UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
_X_ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended: MARCH 31, 1996
OR
__ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 33-90532
SPATIALIZER AUDIO LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4484725
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
20700 VENTURA BOULEVARD, SUITE 134
WOODLAND HILLS, CALIFORNIA 91364-2357
(Address of principal executive offices)
TELEPHONE NUMBER: (818) 227-3370
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days:
YES X
NO ___
As of May 7, 1996 there were 17,680,231 shares of the Registrant's Common
Stock outstanding.
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
(unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $2,138,357 $3,113,057
Trade Receivables 497,055 412,010
Inventory 286,225 262,131
Prepaid Expenses and Deposits 102,690 94,068
---------- ----------
Total Current Assets 3,024,327 3,881,266
Fixed Assets, Net (Note 3) 345,863 294,803
Intangible Assets (Note 4) 297,570 243,532
---------- ---------
$3,667,760 $4,419,601
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts Payable $ 329,253 $ 180,046
Accrued Liabilities 113,184 203,530
Advances from Related Parties (Note 5) 112,500 325,061
Notes Payable 11,768 13,493
---------- ----------
Total Current Liabilities 566,705 722,130
---------- ----------
Shareholders' Equity:
Preferred shares, $.01 par value,
1,000,000 shares authorized, no
shares issued or outstanding 0 0
Common shares, $.01 par value,
50,000,000 shares authorized,
17,574,231 and 17,457,531
shares issued and outstanding
at March 31, 1996 and December
31, 1995, respectively 175,742 174,575
Additional Paid-In Capital 13,735,593 13,578,782
Accumulated Deficit (10,809,513) (10,055,119)
Foreign Currency Translation
Adjustment (767) (767)
----------- -----------
Total Shareholders' Equity 3,101,055 3,697,471
----------- -----------
$3,667,760 $4,419,601
=========== ===========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
For the Three Month Period Ended
March 31, March 31,
1996 1995
----------- ------------
<S> <C> <C>
Revenues:
Product Revenues $ 82,929 $ 43,189
Licensing Revenues 345,635 355,000
--------- ---------
428,564 398,189
Cost of Revenues 30,720 24,645
--------- ---------
397,844 373,544
Operating Expenses:
General and Administrative 547,466 432,153
Research and Development 227,186 142,351
Sales and Marketing 415,000 289,866
--------- ---------
1,189,652 864,370
--------- ---------
Operating Loss (791,808) (490,826)
--------- ---------
Interest and Other Income 42,271 22,632
Interest and Other Expense (4,857) (15,585)
--------- ---------
37,414 7,047
--------- ---------
Net Loss $(754,394) $(483,779)
========= =========
Net Loss Per Common Share $ (0.06) $ (0.05)
========= =========
Weighted Average Common Shares
Outstanding 11,777,889 9,209,518
========== =========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
----------- ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $ (754,394) $(483,779)
Depreciation 18,170 22,297
Net Change in Assets and Liabilities:
Trade Receivables (85,045) (46,368)
Prepaid Expenses and Deposits (8,622) 2,370
Accounts Payable 149,207 (1,763)
Accrued Liabilities (90,346) (83,009)
Inventory (24,095) 8,680
--------- ---------
Net Cash Used in Operating Activities (795,125) (581,572)
Cash Flows from Financing Activities:
Issuance of Common Shares 157,978 200
Due to Related Parties (212,561) (30,188)
Repayments of Notes Payable (1,725) 0
--------- ---------
Net Cash Provided by Financing Activities (56,308) (29,988)
Cash Flows from Investing Activities:
Purchase of Fixed Assets (69,229) 8,501
Increase in Intangible Assets (54,038) (36,771)
---------- ---------
Net Cash Used in Investing Activities (123,267) (28,270)
---------- ---------
Decrease in Cash and Cash Equivalents (974,700) (639,830)
---------- ---------
Cash and Cash Equivalents, Beginning of Period 3,113,057 1,539,768
---------- ---------
Cash and Cash Equivalents, End of Period $2,138,357 $ 899,938
========== =========
See accompanying notes to consolidated financial statements
<PAGE>
</TABLE>
SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES
Consolidated Statement of Shareholders' Equity
(unaudited)
<TABLE>
<CAPTION>
Foreign
Common shares Currency
Number of Par Additional Accumulated Translation
Shares Value Paid-in-Capital Deficit Adjustment Total
---------- --------- --------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance,
12/31/95 17,457,531 $174,575 $13,578,782 $(10,055,119) $(767) $3,697,471
