(FORTUNE Small Business) – Imagine you are gazing at a soaring hawk on a flat screen that seems nine feet high and provides crystal-clear resolution. Imagine, too, that you're viewing this dazzling image through a viewfinder about the size of a postage stamp. Science fiction? A gimmick that will go the way of 3-D movie glasses? Not at all. A small company called eMagin has figured out how to use a new technology called OLED to make tiny videoscreens that trick your eyes into thinking you're looking at something both large and real.

OLED stands for "organic light-emitting diode" and should not be confused with the LCD screens used in many of today's flat-panel TVs. Giant corporations such as Kodak, Norelco, Pioneer, and Samsung are already using OLED screens, which deliver outrageously vivid images that are sharper and brighter than today's TVs, computer monitors, and cellphone displays. Kodak uses OLED screens as viewfinders in one of its high-end digital cameras. Pioneer uses them for the faceplates of some of its car stereos. There's even a $250 Norelco electric shaver with an OLED battery-level indicator, which was featured in the James Bond film Die Another Day. "Right now having an OLED screen is a product differentiator," says Paul Semenza, vice president of iSuppli, a market research firm based in El Segundo, Calif. "These screens look really cool, and companies are hoping to generate buzz."

The annual market for OLEDs has erupted, going from near zero three years ago to roughly $400 million today. According to Semenza, OLED screens will generate $2.4 billion in yearly sales by 2010. A challenge, however, remains. So far OLED technology makes sense only for small screens, such as camera viewfinders. It is too expensive for, say, large-screen TVs.

Tiny eMagin of Hopewell Junction, N.Y., thinks it has the answer. It is the only company selling what are known as near-eye versions of OLED screens. Near-eye means that a tiny OLED screen is placed right next to your eyeball, and thanks to a magnifying lens, you feel as if you're looking at a large screen with vivid images. eMagin's screens are featured in dozens of products. Firefighters depend on thermal-imaging cameras with eMagin's OLED displays to find their way through the haze and smoke of burning buildings. The U.S. Army uses eMagin screens in combat to view detailed reconnaissance photos. The company's newest and most impressive product is the Z800 visor for playing 3-D videogames such as Painkiller.

This young company's financials aren't as pretty as its pictures. eMagin posted a $12.7 million loss against $3.6 million in revenues for 2004. Its stock now trades at 97 cents, down from a 52-week high of $1.35. And the firm has its skeptics. Says Barry Young of DisplaySearch, an Austin research firm specializing in screens: "Screens hanging down in people's faces are never going to find broad market acceptance." Nevertheless, most industry experts believe that CEO Gary Jones has a promising plan for making the company profitable. eMagin holds valuable patents and has a strong technological lead. "This is cutting-edge stuff," says J.P. Mark, who is president of Farmhouse Equity Research in Newport, R.I., and doesn't hold the stock. "It will take years for anyone else to get to where it is."