<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 March 31, 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 (I.R.S. Employer
incorporation or organization) Identification No.)
8-C Commercial Blvd., Novato, CA 94949-1625
--------------------------------------------
(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 May 6, 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 March 31, 1998
Table of Contents
PART I FINANCIAL INFORMATION
<TABLE>
<C> <S> <C>
Item 1. Condensed Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets dated
March 31, 1998 and December 31, 1997...................... 3
Consolidated Statements of Operations
for the Three Months Ended
March 31, 1998 and 1997................................... 4
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 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
Item 6. (A) Exhibits and Reports on Form 8-K...................... 14
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
SPATIALIGHT, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $283,075 $415,624
Accounts receivable 3,383 3,383
Inventories 15,000 15,000
Prepaid expenses and other 26,655 27,253
---------- ---------
Total current assets 328,113 461,260
Property and equipment, net 216,589 217,984
Other assets 34,341 27,701
---------- ---------
Total assets $579,043 $706,945
---------- ---------
---------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $736,819 $796,660
Short-term notes payable 1,085,984 932,479
Accrued expenses and other current 114,957 127,835
---------- ----------
Total current liabilities 1,937,760 1,856,974
Non-current liabilities
Long term capital lease obligations 47,953 53,480
---------- ----------
Total liabilities 1,985,713 1,910,454
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value:
20,000,000 shares authorized; issued,
and outstanding 10,523,916 shares at
March 31, 1998, and 9,200,751 shares at
December 31, 1997 99,039 85,811
Additional paid-in capital 10,230,329 9,458,035
Accumulated deficit (11,736,038) (10,747,355)
---------- ----------
Total stockholders' equity (1,406,670) (1,203,509)
---------- ----------
Total liabilities and stockholders' $579,043 $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>
March 31, March 31,
1998 1997
---------- -----------
<S> <C> <C>
Revenues
Contract revenues $0 $0
Sales 0 0
--------- ---------
Total revenues 0 0
Cost of sales 0 0
--------- ---------
Gross profit 0 0
Selling, general and administrative expenses 463,248 305,168
Research and development expenses 506,089 197,374
--------- ---------
Total operating expenses 969,337 502,542
Operating loss (969,337) (502,542)
Other income (expense)
Interest income 3,683 10,546
Other income (expense) (23,029) 8,842
--------- ---------
Total other income (expense) (19,346) 19,388
Loss from operations before income taxes (988,683) (483,154)
Income taxes 0 1,911
--------- ---------
Net loss ($988,683) ($485,065)
--------- ---------
--------- ---------
Net loss per share (0.10) (0.06)
--------- ---------
Shares used in computing net loss per share 9,640,554 8,533,191
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
SPATIALIGHT, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1998 1997
----------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($988,683) ($485,065)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 20,380 12,679
Non cash stock issuance costs 115,358 0
Changes in assets and liabilities:
Accounts receivable 0 14,021
Inventories 0 (18,322)
Prepaid expenses and other current assets 598 (14,339)
Other assets (6,640) (51,132)
Accounts payable 65,009 236,540
Current portion capital lease obligation (771) 0
Accrued expenses and other current liabilities 83,206 (65,951)
-------- ----------
Net cash used by operating activities (711,543) (371,569)
Cash flows from investing activities:
Capital expenditures (18,985) (47,340)
-------- -----------
Net cash used by investing activities (18,985) (47,340)
Cash flows from financing activities:
Long term capital lease obligation (5,527) --
Proceeds from short-term notes payable 603,505 750,000
Common stock issuance costs 0 (9,402)
-------- ----------
Net cash provided by financing activities 597,978 740,598
Net (decrease) increase cash and cash equivalents (132,550) 321,689
Cash at beginning of period 415,625 1,324,398
-------- ----------
Cash at end of period $283,075 $1,646,087
-------- ----------
-------- ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
SPATIALIGHT, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-QSB but do not
include all information and footnotes necessary for a fair presentation of
financial condition, results of operations and cash flows in 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 March 31, 1998 and the results of its operations for the
three months ended March 31, 1998 and 1997 respectively. The unaudited
interim condensed consolidated financial statements should be read in
conjunction with the Company's 1996 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 relatively small loans; some secured by substantially
all the assets of the Company. Most of these loans have been provided by
persons affiliated with major shareholders of the Company or with management.
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 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 $988,683 in the first three months of 1998.
