSIDIARY
 CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY  AccumulatedCommon
    Stock


Additional


OtherPar


Paid-in


Comprehensive


Accumulated


Treasury


StockholdersShares


Amount


Capital


Income
    (Loss)


Deficit


Stock


Equity(In
    thousands, except share data)Balance at March 31,
    2003


22,163,222


$
22


$
92,444


$
6


$
(62,956
)

$
(750
)

$
28,766Issuance of Common stock under ESPP
    and through exercises of stock options


412,767



1



354















355Unrealized gain on
    available-for-sale
    investments














1











1Net Income


















937







937Balance at March 31,
    2004


22,575,989



23



92,798



7



(62,019
)


(750
)


30,059Issuance of Common stock under ESPP
    and through exercises of stock options


595,057







320















320Unrealized loss on
    available-for-sale
    investments














(97
)










(97
)Net loss


















(7,640
)






(7,640
)Balance at March 31,
    2005


23,171,046



23



93,118



(90
)


(69,659
)


(750
)


22,642Issuance of Common stock under
    ESPP, exercises of stock options


694,805



1



615















616Stock issued in settlement of
    lawsuit










148















148Stock
    compensation  equity plans










1,514















1,514Unrealized loss on
    available-for-sale
    investments














118











118Net loss


















(8,405
)






(8,405
)Balance at March 31,
    2006


23,865,851


$
24


$
95,395


$
28


$
(78,064
)

$
(750
)

$
16,633  34




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TVIA, INC. AND
    SUBSIDIARY
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year
    Ended March 31,2006


2005


2004(In
    thousands)Cash Flows from Operating
    Activities:Net income (loss)

$
(8,405
)

$
(7,640
)

$
936Adjustments to reconcile net
    income (loss) to net cash used in operating activities:Depreciation and amortization


1,075



1,276



1,748Write-down of license technology










1,449Gain on sale of software unit










(9,075
)Loss on retirement of fixed assets






104



Change in accounts receivable
    allowance


110







Stock issued in settlement of
    lawsuit


148







Stock compensation
    expense  equity plans


1,514







Changes in operating assets and
    liabilities:Accounts receivable


(2,980
)


(497
)


36Inventories


(2,003
)


4



453Other current assets and prepaid
    expenses


163



126



(269
)Accounts payable


500



101



(150
)Accrued liabilities and other


892



1,081



(518
)Cash settled stock appreciation
    rights


537







Net cash used in operating
    activities


(8,449
)


(5,445
)


(5,390
)Cash Flows from Investing
    Activities:Purchase of
    available-for-sale
    investments


(11,968
)


(6,137
)


(39,977
)Proceeds from sale of
    available-for-sale
    investments


25,247



12,324



29,369Proceeds from sale of software unit






753



8,373Purchase of property and equipment


(482
)


(503
)


(92
)Purchase of intangible assets










(44
)Net cash provided by (used in)
    investing activities


12,797



6,437



(2,371
)Cash Flows from Financing
    Activities:Repayments of capital leases






(493
)


(415
)Repayments of notes payable


(587
)






Proceeds from issuance of common
    stock


616



320



355Net cash provided by (used in)
    financing activities


29



(173
)


(60
)Net increase (decrease) in cash
    and cash equivalents


4,377



819



(7,821
)Cash and cash equivalents at
    beginning of period


4,078



3,259



11,080Cash and cash equivalents at end
    of period

$
8,455


$
4,078


$
3,259Supplemental Cash Flow Information:Interest paid

$
48


$
10


$
11Notes payable issued for the right
    to the use of design software

$
519


$
920


$
    35




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1.
    Description of
    Business and Summary of Significant Accounting
    Policies  Description of
    Business
      Use of
    Estimates
      Principles of
    Consolidation
    Cash and Cash
    Equivalents and Short-Term Investments
  available-for-sale
  Allowance for
    Sales Returns and Doubtful Accounts
   36




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Inventories
  first-in,
  Property and
    Equipment
    Impairment of
    Long-Lived Assets
    Revenue
    Recognition
  Revenues.
         37




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Software
    Development Costs
    Research and
    Development Expenses
    Income
    Taxes
  Accounting for Income
    Taxes.
  Comprehensive
    Income (Loss)
    For
    the Year Ended March 31,2006


2005


2004Net income (loss)

$
(8,405
)

$
(7,640
)

$
936Unrealized gain (loss) on
    available-for-sale-investments


118



(97
)


2Comprehensive income (loss)

$
(8,287
)

$
(7,737
)

$
938   Stock-Based
    Compensation Expense
  Effect of Early
    Adoption of SFAS 123(R)
   38




