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<SEC-DOCUMENT>0000950148-04-000646.txt : 20040318
<SEC-HEADER>0000950148-04-000646.hdr.sgml : 20040318
<ACCEPTANCE-DATETIME>20040318094408
ACCESSION NUMBER:		0000950148-04-000646
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20040317
ITEM INFORMATION:		
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20040318

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SPATIALIZER AUDIO LABORATORIES INC
		CENTRAL INDEX KEY:			0000890821
		STANDARD INDUSTRIAL CLASSIFICATION:	SEMICONDUCTORS & RELATED DEVICES [3674]
		IRS NUMBER:				954484725
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-26460
		FILM NUMBER:		04676772

	BUSINESS ADDRESS:	
		STREET 1:		20700 VENTURA BOULEVARD SUITE 140
		CITY:			WOODLAND HILLS
		STATE:			CA
		ZIP:			91364
		BUSINESS PHONE:		3102273370

	MAIL ADDRESS:	
		STREET 1:		20700 VENTURA BLVD SUITE 140
		CITY:			WOODLAND HILLS
		STATE:			CA
		ZIP:			91364
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v97429e8vk.htm
<DESCRIPTION>8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>Spatializer Audio Laboratories, Inc. Form 8-K</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, DC 20549</B></FONT>

<P align="center"><FONT size="2"><B>FORM 8-K</B></FONT>

<P align="center"><FONT size="2"><B>CURRENT REPORT<BR>
Pursuant to Section&nbsp;13 OR 15(d) of the Securities Exchange Act of 1934</B></FONT>

<P align="center"><FONT size="2">Date of Report (Date of earliest event reported): March&nbsp;17, 2004</FONT>

<P align="center"><FONT size="5"><B>SPATIALIZER AUDIO LABORATORIES, INC.</B></FONT>

<DIV align="center"><FONT size="2">(Exact name of registrant as specified in its charter)</FONT></DIV>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2"><B>Delaware</B><BR>
State or other jurisdiction<BR>
of incorporation)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>000-26460</B><BR>
(Commission File Number)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><B>95-4484725</B><BR>
(IRS Employer<BR>
Identification No.)</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2"><B>2625 Hampshire Road, Suite&nbsp;330, Westlake Village, California 91361</B><BR>
(Address of Principal executive offices)</FONT>

<P align="center"><FONT size="2">Registrant&#146;s telephone number, including area code: (408)&nbsp;453-4180</FONT>

<P align="center"><FONT size="2">&nbsp;
</FONT>

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<P><HR noshade><P>


<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
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</TR>
<TR><TD></TD><TD colspan="8"><A HREF="#000">ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">Exhibit&nbsp;Index</A></TD></TR>
<TR><TD colspan="9"><A HREF="v97429exv99w1.txt">EXHIBIT 99.1</A></TD></TR>
</TABLE>
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<!-- link2 "ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS" -->
<DIV align="left"><A NAME="000"></A></DIV>
<P align="left"><FONT size="2">ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS</FONT>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
(c)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Exhibits. The following exhibit is furnished in accordance with the
provisions of Item&nbsp;601 of Regulation&nbsp;S-K:</FONT></TD>
</TR>
<TR><TD>&nbsp;</TD></TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">99.1: Spatializer Audio Laboratories, Inc. press release dated March
17, 2004</FONT></TD>
</TR>
</TABLE>
</CENTER>
<!-- link2 "ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION" -->
<DIV align="left"><A NAME="001"></A></DIV>


<P align="left"><FONT size="2">ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;17, 2004, Spatializer issued a press release announcing its
operating results for the year ended December&nbsp;31, 2003. A copy of the press
release is furnished as Exhibit&nbsp;99.1 to this report and is hereby incorporated
to this Item&nbsp;12 by reference.
</FONT>
<P align="center"><FONT size="2">2
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information in this report (including exhibits hereto) shall not be
deemed &#147;filed&#148; for purposes of Section&nbsp;18 of the Securities Exchange Act of
1934 or the Securities and Exchange Commission&#146;s rules and regulations, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933.
</FONT>
<P align="center"><FONT size="2">3
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="002"></A></DIV>
<P align="center"><FONT size="2"><B>SIGNATURES</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
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</TR>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top" colspan="3"><FONT size="2">Spatializer Audio Laboratories, Inc.</FONT></TD>
</TR>
<TR><TD>&nbsp;</TD></TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Date: March&nbsp;18, 2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ Henry R. Mandell</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Name:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Henry R. Mandell</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Title:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Executive Officer and CFO</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">4
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "Exhibit&nbsp;Index" -->
<DIV align="left"><A NAME="003"></A></DIV>
<P align="center"><FONT size="2"><B>Exhibit&nbsp;Index</B></FONT>