Options
Exercised 90,200 902 92,742 93,644
Warrants
Exercised 26,500 265 64,069 64,334
Net Loss (754,394) (754,394)
----------- --------- ------------ -------------- ------------ -----------
Balance,
3/31/96 17,574,231 $175,742 $13,735,593 $(10,809,513) $(767) $3,101,055
=========== ========= ============ ============== ============ ===========
See accompanying notes to consolidated financial statements
</TABLE>
SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) NATURE OF BUSINESS
Spatializer Audio Laboratories, Inc. and subsidiaries (the "Company") is in
the business of developing proprietary advanced audio signal processing
technologies and products for use in professional recording and film
production, television broadcast, and PC game and multimedia title
development. The Company's patented Spatializer 3-D stereo technology creates
a vivid and expansive three dimensional surround sound listening experience
from any stereo source input using only two ordinary loudspeakers. The
Company exploits its technology base through licensing activities and through
the sale of its own proprietary hardware and software products. The
fabrication and distribution of integrated circuits containing Spatializer
signal processing technology is licensed to semiconductor manufacturers for
sale to consumer electronics companies, PC systems manufacturers, and
multimedia peripheral makers.
The Company is actively developing new and expanded hardware and software
products for the professional and semi-professional recording markets as well
as peripheral devices for consumer home theater applications and automotive
environments.
On December 5, 1995 the Board of Directors of the Company authorized the
liquidation of Spatializer Audio Laboratories, Inc. - Yukon pursuant to S.213
of the Business Corporations Act (Yukon). This action was taken to minimize
the tax consequences to the Company. The liquidation was completed on
February 13, 1996.
(2) SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These consolidated financial statements are prepared in accordance with
generally accepted accounting principles in the United States.
Basis of Consolidation
The consolidated financial statements include the accounts of Spatializer
Audio Laboratories, Inc. - Delaware and its wholly owned subsidiaries,
Desper Products, Inc. and Spatializer Audio Laboratories, Inc. - Yukon.
Desper Products, Inc. is the principal operating company and Spatializer Audio
Laboratories, Inc. - Yukon has no operations and was liquidated February 13,
1996. All material intercompany transactions have been eliminated.
Revenue Recognition
The Company recognizes revenue from professional product sales upon shipment
to the customer. The Company recognizes revenue from licensing agreements
when earned, in accordance with the contractual arrangements.
Currency
The operations of the Company take place primarily in the United States.
The assets and liabilities of Spatializer Audio Laboratories, Inc. - Yukon
have been translated into United States dollars at the rate of exchange on
the balance sheet date and the income and expense items are translated at
the average exchange rates for the period. Exchange gains and losses arising
from the translation of the financial statements of Spatializer Audio
Laboratories, Inc. - Yukon are included in shareholders' equity as a foreign
currency translation adjustment.
Cash and Cash Equivalents
Cash equivalents are highly liquid investments with original maturities of
three months or less that are readily convertible to cash.
Inventory
Inventory, which is primarily comprised of finished goods, is stated at the
lower of cost (first-in, first-out) or market.
Research and Development Expenditures
The Company expenses research and development expenditures as incurred.
Fixed Assets
Fixed assets are carried at cost and are depreciated over five to seven years
using accelerated-depreciation methods, which approximates 150% declining
balance. Leasehold improvements are amortized over the shorter of the useful
life or lease term.
Loss per Share
Loss per share has been calculated based on the weighted average number of
common shares outstanding other than the escrowed shares, which are excluded
from the determination of loss per share as the conditions for release have
not yet been attained. Outstanding options and warrants to purchase common
stock have not been included in the calculation of primary loss per share as
the effect of including such securities would be antidilutive.
Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from those estimates.
(3) FIXED ASSETS
Fixed assets, at cost, as of March 31, 1996 and December 31, 1995 consisted
of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
<S> <C> <C>
Office Furniture and Equipment $266,522 $237,287
Test Equipment 50,513 60,895
Tooling Equipment 44,136 25,000
Trade Show Booth and
Demonstration Equipment 165,844 144,369
Leasehold Improvements 25,047 23,916
------- -------
552,062 491,467
------- -------
Less Accumulated Depreciation
and Amortization 206,199 196,664
-------- --------
$345,863 $294,803
======== ========
</TABLE>
(4) INTANGIBLE ASSETS
Capitalized patent, acquisition and technology costs, net, totaling $297,570
and $243,532 at March 31, 1996 and December 31, 1995, respectively, comprise
intangible assets. Intangible assets are amortized, on a straight line
basis, over the lesser of 17 years or their estimated useful life.
(5) ADVANCES FROM RELATED PARTIES
The Company was indebted to certain related parties for amounts totaling
$112,500 and $325,061 at March 31, 1996 and December 31, 1995, respectively,
which includes accrued interest. Amounts bear interest at rates ranging from
a fixed 10% annually to prime (8.75% at December 31, 1995) plus 2% and are
due on demand.
(6) OPTIONS AND WARRANTS
The Company has issued options to purchase common stock to certain directors,
officers and employees under various stock option plans. The option and
warrant exercise prices, which continue to be denominated in Canadian
dollars, represent fair market values at the date of grant. Transactions in
the stock options under these plans are summarized as follows:
<TABLE>
<CAPTION>
Stock Options Shares Option Price
- -------------------------- ---------- -------------------------------------
<S> <C> <C>
Cdn. $1.20 - Cdn. $5.84 (U.S. $.87 -
U.S. $4.30) per Share expiring on
Options Outstanding at various dates, July 1997 to November
December 31, 1995 1,426,432 2000.
Options Issued 0
Cdn. $1.20 - Cdn. $3.10 (U.S. $.87 -
Options Exercised (90,200) U.S. $2.27) per Share.
----------
Cdn. $1.20 - Cdn. $5.84 (U.S. $.87 -
U.S. $4.30) per Share expiring on
Options Outstanding at various dates, July 1997 to November
March 31, 1996 1,336,232 2000.
==========
</TABLE>
The following table summarizes the activity relating to warrants and common
shares issuable upon exercise of such warrants:
<TABLE>
<CAPTION>
Common
Issuable
Warrants Shares Warrant Price
- ------------------------ -------- ---------- ------------------------------
<S> <C> <C> <C>
Cdn. $3.20 - Cdn. $4.50 (U.S.
$2.33 - U.S.$3.35) per Share
Warrants Outstanding at expiring on various dates,
December 31, 1995 780,000 780,000 August 1996 to June 1997.
Warrants Issued 0 0
Cdn. $3.30 - Cdn. $4.50 (U.S.
Warrants Exercised (26,500) (26,500) $2.40 - U.S. $2.69) per Share.
--------- ---------
Cdn. $3.20 - Cdn. $4.50 (U.S.
$2.33 - U.S.$3.35) per Share
Warrants Outstanding at expiring on various dates,
March 31, 1996 753,500 753,500 August 1996 to June 1997.
========= =========
</TABLE>
NOTE: Options and Warrants issued and exercised have been converted to US
dollars using the exchange rate on the issue or exercise date.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis relates to the financial condition and
results of operations of Spatializer Audio Laboratories, Inc. and subsidiaries
(the "Company") for the three-month period ended March 31, 1996, compared
with the three-month period ended March 31, 1995.
CORPORATE DEVELOPMENTS
The Company continued to make substantial advances during the first quarter
of 1996 with the introduction of the first Spatializer brand consumer
hardware product, the HTMS-2510 3-D Stereo Surround System. After
the introduction at Winter Consumer Electronics Show ("CES") in January 1996
the HTMS-2510 was awarded with the prestigious Innovations Award in the
category: Audio - Separate Components.