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Accounting for Stock-Based
    Compensation Accounting for Stock-Based Compensation, Transition and
    Disclosure.
      Foreign
    Currency Translation
    Net Income
    (Loss) Per Share
    Recent
    Accounting Pronouncements
   39




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 2.
    Balance Sheet
    Components (in thousands)  March 31,


March 31,2006


2005Accounts receivable, net:Trade receivables

$
3,672


$
912Less: Allowance for doubtful
    accounts


(10
)


(120
)$
3,662


$
792Inventories, net:Work in process

$
1,716


$
515Finished goods


885



83$
2,601


$
598Property and equipment, net:Furniture and fixtures

$
175


$
76Machinery and equipment


3,123



2,838Software


2,943



2,8516,241



5,765Less: Accumulated depreciation and
    amortization


(5,313
)


(4,677
)$
928


$
1,088  40




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Other assets:License technology

$
833


$
482Less: Amortization


(563
)


(128
)License technology, net


270



354Deposits


33



32$
303


$
386Accrued liabilities and other:Accrued compensation costs


1,476



463Accrued license technology






700Accrued audit and legal


193



192Accrued inventory purchases


777



189Other


154



165$
2,600


$
1,709   Note 3.
    Short-term
    Investments    Mature
    Less Than 12 MonthsCost


Aggregate


UnrealizedAs
    of March 31, 2006

Value


Fair
    Value


Gain/(Loss)(In
    thousands)U.S. corporate and bank debt

$
4,505


$
4,502


$
(3
)   Mature
    Less Than 12 MonthsCost


Aggregate


UnrealizedAs
    of March 31, 2005

Value


Fair
    Value


Gain/(Loss)(In
    thousands)U.S. government and agency
    securities

$
7,000


$
6,958


$
(42
)U.S. corporate and bank debt


10,753



10,706



(47
)Total

$
17,753


$
17,664


$
(89
)   Note 4.
    Sale of Software
    Business and Software-Related Assets   41




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 5.
    Restructuring
    Charges and Impairment Charges  Restructuring
    Charges
    Impairment
    Charges
    Note 6.
    Income
    Taxes    Year
    Ended March 31,2006


2005


2004(In
    thousands)Domestic

$
(8,503
)

$
(9,599
)

$
2,036Foreign


98



1,959



(1,075
)Total

$
(8,405
)

$
(7,640
)

$
961       March 31,2006


2005(In
    thousands)Net operating losses

$
23,241


$
19,566Reserve for accruals not deducted
    for tax purposes


275



677Available tax credit carry forwards


2,928



2,618Other timing differences


1,633



1,818Gross deferred tax asset


28,077



24,679Valuation allowance


(28,077
)


(24,679
)Net deferred tax asset

$



$
    42




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              March 31,2006


2005


2004(In
    thousands)Tax provision (benefit) at
    statutory rate


(34.0
)%


(34.0
)%


34.0
%Valuation allowance


34.0
%


39.0
%


25.4
%Other


(3.8
)%


(5.0
)%


3.6
%Utilization of net operating losses


0.0
%


0.0
%


(60.2
)%Stock options


3.8
%


0.0
%


0.0
%0.0
%


0.0
%


2.8
%  43




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 7.
    Earnings per
    Share    Year
    Ended March 31,2006


2005


2004(In
    thousands, except per share data)Net income (loss)

$
(8,405
)

$
(7,640
)

$
936Basic and diluted:Weighted average shares of common
    stock outstanding


23,471



22,827



22,340Less: Weighted average shares of
    common stock subject to repurchase










(17
)Weighted average shares used in
    computing basic net income (loss) per share


23,471



22,827



22,323Diluted effect of common stock
    equivalents










1,659Weighted average shares used in
    computing diluted net income (loss) per share


23,471



22,827



23,982Basic and diluted net income
    (loss) per share

$
(0.36
)

$
(0.33
)

$
0.04Options and warrants excluded from
    the computation of diluted net income (loss) per share


7,523



5,382



1,364     Note 8.
    Stockholders
    Equity and Employee Compensation Plans  Stock Option
    Plans
  2000 Stock
    Incentive Plan and 2000 Employee Stock Purchase Plan
     44




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    1999 Stock
    Incentive Plan
      SARS Plan (Stock
    Appreciation Rights)
    Out-of-Plan
    Options
   45




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   out-of-plan
  WeightedOptions





AverageAvailable


Outstanding


Exercise
    Pricefor
    Grant


Options


Per
    ShareBalance at March 31, 2003


2,997



4,444


$
1.79Annual increase


730







Granted


(1,347
)


