<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities and Exchange
Act of 1934.
For the quarterly period ended June 30, 1998
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ________________ to _________________
Commission File Number 000-19828
SpatiaLight, Inc.
----------------------
(Exact name of small business issuer as specified in its charter)
New York 16-1363082
-------------- -----------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
8-C Commercial Blvd., Novato, CA 94949-6125
----------------------------------------------------------------
(Address of principal executive offices)
(415) 883-1693
--------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 11,282,501 shares of common
stock as of August 5, 1998.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
SPATIALIGHT, INC. AND SUBSIDIARY
Quarterly Report on Form 10-QSB
For the Quarter Ended June 30, 1998
Table of Contents
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION
<S> <C> <C> <C>
Item 1. Condensed Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets dated
June 30, 1998 and December 31, 1997 . . . . . . . . . . . . .3
Consolidated Statements of Operations
for the Three and Six Months Ended
June 30, 1998 and December 31, 1997 . . . . . . . . . . . . .4
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1998 and 1997 . . . . . . .5
Notes to Condensed Consolidated Financial Statements. . . . .6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations. . . . . . .8
PART II OTHER INFORMATION
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . 12
Item 6. (a) Exhibits and Reports on Form 8-K. . . . . . . . . . . . 13
</TABLE>
2
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PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
SPATIALIGHT, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $26,122 $415,624
Accounts receivable 3,383 3,383
Inventories 15,000 15,000
Prepaid expenses and other 22,750 27,253
----------- ----------
Total current assets 67,255 461,260
Property and equipment, net 195,188 217,984
Other assets 37,087 27,701
----------- ----------
Total assets $299,530 $706,945
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $854,004 $796,660
Short-term notes payable 1,304,436 932,479
Accrued expenses and other current liabilities 119,978 127,835
----------- ----------
Total current liabilities 2,278,418 1,856,974
Non-current liabilities
Long term capital lease obligations 40,835 53,480
----------- ----------
Total liabilities 2,319,253 1,910,454
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value:
20,000,000 shares authorized; issued and
outstanding 11,282,501 at June 30, 1998
and 9,201,111 at December 31, 1997 112,824 92,011
Additional paid-in capital 10,385,001 9,451,835
Accumulated deficit (12,517,548) (10,747,355)
----------- ----------
Total stockholders' equity (2,019,723) (1,203,509)
Total liabilities and stockholders' equity $299,530 $706,945
----------- ----------
----------- ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
SPATIALIGHT, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
-------------------- -------------------
<S> <C> <C> <C> <C>
Revenues
Contract revenues
Sales $0 $0 $0 $0
Total revenues
Cost of sales 0 0 0 0
---------- --------- ---------- ---------
Gross Profit 0 0 0 0
Selling, general and administrative expenses 411,163 646,329 874,412 951,497
Research and development expenses 338,002 348,976 844,090 546,350
---------- --------- ---------- ---------
Total operating expenses 749,165 995,305 1,718,502 1,497,847
Operating loss (749,165) (995,305) (1,718,502) (1,497,847)
Other income (expenses)
Interest income 2,640 1,839 6,322 12,384
Other income (expense) (32,321) (40) (55,349) 8,802
---------- --------- ---------- ---------
Total other income (expenses) (29,681) 1,799 (49,027) 21,186
---------- --------- ---------- ---------
Loss from operations before income taxes (778,846) (993,506) (1,767,529) (1,476,661)
Income taxes 2,665 1,412 2,665 3,322
---------- --------- ---------- ---------
Net loss (781,511) (994,918) (1,770,194) (1,479,983)
---------- --------- ---------- ---------
---------- --------- ---------- ---------
Net loss per share (0.07) (0.12) (0.17) (0.17)
---------- --------- ---------- ---------
---------- --------- ---------- ---------
Shares used in computing net loss per share 11,085,143 8,537,546 10,389,065 8,535,369
---------- --------- ---------- ---------
---------- --------- ---------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
SPATIALIGHT, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($1,770,193) ($1,479,983)
Adjustments to reconcile net loss to net cash by
operating activities:
Depreciation and amortization 40,645 22,028
Non cash stock issuance costs 183,815 0
Non cash litigation settlement 0 300,000
Non cash compensation 0 21,251
Changes in assets and liabilities:
Accounts receivable 0 36,719
Inventories 0 30,201
Prepaid expenses and other current assets 4,503 (99,839)
Other assets (9,386) (2,391)
Accounts payable 182,194 267,961
Current portion capital lease obligation (111) 0
Accrued expenses and other current liabilities 87,567 (15,045)
---------- ----------
Net cash used by operating activities (1,280,966) (919,098)
Cash flows from investing activities:
Capital expenditures (17,849) (107,585)
---------- ----------
Net cash used by investing activities (17,849) (107,585)
Cash flows from financing activities:
Long term capital lease obligation (12,645) 0
Pay down of notes payable (250,000) 0
Proceeds from short-term notes payable 1,171,957 0
Common stock issuance costs 0 (9,402)
---------- ----------
Net cash provided by financing activities 909,312 (9,402)
Net decrease cash equivalents (389,503) (1,036,085)
Cash at beginning of period 415,624 1,324,398
---------- ----------
Cash at end of period $26,121 $288,313
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
SPATIALIGHT, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
(1) Basis of Presentation
The accompanying condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB but are
unaudited and do not include all information and footnotes necessary for
conformity with generally accepted accounting principles. In the opinion
of management of SpatiaLight, Inc., ("SpatiaLight" or the "Company"), the
interim condensed consolidated financial statements included herewith
contain all adjustments (consisting of normal recurring accruals and
adjustments) necessary for a fair presentation of the Company's financial
condition as of June 30, 1998 and the results of its operations for the
three months and six months ended June 30, 1998 and 1997, respectively.
