Full Press Release Details
Spatializer Audio Laboratories Announces Second Quarter Financial Results
LOS ANGELES, Aug. 10 /PRNewswire-FirstCall/ Spatializer Audio Laboratories, Inc. (OTC
Bulletin Board: SPAZ) (the Company ) announced its financial results for the second quarter ended
Revenues increased to $361,000 for the quarter ended June 30, 2007 compared to $93,000 for the
quarter ended June 30, 2006, an increase of 288%. Revenues in the six months ended June 30, 2007
were $721,000, compared to revenues of $193,000 in the comparable period last year, an increase of
274%. Revenues in the three and six months ended June 30, 2007 increased due to revenue from a
licensing extension and related royalty payment received in the first quarter of 2007 which was
spread over the estimated remaining ownership of the Company s audio assets before they were sold
on July 2, 2007. There was no such revenue in the comparable prior periods, nor are such revenues
to be expected in the future.
Net income in the three months ended June 30, 2007 was $150,000 ($0.00 basic and diluted per
share), compared with net loss of ($63,000), ($0.00 basic per share) in the comparable period last
year. Net income in the six months ended June 30, 2007 was $383,000, $0.01 basic and diluted per
share, compared with net loss of ($236,000), ($0.00) basic per share in the comparable period last
year. Net Income resulted from increased revenues. No additional revenues are anticipated from
audio licensing since these assets were sold on July 2, 2007.
At June 30, 2007, the Company had $813,000 in cash and cash equivalents as compared to
$229,000 at December 31, 2006. The increase in cash and cash equivalents results primarily from the
net income and stock sale proceeds. The Company had working capital of $746,000 at June 30, 2007 as
compared with working capital of $242,000 at December 31, 2006. Working capital increased due to
net income and proceeds and subscription in escrow from the stock sale.
There is no current source of future cash flow for the Company as it sold substantially all of
its audio assets and those of our wholly owned subsidiary, Desper Products, Inc., on July 2, 2007,
after the end of the second quarter, which netted the Company approximately $600,000 after selling
and legal expenses. Based on current and projected operating levels, the Company does not believe
that it can maintain its liquidity position at a consistent level, on a short-term or long-term
basis, without a new business model and outside funding. As such, management intends to marshal its
assets and after a contractual nine month indemnification period relating to the sale of assets,
the Company plans to distribute its remaining cash assets, after satisfying liabilities and leaving
a $100,000 cash residual. Upon distribution of the cash assets, anticipated in the first half of
2008, it is anticipated that each of Messrs. Mandell and Civelli will resign from the Board of
Directors and the new investor group involved in the April 25, 2007 stock offering will take
management control of the Company. Although there is no assurance thereof, the new investors in the
Company may bring forth their own plan in the future regarding the direction of the Company,
including new, revenue generating businesses.
Spatializer Audio Laboratories Inc. was a developer, licensor and marketer of next-generation
audio technologies for the consumer electronics, computing and mobile communication markets. The
company s advanced audio technology has been incorporated into consumer electronics audio and video
products, PC and mobile phone handsets from several global brand leaders. The Company has ceased
operations and is awaiting the distribution of its cash assets. Spatializer stock is traded on the
OTC Bulletin Board under the symbol: SPAZ. The company is headquartered in Thousand Oaks, CA.
Further information may be obtained from Spatializer s SEC filings, and by contacting the company s
Investor Relations Department atinvestor@spatializer.com.
Safe Harbor Act Statement Under the Private Securities Litigation Reform Act of 1995: Certain
information 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 lack of future revenue and cash
generating assets, the indeterminate amount of any future cash distribution, if any, unasserted
claims against the remaining assets, and other risks detailed from time to time in the company s
periodic reports filed with the Securities and Exchange Commission.
NOTE: Desper Products Inc. is a wholly owned subsidiary of Spatializer Audio Laboratories Inc.
Spatializer(R) is a registered trademark of Desper Products Inc. as of June 30, 2007. All other
trademarks are the property of their respective owners.
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
SPATIALIZER AUDIO LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2007 | 2006 | |||||||
| (unaudited) | ||||||||
| Current Assets: | ||||||||
| Cash and Cash Equivalents | $ | 812,685 | $ | 228,940 | ||||
| Accounts Receivable, net | 35,137 | 74,828 | ||||||
| Prepaid Expenses and Deposits | 55,235 | 25,073 | ||||||
| Deferred Transaction Expense | 72,196 | |||||||
| Total Current Assets | 975,253 | 328,841 | ||||||
| Property and Equipment, net | 2,949 | 3,477 | ||||||
| Intangible Assets, net | 124,356 | 131,258 | ||||||
| Total Assets | $ | 1,102,558 | $ | 463,576 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Note Payable | 33,881 | 9,670 | ||||||
| Accounts Payable | 44,892 | 32,136 | ||||||
| Accrued Wages and Benefits | 1,242 | 3,169 | ||||||
| Accrued Professional Fees | 148,974 | 41,900 | ||||||
| Accrued Commissions | 100 | 200 | ||||||
| Total Current Liabilities | 229,089 | 87,075 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders Equity: | ||||||||
| Common shares, $.01 par value, 65,000,000 shares authorized, 65,000,000 and 48,763,383 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively. | 650,000 | 487,634 | ||||||
| Additional Paid-In Capital | 46,375,070 | 46,423,893 | ||||||
| Accumulated Deficit | (46,151,601 | ) | (46,535,026 | ) | ||||
| Total Shareholders Equity | 873,469 | 376,501 | ||||||
| $ | 1,102,558 | $ | 463,576 |
See notes to consolidated financial statements
SPATIALIZER AUDIO LABORATORIES, INC. Period:
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three | For the Six | |||||||||||||||
| Month Period Ended | Month Period Ended | |||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Revenues: | ||||||||||||||||
| Royalty Revenues | $ | 360,914 | $ | 92,868 | $ | 720,599 | $ | 193,356 | ||||||||
| Cost of Revenues | 31,312 | 9,288 | 62,805 | 19,477 | ||||||||||||
| Gross Profit | 329,602 | 83,580 | 657,794 | 173,879 | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| General and Administrative | 182,735 | 130,766 | 280,310 | 249,133 | ||||||||||||
| Research and Development | 12,839 | 157,740 | ||||||||||||||
| Sales and Marketing | 1,241 | |||||||||||||||
| 182,735 | 143,605 | 280,310 | 408,114 | |||||||||||||
| Operating Income (Loss) | 146,867 | (60,025 | ) | 377,484 | (234,235 | ) | ||||||||||
| Interest and Other Income | 5,212 | 1,702 | 8,253 | 4,921 | ||||||||||||
| Interest and Other Expense | (2,311 | ) | (2,266 | ) | (2,311 | ) | (2,266 | ) | ||||||||
| 2,901 | (564 | ) | 5,942 | 2,655 | ||||||||||||
| Income (Loss) Before Income Taxes | 149,768 | (60,589 | ) | 383,426 | (231,580 | ) | ||||||||||
| Income Taxes | (2,400 | ) | (4,800 | ) | ||||||||||||
| Net Income (Loss) | $ | 149,768 | $ | (62,989 | ) | $ | 383,426 | $ | (236,380 | ) | ||||||
| Basic and Diluted Earnings Per Share | $ | 0.00 | $ | (0.00 | ) | $ | 0.01 | $ | (0.00 | ) | ||||||
| Weighted Average Shares Outstanding | 61,253,088 | 48,763,383 | 55,008,236 | 48,763,383 |
See notes to consolidated financial statements