1,347



1.41Exercised






(295
)


0.64Forfeitures


595



(595
)


1.88Balance at March 31, 2004


2,975



4,901


$
1.75Annual increase


730







Granted


(1,607
)


1,607



1.44Exercised






(497
)


0.51Forfeitures


629



(629
)


2.27Balance at March 31, 2005


2,727



5,382


$
1.71Annual increase


730







Granted


(3,060
)


3,060



1.76Exercised






(623
)


1.06Forfeitures


296



(296
)


2.86Balance at March 31, 2006


693



7,523


$
1.73    46




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     WeightedAverageOptions





ExerciseAvailable


Outstanding


Price
    Perfor
    Grant


Options


ShareBalance at March 31, 2003


1,269



231


$
1.70Granted


(78
)


78



1.57Exercised


22



(22
)


0.57Forfeitures


119



(119
)


1.98Balance at March 31, 2004


1,332



168


$
1.58Granted


(192
)


192



1.28Exercised


27



(27
)


0.72Forfeitures


4



(4
)


3.29Balance at March 31, 2005


1,171



329


$
1.27Granted


(174
)


174



1.62Exercised


22



(22
)


1.14Forfeitures


13



(13
)


1.48Balance at March 31, 2006


1,032



468


$
1.40       Options
    Outstanding


Options
    ExercisableWeighted











WeightedAverage


Weighted








AverageRemaining


Average








Exercise


AggregateRange
    of

Number


Contractual
    Life


Exercise
    Price


Aggregate


Number


Price
    Per


IntrinsicExercise
    Prices

Outstanding


(in
    Years)


Per
    Share


Intrinsic
    Value


Exercisable


Share


Value$0.12-$1.20


694



6.77


$
0.63


$
1,520



512


$
0.55


$
1,162$1.27-$1.27


1,000



5.67



1.27



1,550



1,000



1.27



1,550$1.35-$1.35


25



8.96



1.35



37



13



1.35



19$1.39-$1.39


1,764



6.25



1.39



2,523



50



1.39



72$1.42-$1.47


1,052



8.47



1.44



1,452



437



1.45



599$1.50-$1.57


936



7.64



1.55



1,189



585



1.55



743$1.67-$2.08


780



8.16



1.79



803



307



1.73



335$2.10-$2.63


834



8.23



2.43



325



295



2.33



145$2.82-$9.00


408



3.62



5.24







207



7.57



$11.00-$11.00


30



4.33



11.00







30



11.00



$0.12-$11.00


7,523



6.98


$
1.73


$
9,398



3,436


$
1.83


$
4,624    47




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  in-the-money
    SARS
    Outstanding


SARS
    ExercisableWeighted


Weighted








WeightedAverage


Average








AverageRemaining


Exercise


Aggregate





Exercise


AggregateRange
    of

Number


Contractual
    Life


Price
    Per


Intrinsic


Number


Price
    Per


IntrinsicPrices

Outstanding


(in
    Years)


Share


Value


Exercisable


Share


Value$0.50-$0.50


33



3.35


$
0.50


$
77



31


$
0.50


$
72$1.20-$1.20


108



8.60



1.20



175



38



1.20



62$1.38-$1.38


71



3.34



1.38



102



25



1.38



36$1.39-$1.39


60



3.08



1.39



86











$1.45-$1.45


1



6.08



1.45



1



1



1.45



1$1.57-$1.57


57



7.50



1.57



71



32



1.57



40$1.65-$1.65


15



5.03



1.65



18



15



1.65



18$1.67-$1.67


10



6.01



1.67



12



10



1.67



12$1.74-$1.74


113



4.67



1.74



122



2



1.74



2$2.10-$2.10






5.32



2.10











2.10



$0.50-$2.10


468



5.47


$
1.40


$
663



154


$
1.25


$
242     Valuation and
    Expense Information under SFAS 123(R)
    Total
    for theYear
    EndedMarch 31,2006Stock-based compensation expense
    included in cost of sales

$
79Research and development


766Sales and marketing


557General and administrative


649Stock-based compensation expense
    included in operating expense


1,880Stock-based compensation expense
    related to employee stock options, employee stock purchases and
    stock appreciation rights

$
2,051  48




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     For
    the Year Ended March 31, 2006UsingPrevious


SFAS 123(R)


AsAccounting


Adjustment


ReportedLoss from operations

$
(6,756
)

$
(2,051
)

$
(8,807
)Net loss

$
(6,354
)

$
(2,051
)

$
(8,405
)Basic and diluted net loss per
    share

$
(0.27
)

$
(0.08
)

$
(0.36
)Net cash used in operating
    activities

$
(8,449
)