The unaudited interim condensed consolidated financial statements should
be read in conjunction with Company's 1997 Annual Report on Form 10-KSB,
which contains the unaudited financial statements and notes thereto,
together with Management's Discussion and Analysis as of and for the years
ended December 31, 1997 and 1996.
(2) Going Concern Uncertainty
The Company's operations are severely constrained by its lack of financing
and inadequate working capital. The Company continues to experience
negative cash flows and net operating losses. The Company's operations in
recent months have been funded by a series of small loans, the majority of
which are secured by substantially all the assets of the Company. Most of
these loans have been provided by a company affiliated with a Director of
the Company. These loan amounts have been adequate for the Company to
meet payroll and certain other imperative obligations, but various
accounts payable and other obligations are past due. The Company is in
default under certain of the loans made to finance its operations, and is
negotiating to extend the due dates. The Company continues its efforts to
locate sources of financing. There can be no assurance that additional
loans or any other financing will be available to the Company. FOR THIS
REASON, THERE IS SIGNIFICANT UNCERTAINTY WHETHER THE COMPANY CAN CONTINUE
AS A GOING CONCERN.
The accompanying unaudited condensed consolidated financial statements
have been prepared assuming that the Company will continue as a going
concern. This contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company incurred
significant operating losses in each of the last five fiscal years and
incurred a net loss of $1,770,193 in the first six months of 1998.
Additionally, as of June 30, 1998 the Company's accumulated deficit
totaled $12,517,548. The Company has generated limited revenues to date
and the development, commercialization and marketing of the Company's
products will require substantial expenditures in the foreseeable future.
The successful completion of the Company's development program and
ultimately, the attainment of profitable operations, is dependent upon
future events. These events include obtaining adequate financing to
fulfill its development activities, successful commercialization and
distribution of its displays, and achieving a level of sales adequate to
support the Company's cost structure. The matters discussed above, among
others, indicate that it is likely that the Company will be unable to
continue as a going concern after a reasonable period of time.
6
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The condensed consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.
Effective July 1, 1998, the Company's Chairman and Chief Executive Officer
announced his retirement from the Company and resignation from its Board
of Directors. In addition, effective June 24, 1998, the Company's
President and Chief Operating Officer is no longer employed by the
Company. In response to this change in management, the Company has formed
an Executive Committee, consisting of three Board members, to assist in
the day to day operation of the Company. (see Dependence on Key
Personnel)
In an effort to improve operating performance, the Company has been and
will be implementing certain programs and strategies in 1998. These
strategies include:
- Raising of additional capital.
- Outsourcing of all manufacturing activities.
- Developing strategic arrangements with potential customers to
share development costs and/or licensing of the Company's
technology.
- Construction of engineering models to demonstrate proof of
technology for OEMs.
The Company's continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its obligations on a
timely basis, to obtain additional financing, and ultimately to attain
successful operations. Management is continuing its efforts to obtain
additional funds so that the Company can meet its obligations and sustain
its operations.
(3) Earnings per share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
(SFAS 128). The Company was required to adopt SFAS 128 in the fourth
quarter of fiscal 1997 and restated at that time earnings per share (EPS)
data for prior periods to conform with SFAS 128.
SFAS 128 replaces previous EPS reporting requirements and requires a dual
presentation of basic and diluted EPS. Basic EPS excludes dilution and is
computed by dividing net income by the weighted average of common shares
outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock.
