SpatiaLight Raises $10 Million in Debt Sale to Fund LCoS Plant
SpatiaLight raised $10 million from the sale of senior secured convertible notes that will fund the first-quarter start of production of LCoS microdisplays at a new factory in S. Korea. The Novato, Cal.-based LCoS display developer secured LG Electronics earlier this year as its first customer for the plant and is expected to deliver 21,000 displays in the first 6 months of 2005. The LG order is for 0.8” microdisplays with 1,920x1080p resolution.
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SpatiaLight, which had been producing LCoS displays in small quantities in 2 clean rooms in Novato, started construction of the S. Korean plant in Oct. It hired Sung Do Engineering to design and build the facility and is required to make $3.8 million in payments over a 4-month period that started in Oct., according to an SEC filing. It made an initial $500,000 payment in Nov., the filing stated. SpatiaLight has said it would invest $10-$12 million in the S. Korea factory.
In raising the needed funding, SpatiaLight sold senior secured notes to Highbridge Capital’s Smithfield Fiduciary Inc. and Ramius Capital Group’s Portside Growth & Opportunity funds -- $4.5 million each -- and the Bluegrass Growth Fund, $1 million, according to the SEC documents. The sale closed last week. The additional financing was critical, given that SpatiaLight’s cash had dwindled to $1 million as of Sept. 30, from $6.3 million the previous Dec. 31. Its total assets also had declined to $4.9 million from $8.3 million. SpatiaLight raised $12.3 million in 2003 through equity sales and another $1.4 million this year via the exercise of stock options, it said in the SEC filing.
It’s still unclear whether LG plans to introduce LCoS- based products in the U.S., where Intel and Philips abandoned development efforts earlier this year. An LG Electronics spokesman said it was “too early to tell” when and if any LCoS- based products will be introduced here. There are indications LG might ship LCoS TVs based on SpatiaLight’s 3- chip design in S. Korea in late 2005, sources said. While Chinese manufacturers -- Skyworth Display, Shanghai China Display and China Electronics -- accounted for about 96% of SpatiaLight’s $268,200 in 3rd-quarter revenue, shipments to LG are forecast to represent a “greater percentage” of future deliveries, SpatiaLight said. In addition to 1080p, SpatiaLight also manufacturers an LCoS chip with 1,280x960p resolution.
SpatiaLight’s factory will have monthly capacity of 28,000 units and employ 200 working across 2 shifts, company officials have said. Monthly production is expected to start at 2,000 units and increase to 5,000 in the 2nd quarter. The 100,000-sq.- ft. plant is located on an 8.3-acre parcel of land in Jinsa, S. Korea, and will assemble the microdisplays using light engines sourced from Fuji Photo Optical.
SpatiaLight said its 3rd-quarter operating loss widened to $1.9 million, from $1.6 million a year ago, as revenue increased to $268,200 from $82,150. SpatiaLight ended the quarter with $216,000 in sales that had been deferred because “they lacked all the elements needed for revenue recognition,” it said. As of late Aug., SpatiaLight had delivered more than 600 chipsets of a 14,100-unit order that Skyworth Display placed in Feb. 2003. Company officials weren’t immediately available for comment. Gross margin improved to $143,100 from $8,277 a year earlier.
Meanwhile, SpatiaLight COO David Hakala sold 25,000 shares in a series on 10 transactions earlier this month in amounts ranging 400-8,700 shares at prices of $7.70-$7.87. Hakala retained ownership of 335,000 shares.