Full Press Release Details
CONTACT: INVESTOR RELATIONS
Henry R. Mandell, CEO
Spatializer Audio Laboratories, Inc.
408-453-4180 Ext.201
For release at 8 a.m. EST
SPATIALIZER AUDIO LABORATORIES, INC. REPORTS
CONTINUED GROWTH AND PROFITABILITY
Revenues Increase 32% Over the Prior Year
San Jose, Calif., November 7, 2005 - Spatializer Audio Laboratories, Inc. (OTC Bulletin
Board: SPAZ) today announced financial results for the third quarter ended September 30, 2005.
Revenues increased to $271,000 for the quarter ended September 30, 2005 compared to $205,000
for the quarter ended September 30, 2004, an increase of 32%. Revenues in the nine months ended
September 30, 2005 were $1,032,000, compared to revenues of $611,000 in the comparable period last
year, an increase of 69%.
Net Income was $37,000 for the quarter ended September 30, 2005; $0.00 basic and diluted per
share, compared to net loss of $81,000, ($0.00) per share basic, for the quarter ended September
30, 2004. Net income in the nine months ended September 30, 2005 was $104,000, $0.00 basic and
diluted per share, compared with net loss of ($328,000) ($0.01) basic per share in the comparable
At September 30, 2005, the Company had $674,000 in cash and cash equivalents as compared to
$871,000 at December 31, 2004. Working capital was $739,000 at September 30, 2005 as compared with
working capital of $603,000 at December 31, 2004
The increase in revenue for the three and nine month periods resulted from the greater usage
of our technology in cellular phones and expansion of revenue from a key consumer electronics
manufacturer. However, current operating results are not indicative of future performance.
We are gratified to have generated revenue growth and profitability in a rough operating
environment, stated Henry R. Mandell, chairman and chief executive officer. Revenue traction
remains difficult to achieve and we remain dependent upon our licensees marketing plans, timing of
licensees new product launches as well as market acceptance of their products. For example, the
launch of a new portable audio player by a new licensee, which we expected to be shipping now, has
been delayed until the first
quarter of 2006. Revenue from the initial Samsung license pre-payment has been fully
recognized in the third quarter of 2005 and future revenue from this license will be based on the
sales volume of these chips by Samsung, the timing of such shipments and the marketing strategy
employed by Samsung. As such, we do not foresee additional revenue, which comprised 21% of our
third quarter revenue, from this license in the fourth quarter, at the very least.
Mandell concluded, The fourth quarter is traditionally a relatively stronger quarter than
others and our lean organization structure is designed to allow us to operate in dynamic
environments. We ve made changes to and expanded our international sales organization throughout
the year and we expect to see the benefits of this initiative. Interest in our technology remains
high and the challenge now is to convert this interest into action, in the form of revenue
generating licenses, with the resources we have at our disposal.
Spatializer Audio Laboratories Inc. is a leading developer, licensor and marketer of
next-generation technologies for the consumer electronics, computing and mobile handset markets.
The company s advanced audio technology is incorporated into products from global brand leaders
including Toshiba, Sanyo 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 the Asia Pacific region. Further
information may be obtained from the company s web site, www.spatializer.com, Spatializer 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 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 intense competition and pricing pressure, complete dependence on product
shipments of third-party licensees and the timing and execution of their marketing plans, delay in
revenue streams due to delays in new product development, fluctuating operating results and its
effect on sustainable operations, the availability of additional capital, and other risks detailed
from time to time in the company s periodic reports filed with the Securities and Exchange
NOTE: Desper Products Inc. is a wholly owned subsidiary of Spatializer Audio Laboratories Inc.
Spatializer(r) and the circle-in-the-square device are registered trademarks of Desper Products
Inc. All other trademarks are the property of their respective owners. Copyright (c) 2005
Spatializer Audio Laboratories, Inc.