In addition, Spatializer PT3D, the first software plug-in which allows sound
editors and musicians to create 3-D sound with a click of a mouse, was
introduced during the National Association of Music Merchants trade show and
will be available for sale in the second quarter.
In February, the Company announced that shipments of the patented Spatializer
3-D integrated circuit had topped the two-million-unit mark with more than
one hundred different products incorporating Spatializer 3-D audio processing
being distributed worldwide.
The Company continued to sign new OEM licensing agreements and increased the
total from twenty-four at December 31, 1995 to thirty-two by the end of the
quarter. In addition, Hewlett-Packard announced the incorporation of
Spatializer 3-D stereo technology into their new line of HP Pavilion home
multimedia PCs.
In April, the Company also announced that it signed an Agreement in Principal
to acquire certain intellectual property and other assets related to Home
Theater Products International, Inc. The closing is currently scheduled for
May and is subject to completion of documentation, and regulatory and
Bankruptcy Court approvals. The Company sees this acquisition as a very
promising opportunity, as it leverages the Company's core assets and
competencies, significantly broadens the technology portfolio, and positions
the Company for long term growth.
RESULTS OF OPERATIONS
For The Three-Month Period Ended March 31, 1996, Compared To The Three-month
Period Ended March 31, 1995
Revenues
The Company reported increased revenues of 8% or $30,375, reaching $428,564
for the three-month period ended March 31, 1996, compared to $398,189 for the
three-month period ended March 31, 1995. Revenues include sales of
professional recording systems, consumer products license issuance fees and
royalties pertaining to the analog IC.
Revenues from licensing were relatively constant for the first quarter of
1996 as compared to the same quarter in 1995, however, during the first
quarter of 1995 the Company's licensing program was in the beginning stages
and the majority of the licensing revenues were derived from one-time, up-
front license issuance fees. In contrast, a substantial portion of the
licensing revenues for the current quarter are derived primarily from running
royalties based on usage. The increase in these recurring royalties reflects
expansion and growth in the usage of the Spatializer chip, and the beginning
of the Company's transition to a steady and ongoing revenue stream. In
addition, the Company introduced its first consumer product, the HTMS-2510,
to U.S. audio dealers. The product revenue impact is anticipated during the
year.
The gross profit in 1996 was approximately 93% of revenues as the majority of
sales are associated with license and royalty revenues which have little or
no direct costs associated with them.
The Company attributes the slower than anticipated growth in revenues to a
combination of factors, primarily to the fact that two of the Company's new
chip licensees that were expected to be in full production for the first
quarter ran a quarter late and did not begin shipping product until May,
deferring the revenue impact.
Operating Expenses
Operating expenses for the three-month period ended March 31, 1996, totaled
$1,189,652 compared to $864,370 for the same three-month period in 1995. The
increase of approximately 38% or $325,282, can be attributed primarily to
increased sales and marketing activities, additional research and development
efforts, as well as operating costs associated with a fully staffed operation.
General and Administrative
General and administrative expenses consisting primarily of professional and
consulting fees, investor relations, and other operating costs, increased by
approximately 27% or $115,313, for a total of $547,466 for the three-month
period ended March 31, 1996, compared to $432,153 for the same three-month
period in 1995. The majority of this increase can be attributed to the
expanding focus on investor relations and the printing and distribution of
the Company's first Annual Report.
Professional Fees
Legal fees decreased approximately 54%, or $56,635, for a total of $48,596 for
the three-month period ended March 31, 1996, compared to $105,231 for the
same three-month period in 1995. Legal fees in 1995 were substantially
higher as the Company prepared and submitted an initial draft registration
statement with the SEC. Except for legal fees associated with the
liquidation of Spatializer Audio Laboratories, Inc. - Yukon, legal fees in
1996 were primarily of a recurring nature and are incurred in connection with
the following: the patent litigation filed in October 1994, trademark research
and licensing negotiations.