Because the Company has experienced continuous net losses, basic EPS and
Diluted EPS are not significantly different than primary and fully diluted
EPS currently reported for the periods.
(4) Short term notes payable
Short term notes payable at June 30, 1998 consist of the following:
Short term notes of $1,304,436, including accrued interest. The
borrowings were made to provide working capital, and accrue interest at a
10-12% per annum. Of the total,
7
<PAGE>
$1,143,880 is due on September 19, 1998, and the balance was due on
February 28, 1998. The Company is in default on the notes due in February
1998 and is negotiating to extend the dates.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that relate to future plans, events
or performance are forward-looking statements which involve risks and
uncertainties. Actual results, events or performance may differ
materially from those anticipated in these forward-looking statements as a
result of a variety of factors. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
date hereof. The Company undertakes no obligation to publicly release the
result of any revisions to these forward-looking statements that may be
needed to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
GENERAL
The Company's operations are severely constrained by its lack of financing
and inadequate working capital. The Company continues to experience
negative cash flows and net operating losses. The Company's operations in
recent months have been funded by a series of small loans, the majority of
which are secured by substantially all the assets of the Company. Most of
these loans have been provided by a company affiliated with a Director of
the Company. These loan amounts have been adequate for the Company to
meet payroll and certain other imperative obligations, but various
accounts payable and other obligations are past due. The Company is in
default under certain of the loans made to finance its operations, and is
negotiating to extend the due dates. The Company continues its efforts to
locate sources of financing. There can be no assurance that additional
loans or any other financing will be available to the Company. FOR THIS
REASON, THERE IS SIGNIFICANT UNCERTAINTY WHETHER THE COMPANY CAN CONTINUE
AS A GOING CONCERN. See Note 2 of Notes to Condensed Consolidated
Financial Statements.
OVERVIEW
SpatiaLight is developing and commercializing a miniature, proprietary,
high-resolution active matrix liquid crystal display ("AMLCD") which is
also known as a Spatial Light Modulator ("SLM"). The Company's SLM is
designed to be the essential component in high-resolution, electronic
projected display systems which may be produced at lower costs than
current or anticipated projection systems. The Company has produced
prototype SLM's in small volume which have been made available to
potential customers. Potential applications of this technology include
projection computer monitors and televisions, head mounted displays,
optical computing, holographic data storage and other display
applications. The Company has made only limited sales of prototype units
to date, and there can be no assurance that the Company will ever be able
to commercialize its technology.
8
<PAGE>
RESULTS OF OPERATIONS
SpatiaLight reported no revenue for the six months ended June 30, 1998 or
for the six months ended June 30, 1997. The Company is continuing to
develop its technological capabilities and believes that significant sales
of its Spatial Light Modulator product will be required in order for the
Company to continue to meet its financial obligations and operating plans.
Any lack of significant sales would have a material adverse affect upon
the financial condition of the Company, and could cause the Company to
cease operations.
Selling, general and administrative expenses decreased $77,085 or 8% for
the six months ended June 30, 1998 as compared to the six months ended
June 30, 1997. The decrease was due to a reduction in spending as a
result of limited cash flow.
Research and development expenses increased by $297,740 or 55% for the
six months ended June 30, 1998 as compared to the six months ended June
30, 1997 and decreased $10,974 or 3% for the three months ended June 30,
1998 compared to the three months ended June 30, 1997. Research and
development expenses represent costs incurred, primarily personnel
related, for the design and development of new products and the redesign
of existing prototype products. The Company believes that the development
of new products will be required to allow it to compete effectively and to
achieve future revenues. The Company currently has 10 full time employees
whose duties include research and development. The Company intends to
continue its development programs, focusing on increasing the display
size, capabilities and final manufacturing processes. The Company
believes that such developments will be required to exploit future markets
for large screen projection monitors, high definition televisions and head
mounted displays.
NET LOSS
As a result of the above factors the Company recorded a net loss of
$1,770,194 or $.12 per share for the six months ended June 30, 1998 and a
net loss of $781,511 or $.07 per share for three months ended June 30,
1998. While the Company is taking steps to improve its performance, there
can be no assurance that the attempts by management at product development
will be successful. Any delay in effecting operational performance
improvement by the Company or in the further development of the SLM by the
Company may have a material adverse impact on the financial condition of
the Company.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities totaled $1,280,966 for the six
months ended June 30, 1998 as a result of selling, general, and
administrative expenses and research and development expenses incurred
during the period.
As of June 30, 1998 the Company had $26,122 in cash and cash equivalents.
Net working capital was ($1,357,159).