<CENTER>
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    <TD width="5%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>
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    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description of Exhibit</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"></FONT></TD>
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    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">99.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Spatializer Audio Laboratories, Inc. press release dated March&nbsp;17, 2004</FONT></TD>
</TR>
</TABLE>
</CENTER>





<P align="center"><FONT size="2">5</FONT>


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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>v97429exv99w1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<PAGE>
EXHIBIT 99.1

                            [SPATIALIZER LETTERHEAD]

FOR RELEASE 6:30 AM MARCH 18, 2004:

    SPATIALIZER AUDIO LABORATORIES INC. REPORTS FISCAL 2003 OPERATING RESULTS

      Fiscal 2003 Marked by Transition of Licensee Base to New Markets and
                           Streamlining of Operations

      Overhead Rationalization Targets Break-Even at Q4 2003 Revenue Level

SAN JOSE, CA, March 17, 2004 -- Spatializer Audio Laboratories Inc. (OTC BB:
SPAZ) today reported revenues for the twelve months ended December 31, 2003 of
$1,269,000, compared to $1,856,000 in the prior year. Net loss for the year
ended December 31, 2003 was ($495,000), or ($0.01) per share, compared to net
income of $18,000, or $0.00 per share in the prior year.

Revenues for the fourth quarter ended December 31, 2003 were $345,000, compared
to $464,000 in the prior year. Spatializer reported a net loss of ($102,000),
($0.00) per share, for the three months ended December 31, 2003, compared to net
loss of ($17,000), ($0.00) per share, in the prior year.

Spatializer working capital at December 31, 2003 was $793,000 compared with
working capital of $1,125,000 at December 31, 2002. At December 31, 2003,
Spatializer had $590,000 in cash and cash equivalents, compared to $859,000 at
December 31, 2002.

The decrease in revenues is attributed primarily to the loss or reduction at
three key accounts which generated in excess of 20% of total revenue each,
partially offset by revenue from a new account. The first lost account was in
the PC market, where the customer completed its migration to a new operating
system in which it chose not to include any software audio enhancements. The
other two accounts were in the DVD player market, where a lower cost solution,
or no solutions were selected for low cost, high volume DVD players.

"Fiscal 2003 was a transition year for us," explained Henry R. Mandell, Chairman
and CEO of Spatializer Audio Laboratories, Inc. "In 2003, we experienced
declining revenues from three major customers, primarily from the curtailment or
cessation of use of our products by these customers. Two of these cases were in
the DVD player market, where we have been historically strong. During 2003, the
DVD player market became largely commoditized, resulting in intense pricing
pressure and a steep decline in price and margins. Manufacturers were forced to
strip out features, such as those offered by our company, in order to compete.
One of these accounts switched to outside sourcing and we were able to expand
our relationship with their supplier to recapture most of that revenue. However,
a major new design win we were projecting for the DVD market was cancelled due
to these cost constraints. Lastly, another PC account migrated completely in
2003 to a new operating system and chose not to include any audio software
enhancements."

"To lessen competitive pressures on us, we laid the ground work in 2003 to
transition the Company into other growing markets where we believe our value
proposition is both resonant and adoption of our technologies more feasible,"
continued Mr. Mandell. "We developed our new Spatializer ((environ))(TM)
technology to serve the cellular


<PAGE>

telephone market, which culminated in our first design win in that market with
Sanyo for the Vodafone system. We also developed Spatializer Audio Alchemy(TM),
a new class of noise reduction technology to address the needs of the digital
camcorder, digital camera and DVD authoring markets. We rolled out the new
Spatializer Ultra HD(TM) class of whole product solutions to penetrate the
digital mobile audio, DVD-R, digital television and PC markets. More
importantly, we are awaiting the announcement of new design wins in these
markets as documentation is finalized and the related licensee product nears
launch."

Mandell concluded, "Such a transition as we have undertaken is not easily
accomplished, yet we are beginning to see positive results. To help ensure
further positive results and to reduce the financial disruption such a
transition entails, we completed a streamlining of our operations in the fourth
quarter of 2003 that we expect to result in a 25% reduction in our cost of doing
business. This streamlining included a comprehensive overhaul of our domestic
and international sales organization and the relocation of our corporate office
to lower cost facilities. On a going forward basis, our operating costs have
been restructured to deliver a lower break-even level, such that we currently
believe profitable operations can be achieved at slightly below Q4 2003 revenue
levels. The result of these initiatives is greater bottom line leverage as we
look to successfully complete the transition to and further penetrate these more
attractive markets. "

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.

NOTE: Desper Products Inc. is a wholly owned subsidiary of Spatializer Audio
Laboratories Inc. Spatializer(R) is a registered trademark and Spatializer
((environ))(TM), Spatializer Audio Alchemy(TM) and Spatializer UltraMobile
HD(TM) are trademarks of Desper Products Inc. All other trademarks are the
property of their respective owners.