External Accounting fees increased approximately 416%, or $16,144, for a total
of $20,029 for the three-month period ended March 31, 1995, compared to
$3,885 for the same three-month period in 1995. The increase is primarily
associated with services provided in the February 1996 liquidation of
Spatializer Audio Laboratories, Inc. (Yukon).
Outside Services, Consulting Fees and Temporary Help
Outside services, consulting fees, and temporary help increased 235%, or
$60,042, for a total of $85,555 for the three-month period ended March 31,
1996, compared to $25,513 for the same three-month period in 1995. The
majority of these costs were incurred in connection with researching various
technologies for potential acquisition. In addition, consulting fees were
incurred in association with expanded corporate finance activities, and
payments to consultants and other personnel working on a part-time or
special-project basis.
Investor Relations Costs
Investor relations costs increased approximately 357%, or $56,786, for a total
of $72,688 for the three-month period ended March 31, 1996, compared to
$15,902 for the same three-month period in 1995. The increased costs were
incurred to accommodate increased interest in the Company and to keep the
investment community informed of corporate developments.
Annual Report Costs
The Company produced and mailed its first Annual Report and Form 10-K during
the quarter ended March 31, 1996. In addition to expenses incurred in 1995
for design and development of the Annual report costs of $52,761 were incurred
in the first quarter. The Company document includes a Letter to Shareholders,
Corporate Milestones and Form 10-K for the year ended December 31, 1995.
Research and Development Costs
The Company continued efforts to identify, validate, and develop new product
ideas. All research and development activities and related costs are
expensed in the period incurred. During the three-month period ended March
31, 1996, Research & Development expenditures increased as the company had
resources to allocate to this effort and its understanding of market and
product needs matured. This effort resulted in the introduction of the
Company's first software product Spatializer PT3D, the first software
plug-in to provide Spatializer 3-D sound imaging and enhancement for
Digidesign's Pro Tools 3 Digital Audio Workstation. PT3D allows sound
editors and musicians to create 3-D sound with the click of a mouse. In
addition, the Company furthered development on several consumer products
which will be brought to market over the year.
Research and development expenses increased by approximately 60%, or $84,835,
for a total of $227,186 for the three-month period ended March 31, 1996,
compared to $142,351 for the same three-month period in 1995.
The increase can be attributed primarily to increased personnel with payroll
and payroll related costs increasing approximately 47%, or $41,021, for a
total of $127,769 for the three-month period ended March 31, 1996,
compared to $86,748 for the same three-month period in 1995. The increase in
personnel is to support the Company's newly introduced consumer products as
well as continue efforts on new research and development activities.
Additional increases are related to general office operation costs such as
telephone, office supplies and stationary, depreciation, on-line
subscriptions, postage, and other general operating costs associated with the
first quarter utilizing a full staff. These operating costs increased by
approximately 145%, or $24,367, for a total of $41,152 for the three-month
period ended March 31, 1996, compared to $16,785 for the same three-month
period in 1995.
Sales and Marketing Expenses
Sales and marketing expenses increased approximately 43%, or $125,134, for a
total of $415,000 for the three-month period ended March 31, 1996, compared
to $289,866 for the same three-month period in 1995. The increase is
attributed to a larger trade show presence, public relations and publicity
related to the development of an organized advertising and promotional
campaign directed at the consumer and computer marketplaces.
Trade show costs increased approximately 136%, or $53,068, for a total of
$92,026 for the three-month period ended March 31, 1996, compared to $38,958
for the same three-month period in 1995. This is related primarily to a
larger presence at Winter CES 96 where the Company introduced its first
Spatializer brand consumer hardware product, the HTMS-2510.
Public relations and publicity increased approximately 115%, or $39,149, for
a total of $73,273 for the three-month period ended March 31, 1996, compared
to $34,124 for the same three-month period in 1995. This is to support the
introduction of the HTMS-2510 into the consumer market place as well as to
establish brand name recognition.
Payroll and payroll related costs increased approximately 17%, or $22,196,
for a total of $152,011 for the three-month period ended March 31, 1996,
compared to $129,815 for the same three-month period in 1995. The increase
in payroll and related costs is the result of a fully staffed operation as
well as additional staff added to support the Company's newly introduced
consumer products.
