##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
       Form 10-Q/A
   Amendment No. 1
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    June 30, 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)

(I.R.S. employer
    identification number)4001 Burton Drive,
    Santa Clara, California

95054(Address of Principal Executive
    Offices)

(Zip Code)   Registrants telephone number, including area code:
 (408) 982-8588
      þ o
  Rule 12b-2
 o o þ
  Rule 12b-2 o þ




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TABLE OF CONTENTS  PART I: FINANCIAL INFORMATIONITEM 1: FINANCIAL STATEMENTSTVIA, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETSTVIA, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSTVIA, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 4: CONTROLS AND PROCEDURESPART II: OTHER INFORMATIONItem 1A: Risk FactorsSIGNATURESEXHIBIT INDEXEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2    Table of Contents   EXPLANATORY
    NOTE
  Form 10-Q/A Form 10-Q
  Form 8-K
  Form 10-Q/A. Form 10-Q/A
    
    Item 1. Financial Statements
    Item 2. Managements Discussion and Analysis of
    Financial Condition and Results of Operations
    Item 4. Controls and Procedures    
    Item 1A. Risk Factors   i




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##### Table of Contents



PART I:
    FINANCIAL INFORMATION
 
  ITEM 1:
    FINANCIAL
    STATEMENTS 
  TVIA,
    INC. AND SUBSIDIARY
  CONDENSED
    CONSOLIDATED BALANCE SHEETS
  June 30,


March 31,2006


2006Restated


RestatedASSETSCurrent assets:Cash and cash equivalents

$
4,767


$
8,455Investments


3,995



4,502Accounts receivable, net


7,436



3,662Inventories, net


2,058



2,601Deferred cost of goods sold


3,751



1,284Other current assets and prepaid
    expenses


656



902Total current assets


22,663



21,406Property and equipment, net


1,244



928Other assets


303



303Total assets

$
24,210


$
22,637LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
778


$
802Accrued liabilities and other


1,758



2,327Short-term portion of notes payable


462



541Deferred revenue


6,732



2,733Cash settled stock appreciation
    rights


904



566Total current liabilities


10,634



6,969Long-term portion of notes payable






211Total liabilities


10,634



7,180Commitments and contingencies
    (Note 8)Stockholders equityCommon stock, $0.001 par
    value: 125,000 shares authorized; and 23,916 and
    23,866 shares outstanding, respectively


24



24Additional
    paid-in-capital


95,923



95,395Accumulated other comprehensive
    income


36



28Accumulated deficit


(81,657
)


(79,240
)Treasury stock: 204,400 shares


(750
)


(750
)Total stockholders equity


13,576



15,457Total liabilities and
    stockholders equity

$
24,210


$
22,637    1




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  CONDENSED
    CONSOLIDATED STATEMENTS OF OPERATIONS
  Three MonthsEndedJune 30,2006


2005Restated(In thousands, except per share amounts)(Unaudited)Revenues

$
1,072


$
1,108Cost of revenues


50



610Gross profit


1,022



498Operating expenses:Research and development


1,551



1,282Sales and marketing


997



542General and administrative


1,124



814Total operating expenses


3,672



2,638Operating loss


(2,650
)


(2,140
)Cumulative effect for forfeiture
    rate change


121



Other income, net


112



98Net loss

$
(2,417
)

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

$
(0.10
)

$
(0.09
)Shares used in computing basic and
    diluted net loss per share


23,901



23,191    2




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS
  Three MonthsEndedJune 30,2006


2005Restated(In thousands)(UnauditedCash Flows from Operating
    Activities:Net (loss)

$
(2,417
)

$
(2,042
)Adjustments to reconcile net loss
    to net cash used in operating activities:Depreciation and Amortization


253



332Net Gain on the Sale of Assets


2



Change in inventory reserve


(31
)


64Stock compensation
    expense  equity plans


477



280Changes in operating assets and
    liabilities:Accounts receivable


(3,774
)


(426
)Inventories


574



(346
)Deferred cost of sales sold


(2,467
)


Other current assets and prepaid
    expenses


150



(31
)Other long-term assets


(47
)Accounts payable


(24
)


130Accrued liabilities and others


(569
)


(573
)Deferred revenue


3,999



Cash settled stock appreciation
    rights


338



Net cash used in operating
    activities


(3,536
)


(2,612
)Cash Flows from Investing
    Activities:Purchase of
    available-for-sale
    investments


(2,483
)


(2,240
)Proceeds from sale of
    available-for-sale
    investments


3,000



6,650Purchase of property and equipment


(435
)


(19
)Net cash provided by investing
    activities


82



4,391Cash Flows from Financing
    Activities:Repayments of notes payable


(284
)


(115
)Proceeds from issuance of common
    stock


50



107Net cash used in financing
    activities


(234
)


(8
)Net increase (decrease) in cash
    and cash equivalents


(3,688
)


