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Spatial Inc. Reports Q2 Financial Results Will be Impacted by Delays

9 July 1999

Spatial Inc. Reports Second-Quarter Financial Results Will be Impacted by Delays in Expected Orders

     Buisness Editors
     
     BOULDER, Colo.--July 8, 1999--

       Management Says Impact Should Be Limited to the Quarter;
         Expects to Meet Financial Targets for the Fiscal Year

     Spatial Inc. (AMEX: STY), the world's leading developer of open,
component 3D modeling technology and interoperability solutions, today
announced that delays in the receipt of several large orders will
cause the Company to fall short of analysts' consensus financial
estimates for the second quarter of fiscal 1999. Spatial anticipates
reporting revenue of approximately $3.6 million for the second quarter
ended June 30, 1999. Management said the delayed transactions should
be completed during the second half of the year, and Spatial's top-
and bottom-line results for fiscal 1999 should be in line with
consensus estimates.
     The delayed orders are related to the Company's model viewing and
deformable modeling technologies. Bruce Morgan, president and CEO,
said negotiations on the transactions were progressing and should be
completed in the coming months. He added that demand for Spatial's
core ACIS(R) modeling components was strong during the second quarter,
and maintenance and royalty revenue was robust and in line with
expectations.
     "We are very disappointed these delays will negatively impact our
second-quarter financial results, but accept that order delays are
sometimes unavoidable," Morgan said. "We believe these specific
transactions should be completed during the second half of the year.
Moreover, we are on track in the development and release of our much
anticipated model interoperability products and services, which we
believe will provide opportunities for additional revenue growth. We
believe these products and services will provide us with more
predictable and balanced elements to our revenue stream that will help
mitigate the impact large orders can have on our quarterly results."

     About Spatial Inc.

     A leading innovator of 3D modeling technology, Spatial provides
advanced component and interoperability products for creating,
viewing, exchanging, and sharing high-fidelity 3D digital geometry.
     The ACIS(R) 3D Toolkit(TM), Spatial's flagship product, is the de
facto standard 3D modeling kernel for the MCAD, CAM, CAE, and AEC
industries. With more than 500 ACIS licensees and 1.4+ million end
users of over 185 ACIS-enabled applications, ACIS is indisputably the
world's most widely used 3D modeling kernel. ACIS-enabled applications
include ABAQUS/CAE by Hibbit, Karlsson & Sorensen, Inc., AutoCAD and
Mechanical Desktop by Autodesk, Inc., CADKEY by Baystate Technologies,
Inc., GAMBIT by Fluent Inc., Grade/CUBEII by Hitachi Zosen Information
Systems, GSCAD by Intergraph Corporation, IronCAD by Visionary Design
Systems, Inc., Maxwell 3D Field Simulation by Ansoft Corporation,
TurboCAD Solid Modeler and Professional by IMSI, Vellum Solids by
Ashlar Inc., and Working Model 3D by MacNeal-Schwendler Corporation.
Spatial offers a diversity of production-proven 3D modeling component
products, like Spatial Deformable Modeler(TM), a 3D surface modeling
tool for high-level artistic design and industrial styling.
     Spatial's Interoperability Products enable developers and end
users to optimize engineering processes by providing efficient methods
of communicating 3D models and product data across multiple
CAD/CAM/CAE systems throughout the design-to-manufacturing process.
Interoperability Products include comprehensive visualization
solutions, like IntraVISION(TM); data translators for IGES, STEP, and
VDA-FS; 3D model healing technology; and PDM integration modules.
     Headquartered in Boulder, Colorado, Spatial has offices in Europe
and Asia. Spatial stock is publicly traded on the NASDAQ-AMEX exchange
under the symbol "STY." For more information, visit Spatial's web site
at http://www.spatial.com, or call (303) 544-2900.
     Statements made in this news release that are not historical
facts may be forward-looking statements. Actual results may differ
materially from those projected in any forward-looking statement.
There are a number of important factors that could cause actual
results to differ materially from those anticipated by any
forward-looking information, including, but not limited to, the
possibility that certain transactions cited herein may not be
completed. A description of risks and uncertainties attendant to
Spatial Technology Inc. and its industry, and other factors which
could affect the Company's financial results, are included in the
Company's Securities and Exchange Commission filings, including, but
not limited to, the Company's annual report on Form 10-KSB for the
year ended December 31, 1998.