Spatializer Audio Laboratories, Inc. Announces Third Quarter 1998 Financial Results.

WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Nov. 16, 1998-- Spatializer Audio Laboratories, Inc. (Nasdaq:SPAZ) today announced its financial results for the third quarter ended September 30, 1998. Revenues for the third quarter were $390,000, compared to $833,000 in the comparable period last year.

The company reported a net loss for the quarter of $1,124,280, or $0.05 per share, compared to a net loss of $661,435, or $0.03 per share, in the comparable period last year.

Henry R. Mandell, Interim Chief Executive Officer stated, "The decrease in revenue and gross profit reflects a decrease in recurring royalties as a result of the weakness in the Asian Market as well the closing, in the third quarter of 1997, of a significant licensing agreement for which there was no comparable new license agreement in the current quarter. While the Asian crisis is beyond our control, we intend to vigorously compete for market share in the audio licensing sector and are fast-tracking transactions under negotiation."

Mr. Mandell added, "Since the refocusing of the Company's business by our Board of Directors on September 25, 1998, we have aggressively moved forward with the implementation of our recovery plan. We have reduced overhead by more than 60%, have installed additional goal-oriented operating disciplines to promote accountability and results, and are actively pursuing the marketing, to potential acquirers, of our MultiDisc Technologies, Inc. subsidiary."

As for the future, Mr. Mandell concluded, "We have a strong team of professionals at our core audio business, Desper Products, Inc., who have responded to the challenge of the re-directed corporate focus. While we face a difficult period ahead, including the need for additional working capital, we believe we have initiated a logical recovery plan which we intend to pursue over the next several months."

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, Panasonic, Hitachi, Sharp, Sanyo and Proton and in PC multimedia systems and peripherals from Compaq, AST, Dell, Gateway 2000, Fujitsu, Seiko-Epson, NEC, Micron and Labtec.

Spatializer's MultiDisc Technologies, Inc. subsidiary is a developer of innovative and scaleable CD/DVD server designs for business and enterprise networking, the Internet, back-up and archiving applications and specialized vertical markets including video-on-demand. The company's Modular Stackable Storage Library combines the robotic approach of an optical storage jukebox with the scalability of a disk array to create a data storage solution with unlimited growth potential in both capacity and performance.

Spatializer stock is traded on the Nasdaq SmallCap Market System under the symbol SPAZ. The company is headquartered in Woodland Hills, Ca., and has marketing, engineering and R&D facilities in Mountain View, Ca. and Tokyo, Japan. Further information may be obtained from Securities and Exchange Commission (SEC) filings, Web site, or by contacting the company directly.

Safe Harbor Act Statement Under the Private Securities Litigation Reform Act of 1995: Certain information in this news release, including the comments by Mr. Mandell in paragraphs three, four, and five 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 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, the timing and realizable value of the MDT technology, the continued need for additional capital and other risks detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission.

Note to Editors: Desper Products, Inc. and MultiDisc Technologies, Inc. are wholly owned subsidiaries of Spatializer Audio Laboratories, Inc. Spatializer(R) is a registered trademark of Desper Products, Inc. MultiDisc and MSSL are trademarks of MultiDisc Technologies, Inc. -0-

                 SPATIALIZER AUDIO LABORATORIES, INC.
                           AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF OPERATIONS
                             (unaudited)

                             For the                   For the
                     Three-Month Period Ended  Nine-Month Period Ended
                          September 30,             September 30,
                        1998         1997         1998         1997
Revenues:
 License Revenues  $    55,000  $   778,971  $   955,322  $   898,971
 Royalty Revenues      336,120       26,911      566,127      716,453
 Product
  Development
  Revenues                --           --         50,000         --
 Product Revenues         (739)      27,000       16,918      312,788
                       390,381      832,882    1,588,367    1,928,212

Cost of Revenues         5,556       36,261       35,846      223,502
Gross Profit           384,825      796,621    1,552,521    1,704,710
Operating Expenses:
 General and
  Administrative       655,725      458,236    1,823,176    1,566,791
 Research and
  Development          610,948      775,166    1,774,455    2,154,231
 Sales and
  Marketing            213,342      211,519    1,026,841      831,403
                     1,480,015    1,444,921    4,624,472    4,552,425

Operating Loss      (1,095,190)    (648,300)  (3,071,951)  (2,847,715)
Interest and
 Other Income           10,283       11,645       25,418       43,337
Interest and
 Other Expense         (31,317)      (6,028)     (61,856)     (15,647)
                       (21,034)       5,617      (36,438)      27,690

Loss Before
 Income Taxes       (1,116,224)    (642,683)  (3,108,389)  (2,820,025)
Income Taxes            (8,056)     (18,752)     (28,436)     (39,252)
Net Loss           $(1,124,280) $  (661,435) $(3,136,825) $(2,859,277)
Basic and Diluted
 Loss Per Share    $     (0.05) $     (0.03) $     (0.14) $     (0.14)
Weighted Average
 Shares
 Outstanding        22,069,652   20,807,516   22,056,157   20,406,282