1,771Cash and cash equivalents at
    beginning of period


8,455



4,078Cash and cash equivalents at end
    of period

$
4,767


$
5,849Supplemental Cash Flow Information:Interest paid

$
16


$
10    3




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)
  NOTE 1.
    INTERIM
    STATEMENTS    Form 10-K
  NOTE 2.
    SUMMARY
    OF SIGNIFICANT POLICIES  Use of
    Estimates
      Principles
    of Consolidation
    Cash
    and Cash Equivalents and Short-Term Investments
  available-for-sale
  Allowance
    for Sales Returns and Doubtful Accounts
   4




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
    Inventories
  first-in,
  Property
    and Equipment
    Impairment
    of Long-Lived Assets
    Revenue
    Recognition
  Revenues.
  End Users Sales:
       5




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Software
    Development Costs
    Research
    and Development Expenses
    Income
    Taxes
  Accounting for Income
    Taxes.
  Comprehensive
    Income (Loss)
  available-for-sale
  For the Three Months Ended June 302006


2005RestatedNet loss

$
(2,417
)

$
(2,042
)Change in unrealized gain on
    available-for-sale-investments


8



44Comprehensive loss

$
(2,409
)

$
(1,998
)   Recent
    Accounting Pronouncements
  Accounting for Uncertainty in Income
    Taxes: an interpretation of FASB Statement No. 109. Accounting
    for Income Taxes
  Foreign
    Currency Translation
   6




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
    Net
    Loss Per Share
    For the Three Months Ended June 302006


2005RestatedNet loss

$
(2,417
)

$
(2,042
)Weighted average shares used in
    computing basic and diluted net loss per share


23,901



23,191Basic and diluted net loss per
    share

$
(0.10
)

$
(0.09
)Options and warrants excluded from
    the computation of diluted net loss per share


7,437



6,833     Note 3.
    Stock and
    Share-Based Payments  Share-Based
    Compensation
     7




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  85Note 4.
    Balance
    Sheet Components (in thousands)  June 30,


March 31,2006


2006Restated


RestatedAccounts receivable,
    netTrade receivables

$
7,446


$
3,672Less: Allowance for doubtful
    accounts


(10
)


(10
)$
7,436


$
3,662Inventories (net of
    reserves):Work in process

$
1,621


$
1,716Finished goods


437



885$
2,058


$
2,601Property and equipment,
    net:Furniture and fixtures

$
188


$
175Machinery and equipment


3,465



3,123Software


3,019



2,9436,672



6,241Less: Accumulated depreciation and
    amortization


(5,428
)


(5,313
)$
1,244


$
928For the three months ended
    June 30, 2006 and 2005, depreciation expense was $115 and
    $212, respectively.Accrued liabilities and
    others:Accrued compensation costs

$
857


$
1,203Accrued audit and legal


148



193Accrued inventory


454



777Other


299



154$
1,758


$
2,733   Note 5.
    Short-term
    Investments    Mature Less Than 12 MonthsCost


Aggregate


UnrealizedValue


Fair Value


Gain/(Loss)(In thousands)As of June 30,
    2006U.S. Corporate and Bank Debt

$
3,996


$
3,995


$
(1
)As of March 31,
    2006U.S. Corporate and Bank Debt

$
4,505


$
4,502


$
(3
)  8




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Note 6.
    Certain
    Risks    Significant
    customers
    For the Three Months EndedJune 30,2006


2005RestatedCustomer A


19
%


*Customer B


19
%


*Customer C


17
%


*Customer D


14
%


*Customer E


*



33
%Customer F


*



14
%Customer G


*



12
%       Revenue
    by product
    For the Three Months EndedJune 30,Product Family

2006


2005Restated5700 TrueView


14
%


15
%5600 TrueView


37
%


30
%5300 CyberPro






3
%5200 CyberPro


38
%


34
%5000 CyberPro


3
%


17
%NRE and other


8
%


1
%100
%


100
%   Concentration
    of Credit Risk
   9




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
    June 30,

March 31,2006

2006Customer A


42
%


*Customer B


11
%


17
%Customer C


10
%


24
%Customer D


*



11
%Customer E


*



11
%       Vendor
    Concentration
      Note 7.
    Segment
    and Geographic Information     10




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
    For the Three Months EndedJune 30,2006

2005RestatedChina


28
%


54
%Europe


20
%


*Japan


19
%


*United States


27
%


20
%Taiwan


*



12
%       Note 8.
    Commitments
    and Contingencies  Stock
    Repurchase
      Litigation
    and/or
  Lease
    Commitments
     11




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
      Notes


OperatingFiscal Year

Payable


Leases


Total2007

$
250


$
249


$
4992008


225



206



4312009






32



32Total minimum payments


475


$
487


$
962Less: Amount representing interest


(13
)Present value of minimum payments


462Less: Current portion


(462
)Long-term portion

$
   Note 9.
    Restatement  Form 8-K
 12




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Form 10-Q
  Three Months Ended June 30, 2006As PreviouslyReported


Adjustments


As Restated(In thousands, except per share amounts)Revenues

$
5,071


$
(3,999
)(1)

$
1,072Cost of revenues


2,518



(2,468
)(2)


