8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

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) August 10, 2005

Spatializer Audio Laboratories, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

000-26460 95-4484725

(Commission File Number) (IRS Employer Identification No.)

2625 Townsgate Road, Suite 330, Westlake Village, CA 91361

(Address of Principal Executive Offices) (Zip Code)

408-453-4180

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

     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 (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1 — Registrant’s Business and Operations

Item 2.02. Results of Operation and Financial Condition.

On August 10, 2005, the Registrant issued a press release announcing its operating results for the quarter ended June 30, 2005. A copy of the press release is furnished as Exhibit 99.1 to this report and is hereby incorporated to this Item 9 by reference.

Section 9 — Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits

(c) Exhibits

The following exhibit is furnished as part of this Current Report on Form 8-K:

Exhibit Index

Exhibit No.	Exhibit
99.1	Press Release

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.
By:	/s/ Henry R. Mandell
	Henry R. Mandell, Chief Executive Officer

Date: August 10, 2005

EX-99.1

Exhibit 99.1

CONTACT: INVESTOR RELATIONS

Henry R. Mandell, CEO
Spatializer Audio Laboratories, Inc.
408-453-4180 Ext.201
investor@spatializer.com

SPATIALIZER AUDIO LABORATORIES, INC. REPORTS
CONTINUED PROFITABILITY IN THE SECOND
QUARTER 2005

Revenues Increase 83% Over the Prior Year

     San Jose, Calif., August 10, 2005- Spatializer Audio Laboratories, Inc. (OTC Bulletin Board: SPAZ) today announced financial results for the second quarter ended June 30, 2005.

     Revenues increased to $429,000 for the quarter ended June 30, 2005 compared to $235,000 for the quarter ended June 30, 2004, an increase of 83%. Revenues in the six months ended June 30, 2005 were $761,000, compared to revenues of $406,000 in the comparable period last year, an increase of 87%.

     Net income in the three months ended June 30, 2005 was $58,000, $0.00 basic per share, compared with net loss of ($123,000) ($0.00) basic per share in the comparable period last year. Net income in the six months ended June 30, 2005 was $68,000, $0.00 basic per share, compared with net loss of ($247,000) ($0.01) basic per share in the comparable period last year.

     At June 30, 2005, the Company had $729,000 in cash and cash equivalents as compared to $871,000 at December 31, 2004. Working capital was $693,000 at June 30, 2005 as compared with working capital of $603,000 at December 31, 2004

     Revenues in the three and six months ended June 30, 2005 increased due to greater usage of the Company’s technology in mobile telephones and the continued recognition of deferred revenue on a royalty prepayment received in the third quarter of 2004.

     “We continue to make progress in the cell phone market which is having a positive effect on our revenue stream,” stated Henry R. Mandell, chairman and chief executive officer. “In addition, our licensing arrangement with Samsung for its mobile music player and DVD decoder chips continues to have a significant impact on our current revenues, as we expected.”

     Mandell continued, “While we are cautiously optimistic for our business going forward, this is a very competitive environment which poses market risk. Timing of design-ins and licensee product roll-out is beyond our control. For example, revenue from the initial Samsung license pre-payment will be fully recognized in the third quarter of 2005 and future revenue from this license will be based on the sales volume of these chips by Samsung and the timing of such shipments. The timing of product launch in the cell phone market is also in the hands of the OEM and system operator and volume is determined by market acceptance of a particular Spatializer-equipped handset.”

     “Nevertheless, our stepped-up promotion efforts in Greater China and Korea are well received and the number of chip alliances and resulting increased availability on a wider range of chip platforms is gaining momentum,” concluded Mr. Mandell. “Our Asian Development Center in India is providing us with the engineering resources to fuel this momentum. Multimedia mobility lends itself very well, we believe, to the mobile audio enhancement technology that we offer. As more and new product prospects are introduced to the Spatializer advantage, we expect that we will be able to convert this interest to new royalty-bearing licenses in the future.”

About Spatializer

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’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. 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’s web site, www.spatializer.com, Spatializer SEC filings, and by contacting the company’s Investor Relations Department at 408-453-4180 or by writing to investor@spatializer.com.

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 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, dependence on third-party technology integrators or chip suppliers, 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(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) 2005 Spatializer Audio Laboratories, Inc.

(more)

SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	For the Three Month Period Ended						For the Six Month Period Ended
	June 30,			June 30,			June 30,			June 30,
	2005			2004			2005			2004
Revenues :
License Revenues	$	—		$	—		$	—		$	—
Royalty Revenues		428,912			234,860			760,863			405,539
Product Revenues		—			—			—			—
		428,912			234,860			760,863			405,539
Cost of Revenues		42,890			18,133			76,762			35,138
Gross Profit		386,022			216,727			684,101			370,401
Operating Expenses :
General and Administrative		189,723			206,284			340,924			372,913
Research and Development		83,358			106,223			182,649			201,788
Sales and Marketing		56,201			21,859			95,454			35,478
		329,282			334,366			619,027			610,179
Operating (Loss)		56,740			(117,639	)		65,074			(239,778	)
Interest and Other Income		3,696			948			6,616			1,889
Interest and Other Expense		(2,870	)		(4,168	)		(4,110	)		(6,766	)
		826			(3,220	)		2,506			(4,877	)
Income (Loss) Before Income Tax		57,566			(120,859	)		67,580			(244,655	)
Income Taxes		—			(2,400	)		—			(2,400	)
Net Income (Loss)	$	57,566		$	(123,259	)	$	67,580		$	(247,055	)
Basic and Diluted Earnings Per S	$	0.00		$	(0.00	)	$	0.00		$	(0.01	)
Weighted Average Shares Outstanding		46,975,365			46,975,365			46,975,365			46,975,365

See notes to the financial statements

SPATIALIZER AUDIO LABORATORIES, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

	June 30,			December 31,
	2005			2004
	(unaudited)
Current Assets:
Cash and Cash Equivalents	$	729,336		$	871,155
Accounts Receivable, net		180,385			325,712
Prepaid Expenses and Deposits		66,721			70,940
Total Current Assets		976,442			1,267,807
Property and Equipment, net		26,381			29,527
Intangible Assets, net		146,730			166,710
Total Assets	$	1,149,553		$	1,464,044
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Note Payable		67,090			66,252
Accounts Payable		24,446			71,873
Accrued W ages and Benefits		39,927			50,446
Accrued Professional Fees		10,000			20,000
Accrued Commissions		29,335			32,182
Accrued Expenses		33,979			32,979
Deferred Revenue		78,279			391,395
Total Current Liabilties		283,056			665,127
Commitments and Contingencies
Series B-1, Redeemable Convertible Preferred shares, $.01 par value, 1,000,000 shares authorized, 118,351 shares issued and outstanding at June 30, 2005 and December 31, 2004		1,182			1,182
Shareholders’ Equity:
Common shares, $.01 par value, 65,000,000 shares authorized, 46,975,365 shares issued and outstanding at June 30, 2005 and December 31, 2004.		469,754			469,754
Additional Paid-In Capital		46,428,866			46,428,866
Accumulated Deficit		(46,033,305	)		(46,100,885	)
Total Shareholders’ Equity		865,315			797,735
	$	1,149,553		$	1,464,044

See notes to the financial statements

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