$
(8,449
)Net cash provided by investing
    activities

$
12,797






$
12,797Net cash provided by financing
    activities

$
29






$
29   Valuation
    Assumptions for Stock Options
    Quarter
    Ended


Quarter
    Ended


Quarter
    Ended


Quarter
    EndedMarch 31,


December 31,


September 30,


June 30,2006


2005


2005


2005Stock Option PlanRisk-free Interest rate


4.6
%


4.2
%


3.6
%


3.8
%Expected life (in years)


3.1



3



3.2



5.4Volatility


101
%


90
%


90
%


91
%SARS PlanRisk-free Interest rate


4.6
%


4.2
%


3.6
%


3.8
%Expected life (in years)


1.6



1.9



2.3



2.4Volatility


101
%


90
%


90
%


91
%Employee Stock Purchase Plan
    (ESPP)Risk-free Interest rate


4.6
%






3.6
%


Expected life (in years)


0.5







0.05



Volatility


230
%






65
%


        49




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Pro Forma
    Information Under SFAS 123 for Periods Prior to Fiscal Year
    Ended March 31, 2006
    For
    the Year Ended March 31,2005


2004Net income (loss) as reported

$
(7,640
)

$
936Less: stock based compensation
    determined under SFAS 123


(1,071
)


(1,315
)Pro forma net income (loss)

$
(8,711
)

$
(379
)Basic and diluted net income
    (loss) per share:As reported

$
(0.33
)

$
0.04Pro forma

$
(0.38
)

$
(0.02
)   Deferred Stock
    Compensation
    Stock
    Repurchase Agreements
    401(k)
    Plan
   50




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 9.
    Certain
    Risks      For
    the Year Ended March 31,2006


2005


2004Customer A


13
%


*



*Customer B


13
%


10
%


*Customer C


11
%


*



*Customer D


10
%


*



*Customer E


*



34
%


12
%Customer F


*



17
%


15
%         Fiscal
    Year EndedMarch 31,


March 31,


March 31,Product
    Family

2006


2005


20045700 TrueView


21
%


7
%


5600 TrueView


44
%


1
%


5300 CyberPro


4
%


38
%


16
%5200 CyberPro


21
%


46
%


28
%5000 CyberPro


5
%


7
%


42
%2000 CyberPro










4
%NRE and other


5
%


1
%


10
%100
%


100
%


100
%   Concentration
    of Credit Risk
   51




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     March 31,2006


2005Customer A


24
%


*Customer B


17
%


27
%Customer C


11
%


20
%Customer D


11
%


*Customer E


*



16
%Customer F


*



27
%         Balance
    at


Charged
    toBeginning


Costs
    and





Balance
    atDescription

of
    Period


Expenses


Write-offs


End
    of PeriodYear Ended March 31, 2006Allowance for doubtful accounts

$
120


$
(110
)

$



$
10Year Ended March 31, 2005Allowance for doubtful accounts

$
3


$
117


$



$
120Year Ended March 31, 2004Allowance for doubtful accounts

$
50


$
15


$
62


$
3   Vendor
    Concentration
     52




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 10.
    Segment and
    Geographic Information        For
    the Year Ended March 31,2006


2005


2004United States


15
%


11
%


24
%Europe


*



34
%


24
%China


57
%


13
%


18
%Japan


17
%


20
%


15
%Korea


*



10
%


*       Note 11.
    Commitments and
    Contingencies  Stock
    Repurchase
    Litigation
       53




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Lease
    Commitments
          Notes


OperatingFiscal
    Year

Payable


Leases


Total2007

$
550


$
320


$
8702008


225



203



4282009






31



31Total minimum payments


775



554



1,329Less: Amount representing interest


(23
)Present value of minimum payments


752Less: Current portion


(541
)Long-term portion

$
211   Note 12.
    Quarterly
    Information (Unaudited)  Quarterly
    Financial Data:

4th
    Quarter


3rd
    Quarter


2nd
    Quarter


1st
    Quarter(In
    thousands, except per share amounts)Fiscal 2006:Revenues

$
2,760


$
2,710


$
1,755


$
1,108Gross margin

$
1,828


$
1,404


$
794


$
498Net (loss)

$
(1,764
)

$
(1,733
)

$
(2,421
)

$
(2,042
)Basic and diluted net (loss) per
    share

$
(0.07
)

$
(0.07
)

$
(0.10
)

$
(0.09
)  54




---



##### Table of Contents



TVIA, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4th
    Quarter


3rd
    Quarter


2nd
    Quarter


1st
    QuarterFiscal 2005:Revenues

$
1,046


$
1,090


$
617


$
528Gross margin

$
493


$
501


$
266


$
236Net (loss)