Copyright (C) 2004 Spatializer Audio Laboratories, Inc.


<PAGE>

                                     -more-

                      SPATIALIZER AUDIO LABORATORIES, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                    DECEMBER 31,     DECEMBER 31,
                                                                                        2003             2002
                                                                                    ------------      ------------
<S>                                                                                 <C>               <C>
Current Assets:
  Cash and Cash Equivalents ...................................................     $    589,797      $    858,725
  Accounts Receivable .........................................................          345,411           499,023
  Prepaid Expenses and Other Current Assets ...................................           35,430            82,920
                                                                                    ------------      ------------
    Total Current Assets ......................................................          970,638         1,440,668
Property and Equipment, Net ...................................................           42,022            70,842
Intangible Assets, Net ........................................................          192,485           225,859
Other Assets ..................................................................               --             8,471
                                                                                    ------------      ------------
                                                                                    $  1,205,145      $  1,745,840
                                                                                    ============      ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Notes Payable to Related Party, Short Term ..................................           37,500           112,500
  Accounts Payable ............................................................           21,466            39,027
  Accrued Wages and Benefits ..................................................           36,973           108,771
  Accrued Professional Fees ...................................................           20,000                --
  Accrued Commissions .........................................................           33,856                --
  Accrued Expenses ............................................................           28,197            55,682
                                                                                    ------------      ------------
    Total Current Liabilities .................................................          177,992           315,980
Notes Payable to Related Party, Long Term                                                 70,746                --

Commitments and Contingencies
Series B-1 Redeemable Convertible Preferred Shares, $0.01 par value:
  1,000,000 shares authorized; 102,762 shares issued and outstanding at
  December 31, 2003 (liquidation preference of $1,027,620) ....................            1,028             1,028
Stockholders' Equity (Deficit):
     10% Series B Convertible Preferred Shares $0.01 par value 1,000,000 shares
      authorized; 87,967 converted to Series B-1

     Common shares, $0.01 par value; 65,000,000 shares authorized; 47,015,865
      and 47,406,939 shares issued and outstanding at December 31, 2003 and
      2002, respectively ......................................................          470,159           474,070
     Additional Paid-In Capital ...............................................       46,428,615        46,402,704

     Accumulated Deficit ......................................................      (45,943,395)      (45,447,942)
                                                                                    ------------      ------------
        Total Shareholders' Equity ............................................          955,379         1,428,832
                                                                                    ------------      ------------
                                                                                    $  1,205,145      $  1,745,840
                                                                                    ============      ============
</TABLE>

           See accompanying notes to consolidated financial statements


<PAGE>

                      SPATIALIZER AUDIO LABORATORIES, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                   ------------------------------------------------
                                                       2003              2002              2001
                                                   ------------      ------------      ------------
<S>                                                <C>               <C>               <C>
Revenues:
  Product Revenues, Net
  Licensing Revenues
  Royalty Revenues ...........................     $  1,269,286      $  1,855,934      $  1,603,782
                                                   ------------      ------------      ------------
                                                      1,269,286         1,855,934         1,603,782
    Cost of Revenues .........................          122,417           130,516            96,783
                                                   ------------      ------------      ------------
                                                      1,146,869         1,725,418         1,506,999
                                                   ------------      ------------      ------------
Operating Expenses:
  General and Administrative .................          811,024           765,637           707,115
  Research and Development ...................          458,940           432,826           639,223
  Sales and Marketing ........................          360,692           512,727           476,432
                                                   ------------      ------------      ------------
                                                      1,630,656         1,711,190         1,822,770
                                                   ------------      ------------      ------------
    Operating Income (Loss) ..................         (483,787)           14,228          (315,771)
                                                   ------------      ------------      ------------
Interest Income ..............................            7,201            12,432            41,358
Interest Expense .............................          (13,447)          (14,493)          (11,250)
Other Income (Expense), Net ..................                0                25            42,691
                                                   ------------      ------------      ------------
                                                         (6,246)           (2,036)           72,799
                                                   ------------      ------------      ------------
    Income (Loss) Before Income Taxes ........         (490,033)           12,192          (242,972)
    Income Taxes .............................           (5,420)           (6,100)            2,865
                                                   ------------      ------------      ------------
    Net Income (Loss) ........................     $   (495,453)     $     18,292      $   (240,107)
                                                   ============      ============      ============
    Basic and Diluted Income (Loss) per Share:     $       (.01)     $        .00      $       (.01)
                                                   ============      ============      ============
     Weighted-Average Shares Outstanding .....       47,309,171        47,406,939        47,247,455
                                                   ============      ============      ============
</TABLE>

           See accompanying notes to consolidated financial statements


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