EXHIBIT 99.1
CONTACT: INVESTOR RELATIONS
HENRY R. MANDELL, CEO
SPATIALIZER AUDIO LABORATORIES, INC.
408-453-4180 EXT. 4
INVESTOR@SPATIALIZER.COM
SPATIALIZER AUDIO LABORATORIES, INC. REPORTS
FIRST QUARTER 2004 OPERATING RESULTS
San Jose, Calif., May 12, 2004- Spatializer Audio Laboratories, Inc.
(OTC Bulletin Board:SPAZ) today announced financial results for the first
quarter ended March 31, 2004.
Revenues for the three months ended March 31, 2004 were $171,000,
compared to revenues of $332,000 in the comparable period last year, a decrease
of 48%.
Net loss in the three months ended March 31, 2004 was ($124,000),
($0.00) basic per share, compared with net loss of ($74,000), ($0.00) basic per
share in the comparable period last year.
The decline in revenue resulted from the expiration of a licensing
agreement with a major computer account in January 2003 and the effects of cost
reductions by DVD player accounts resulting in outsourcing to manufacturers in
China who generally decline to pay for such software or where features must be
eliminated to achieve manufacturing cost targets. This was partially offset by
an increase in revenues from cell phone accounts that started shipping
commercial quantities with our technologies in the first quarter.
The net loss resulted from decreased revenues, partially offset by
reduced operating expenses.
At March 31, 2004, the Company had $647,000 in cash and cash equivalents
as compared to $589,000 at December 31, 2003. The increase in cash and cash
equivalents is attributed to the decreases in accounts receivable. The Company
had working capital of $663,000 at March 31, 2004 as compared with working
capital of $792,000 at December 31, 2003.
"We continued to experience declining year-to-year revenues from DVD
customers, primarily from the curtailment or cessation of use of our products
due to intense on-going pressure on cost reduction," stated Henry R. Mandell,
chairman and chief executive officer of Spatializer Audio Laboratories, Inc. "On
the positive side, our overhead reduction initiative yielded strong results,
with a reduction in year-to-year quarterly overhead of nearly $100,000, or 25%.
Further, we saw the beginning of the ramp-up of revenue from the cell phone
market, which we are targeting, among others, to replace lost business in the
DVD player market and to fuel future growth."
Henry R. Mandell concluded, "The convergence of entertainment, computing
and communications is creating new and viable applications for Spatializer
technology. These platforms are less commoditized than DVD players. Impressive,
high quality audio is being perceived as a requirement to help bridge this
convergence. The response from these markets to our solutions has been strong.
As such, we expect to successfully penetrate markets that are new to Spatializer
where the competitive dynamics are more favorable to enhancing and expanding our
business. I look forward to providing more specific information in the future
when these transactions can be announced."
ABOUT SPATIALIZER
Spatializer Audio Laboratories Inc. is a leading developer, licensor and
marketer of next-generation technologies for the consumer electronics, computing
and entertainment industries. The company's advanced audio technology is
incorporated into consumer electronics audio and video products from global
brand leaders including Toshiba, Samsung and Sharp, among others. Spatializer
stock is traded on the OTC Bulletin Board under the symbol: SPAZ. The company is
headquartered in San Jose, CA, with executive offices in Westlake Village, CA
and representative offices throughout Japan and in Korea. Further information
may be obtained from the company's web site, www.spatializer.com, Spatializer's
SEC filings, and by contacting the company's Investor Relations Department at
408-453-4180 or by writing to investor@spatializer.com.
Safe Harbor Act Statement Under the Private Securities Litigation Reform Act of
1995: Certain information in this background news release, including the
comments by Mr. Mandell in this press release are forward looking statements
that are based on management's belief, as well as assumptions made by, and
information currently available to management. While the company believes that
its expectations are based upon reasonable assumptions, there can be no
assurances that the company's financial goals will be realized. Numerous
uncertainties and risk factors may affect the company's actual results and may
cause results to differ materially from those expressed in forward-looking
statements made by or on behalf of the company. These uncertainties and risk
factors include, but are not limited to the continued need for additional
capital, dependence on new technology and intellectual property, dependence on
the PC and consumer electronics industries, dependence on product shipments of
third-party licensees, dependence on third-party technology integrators or chip
suppliers, competition and pricing pressures, and other risks detailed from time
to time in the company's periodic reports filed with the Securities and Exchange
Commission.
NOTICES: Spatializer is a registered and trademark of Desper Products, Inc.
Desper Products, Inc. is a wholly owned subsidiary of Spatializer Audio
Laboratories, Inc. Copyright (C) 2004 Spatializer Audio Laboratories, Inc.
SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
FOR THE THREE MONTH PERIOD ENDED
-------------------------------
MARCH 31, MARCH 31,
2004 2003
------------ ------------
Revenues:
License Revenues $ -- $ --
Royalty Revenues 170,679 332,378
Product Revenues -- --
------------ ------------
170,679 332,378
Cost of Revenues 17,004 35,942
------------ ------------
Gross Profit 153,675 296,436
Operating Expenses:
General and Administrative 166,630 156,402
Research and Development 95,482 109,003
Sales and Marketing 13,701 102,139
------------ ------------
275,813 367,544
------------ ------------
Operating Profit (Loss) (122,138) (71,108)
Interest and Other Income 941 2,492
Interest and Other Expense (2,599) (2,813)
------------ ------------
(1,658) (321)
------------ ------------
Income (Loss) Before Income Taxes (123,796) (71,429)
Income Taxes -- (3,020)
------------ ------------
Net Income (Loss) $ (123,796) $ (74,449)
============ ============
Basic (Loss) Per Share $ (0.00) $ (0.00)
============ ============
Weighted Average Shares
Outstanding 47,015,865 47,406,939
============ ============
SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
MARCH 31, DECEMBER 31,
2004 2003
------------ ------------
(unaudited)
Current Assets:
Cash and Cash Equivalents $ 647,148 $ 589,797
Accounts Receivable, net 182,519 345,411
Prepaid Expenses and Deposits 7,844 35,430
------------ ------------
Total Current Assets 837,511 970,638
Property and Equipment, net 38,221 42,022
Intangible Assets, net 188,897 192,485
------------ ------------
Total Assets $ 1,064,629 $ 1,205,145
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes Payable to Related Parties, Short Term 37,500 37,500
Accounts Payable 40,246 21,466
Accrued Wages and Benefits 44,491 36,973
Accrued Professional Fees 5,000 20,000
Accrued Commissions 17,813 33,856
Accrued Expenses 29,197 28,197
------------ ------------
Total Current Liabilties 174,247 177,992
Notes Payable to Related Parties, Long Term 57,771 70,746
Commitments and Contingencies
Series B-1, Redeemable Convertible Preferred shares, $.01 par
value, 1,000,000 shares authorized, 102,762
shares issued and outstanding at March 31, 2004
and December 31, 2003 1,028 1,028
Shareholders' Equity:
Common shares, $.01 par value, 65,000,000
shares authorized, 47,015,865 shares issued
and outstanding at March 31, 2004 and
December 31, 2003 470,159 470,159
Additional Paid-In Capital 46,428,615 46,428,615
Accumulated Deficit (46,067,191) (45,943,395)
------------ ------------
Total Shareholders' Equity 831,583 955,379
------------ ------------
$ 1,064,629 $ 1,205,145
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