Additionally, as of March 31, 1998 the Company's accumulated deficit
totaled $11,736,038. 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 the obtaining adequate financing to
fulfill its development
6
<PAGE>
activities, successful launching of the commercial production and
distribution of its products and achieving a level of sales adequate
to support the Company's cost structure. These matters discussed
above, among others, may indicate that the Company will be unable to
continue as a going concern for a reasonable period of time.
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.
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, which will be monitored
by Company's manufacturing/quality control engineering staff.
- 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
OEM's.
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 note payable
Short-term notes payable at March 31, 1998 consist of the following:
7
<PAGE>
A line of credit for $250,000 under a credit agreement with a bank under
which the Company can borrow up to an amount equal to the Certificate of
Deposit, up to a maximum of $750,000. The purpose of the line of credit is
to facilitate working capital. Under the terms of the credit agreement,
interest is accrued at the greater of Prime or the certificate of deposit
interest rate plus 2 percent. The line of credit expires on June 8, 1998.
Short-term notes of $735,985, including accrued interest. The borrowings
were made to provide working capital, and accrue interest at 10-12% per
annum. Of the total, $579,000 is due on May 22, 1998, and the balance was
due on February 28, 1998. The Company is in default on the notes and is
negotiating to extend the due dates.
A convertible debenture with a principal amount of $100,000 was issued to a
purchaser outside of the United States in conjunction with a private
placement. The debenture has a two year term, carries a 3% interest rate
and is convertible into the Company's common stock at 120% of the five day
average closing bid price for the stock at the issuance date or, if lower,
75% of the five day average closing bid price of the stock at the time the
debt is converted. The debenture is recorded in short-term liabilities.
Subsequent to March 31, 1998, the debenture was converted to 305,989 shares
of common stock.
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 relatively small loans; some
secured by substantially all the assets of the Company. Most of these
loans have been provided by persons affiliated with major shareholders of
the Company or with management. 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
8
<PAGE>
REASON, THERE IS UNCERTAINTY WHETHER THE COMPANY CAN CONTINUE AS A
GOING CONCERN. See Note 2 of Notes to Condensed Consolidated Financial
Statements.
Overview
SpatiaLight is in the business of designing, producing, and commercializing
a miniature, proprietary, high-resolution active matrix liquid crystal
display ("AMLCD"). The AMLCD, when mounted on a semiconductor chip, is
known as a Spatial Light Modulator ("SLM"). The Company's SLM is designed
to be the essential component in both small and large sized, high
resolution, electronic display systems which may be produced at lower costs
than current or anticipated display systems. The Company has produced
prototype SLM's in small volume which have been made available to potential
customers who are involved in the development of applications of this
technology, including manufacturers of computer monitors, headset displays,
optical computing equipment, 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.
RESULTS OF OPERATIONS
SpatiaLight reported no revenue for the three months ended March 31,1998,
and 1997 respectively. The Company is continuing to develop its
technological capabilities and its production capacity 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 increased $167,379 or 52% for
the three months ended March 31, 1998 as compared to the three months ended
March 31, 1997. The increase was due primarily to costs associated with the
conversion of debt to equity.
Research and development expenses increased by $308,715 or 156% for the
three months ended March 31, 1997 as compared to the three months ended
March 31, 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 11
full time employees whose duties include research and development. The
Company intends to continue its product enhancement and development
programs, focusing on increasing the display size and finalizing field
sequential color capabilities and liquid crystal filling manufacturing
processes. The Company believes that such enhancements and new products
will be required to exploit future markets for large screen monitors, high
definition television and head mount displays.
9
<PAGE>
NET LOSS
As a result of the above factors the Company recorded a net loss of
$988,683 or $.10 per share for the three months ended March 31, 1998 and a
net loss of $485,065 representing $.06 per share for the three months ended
March 31, 1997. 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 $711,543 for the three months
ended March 31, 1998 as a result of selling, general, and administrative
expenses, and research and development expenses incurred during the period.
As of March 31, 1998 the Company had $283,075 in cash and cash
equivalents. Net working capital was ($1,609,647).
The Company has secured a line of credit for up to a maximum of $750,000
based on the amount in the Certificate of Deposit. As of March 31, 1998
the Company has borrowed $250,000 under the line of credit and no
additional borrowing is available. The line of credit accrues interest at
the greater of Prime or the Certificate of Deposit interest rate plus 2%
and expires in June 1998.