$
(2,937
)

$
(1,580
)

$
(1,598
)

$
(1,525
)Basic and diluted net (loss) per
    share

$
(0.13
)

$
(0.07
)

$
(0.07
)

$
(0.07
)     
    The Company recorded additional compensation expense of $445,000
    for cash settled stock appreciation rights that are issued to
    employees of the Companys foreign operations to correct
    errors in the calculation of the total liability under
    SFAS 123(R).
    The Company recorded a reduction of $377,000 to its bad debt
    reserve related to accounts receivable that were previously
    considered uncollectible but were subsequently collected.
    The Company recorded a reduction of $145,000 to its warranty
    reserve. The Company did not experience previously anticipated
    warranty costs and returns related to new product introductions. 55




---



##### Table of Contents



Item 9.
    Changes In and
    Disagreements with Accountants on Accounting and Financial
    Disclosure      regulation S-K,
  Regulation S-K.
  Item 9A.
    Controls and
    Procedures  Managements
    Report on Internal Control Over Financial Reporting
  Evaluation of disclosure controls and
    procedures. Rule 13a-15(e)
     56




---



##### Table of Contents



In connection with the preparation of this Annual Report on
    Form 10-K,
    an evaluation was performed under the supervision and with the
    participation of our management, of the effectiveness of the
    design and operation of our disclosure controls and procedures
    (as defined in
    Rule 13a-15(e)
    under the exchange act). In the course of this evaluation,
    management identified a material weakness in our
    Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
  Form 10-K
  Changes in
    internal controls
  Rule 13a-15(f)
  Item 9B.
    Other
    Information   PART III  Item 10.
    Directors and
    Executive Officers of the Registrant    Regulation S-K
 57




---



##### Table of Contents



.
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholders Matters    EQUITY
    COMPENSATION PLAN INFORMATION
    Number
    of Securities


Weighted-Average


Number
    of Securitiesto
    be Issued Upon


Exercise
    Price of


Remaining
    Available ForExercise
    of


Outstanding


Future
    Issuance UnderOutstanding
    Options,


Options,
    Warrants


Equity
    CompensationPlan
    Category

Warrant
    and Rights


and
    Rights


PlansEquity compensation plans
    approved by security holders


6,523,109
(1)

$
1.81



693,532Equity compensation plans not
    approved by security holders


1,000,000
(2)

$
1.27



Totals


7,523,109


$
1.73



693,532     (1)
    
    Includes shares to be issued upon exercise of outstanding
    options and warrants granted under the 1999 Plan and the 2000
    Plan. Options or warrants to purchase shares of the
    Companys Common Stock are no longer granted under the 1999
    Plan.(2)
    
    In November 2001, the Company issued two
    out-of-plan
    non-qualified options. The first grant is for
    800,000 shares of Common Stock, with an exercise price of
    $1.27, the fair market value on the date of grant. The option
    vests over a four year period. The second grant is for
    200,000 shares of Common Stock, with an exercise price of
    $1.27, the fair market value on the date of grant. If certain
    performance objectives are met, the second option will vest
    ratably over 48 months beginning on the last day of the 58




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##### Table of Contents



first month following the first anniversary of the vesting
    commencement date. If the performance objectives are not met,
    the option will vest in full on the sixth anniversary of the
    vesting commencement date.  Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits and
    Financial Statement Schedules  Documents filed as part of this report:
              Exhibits
  ExhibitNumber

Description
    of Document3(i)
.1

Amended and Restated Certificate
    of Incorporation (incorporated by reference to Exhibit 3.3
    to Amendment No. 8 to the Companys Registration
    Statement on
    Form S-1
    (File
    No. 333-34024)).3(ii)
.1

Amended and Restated Bylaws of
    Tvia, Inc. (incorporated by reference to the exhibit of the same
    number in the Registrants Form 10-Q for the Quarter ended
    June 30, 2005, as filed with the SEC on August 15,
    2005).4
.1

Form of Common Stock Certificate
    (incorporated by reference to Exhibit 4.1 to Amendment
    No. 2 to the Companys Registration Statement on
    Form S-1
    (File
    No. 333-34024)).4
.2

Form of Amended and Restated
    Registration Rights Agreement dated as of April 3, 2000
    (incorporated by reference to Exhibit 4.2 to the
    Companys Registration Statement on
    Form S-1
    (File
    No. 333-34024)).10
.1#

Amended and Restated 1999 Stock
    Incentive Plan of Tvia, Inc. (incorporated by reference to
    Exhibit 10.1 to Amendment No. 1 to the Companys
    Registration Statement on
    Form S-1
    (File
    No. 333-34024)).10
.2#

