Emphasis for 2007 to Be New Products and Customer Diversification

NOVATO, Calif., March 16 /PRNewswire-FirstCall/ -- SpatiaLight, Inc. (Nasdaq: HDTV), a developer and manufacturer of ultra high-resolution microdisplays, today reported its year-end financial results for 2006.

For the year ended December 31, 2006, the Company reported revenues of $474,004, as compared to $238,000 in revenues achieved in 2005. Net loss for the 2006 fiscal year was $18,967,000, or a loss of $0.47 per basic and diluted share, versus a net loss of $14,025,000, or a loss of $0.39 per share for the year ended December 31, 2005.

'This past year was an extremely challenging one for our Company. We successfully resolved the technical and quality issues in meeting the numerous specification change requests by our primary customer LG Electronics (LGE), and demonstrated our capability to ramp production and supply LGE's needs and requirements. Unfortunately, as described in more detail in our recently filed Form 10-K for fiscal year 2006, we were recently informed by LGE of their intention to stop the manufacturing of all rear projection televisions,' said Dave Hakala, SpatiaLight's Chairman and Chief Executive Officer. He continued, 'the fact is that we have focused too much on LGE as a customer, and on LCoS imagers for high definition rear projection television (RPTV) as our only product. We started to address these issues some time ago and are now in the process of implementing a new direction for the Company that builds upon our key strengths and utilizes our key assets. Our focus for 2007 will be in developing and bringing to market new products in the Near-To Eye category, such as Head Mounted Displays in cooperation with DeoCom of Korea, as well as micro-projector products which we are co-developing with SI InfoComm and SCRAM Technologies. We believe both of these new product categories have substantial growth potential. In the projection television product category, we are continuing to look for opportunities both in terms of new customers in China and elsewhere, as well as with new products such as the LED/LCoS light engine being co-developed by SpatiaLight and Foreal Spectrum. We expect that this new class of product, using long-lived solid state light sources with improved color gamut and low power consumption, will be successful and well accepted in the marketplace.'

The Company will hold a conference call and webcast to discuss its 2006 results and outlook for 2007 at 8:30 a.m. EDT (5:30 a.m.