50Gross profit


2,553



(1,531
)


1,022Operating expenses:Research and development


1,551







1,551Sales and marketing


1,397



(400
)(3)


997General and administrative


1,124







1,124Total operating expenses


4,072



(400
)


3,672Operating loss


(1,519
)


(1,131
)


(2,650
)Cumulative effect for forfeiture
    rate change


121







121Other income, net


112







112Net loss

$
(1,286
)

$
(1,131
)

$
(2,417
)Basic and diluted net loss per
    share:

$
(0.05
)

$
(0.05
)

$
(0.10
)Shares used in computing basic and
    diluted net loss


23,901



23,901



23,901   13




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##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  June 30, 2006CumulativeAs


Effect of Prior


Currentpreviously


Period


Quarter


AsReported


Adjustments


Adjustments


Restated(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
4,767










$
4,767Short-term investments


3,995











3,995Accounts receivable, net


7,436











7,436Inventories


2,058











2,058Deferred cost of goods sold






1,284



2,467
(2)


3,751Other current assets and prepaid
    expenses


656











656Total current assets


18,912



1,284



2,467



22,663Property and equipment, net


1,244











1,244Other assets


303











303Total assets

$
20,459


$
1,284


$
2,467


$
24,210LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
778










$
778Accrued liabilities and other


2,431



(273
)


(400
)(3)


1,758Short-term portion of notes payable


462











462Deferred revenue






2,733



3,999
(1)


6,732Cash settled stock appreciation
    rights


904











904Total current liabilities


4,575



2,460



3,599



10,634Long-term portion of notes payable














Total liabilities


4,575



2,460



3,599



10,634Commitments and contingenciesStockholders equityCommon stock, $0.001 par
    value: 125,000 shares authorized; 23,916 and
    23,866 shares outstanding, respectively


24











24Additional
    paid-in-capital


95,923











95,923Accumulated comprehensive income
    (loss)


36











36Accumulated deficit


(79,349
)


(1,176
)


(1,132
)


(81,657
)Treasury stock


(750
)










(750
)Total stockholders equity


15,884



(1,176
)


(1,132
)


13,576Total liabilities and
    stockholders equity

$
20,459


$
1,284


$
2,467


$
24,210     (1)
    
    Reflects the deferral of revenue(2)
    
    Reflects the COGS adjustment related to (1) above(3)
    
    Reflects the adjustment of accrued sales commissions as a result
    of (1) above 14




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##### Table of Contents



ITEM 2:
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-Q Form 10-K/A
  Form 10-Q Form 10-Q 10-K/A
  Restatement
  Form 8-K
  Overview
     15




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##### Table of Contents



Critical
    Accounting Policies and Estimates
  Form 10-K/A
 16




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##### Table of Contents



Results
    of Operations
    For the Three Months EndedJune 30,2006


2005RestatedRevenues


100
%


100
%Cost of revenues


5
%


55
%Gross profit


95
%


45
%Operating expenses:Research and development


144
%


116
%Sales and marketing


93
%


49
%General and administrative


105
%


73
%Total operating expenses


342
%


238
%Operating loss


(247
)%


(193
)%Cumulative effect for forfeiture
    rate change


11
%


Interest income


10
%


9
%Net loss


(226
)%


(184
)%   Revenues.
  Gross margin.
  Research and development.
  Sales and marketing.
 17




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##### Table of Contents



General and administrative.
  Cumulative effect for forfeiture rate
    change.
  Other income, net. .
  Provision for income tax.
  Liquidity
    and Capital Resources
           18




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##### Table of Contents



Purchase
    of Equity Securities by the Issuer and Affiliated
    Purchasers
      Off-Balance
    Sheet Arrangements
        Less Than





More ThanContractual Obligations

Total

1 Year

1-3 Years

3-5 Years

5 YearsNotes Payable

$
475


$
250


$
225


$



$
Operating Lease Obligations


487



249



238







Total

$
962


$
499


$
463


$



$
    
  ITEM 4:  CONTROLS
    AND PROCEDURES
  Evaluation of disclosure controls and
    procedures. Rule 13a-15(e)
 19




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##### Table of Contents



Form 10-K Rule 13a-15(e)
      Form 8-K
      Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
  Form 10-Q
 20




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##### Table of Contents



Changes
    in internal controls
  Rule 13a-15(f)
 
  PART II:
    OTHER INFORMATION
 
  Item 1A:  Risk
    Factors
  Form 10-K/A Form 10-K/A.
 21




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##### Table of Contents



SIGNATURES
      By:
    /s/  Keith
    Yee        22




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber3(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 Exhibit 3(ii)1 to
    the Companys Annual Report on
    Form 10-K
    for the fiscal year ended March 31, 2006 (File
    No. 000-30539)).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)).31
.1

Certification of Principal
    Executive Officer Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.31
.2

Certification of Principal
    Financial Officer Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32
.1

Certification of Principal
    Executive Officer Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.**32
.2

Certification of Principal
    Financial Officer Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.**     **
    
    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-Q
    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.