Spatialight Receives Purchase Agreement From DeoCom Worth $27 Million

Production Commences of LCoS Microdisplays for Head Mounted Display Units 


NOVATO, Calif., March 16  /PRNewswire-FirstCall/ -- SpatiaLight, Inc. (NASDAQ:HDTV), a leading developer and manufacturer of ultra high-resolution Liquid Crystal on Silicon (LCoS) microdisplays, announced today that it has entered into a Purchase Agreement with DeoCom of South Korea.  The agreement was consummated on March 9, 2007, and provides the terms and conditions under which SpatiaLight will supply DeoCom with LCoS imagers and associated products for Head Mounted Display applications over a period of three years.  The estimated value of product expected to be sold by SpatiaLight under this agreement, given DeoCom's forecast, is over $27 Million. SpatiaLight has received a firm purchase order for the first 1,000 units to be delivered under this agreement and has commenced production of LCoS microdisplays for use in DeoCom's Head Mounted Display (HMD) units to fulfill this order.

Dr. Michael Jin, Chief Technology Officer of SpatiaLight, stated, "Technically, this product is similar to our core product, the T3, but with some modifications to the cell fabrication that allow for a faster response time.  Several small drive circuitry and firmware modifications enable single panel operation, as well In addition to single panel designs, DeoCom also intends to manufacture the 'glasses' in a dual panel, dual channel configuration.  This '3-D' HMD is capable of stereoscopic operation, and will therefore support some very exciting 3D applications. This is a new, intriguing and growing market segment."

David Hakala, SpatiaLight Chairman and Chief Executive Officer, said, "We are very pleased to have entered into this agreement that grew out of our memorandum of understanding signed in January.  This marks an important point in our drive to diversify our customer base. To our knowledge, this is the first and only 1920 x 1080p near-to-eye product to be announced in the marketplace, let alone manufactured.  We believe that this will become an important product segment for business travelers, gamers and anyone who wants total immersion while using video-based equipment.  We anticipate that DeoCom will demonstrate this product in the near future to well known Tier 1 US companies in the gaming, personal computer and personal mobile electronics industries. We believe the market segments addressed by this product have tremendous growth potential and believe this is only the beginning of opportunities for this category of product."

About DeoCom

DeoCom, founded in Korea in 2000, is a developer and manufacturer of innovative near-to-eye (NTE) display products and is focused on selling near-to-eye high resolution display products into the consumer and professional markets.  DeoCom introduced its first model of head mounted NTE displays in Korea in July of 2001 and continues to be a leader in the industry.

About SpatiaLight

SpatiaLight, Inc., founded in 1989, manufactures high-resolution LCoS microdisplays for use in high-definition televisions and other display applications.  The company manufactures its products at its production facility in South Korea.  SpatiaLight is committed to developing microdisplay technologies that will be the standard for the next generation of high definition televisions and to providing OEMs with the most cost effective, high-resolution microdisplays in the industry.

For more information about SpatiaLight, please visit the Company's website at:  http://www.spatialight.com/.

Safe Harbor Statement

This news release includes forward-looking statements that reflect SpatiaLight's current expectations about its future results, performance, prospects and opportunities.  SpatiaLight has tried to identify these forward- looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available to SpatiaLight and are subject to a number of risks, uncertainties and other factors that could cause SpatiaLight's actual results, performance, prospects or opportunities in the remainder of 2007 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements.  These risks and uncertainties are outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its most recent reports on Form 10-Q and 10-K. 

DATASOURCE: SpatiaLight, Inc.



CONTACT:  Michael Porter or Marlon Nurse, [phone], or

, both of Porter, LeVay and Rose, Inc., for SpatiaLight,

Inc.



Web site:  http://www.spatialight.com/

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