SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 27, 1999
SPATIALIZER AUDIO LABORATORIES, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 33-90532 95-4484725
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
20700 Ventura Boulevard, Suite 140, Woodland Hills, California 91364
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (818) 227-3370
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Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Not applicable.
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events.
In December 1999, the Registrant completed a set of financial transactions
(the "December Transactions") with certain existing holders of the Registrant's
equity and debt and with new institutional investors. The December Transactions
included the private placement of 1,884,254 additional shares of the
Registrant's common stock, par value $.01 (the "Common Stock") ($1.05 million in
new capital or $0.55725 per share), the issuance of warrants to acquire
2,100,000 shares of Common Stock exercisable for three years at an exercise
price of $.67 per share), the cancellation of 500,000 warrants to acquire Common
Stock (at a variable exercise ratio), the conversion of $1 million of short term
debt into a new Series B Redeemable Convertible Preferred Stock ("Series B
Preferred Stock") and the conversion of $225,000 of secured debt into secured
long term convertible debt.
As a result of the December Transactions, 2,100,000 of the additional
shares of Common Stock to be authorized at the Registrant's Annual Meeting of
Stockholders are required to be reserved for grant on exercise of the warrants
issued in the December Transactions. Also, other shares of Common Stock will be
required if the conversion options underlying the Series B Preferred Stock or
the long term debt are exercised but the number of shares will vary depending on
the market price of the Registrant's Common Stock at the time of conversion. The
participants in the December Transactions acknowledged that stockholder approval
of an increase in the Registrant's total authorized capital stock at the
Registrant's Annual Meeting of Stockholders, was required to fully implement the
share issuances contemplated by those transactions. The Registrant's Annual
Meeting of Stockholders is currently scheduled to be held on February 10, 2000.
In the December Transactions, $895,000 in short term loan advances from
officers, directors and their affiliates and certain other securities holders,
and accrued interest of $134,647,
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were restructured into the $1,000,000 in new Series B Preferred Stock. The
Series B Preferred Stock, and any dividends therefrom not converted into cash,
are convertible commencing in 2001 into restricted Common Stock at a 10%
discount, based on the 10 day average closing bid price prior to the conversion,
but subject to a minimum conversion of $.56 per share and a maximum of $1.12 per
share. The Company has a three year option to redeem any Series B Preferred
Stock, not sooner converted, in whole or in part, in cash.
Finally, in the December Transactions, $225,000 of secured debt, including
accrued interest, was converted into secured long term convertible debt. The
long term debt is held by existing institutional investors and is secured by
essentially all of the assets of the Company. The debt, and accrued interest, is
convertible at the Company's or the holder's options into registered Common
Stock at a conversion price equal to the average 10 day closing bid price prior
to conversion but subject to the same minimum and maximum conversion prices set
for the Series B Preferred Stock.
A copy of the press release dated January 3, 2000 describing the December
Transactions is attached as Exhibit A.
Item 6. Resignations of Registrant's Directors.
Not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Not applicable.
Item 8. Change in Fiscal Year.
Not applicable.
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 hereunto duly authorized.
Spatializer Audio Laboratories, Inc.
Registrant
Date: January 17, 2000 By: /s/ Henry R. Mandell
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Henry R. Mandell, Interim Chief
Executive Officer
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EX-99.A
PRESS RELEASE DATED JANUARY 3, 2000
EXHIBIT A
FOR IMMEDIATE RELEASE
SPATIALIZER AUDIO LABORATORIES, INC.
Corporate Contact: Henry R. Mandell, Interim Chief Executive Officer
Tel 818.227.3370
WWW Site: http://www.spatializer.com
SPATIALIZER COMPLETES $2 MILLION FINANCING
AND DEBT TO EQUITY RESTRUCTURING
$1 MILLION PRIVATE PLACEMENT OF COMMON STOCK AT NO DISCOUNT AND CONVERSION OF $1
MILLION SHORT TERM DEBT TO NEW SERIES B PREFERRED STOCK ELIMINATES NEGATIVE
WORKING CAPITAL AND SHAREHOLDERS' DEFICIT
NEW LIQUIDITY CONCLUDES TURNAROUND
AND POSITIONS THE COMPANY FOR FUTURE GROWTH
WOODLAND HILLS, Calif., Jan. 3. 2000 -- Spatializer Audio Laboratories (OTC
Bulletin Board: SPAZ - news) announced today that it has completed the placement
of $1 million of common stock, at no discount and the conversion of $1 million
of short-term debt to new Series B Redeemable Convertible Preferred Stock. This
new equity significantly strengthens the balance sheet, restores working capital
and shareholder's equity, and the resulting liquidity will allow the Company to
emerge from its turnaround mode and to aggressively pursue growth.
The private placement of $1,050,000 of common stock was completed at no discount
to market. The institutional investors include entities who participated in the
April 1998 financing as well as new investors. The investors will receive two
warrants to purchase the Company's common stock for each dollar invested,
exercisable at 120% of the ten day average closing bid price prior to closing of
the financing. In addition, the two institutional investors in the current
financing who also participated in the April 1998 financing have cancelled the
warrants issued to them in the April 1998 financing. The Company has agreed to
promptly file a registration statement under Form S-3 with the Securities and
Exchange Commission to register both the common stock and warrants for resale.