Net Loss
The net loss for the three-month period ended March 31, 1996, totaled
$754,394 or ($0.06) per share, compared to a net loss of $483,779 or ($0.05)
per share in the same three-month period in 1995. The net loss is a result
of a combination of higher than anticipated operating expenses and lower than
expected revenues. The net loss is also attributed to an increased effort in
research and development activities, an expanding focus on investor
relations, and an organized advertising and promotional campaign.
Liquidity and Capital Resources
At March 31, 1996, the Company had $2,138,357 in cash and cash equivalents
as compared to $3,113,057 at December 31, 1995. The decrease in cash and
cash equivalents can be attributed to cash used for operations, the purchase
of fixed assets and the retirement of a portion of the related party
advances. The Company had working capital of $2,457,622 at March 31, 1996
as compared with $3,159,139 at December 31, 1995.
The Company's future cash flow from operations will come primarily from
foundry royalties as they ship the Spatializer IC to the OEMs, licensing the
technology to OEMs and royalties on ICs incorporated into OEM products as
well as from Company product sales. At March 31, 1996 the Company had
three Foundry Licensees and thirty-two OEM Licensees, as compared with three
Foundry Licensees and twenty-four OEM Licensees at December 31, 1995.
Incorporation of the Spatializer technology into the OEMs finished product
usually takes three to six months. The Company does not earn revenue from
the OEMs until they ship the finished product. As a result, the 1996 first
quarter shipments of IC's from foundries to OEMs will provide the Company
with OEM licensee royalty payments in future periods.
The Company continues to have no long-term debt and has no present
commitments or agreements which would require any long-term debt to be
incurred. The Company does, however, owe $112,500 as of March 31,
1996 to related parties. A substantial payment was made during the first
quarter of 1996 to help retire Company debt.
In addition to foundry royalties the Company anticipates an increase in
product revenues as new Spatializer products are introduced into the
consumer markets.
Based on current operating plans, management does not believe that existing
cash balances will be sufficient to satisfy the Company's cash requirements
for the next twelve months. The Company anticipates longer term cash
requirements, in addition to normal operating expenses, for development and
introduction of new products, and the acquisition of technologies or
enterprises complementary to the Company's business. Additional sources of
financing including debt, equity or strategic investments may be required to
fund such capital expenditures, acquisitions, research and development and
marketing costs related to these activities.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Company's Form 10-K for the year ended December 31,
1995 with respect to the Company's litigation with QSound Labs, Inc.
No material developments in such litigation occurred during the three months
ended March 31, 1996.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the security holders of the
Company either through solicitation of proxies or otherwise in the first
quarter of the fiscal year ending December 31, 1996.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(a) EXHIBITS
EXHIBIT 27 FINANCIAL DATA SCHEDULE
(b) REPORTS ON FORM 8-K
NONE
<PAGE>
SIGNATURES
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, thereunto duly authorized.
Dated: May 14, 1996
SPATIALIZER AUDIO LABORATORIES, INC.
(Registrant)
/s/ STEVEN D. GERSHICK
STEVEN D. GERSHICK
President & Chief Executive Officer
/s/ WENDY MARIE GUERRERO
WENDY MARIE GUERRERO
Chief Financial Officer
/s/ KATHY PARTCH
KATHY PARTCH
Director of Accounting
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the March 31, 1996 financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,138,357
<SECURITIES> 0
<RECEIVABLES> 497,055
<ALLOWANCES> 0
<INVENTORY> 286,225
<CURRENT-ASSETS> 3,024,327
<PP&E> 552,062
<DEPRECIATION> 206,199
<TOTAL-ASSETS> 345,863
<CURRENT-LIABILITIES> 566,705
<BONDS> 0
0
0
<COMMON> 175,742
<OTHER-SE> 2,925,313
<TOTAL-LIABILITY-AND-EQUITY> 3,667,760
<SALES> 428,564
<TOTAL-REVENUES> 428,564
<CGS> 30,720
<TOTAL-COSTS> 30,720
<OTHER-EXPENSES> 1,189,652
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