Exhibit 99.1
CONTACT: INVESTOR RELATIONS
HENRY R. MANDELL, CEO
SPATIALIZER AUDIO LABORATORIES, INC.
408-296-0600 EXT. 4
investor@spatializer.com
SPATIALIZER AUDIO LABORATORIES, INC. REPORTS
FIRST QUARTER 2003 OPERATING RESULTS
Santa Clara, Calif., May 12, 2003- Spatializer Audio Laboratories, Inc.
(OTC Bulletin Board:SPAZ) today announced financial results for the first
quarter ended March 31, 2003.
Revenues for the three months ended March 31, 2003 were $332,000, compared
to revenues of $440,000 in the comparable period last year, a decrease of 25%.
The company reported a net loss for the quarter of $74,000, ($0.00) basic
per share, compared with net income of $21,000 ($0.00) basic and fully diluted
per share in the comparable period last year.
The decrease in revenues resulted primarily from the wind down and
expiration of a license agreement with a major account and further reductions
from a second account which began outsourcing manufacturing to third parties.
These reductions were partially offset by increases in royalties from licensees
added over the past several months, including a third party manufacturer of an
existing customer.
The net loss resulted from decreased revenues, partially offset by reduced
operating expenses.
The Company's cash position improved to $894,000 at March 31, 2003 as
compared to $859,000 at December 31, 2002. The increase in cash and cash
equivalents is attributed to the decreases in accounts receivable. Spatializer
had working capital of $1,076,000 at March 31, 2003 as compared with working
capital of $1,125,000 at December 31, 2002.
"As we reported two months ago, we expected a sharp downtrend in the first
and second quarters, resulting primarily from the expiration of a license
agreement with a major account," stated Henry R. Mandell, Chairman and CEO of
Spatializer Audio Laboratories, Inc. "In addition, another account began
outsourcing manufacturing, which disrupted our royalty revenue stream. While
discussions on future use of our technology continue with these accounts as part
of our aggressive licensing effort, timing was such that the revenue decline was
unavoidable, which frankly was less than we anticipated. This is because of
strong performances turned in by some of our newer licensees, including
those who are manufacturing for others. This is one case where our aggressive,
customer-centric marketing approach over the past nine months has started to pay
off. ."
Henry R. Mandell concluded, "Clearly, we have our work cut out for us in
2003 as we work to compensate for the dynamics in the marketplace. We will
compete vigorously with our traditional products and intend to win our fair
share of this business. Technology product life cycles are not endless and to
assume so is delusional. Spatializer is not just a technology licensing
company...we are a laboratory and there holds they keys to the future. We've
announced two new technology initiatives, Spatializer Audio Alchemy and
Spatializer Interactive, that we believe will drive the Company into new markets
and into areas offering greater growth opportunities. Spatializer Audio Alchemy,
with its combination of noise reduction, voice and music enhancement capability,
has struck a responsive chord with those prospects who have heard it. It fills a
need. It solves a problem. It is not just a nice feature to have...that's the
difference. Spatializer Audio Alchemy serves as a platform that is capable of
supporting a broad family of new products for digital recording, cellular
communications, PC and Internet-based applications. It is the future and it is
here. We look forward to communicating more on these initiatives in the coming
months."
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, JVC, Panasonic, Hitachi, Samsung, Sharp and
Sanyo, among others. Spatializer stock is traded on the OTC Bulletin Board under
the symbol: SPAZ. The company is headquartered in Santa Clara, CA, with
executive offices in Westlake Village, CA and marketing offices in Tokyo, Japan.
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 408-296-0600 or by writing to
investor@spatializer.com.
SAFE HARBOR ACT STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: Certain information in this 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, competition and pricing
pressures, the timing and realizable value of the MDT technology, 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 Spatializer Audio Alchemy and
Spatializer Interactive are trademarks of Desper Products, Inc.. Desper
Products, Inc. is a wholly owned subsidiary of Spatializer Audio Laboratories,
Inc. Copyright(C) 2003 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,
2003 2002
------------- -------------
Revenues:
License Revenues $ -- $ --
Royalty Revenues 332,378 440,481
Product Revenues -- --
------------ ------------
332,378 440,481
Cost of Revenues 35,942 28,202
------------ ------------
Gross Profit 296,436 412,279
Operating Expenses:
General and Administrative 156,402 135,335
Research and Development 109,003 123,603
Sales and Marketing 102,139 130,339
------------ ------------
367,544 389,276
------------ ------------
Operating Profit (Loss) (71,108) 23,003
Interest and Other Income 2,492 3,489
Interest and Other Expense (2,813) (2,813)
------------ ------------
(321) 677
------------ ------------
Income (Loss) Before Income Taxes (71,429) 23,680
Income Taxes (3,020) (2,400)
------------ ------------
Net Income (Loss) $ (74,449) $ 21,280
============ ============
Basic and Diluted Income (Loss) Per Share $ (0.00) $ 0.00
============ ============
Weighted Average Shares
Outstanding 47,406,939 47,406,939
============ ============
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
MARCH 31, DECEMBER 31,
2003 2002
------------ ------------
(unaudited)
Current Assets:
Cash and Cash Equivalents $ 893,577 $ 858,725
Accounts Receivable, net 345,500 499,023
Prepaid Expenses and Deposits 91,777 82,920
------------ ------------
Total Current Assets 1,330,854 1,440,668
Property and Equipment, net 59,856 70,842
Intangible Assets, net 212,809 225,859
Other Assets 6,853 8,471
------------ ------------
Total Assets $ 1,610,372 $ 1,745,840
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes Payable to Related Parties 112,500 112,500
Accounts Payable 31,993 39,027
Accrued Wages and Benefits 76,703 108,771
Accrued Expenses 33,765 55,682
------------ ------------
Total Current Liabilities 254,961 315,980
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, 2003
and December 31, 2002. 1,028 1,028
Shareholders' Equity:
Common shares, $.01 par value, 65,000,000 shares
authorized, 47,406,939 shares
issued and outstanding at March 31, 2003 and
December 31, 2002. 474,070 474,070
Additional Paid-In Capital 46,402,704 46,402,704
Accumulated Deficit (45,522,391) (45,447,942)
------------ ------------
Total Shareholders' Equity 1,354,383 1,428,832
------------ ------------
$ 1,610,372 $ 1,745,840
============ ============
###