OTCBB ALERTS

[Mandroid]

Spatializer Audio Laboratories Inc. SPAZ) today reported revenues of $1,192,000 for the year ended December 31, 2005 compared to $1,106,000 for the
year ended December 31, 2004, an increase of 8%. Net loss was $81,000 for the
year ended December 31, 2005; ($0.00) basic per share, compared to net loss of
$157,000, ($0.00) per share for the year ended December 31, 2004.
Revenues for the fourth quarter ended December 31, 2005 were $161,000,
compared to $495,000 in the prior year, a decrease of 67%. Spatializer
reported net loss of ($187,000), ($0.00) per share, for the three months ended
December 31, 2005, compared to net income of $170,000, $0.00 per share, in the
prior year.
At December 31, 2005, the Company had $551,000 in cash and cash
equivalents as compared to $871,000 at December 31, 2004. The Company had
working capital of $560,000 at December 31, 2005 as compared with working
capital of $586,000 at December 31, 2004.
The increase in revenue resulted from a greater recognition of deferred
revenue in the current year, as compared to the prior year, in which a royalty
advance was received. In addition, revenues increased from royalties on a
third party semiconductor used in cellular phones, as compared to the prior
year. This was partially offset by declining revenues from two accounts whose
products using our technology reached end of life. Their new models do not
utilize our technology.
The reduction in net loss for the current period is primarily the result
of higher revenue, partially offset by higher overhead.
About Spatializer
Spatializer Audio Laboratories Inc. is developer, licensor and marketer of
next-generation audio technologies for the consumer electronics, computing and
mobile communication markets. The company's advanced audio technology is
incorporated into consumer electronics audio and video products, PC and mobile
phone handsets from several global brand leaders. Spatializer stock is traded
on the OTC Bulletin Board under the symbol: SPAZ. The company is headquartered
in San Jose, CA, and representative offices throughout the Asia Pacific
region. 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
[e-mail].
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, loss of key personnel, 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.
NOTE: Desper Products Inc. is a wholly owned subsidiary of Spatializer
Audio Laboratories Inc. Spatializer(R) is a registered trademark of Desper
Products Inc. All other trademarks are the property of their respective
owners.


SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, December 31,
2005 2004

ASSETS
Current Assets:
Cash and Cash Equivalents $ 550,633 $ 871,155
Accounts Receivable 155,233 325,712
Prepaid Expenses and Other Current Assets 34,104 70,940
Total Current Assets 739,970 1,267,807
Property and Equipment, Net 18,403 29,527
Intangible Assets, Net 138,548 166,710
----------- ------------
TOTAL ASSETS $ 896,921 $ 1,464,044

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes Payable 10,443 66,252
Accounts Payable 14,195 71,873
Accrued Wages and Benefits 48,095 50,446
Accrued Professional Fees 34,000 20,000
Accrued Commissions 31,917 32,182
Accrued Expenses 40,869 32,979
Deferred Income -- 391,395
----------- -----------
Total Current Liabilities 179,519 665,127
Notes Payable to Related Party, Long Term -- --
Commitments and Contingencies
Series B-1 Redeemable Convertible
Preferred Shares, $0.01 par value:
1,000,000 shares authorized; 118,351 shares
issued and outstanding at December 31, 2004
(liquidation preference of $1,183,510) -- 1,182

Stockholders' Equity (Deficit):
Common shares, $0.01 par value;
65,000,000 shares authorized;
48,763,383 and 46,975,363 shares
issued and outstanding at
December 31, 2005 and 2004, respectively 469,772 469,754
Additional Paid-In Capital 46,430,030 46,428,866
Accumulated Deficit (46,182,400) (46,100,885)
Total Shareholders' Equity 717,402 797,735
----------- -----------
Total Liabilities and Shareholders' Equity $ 896,921 $ 1,464,044


SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,
2005 2004 2003

Revenues:
Royalty Revenues $ 1,192,447 $ 1,105,923 $ 1,269,286
Cost of Revenues 106,062 111,395 122,417
1,086,385 994,528 1,146,869
Operating Expenses:
General and Administrative 670,124 615,412 811,024
Research and Development 354,138 393,004 458,940
Sales and Marketing 152,473 137,889 360,692
------------ ------------ ----------
1,176,735 1,146,305 1,630,656
------------ ------------ ----------
Operating Income (Loss) (90,350) (151,777) (483,787)
Interest Income 13,230 4,982 7,201
Interest Expense (5,269) (10,295) (13,447)
------------ ------------ ----------
7,961 (5,313) (6,246)
------------ ------------ ----------
Income (Loss) Before
Income Taxes (82,389) (157,090) (490,033)
Income Taxes 874 (400) (5,420)
------------ ------------ ----------
Net Income (Loss) $ (81,515) $ (157,490) $ (495,453)
Basic and Diluted Income
(Loss) per Share: $ (.00) $ (.00) $ (.01)
Weighted-Average Shares
Outstanding 46,990,059 46,975,363 47,309,171
SOURCE Spatializer Audio Laboratories Inc.


Contact Information:
investors, Henry R. Mandell, Chairman, of Spatializer Audio Laboratories, Inc., [phone], ext. 201, or [e-mail]

WebSite:
http://www.spatializer.com/