HDTV Spatialight (MM)

NOVATO, Calif., July 31 /PRNewswire-FirstCall/ -- SpatiaLight, Inc. (NASDAQ:HDTV), a leading developer and manufacturer of ultra high-resolution liquid crystal on silicon (LCoS) microdisplays for the high definition television market, today announced that it has moved to sample testing of its six million pixel 1080p imager sets from 100% testing of certain product characteristics. These tests have been performed in order to validate meeting demanding customer expectations in a consistent and reliable manner. This change will go into effect immediately. Consequently, the Company expects to be able to initiate production ramp in September to quickly reach levels of several thousand imager sets per month from the current maximum of 1,000 imager sets per month. David Hakala, Chief Operating Officer of SpatiaLight, explained, "We have compiled a sufficient volume of data establishing a high-level of process capability so that we can now confidently move to sample testing from 100% testing, eliminating a production bottleneck." Until now, the 100% level of testing has inhibited SpatiaLight's ability to deliver product in quantity to LG Electronics and other customers. The time required to do the testing has taken an average of almost seven man-hours per imager set shipped. Devoting that much time to each and every imager set shipped meant that over 50% of the plant personnel were involved in final product testing rather than in actual production. Under these conditions the Company has been able to deliver fewer than 1,000 sets per month. Hakala said, "LG Electronics has recently told us of its intent to move into the U.S. market with LCoS based televisions in the 4th quarter of 2006, shortly after we demonstrate adequate quality and delivery consistency. This shift in testing procedures enables precisely that opportunity to enter the U.S. market by enhancing our ability to move up the ramp curve. I am pleased to say that we believe this major milestone at last marks the transition of our Company from an R&D and low volume production mode to a firm capable of producing and supplying commercial volumes of our exciting high definition displays." About SpatiaLight SpatiaLight, Inc., founded in 1989, manufactures high-resolution LCoS microdisplays for use in high definition televisions and other display applications. Providing resolution of more than 6.2 million pixels, each SpatiaLight LCoS Set incorporates three proprietary imagEngine(TM) microdisplays. The company manufactures its products at its facility in South Korea. The company 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 2006 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-K/A and Form 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date that they were made. SpatiaLight does not undertake any duty to update these forward- looking statements, or any other information provided in this press release, unless required by law. DATASOURCE: SpatiaLight, Inc. CONTACT: Michael J. Porter of Porter, LeVay & Rose, Inc., +1-212-564-4700, or , for SpatiaLight, Inc. Web site: http://www.spatialight.com/

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