The Company is experiencing negative cash flow from operations resulting
in the need to fund ongoing operations from financing activities. The
future existence and profitability of the Company is dependent upon its
ability to obtain additional funds to finance and expand operations in an
effort to achieve profitability from operations. No assurance can be
given that the Company's business will ultimately generate sufficient
revenue to fund the Company's
9
<PAGE>
operations on a continuing basis. The matters discussed above, among
others, indicate that the Company may be unable to continue as a going
concern for a reasonable period of time.
BUSINESS RISKS
Most of the Company's revenue to date has been derived from research and
development contracts and limited sales of its SLM devices. Although the
Company has demonstrated SLM devices based on its core technology, the
Company has not yet produced any prototype SLM products with quality and
resolution sufficient to satisfy commercial end-use applications. Further
development and testing will be necessary before the Company's proposed
displays will be available for commercial end-use applications. Delays in
development may result in the Company's introduction of its displays later
than anticipated, which may have an adverse effect on both the Company's
financial and competitive position. Moreover, there can be no assurance
that the Company will ever be successful in developing or manufacturing a
commercially viable SLM devices or any of its displays at commercially
acceptable cost levels or on a timely basis.
LACK OF SALES, MARKETING AND DISTRIBUTION EXPERIENCE. The Company
currently employs no full time sales or marketing specialists. The
Company intends to form alliances with corporate partners for the
marketing and distribution of certain of its anticipated displays. There
can be no assurance that the Company will be successful in forming and
maintaining such alliances or that the Company's partners will devote
adequate resources to successfully market and distribute these anticipated
products. There can be no assurance that the Company will be able to
attract and retain qualified marketing and sales personnel, that the
Company will be able to enter into satisfactory agreements with marketing
partners or that the Company or its marketing partners will be successful
in gaining market acceptance for its anticipated products.
NO ASSURANCES OF SUCCESSFUL MANUFACTURING. The Company has no experience
manufacturing SLM devices or displays. The Company's facility is designed
principally for research and development, small-scale assembly and
inventory storage, and the Company currently anticipates engaging outside
manufacturers to produce its products utilizing its SLM devices in volume.
The Company is negotiating with manufacturers to establish full scale
integrated manufacturing capacity for its SLM devices and has reached an
agreement with one manufacturer for production of silicon wafers.
However, no decision has been made by any such manufacturer to establish
volume capability and there can be no assurance that any of them will do
so. In the event any such manufacturer establishes a volume full scale
integrated manufacturing capability, the Company could become dependent on
such manufacturer for the manufacture of SLM devices. The termination or
cancellation of the Company's agreement with the manufacturer could
adversely affect the Company's ability to sell its displays. In such
event, the Company could be required to establish an alternative
manufacturing relationship or establish its own manufacturing capability.
There can be no assurance that the Company would be able to establish such
a relationship on acceptable terms or develop its own manufacturing
capability; in any event the time required to establish such a substitute
relationship or capability could substantially delay the commercialization
of the Company's displays, which, in turn, could have substantial adverse
impact on the Company's results of operations and financial condition.
10
<PAGE>
PATENTS AND PROTECTION OF PROPRIETARY TECHNOLOGY. The Company's ability
to compete effectively with other companies will depend, in part, on the
ability of the Company to maintain the proprietary nature of its
technologies. Although the Company has been awarded patents in the United
States, there can be no assurance as to the degree of protection offered
by these patents or as to the likelihood that pending patents will be
issued. Furthermore, the Company has not yet obtained any foreign
patents. There can be no assurance that competitors, in both the United
States and foreign countries, many of which have substantially greater
resources and have made substantial investments in competing technologies,
will not seek to apply for and obtain patents that will prevent, limit or
interfere with the Company's ability to make and sell its products or
intentionally infringe the Company's patents. The defense and prosecution
of patent suits is both costly and time consuming, even if the outcome is
favorable to the Company. This is particularly true in foreign countries.
In addition, there is an inherent unpredictability regarding obtaining and
enforcing patents in foreign countries. An adverse outcome in the defense
of a patent suit could subject the Company to significant liabilities to
third parties, require disputed rights to be licensed from third parties,
or require the Company to cease selling its products. The Company also
relies on proprietary technology and there can be no assurance that others
may not independently develop the same or similar technology or otherwise
obtain access to the Company's proprietary technology. To protect its
rights in these areas, the Company requires all employees and technology
consultants, advisors and collaborators to enter into confidentiality
agreements. There can be no assurance, however, that these agreements
will provide meaningful protection for the Company's trade secrets, know
how or other proprietary information in the event of any unauthorized use,
misappropriation or disclosure of such trade secrets, know how or other
proprietary information. To date, the Company has no experience in
enforcing its confidentiality agreements.