Amended and Restated 2000 Stock
    Incentive Plan of Tvia, Inc. (incorporated by reference to
    Exhibit 10.2 to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended March 31, 2002). 59




---



##### Table of Contents



ExhibitNumber

Description
    of Document10
.3#

Amended and Restated 2000 Employee
    Stock Purchase Plan of Tvia, Inc. (incorporated by reference to
    Exhibit 10.3 to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended March 31, 2004 (File
    No. 000-30539)).10
.4

Form of Directors and
    Officers Indemnification Agreement (incorporated by
    reference to Exhibit 10.4 to Amendment No. 3 to the
    Companys Registration Statement on
    Form S-1
    (File
    No. 333-34024)).10
.5

UMC Wafer Foundry Standard Terms
    and Conditions (incorporated by reference to Exhibit 10.6
    to Amendment No. 1 to the Companys Registration
    Statement on
    Form S-1
    (File
    No. 333-34024)).10
.6#

Form of Executive Severance
    Agreement (incorporated by reference to Exhibit 10.9 to
    Amendment No. 2 to the Companys Registration
    Statement on
    Form S-1
    (File
    No. 333-34024)).10
.7#

Confidential Severance Agreement
    and Change Status Release dated March 11, 2005 by and
    between the Company and Kenny Liu (incorporated by reference to
    Form 8-K,
    filed March 15, 2005) (File
    No. 0-30539)10
.8

Multi-Tenant Single-Building
    Modified-Net Lease dated October 27, 1995 between
    Koll/Intereal Bay Area and Integraphics System, Inc.
    (incorporated by reference to Exhibit 10.13 to the
    Companys Registration Statement on
    Form S-1
    (File
    No. 333-34024)).10
.9

First Amendment to Lease Agreement
    dated January 15, 1999 between Koll/Intereal Bay Area and
    IGS Technologies, Inc. (incorporated by reference to
    Exhibit 10.14 to the Companys Registration Statement
    on
    Form S-1
    (File
    No. 333-34024)).10
.10

Second Amendment to Lease
    Agreement dated May 6, 1999 between Koll/Intereal Bay Area
    and IGS Technologies, Inc. (incorporated by reference to
    Exhibit 10.15 to the Companys Registration Statement
    on
    Form S-1
    (File
    No. 333-34024)).10
.11

Third Amendment to Lease Agreement
    dated June 27, 2003 between Koll/Intereal Bay Area and IGS
    Technologies, Inc. (incorporated by reference to
    Exhibit 10.15 to the Companys registration statement
    on Form S-1 (File No. 333-34024)).10
.12

Fourth Amendment to Lease
    Agreement dated June 7, 2004 between Koll/Intereal Bay Area
    and IGS Technologies, Inc. (incorporated by reference to
    Exhibit 10.15 to the Companys registration statement
    on Form S-1 (File No. 333-34024)).10
.13

Fifth Amendment to Lease Agreement
    dated May 17, 2005 between Koll/Intereal Bay Area and IGS
    Technologies, Inc. (incorporated by reference to
    Exhibit 10.15 to the Companys registration statement
    on Form S-1 (File No. 333-34024)).10
.14#

Option Agreement between the
    Company and Eli Porat dated November 30, 2001 (incorporated
    by reference to Exhibit 10.18 to the Companys
    Quarterly Report on
    Form 10-Q
    for the period ended December 31, 2001).10
.15#

Option agreement between the
    Company and Eli Porat dated November 30, 2001 (incorporated
    by reference to Exhibit 10.19 to the Companys
    Quarterly Report on
    Form 10-Q
    for the period ended December 31, 2001).10
.16#

Agreement and Release of Claims by
    and between the Company and Jack Guedj dated January 31,
    2002 (incorporated by reference to Exhibit 10.21 to the
    Companys Annual Report on
    Form 10-K
    for the fiscal year ended March 31, 2002).21
.1

Subsidiaries of the Company
    (incorporated by reference to Exhibit 21.1 to the
    Companys Annual Report on
    Form 10-K
    for the fiscal year ended March 31, 2003).23
.1

Consent of BDO Seidman, LLP,
    Independent Registered Public Accounting Firm.23
.2

Consent of PricewaterhouseCoopers
    LLP, Independent Registered Public Accounting Firm.24
.1