SPATIALIZER AUDIO LABORATORIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2005 | 2004 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and Cash Equivalents | $ | 674,427 | $ | 871,155 | ||||
| Accounts Receivable, net | 187,353 | 325,712 | ||||||
| Prepaid Expenses and Deposits | 42,280 | 70,940 | ||||||
| Total Current Assets | 904,060 | 1,267,807 | ||||||
| Property and Equipment, net | 22,469 | 29,527 | ||||||
| Intangible Assets, net | 141,256 | 166,710 | ||||||
| Total Assets | $ | 1,067,785 | $ | 1,464,044 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Note Payable | 36,361 | 66,252 | ||||||
| Accounts Payable | 25,703 | 71,873 | ||||||
| Accrued Wages and Benefits | 44,940 | 50,446 | ||||||
| Accrued Professional Fees | 22,500 | 20,000 | ||||||
| Accrued Commissions | 34,255 | 32,182 | ||||||
| Accrued Expenses | 984 | 32,979 | ||||||
| Deferred Revenue | 391,395 | |||||||
| Total Current Liabilties | 164,743 | 665,127 | ||||||
| Commitments and Contingencies | ||||||||
| Series B-1, Redeemable Convertible Preferred shares, $.01 par value, 1,000,000 shares authorized, 118,351 shares issued and outstanding at September 30, 2005 and December 31, 2004 | 1,182 | 1,182 | ||||||
| Shareholders Equity: | ||||||||
| Common shares, $.01 par value, 65,000,000 shares authorized, 46,975,365 shares issued and outstanding at September 30, 2005 and December 31, 2004. | 469,754 | 469,754 | ||||||
| Additional Paid-In Capital | 46,428,866 | 46,428,866 | ||||||
| Accumulated Deficit | (45,996,760 | ) | (46,100,885 | ) | ||||
| Total Shareholders Equity | 901,860 | 797,735 | ||||||
| $ | 1,067,785 | $ | 1,464,044 |
See notes to consolidated financial statements
SPATIALIZER AUDIO LABORATORIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three Month Period Ended | For the Nine Month Period Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
| Revenues: | ||||||||||||||||
| Royalty Revenues | $ | 270,914 | $ | 205,324 | $ | 1,031,777 | $ | 610,863 | ||||||||
| 270,914 | 205,324 | 1,031,777 | 610,863 | |||||||||||||
| Cost of Revenues | 12,752 | 26,114 | 89,514 | 61,252 | ||||||||||||
| Gross Profit | 258,162 | 179,210 | 942,263 | 549,611 | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| General and Administrative | 116,539 | 155,268 | 457,463 | 528,181 | ||||||||||||
| Research and Development | 62,068 | 93,842 | 244,717 | 295,630 | ||||||||||||
| Sales and Marketing | 45,356 | 11,484 | 140,810 | 46,962 | ||||||||||||
| 223,963 | 260,594 | 842,990 | 870,773 | |||||||||||||
| Operating (Loss) | 34,199 | (81,384 | ) | 99,273 | (321,162 | ) | ||||||||||
| Interest and Other Income | 3,376 | 744 | 9,992 | 2,633 | ||||||||||||
| Interest and Other Expense | (1,030 | ) | (1,936 | ) | (5,140 | ) | (8,702 | ) | ||||||||
| 2,346 | (1,192 | ) | 4,852 | (6,069 | ) | |||||||||||
| Income (Loss) Before Income Taxes | 36,545 | (82,576 | ) | 104,125 | (327,231 | ) | ||||||||||
| Income Taxes | 2,000 | (400 | ) | |||||||||||||
| Net Income (Loss) | $ | 36,545 | $ | (80,576 | ) | $ | 104,125 | $ | (327,631 | ) | ||||||
| Basic and Diluted Earnings Per Share | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.01 | ) | ||||||
| Weighted Average Shares Outstanding | 46,975,365 | 46,975,365 | 46,975,365 | 46,975,365 |
See notes to consolidated financial statements
See notes to the financial statements