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The participants in the restructuring of $1 Million of short-term 10% Notes have
agreed to convert these notes into new 10% Series B Redeemable Convertible
Preferred Stock. The new series will be convertible after one year into
restricted common stock at a 10% discount to market, based on the ten day
average closing bid price immediately prior to conversion. The conversion price
has a floor equal to the ten-day average closing bid price prior to the
restructuring, with a maximum conversion price of 200% of the floor price. The
preferred stock is redeemable in cash in whole or in part solely at the
Company's option over the next three years. The common stock underlying the
preferred stock will not be registered, and therefore the sale of such
securities will be subject to volume and holding restrictions under Rule 144.
In a concurrent, but separate transaction, the holder of the Company's $225,000
of secured short term 10% notes has restructured them into Secured Long Term
Convertible Debt. The Company may repay the debt, in whole or in part, at any
time with no penalty. The debt is convertible at either the Holder's or
Company's option into registered common stock at no discount to market, based on
the ten day average closing bid price immediately prior to conversion. The
conversion price has a floor equal to the ten-day average closing bid price
prior to the restructuring, with a maximum conversion price of 200% of the floor
price. The maximum number of shares, which may arise from such conversion, will
be included in the registration statement to be filed by the Company. The
Company will also seek shareholder approval at its annual shareholder's meeting
planned for early 2000, to increase the authorized common stock of the Company
from 50 million to 65 million to cover the common stock underlying the preferred
stock and the convertible long term debt, and to allow flexibility for any
additional financing over the next few years.
"This new equity financing and financial restructuring is the culmination of
extraordinary efforts put forth by the management, employees and the Board of
Directors of the Company over these past fifteen months," stated Henry R.
Mandell, interim CEO of Spatializer Audio Laboratories, Inc. "This is the final
piece of our turnaround and recovery strategy. We all share a great sense of
satisfaction that we were able to achieve this watershed event, while at the
same time significantly extending our market presence, establishing
profitability and creating shareholder value even during this difficult
turnaround period."
Mr. Mandell continued, "In our public filings over the past year, we have made
it clear that the Company needed additional working capital to succeed. However,
we have diligently sought a financing structure that minimized dilution, placed
any new equity with responsible investors and did not disrupt market
equilibrium, while at the same time, provided the Company with the resources it
needed to vigorously move forward. I believe that we have succeeded in
structuring such a transaction. Interest in this placement exceeded our
expectations, but we limited the investment to an amount that we felt was
commensurate with our needs. The common shares were sold at no discount to
market, with an appropriate pricing floor and ceiling. These actions were
specifically devised to minimize potential dilution. While we were able to
broaden the shareholder base by attracting two new institutional investors, we
were pleased when existing shareholders stepped forward to participate. The new
preferred stock cannot be converted into
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common stock for at least one year. Both the new preferred stock and the new
long-term debt are redeemable, at the Company's option, as cash flow permits.
These features were designed to achieve our objective of maintaining market
equilibrium for our shareholders. Finally, with the operating expense
restructuring we effected in late 1998, combined with new sources of revenue
generated in 1999, the Company anticipates to be able to use the new funding for
working capital to fund expanded research and development and sales efforts,
rather than to fund losses."
"In conclusion", stated Mr. Mandell," this comprehensive financial restructuring
closes the final chapter on the past, and begins a new chapter in the Company's
future. Our technology is highly regarded and our relationships with industry
leaders such as Apple Computer, Matsushita, Toshiba and C-Cube speak for
themselves. We are in the midst of a digital audio revolution. As a world leader
in providing digital and virtual audio solutions, Spatializer is well positioned
at the forefront of this revolution. Now that we are properly financed, and no
longer handicapped, we intend and expect to compete intensely and capitalize on
these opportunities. We are truly excited by these prospects."
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, video and DVD products from global
brand leaders including Toshiba, JVC, Panasonic, Hitachi, Mitsubishi, Samsung,
Sanyo, Goldstar, Emerson, Zenith and Proton and in PC multimedia systems and
peripherals from Apple, Dell, Gateway, Hewlett Packard, Sony, Fujitsu,
Seiko-Epson, NEC, Micron and Labtec.
Spatializer stock is traded on the OTC Bulletin Board under the symbol "SPAZ."
The company is headquartered in Woodland Hills, Calif. and has marketing,
engineering and R&D facilities in Santa Clara, Calif. and Tokyo. Further
information may be obtained from Spatializer's SEC filings, Web-site
(www.spatializer.com) or by contacting the company directly.
Safe Harbor Act Statement Under the Private Securities Litigation Reform Act of
1995: This news release contains forward looking statements, including Mr.
Mandell's quotes in paragraphs five, six and seven which are subject to a
variety of risks and uncertainties.
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 dependence on new
technology and intellectual property, dependence on the PC and consumer
electronics industries, successful consummation of transactions in negotiation,
dependence on product shipments of third-party licensees, competition and
pricing pressures, the timing and realizable value of the MDT technology and
other risks detailed from time to time in the Company's periodic reports filed
with the Securities and Exchange Commission.
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Notices: Spatializer(R) is a registered trademark of Spatializer Audio
Laboratories. Copyright (C) 2000 Spatializer Audio Laboratories, Inc.
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