Power of Attorney (see
    page 61 of this
    Form 10-K).31
.1

Rule 13a-14(a)
    certification of Chief Executive Officer31
.2

Rule 13a-14(a)
    certification of Chief Financial Officer 60




---



##### Table of Contents



ExhibitNumber

Description
    of Document32
.1**

Statement of Chief Executive
    Officer under Section 906 of the Sarbanes-Oxley Act of 2002
    (18 U.S.C.ss.1350).32
.2**

Statement of Chief Financial
    Officer under Section 906 of the Sarbanes-Oxley Act of 2002
    (18 U.S.C.ss.1350).   **
    In accordance with Item 601(b)(32)(ii) of
    Regulation S-K
    and SEC Release Nos.
    33-8238 and
    34-47986, Final Rule: Managements Reports on Internal
    Control Over Financial Reporting and Certification of Disclosure
    in Exchange Act Periodic Reports, the certifications furnished
    in Exhibits 32.1 and 32.2 hereto are deemed to accompany
    this
    Form 10-K
    and will not be deemed filed for purpose of
    Section 18 of the Exchange Act. Such certifications will
    not be deemed to be incorporated by reference into any filing
    under the Securities Act or the Exchange Act, except to the
    extent that the registrant specifically incorporates it by
    reference.    #
    
    Indicates management contact or compensatory plan or arrangement.
    
    Confidential treatment has been requested or granted with
    respect to certain portions of these agreements.  Financial Statement Schedules.
    SIGNATURES
      By:
    /s/  ELI
    PORAT       POWER OF
    ATTORNEY
  attorneys-in-fact, Form 10-K attorneys-in-fact
 61




---



##### Table of Contents



Name

Title

Date/s/  ELI
    PORATEli
    Porat

Chairman of the Board, Chief
    Executive Officer and President 
    (Principal Executive Officer)

June 27, 2006/s/  DIANE
    BJORKSTROMDiane
    Bjorkstrom

Chief Financial Officer (Principal
    Financial and Accounting Officer)

June 27, 2006/s/  KENNY
    LIUKenny
    Liu

Director

June 27, 2006/s/  YVES
    FAROUDJAYves
    Faroudja

Director

June 27, 2006/s/  JAMES
    BUNKERJames
    Bunker

Director

June 27, 2006/s/  MARK
    MANGIOLAMark
    Mangiola

Director

June 27, 2006/s/  R.
    DAVID DICIOCCIOR.
    David Dicioccio

Director

June 27, 2006  62




---



##### Table of Contents



Exhibit Index
  ExhibitNumber

Description
    of Document3(i)
.1

Amended and Restated Certificate
    of Incorporation (incorporated by reference to Exhibit 3.3
    to Amendment No. 8 to the Companys Registration
    Statement on
    Form S-1
    (File
    No. 333-34024)).3(ii)
.1

Amended and Restated Bylaws of
    Tvia, Inc. (incorporated by reference to the exhibit of the same
    number in the Registrants
    Form 10-Q
    for the quarter ended June 30, 2005, as filed with the SEC
    on August 15, 2005).4
.1

Form of Common Stock Certificate
    (incorporated by reference to Exhibit 4.1 to Amendment
    No. 2 to the Companys Registration Statement on
    Form S-1
    (File
    No. 333-34024)).4
.2

Form of Amended and Restated
    Registration Rights Agreement dated as of April 3, 2000
    (incorporated by reference to Exhibit 4.2 to the
    Companys Registration Statement on
    Form S-1
    (File
    No. 333-34024)).10
.1#

Amended and Restated 1999 Stock
    Incentive Plan of Tvia, Inc. (incorporated by reference to
    Exhibit 10.1 to Amendment No. 1 to the Companys
    Registration Statement on
    Form S-1
    (File
    No. 333-34024)).10
.2#

Amended and Restated 2000 Stock
    Incentive Plan of Tvia, Inc. (incorporated by reference to
    Exhibit 10.2 to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended March 31, 2002).10
.3#

Amended and Restated 2000 Employee
    Stock Purchase Plan of Tvia, Inc. (incorporated by reference to
    Exhibit 10.3 to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended March 31, 2004 (File
    No. 000-30539)).10
.4

Form of Directors and
    Officers Indemnification Agreement (incorporated by
    reference to Exhibit 10.4 to Amendment No. 3 to the
    Companys Registration Statement on
    Form S-1
    (File
    No. 333-34024)).10
.5

UMC Wafer Foundry Standard Terms
    and Conditions (incorporated by reference to Exhibit 10.6
    to Amendment No. 1 to the Companys Registration
    Statement on
    Form S-1
    (File
    No. 333-34024)).10
.6#

Form of Executive Severance
    Agreement (incorporated by reference to Exhibit 10.9 to
    Amendment No. 2 to the Companys Registration
    Statement on
    Form S-1
    (File
    No. 333-34024)).10
.7#