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 operations 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 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. The
Company recently entered into a contract to produce an engineering
prototype of a consumer product for mass production. However, further
development and testing will be necessary before this product or the
Company's other proposed products will be available for commercial end-use
applications. Delays in development may result in the Company's
introduction of its products later than anticipated, which may have an
adverse effect on both
10
<PAGE>
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 device or any of its proposed
display products. In addition, there is no assurance that an SLM device
or any of the Company's display products will be technically or
commercially successful or that the Company will be able to manufacture
adequate quantities of its SLM devices or any of its display products 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 display products. 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 display products. The Company's facility is
designed principally for research and development and small-scale assembly
and inventory storage, and the Company currently engages outside
manufacturers to produce its SLM devices. The Company is negotiating with
several manufacturers for establishment of full scale integrated
manufacturing capacity for its SLM devices and has reached an agreement
with one manufacturer for fabrication of silicon wafers. However, no
decision has been made by any such manufacturer to establish such a
capability and there can be no assurance that any of them will do so. In
the event any such manufacturer establishes a 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 manufacture its products. 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 SLM devices and display products, which, in turn, could
have a substantial adverse impact on the Company's results of operations
and financial condition.
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 or has filed
applications for several patents in the United States, there can be no
assurance as to the degree of protection offered by these patents, or as to
11
<PAGE>
the likelihood that pending patents will be issued. Furthermore, the
Company has not yet applied for or 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 unpatented
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 most 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 significant portion of related research and development,
acquisition and commercialization costs. If the Company is successful in
the development of a commercially viable SLM device and its proposed
display and other products, the Company's ability to compete will depend in
part upon the consistency of product 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 competitors, product performance and
price, product distribution and customer support. There can be no
assurance that the Company's competitors will not succeed in developing
technologies and products that are equally or more effective than any which
are being developed by the Company or that will render the Company's
technology, SLM devices or display and other products 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 response that may include
misappropriation of the Company's intellectual property or predatory
pricing.
12
<PAGE>
The electronic imaging display industry has been characterized by rapid and
significant technological advances. There can be no assurance that the
Company's SLM devices and display products will be reflective of such
advances or that the Company will have sufficient funds to invest in new
technologies or products or processes. A number of companies in the United
States assemble workstation monitors using LCDs and cathode ray tubes
("CRTs") purchased from Japan. A number of Japanese companies build
monitors around their LCDs and CRTs. Korean companies are also entering
the LCD and CRT monitor market. Development of improved high definition
LCDs and CRTs continues to receive significant attention by these and other
companies. Although the Company believes that its SLM products have the
capability to improve LCD performance beyond that of commercially available
LCD and CRT based display products, there is no assurance that
manufacturers of LCDs or CRTs will not develop further improvements of LCD
or CRT technology that would eliminate or diminish the Company's
anticipated advantage.
DEPENDENCE ON KEY PERSONNEL. The Company is dependent upon its key
scientific and management personnel, including its Chief Executive Officer,
William Hollis, and its President, L. John Loomis. During 1997 the Company
hired several additional technical and scientific staff members to
complement and reduce the Company's dependence on any individual employee.
As of March 21, 1998, Mr. Dean Irwin, former Vice President of Engineering
resigned as an officer and employee and his role with the Company has
changed to a consultant technology advisory capacity. The Company's success
will always depend on its ability to attract and retain other 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 to 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 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. If not, there will be no market
for the Company's SLM's.
13
<PAGE>
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
During the first quarter of 1998, 364,700 shares of the Company's Common
Stock were issued to vendors in consideration for computer software and
consultant services rendered. The shares were issued pursuant to the
exemption from the registration requirements of the Securities Act of 1933,
as amended, provided by Section 4(2) thereof.
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 three months ended March
31, 1998.
14
<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: May 14, 1998
------------------------------
SpatiaLight, Inc.
By: /s/ William E. Hollis
---------------------------------
William E. Hollis
Chairman of the Board and
Chief Executive Officer
and Chief Financial Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 283075
<SECURITIES> 0
<RECEIVABLES> 3383
<ALLOWANCES> 0
<INVENTORY> 15000
<CURRENT-ASSETS> 328113
<PP&E> 216589
<DEPRECIATION> 0
<TOTAL-ASSETS> 579043
<CURRENT-LIABILITIES> 1937760
<BONDS> 0
0
0
<COMMON> 99039
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 579043
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 969337
<OTHER-EXPENSES> 23029
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (988683)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (988683)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> 0
</TABLE>