RAPID TECHNOLOGICAL CHANGE; COMPETITION. The electronic imaging display
industry has undergone rapid and significant technological change. The
Company expects the technology to continue to develop rapidly, and the
Company's success will depend significantly on its ability to maintain a
competitive position. Rapid technological development may result in
actual and proposed products or processes becoming obsolete before the
Company recoups a signification portion of related research development,
acquisition and commercialization costs. If the Company is successful in
the development of a commercially viable SLM device, the Company's ability
to compete will depend in part upon the consistency of display quality and
delivery, as well as pricing, technical capability and servicing, in
addition to factors within and outside its control, including the success
and timing of product introductions by the Company and its partners,
product performance and price, product distribution and customer support.
There can be no assurance that the Company will succeed in developing
technologies and products that are equally or more effective than any
which are being developed by the Company's competitors. There can be no
assurance that competitive processes will not render the Company's
technology, obsolete and non competitive. In addition, numerous
competitors have substantially greater financial, technical and other
resources than the Company. The Company may face an aggressive, well
financed competitive campaign that may include misappropriation of the
Company's intellectual property or predatory pricing.
11
<PAGE>
DEPENDENCE ON KEY PERSONNEL. Effective July 1, 1998, the Company's
Chairman and Chief Executive Officer William Hollis announced his
retirement from the Company and resignation from its Board of Directors.
In addition, effective June 23, 1998, the Company's President and Chief
Operating Officer, L. John Loomis is no longer employed by the Company.
Further, on March 20, 1998 Dean Irwin, the Company's Vice President of
Engineering resigned from his position with the Company.
The Company has formed an Executive Committee, consisting of three Board
members, Robert A. Olins, Lawrence J. Matteson, and Michael H. Burney to
assist in the day to day operation of the Company. The Executive
Committee immediately appointed Michael H. Burney as the interim Chief
Executive Officer, Treasurer and Secretary. The Executive Committee also
appointed Fred R. Hammett as the Company's interim President.
The Company is utilizing the services of outside consultants in key
technological areas. The Company's continued success will depend on its
ability to attract and retain highly qualified scientific, marketing,
manufacturing and other key management personnel. The Company faces
competition for such personnel and there can be no assurance that the
Company will be able to attract or retain such personnel.
DEPENDENCE ON THIRD PARTIES TO DEVELOP PRODUCTS INCORPORATING SLM. The
Company intends to develop its SLM devices to be a component for
incorporation into finished products which will be developed, manufactured
and marketed by third parties. The Company does not plan, nor does it
have the financial resources, to develop or market any such end products
itself. Therefore, the Company will be completely dependent upon
independent third parties for the development, manufacturing and marketing
of such products. No such products exist today, and the Company does not
have any commitments from any third party for such development,
manufacturing or marketing. There can be no assurance that any third
party will develop or market a product incorporating the Company's SLM's.
PART II. OTHER INFORMATION
Item 2. During the second quarter of 1998 the Company entered into
arrangements with accredited individual investors which may require the
issuance of warrants to purchase up to 162,000 shares of Common Stock at
exercise prices ranging from $0.50 to $0.85, and which expire no later
than June 30, 2001 in consideration of the delay of enforcement of default
conditions for certain loans to the Company. In issuing these securities
the Company relied upon the exemption from the registration requirements
of the Securities Act of 1933, as amended, provided by Section 4(2)
thereof.
During the second quarter of 1998, the Company issued a series of
convertible notes in the aggregate principal amount of $1,113,000 to a
company affiliated with a Director of the Company. These notes are
convertible into Common Shares at a conversion price of $0.50 per Common
Share. In issuing these securities the Company relied upon the exemption
from the registration requirements of the Securities Act of 1933, as
amended, provided by Section 4(2) thereof.
12
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the six months ended June 30,
1998.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 12, 1998
SpatiaLight, Inc.
By: /s/ Michael H. Burney
-----------------------------------
Michael H. Burney
Chief Executive Officer
(Principal Executive, Financial
And Accounting Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 26,122
<SECURITIES> 0
<RECEIVABLES> 3,383
<ALLOWANCES> 0
<INVENTORY> 15,000
<CURRENT-ASSETS> 67,255
<PP&E> 389,375
<DEPRECIATION> 195,187
<TOTAL-ASSETS> 299,530
<CURRENT-LIABILITIES> 2,278,418
<BONDS> 0
0
0
<COMMON> 112,824
<OTHER-SE> (2,132,547)
<TOTAL-LIABILITY-AND-EQUITY> 299,530
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,718,502
<OTHER-EXPENSES> 49,027
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,767,529)
<INCOME-TAX> 2,665
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,770,194)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