Confidential Severance Agreement
    and Change Status Release dated March 11, 2005 by and
    between the Company and Kenny Liu (incorporated by reference to
    Form 8-K,
    filed March 15, 2005) (File
    No. 0-30539)10
.8

Multi-Tenant Single-Building
    Modified-Net Lease dated October 27, 1995 between
    Koll/Intereal Bay Area and Integraphics System, Inc.
    (incorporated by reference to Exhibit 10.13 to the
    Companys Registration Statement on
    Form S-1
    (File
    No. 333-34024)).10
.9

First Amendment to Lease Agreement
    dated January 15, 1999 between Koll/Intereal Bay Area and
    IGS Technologies, Inc. (incorporated by reference to
    Exhibit 10.14 to the Companys Registration Statement
    on
    Form S-1
    (File
    No. 333-34024)).10
.10

Second Amendment to Lease
    Agreement dated May 6, 1999 between Koll/Intereal Bay Area
    and IGS Technologies, Inc. (incorporated by reference to
    Exhibit 10.15 to the Companys Registration Statement
    on
    Form S-1
    (File
    No. 333-34024)).10
.11

Third Amendment to Lease Agreement
    dated June 27, 2003 between Koll/Intereal Bay Area and IGS
    Technologies, Inc. (incorporated by reference to
    Exhibit 10.15 to the Companys registration statement
    on Form S-1 (File No. 333-34024)).10
.12

Fourth Amendment to Lease
    Agreement dated June 7, 2004 between Koll/Intereal Bay Area
    and IGS Technologies, Inc. (incorporated by reference to
    Exhibit 10.15 to the Companys registration statement
    on Form S-1 (File No. 333-34024)).10
.13

Fifth Amendment to Lease Agreement
    dated May 17, 2005 between Koll/Intereal Bay Area and IGS
    Technologies, Inc. (incorporated by reference to
    Exhibit 10.15 to the Companys Registration Statement
    on
    Form S-1
    (File
    No. 333-34024)).10
.14#

Option Agreement between the
    Company and Eli Porat dated November 30, 2001 (incorporated
    by reference to Exhibit 10.18 to the Companys
    Quarterly Report on
    Form 10-Q
    for the period ended December 31, 2001).




---



##### Table of Contents



ExhibitNumber

Description
    of Document10
.15#

Option agreement between the
    Company and Eli Porat dated November 30, 2001 (incorporated
    by reference to Exhibit 10.19 to the Companys
    Quarterly Report on
    Form 10-Q
    for the period ended December 31, 2001).10
.16#

Agreement and Release of Claims by
    and between the Company and Jack Guedj dated January 31,
    2002 (incorporated by reference to Exhibit 10.21 to the
    Companys Annual Report on
    Form 10-K
    for the fiscal year ended March 31, 2002).21
.1

Subsidiaries of the Company
    (incorporated by reference to Exhibit 21.1 to the
    Companys Annual Report on
    Form 10-K
    for the fiscal year ended March 31, 2005).23
.1

Consent of BDO Seidman, LLP,
    Independent Registered Public Accounting Firm.23
.2

Consent of PricewaterhouseCoopers
    LLP, Independent Registered Public Accounting Firm.24
.1

Power of Attorney (see
    page 61 of this
    Form 10-K).31
.1

Rule 13a-14(a)
    certification of Chief Executive Officer31
.2

Rule 13a-14(a)
    certification of Chief Financial Officer32
.1**

Statement of Chief Executive
    Officer under Section 906 of the Sarbanes-Oxley Act of 2002
    (18 U.S.C.ss.1350).32
.2**

Statement of Chief Financial
    Officer under Section 906 of the Sarbanes-Oxley Act of 2002
    (18 U.S.C.ss.1350).   **
    In accordance with Item 601(b)(32)(ii) of
    Regulation S-K
    and SEC Release Nos.
    33-8238 and
    34-47986, Final Rule: Managements Reports on Internal
    Control Over Financial Reporting and Certification of Disclosure
    in Exchange Act Periodic Reports, the certifications furnished
    in Exhibits 32.1 and 32.2 hereto are deemed to accompany
    this
    Form 10-K
    and will not be deemed filed for purpose of
    Section 18 of the Exchange Act. Such certifications will
    not be deemed to be incorporated by reference into any filing
    under the Securities Act or the Exchange Act, except to the
    extent that the registrant specifically incorporates it by
    reference.    #
    
    Indicates management contact or compensatory plan or arrangement.
    
    Confidential treatment has been requested or granted with
    respect to certain portions of these agreements.