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<SEC-DOCUMENT>0000950134-05-023678.txt : 20051222
<SEC-HEADER>0000950134-05-023678.hdr.sgml : 20051222
<ACCEPTANCE-DATETIME>20051222081520
ACCESSION NUMBER:		0000950134-05-023678
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20051219
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20051222
DATE AS OF CHANGE:		20051222

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:		051280104

	BUSINESS ADDRESS:	
		STREET 1:		2025 GATEWAY PLACE
		STREET 2:		SUITE 365
		CITY:			SAN JOSE
		STATE:			CA
		ZIP:			95110
		BUSINESS PHONE:		3102273370

	MAIL ADDRESS:	
		STREET 1:		2625 TOWNSGATE ROAD
		STREET 2:		SUITE 330
		CITY:			WESTLAKE VILLAGE
		STATE:			CA
		ZIP:			91361
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v15706e8vk.htm
<DESCRIPTION>SPATIALIZER AUDIO LABORATORIES, INC.
<TEXT>
<HTML>
<HEAD>
<TITLE>e8vk</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20459</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>


<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 8-K</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>CURRENT REPORT<br>PURSUANT TO SECTION 13 OR 15(d) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Date of report (Date of earliest event reported): December&nbsp;19, 2005</B></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>Spatializer Audio Laboratories, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of Registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <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>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Delaware</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>000-26460</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>95-4484725</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or<BR>
other jurisdiction<BR>
of incorporation)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Commission File Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(IRS Employer Identification No.)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>2625 Townsgate Road, Suite&nbsp;330, Westlake Village, California 91361</B><BR>
(Address of principal executive offices)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Zip Code)</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>2025 Gateway Place, Suite&nbsp;365, San Jose, California 95110</B><BR>
(Address of principal corporate offices)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Zip Code)
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Registrant&#146;s telephone number, including area code: (408)&nbsp;453-4180</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions (<I>see </I>General
Instruction A.2. below):
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))</TD>
</TR>

