Looking for who said what in the sound world? Well there is no better place to find every audio related press release than 3DsoundSurge.!

Fiscal 2002 Marked by Diversification of Licensee Base and New Product Launches

Revenues for the fourth quarter ended December 31, 2002 were $464,000, compared to $389,000 in the prior year, an increase of 19%. Spatializer reported a net loss of $17,000, $0.00 per share, for the three months ended December 31, 2002, compared to net income of $27,000, $0.00 per share, in the prior year.

Spatializer's working capital at December 31, 2002 was $1,125,000 compared with working capital of $1,124,000 at December 31, 2001. At December 31, 2002, Spatializer had $859,000 in cash and cash equivalents, compared to $869,000 at December 31, 2001.

"We have successfully moved the company forward in fiscal 2002 in a difficult economic environment," stated Henry R. Mandell, Chairman and CEO of Spatializer Audio Laboratories, Inc. "We restored profitability and generated revenue growth of 16%, the first year of revenue growth since 2000. Moreover, we were able to expand the diversification of our licensee base and introduced several new products in 2002 that will serve as a platform for product diversification going forward."

Mandell continued, "We added or expanded our relationships with JVC, Sanyo, Orion and Mediatech this past year. We anticipate that there will be a wind down of our licensing program in early 2003 with a large computer account as that entity completes its migration to its latest operating system. However, we believe that growth from these and other licensing arrangements including some that are pending but not announced or in negotiation, will substantially offset any revenue shortfalls from the computer account by the third quarter of fiscal 2003. Mediatech, in particular, has been successful in penetrating the DVD market and our relationship with them positions us well as the audio solutions provider of choice in these new accounts for 2003 and 2004. Further, by the second half of 2003, we expect to begin generating revenues from the Company's new products that were introduced in 2002."

Mandell concluded, "Some stockholders contact us expressing concern over our stock price, assuming that fluctuations in share price signals business changes for the company on a daily basis. In fact, equity markets in general are in turmoil, pressed by economic and political uncertainty. Stocks traded on the OTC Bulletin Board are particularly volatile and subject to various stock trading tactics. In these uncertain times, our management team is focused on what we can better control ... our business. There were many positive achievements in 2002. We are pursuing a more aggressive and value proposition oriented sales approach under the direction of Michael Wood who joined us in the second half of 2002. Our customers and prospects give us strong positive feedback on our products, especially in head to head comparison with the competition. We grew revenue 16%, had a profitable 2002 and we are doing new deals. Our working capital has remained stable at over $1.1 million. While one of our non-operating directors is selling small quantities of shares on a regular basis to fund his personal needs, none of our other insiders or management team has sold any shares since 2001. Markets today are at the mercy of forces often beyond our control or conventional analysis. While we cannot control those forces, we can and are continuing to focus on our business, working hard at aggressively seeking new opportunities to unleash value and to generate accelerated growth."

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, JVC, Panasonic, Samsung, Sharp and Sanyo, among others. Spatializer stock is traded on the OTC Bulletin Board under the symbol: SPAZ. The company is headquartered in Santa Clara, CA, with executive offices in Westlake Village, CA and marketing offices in Tokyo, Japan. 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 408-296-0600 or by writing to investor@spatializer.com.

                     SPATIALIZER AUDIO LABORATORIES, INC.
                               AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS

                       ASSETS
                                                   December 31,   December 31,
                                                      2002           2001
    Current Assets:
      Cash and Cash Equivalents                     $858,725       $869,478
      Accounts Receivable                            499,023        442,555
      Prepaid Expenses and Deposits                   82,920        133,251
        Total Current Assets                       1,440,668      1,445,284
    Property and Equipment, Net                       70,842         50,586
    Intangible Assets, Net                           225,859        255,726
    Other Assets                                       8,471          1,510
                                                  $1,745,840     $1,753,106

          LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities:
      Notes Payable to Related Party                 112,500        112,500
      Accounts Payable                                39,027         14,872
      Accrued Wages and Benefits                     108,771         72,969
      Accrued Expenses                                55,682         41,197
      Net Liabilities of Discontinued Operation           --        100,000
        Total Current Liabilities                    315,980        341,538
      Commitments and Contingencies
      Stockholders' Equity (Deficit):
        Series B-1 Convertible Preferred shares,
         $0.01 par value; 1,000,000 shares authorized;
         87,967 and 87,967 shares issued and outstanding
         at December 31, 2002 and 2001, respectively     880          880
        Common shares, $0.01 par value; 65,000,000
         shares authorized; 47,406,939 and 47,406,939
         shares issued and outstanding at
         December 31, 2002 and 2001, respectively    474,070      474,070
        Additional Paid-In Capital                46,402,852   46,402,852
        Accumulated Deficit                      (45,447,942) (45,466,234)
        Total Shareholders' Equity                 1,429,860    1,411,568
                                                  $1,745,840   $1,753,106


                     SPATIALIZER AUDIO LABORATORIES, INC.
                               AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                          Year Ended December 31,
                                     2002           2001          2000
    Revenues:
      Product Revenues, Net
      Licensing Revenues
      Royalty Revenues           $1,855,934      $1,603,782    $2,201,812
                                  1,855,934       1,603,782     2,201,812
        Cost of Revenues            130,516          96,783       248,217
                                  1,725,418       1,506,999     1,953,595
    Operating Expenses:
      General and Administrative    765,637         707,115       599,291
      Research and Development      432,826         639,223       540,269
      Sales and Marketing           512,727         476,432       455,901
                                  1,711,190       1,822,770     1,595,461
        Operating Income (Loss)      14,228        (315,771)      358,134
    Interest Income                  12,432          41,358        64,857
    Interest Expense                (14,493)        (11,250)      (34,112)
    Other Income (Expense), Net          25          42,691         3,140
                                      2,036          72,799        33,885
        Income (Loss) Before Income
         Taxes                       12,192        (242,972)      392,019
        Income Taxes                 (6,100)          2,865       (10,000)
        Net Income (Loss)           $18,292       $(240,107)     $382,019
        Basic and Diluted Income
        (Loss) per Share:              $.00           $(.01)         $.01
        Weighted-Average Shares
         Outstanding             47,406,939      47,247,455    46,736,224

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, 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® is a registered trademark of Desper Products Inc. All other trademarks are the property of their respective owners