</TABLE>
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<!-- 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>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
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	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD></TD><TD colspan="8"><A HREF="#000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;1.01 Entry into a Material Definitive Agreement</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;9.01 Financial Statements and Exhibits</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">EXHIBIT INDEX</A></TD></TR>
<TR><TD colspan="9"><A HREF="v15706exv99w1.htm">Exhibit 99.1</A></TD></TR>
</TABLE>
</CENTER>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<!-- link2 "&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;1.01 Entry into a Material Definitive Agreement" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Item&nbsp;1.01 Entry into a Material Definitive Agreement</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company and Strategic Equity Group (&#147;SEG&#148;) entered into an agreement, dated October&nbsp;12,
2005, for investment banking services. Based on certain changes in the Company&#146;s circumstances as
of December&nbsp;19, 2005 (see the discussion under item 5.02 below), the Company believes that the
agreement, while not a material agreement upon the date of execution, may be deemed to be a
material agreement and thus is providing the following disclosure,
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms of the agreement, SEG will provide the Company with investment banking
services, including without limitation identification of possible strategic, financial and foreign
partners or purchasers. The Company has agreed that SEG will be the exclusive investment banker to
the Company for a period ending twelve months after termination of the business relationship
between them. The agreement may be terminated by mutual agreement or by either party if a change
has occurred in the Company&#146;s financial condition, results of operations, properties, business or
prospects, or in the composition of the Company&#146;s management or Board of Directors, which has
adversely affected the marketability of the Company or if there is a material breach of the
representations and warranties discussed in the agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The agreement provides for an upfront payment of a non-refundable retainer in the amount of
$25,000. If a sale transaction (as defined in the agreement) is completed as a result of SEG&#146;s
efforts, SEG will be entitled to a &#147;success fee&#148; in an amount equal to the greater of (a) $250,000
or (b)&nbsp;the sum of 5% of the first $2,000,000 of consideration, 4% of the second $2,000,000, 3% of
the third $2,000,000 and 2% of any amount in excess of $6,000,000. The success fee will be payable
upon and concurrently with the consummation of such sale transaction (or, to the extent any portion
of the consideration payable in the transaction is contingent upon any future events or is
deferred, then at such time as such contingent or deferred consideration is actually paid to the
Company or its stockholders or other parties). In the event that the agreement is terminated, the
Company will still be required to pay the success fee if a sale transaction occurs, or a definitive
agreement or letter of intent with respect to a sale transaction is entered into which subsequently
results in a sale transaction, during the six month period following termination of the agreement.
SEG will also be entitled to reimbursement for reasonable actual out-of-pocket expenses for travel
and other incidentals in an amount not to exceed $25,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has agreed to indemnify, defend and hold harmless SEG and its partners,
principals, associates, employees, representatives and agents from and against claims, actions,
lawsuits, causes of action, expenses (including attorneys&#146; fees, court costs and costs of appeals),
liabilities and interest which SEG may suffer and which arise from or out of or in connection with
any breach of any representations or warranties in the agreement, the breach of any covenant of the
Company in the agreement or any instrument contemplated by the agreement, any misrepresentations in
any statement or certificate furnished by the Company pursuant to the agreement or in connection
with any sale transaction contemplated by the agreement, any claims against, or liabilities or
obligations of, the Company and any good faith acts of SEG undertaken in good faith and in
furtherance of SEG&#146;s performance under the agreement. The Company is
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">also required to advance attorneys&#146; fees and other expenses and disbursements as the same are
incurred by SEG in connection with investigating, defending or preparing for any of the foregoing.
SEG has agreed to indemnify, defend and hold harmless the Company and its officers, shareholders
and agents from and against any claims which result from or arise out of or in connection with the
gross negligence or willful misconduct of SEG, its principals and employees or the material breach
of SEG&#146;s obligations under the agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company and SEG are also party to a separate confidentiality agreement dated August&nbsp;19,
2005.
</DIV>
<!-- link2 "&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Item&nbsp;5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On and effective as of December&nbsp;19, 2005, each of Gilbert N. Segel and James D. Pace, two of
the three independent directors of the Company, resigned as directors of the Company. Mr.&nbsp;Segel
served on both the Audit Committee and the Compensation Committee of the Company at the time of his
resignation. Mr.&nbsp;Pace served on the Compensation Committee at the time of his resignation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;19, 2005, Henry R. Mandell, a director and officer of the Company, tendered his
resignation from all offices held by him with the Company other than as Chairman of the Board of
Directors and Secretary thereof but did not tender his resignation as a director of the Company.
His resignation from such offices will be effective January&nbsp;6, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company issued a press release relating to the foregoing, a copy of which is attached
hereto as Exhibit&nbsp;99.1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Forward Looking Statements. </I>The statements in this Form 8-K Current Report concerning current
management&#146;s expectations are &#147;forward looking statements&#148; within the meaning of Section&nbsp;27A of the
Securities and Exchange Act of 1993, as amended, and Section&nbsp;21E of the Securities and Exchange Act
of 1934, as amended, that involve risks and uncertainties. Any statements contained herein
(including, without limitation, statements to the effect that the Company or management
&#147;estimates,&#148; &#147;expects,&#148; &#147;intends,&#148; &#147;continues,&#148; &#147;may,&#148; or &#147;will&#148; or statements concerning
&#147;potential&#148; or variations thereof or comparable terminology or the negative thereof), that are not
statements of historical fact should be construed as forward looking statements. These
forward-looking statements are based on our management&#146;s current views and assumptions.
</DIV>
<!-- link2 "&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;9.01 Financial Statements and Exhibits" -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Item&nbsp;9.01 Financial Statements and Exhibits</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;99.1 Press release dated December&nbsp;22, 2005
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>Spatializer Audio Laboratories, Inc.</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date: December 22, 2005&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Henry R. Mandell
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Henry R. Mandell&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Chief Executive Officer and Chief Financial
Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>
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<DIV align="left"><A NAME="004"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">EXHIBIT INDEX
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">99.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Press release dated December&nbsp;22, 2005
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>v15706exv99w1.htm
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;99.1
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><IMG src="v15706v15706.gif" alt="(SPATIALIZER AUDIO LABORATORIES, INC. LOGO)">
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">CONTACT: INVESTOR RELATIONS<BR>
Henry R. Mandell<BR>
Spatializer Audio Laboratories, Inc.<BR>
408-453-4180 Ext. 201<BR>
E-mail: investor@spatializer.com
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>FOR RELEASE AT 8 A.M. EST</U>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Spatializer Audio Laboratories Announces Resignations</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Company to Pursue Strategic Transaction</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>SAN JOSE, Calif., December&nbsp;22, 2005 </B>&#150; Spatializer Audio Laboratories, Inc. (OTCBB: SPAZ)
announced today that Gil Segel and Jim Pace, two of its independent directors, have resigned from
the Board of Directors effective December&nbsp;19, 2005. In addition, Henry R. Mandell will be
resigning as CEO, CFO and as an employee of the company effective January&nbsp;6, 2006, for personal
reasons. Mr.&nbsp;Mandell will be continuing as a director and as Chairman and Secretary of the
company. While the company and Mr.&nbsp;Mandell are interested in Mr.&nbsp;Mandell serving as a part-time
consultant during the transition, the terms of such a consulting arrangement have not been
finalized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Strategic Equity Group, financial advisor to the company, is exploring strategic alternatives for
the company, which may include a merger, asset sale, investment in the company or another
comparable transaction or a financial restructuring. The company expects to announce a specific
plan for pursuing such transactions in January&nbsp;2006. The company indicated that it intends to
continue normal operations in the interim. The company remains liquid and has no long term debt and
minimal short term debt.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Spatializer Chairman Henry R. Mandell stated, &#147;Despite our continuing efforts to secure new design
wins, fully capitalizing on the opportunities in the PC, consumer electronics and cellular phone
markets require more financial and human resources than are currently available to us. We remain
dependent upon our licensees&#146; marketing plans, timing of licensees&#146; new product launches as well as
market acceptance of their products. Without the services of a full-time CEO, under the
circumstances, the Board believes that pursuing a strategic transaction is the best available
alternative to try to maximize shareholder value.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">About Spatializer
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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&#146;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.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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&#146;s web site, www.spatializer.com, Spatializer SEC filings, and by contacting the
company&#146;s Investor Relations Department at 408- 453-4180 or by writing to investor@spatializer.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-size:8pt">
Safe Harbor Act Statement Under the Private Securities Litigation Reform Act of 1995: Certain
information in this news release, including the comments by Mr.&nbsp;Mandell in this press release are
forward looking statements that are based on management&#146;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&#146;s financial
goals will be realized. Numerous uncertainties and risk factors may affect the company&#146;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&#146;s periodic reports filed with the Securities and Exchange
Commission.</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-size:8pt">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)&nbsp;2005
Spatializer Audio Laboratories, Inc.</FONT>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
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