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New Spatializer e-Store Now Open on Yahoo! Shopping

Spatializer e-Store to Serve as the Platform for Several Future e-Commerce Based Initiatives Designed to Stimulate Growth and Augment The OEM Licensing Model

The opening of the Spatializer e-Store at Yahoo! is designed to be more than a simple foray into e-retailing. Rather, it marks the establishment of an Internet-based platform upon which to build and roll-out a wide array of consumer targeted e-commerce initiatives involving the Company's products. This structure opens a new distribution channel for direct-to-consumer software licensing, at individual license fees well in excess of OEM licensing structures. It allows Spatializer to test market and enhance new technologies and to measure consumer acceptance prior to offering such new technology to its OEM and chip licensees, thereby validating the value and enhancing the related royalty. In the coming months, Spatializer intends to build an extensive affiliates program that will drive greater traffic to the Company's e-store while creating a risk-free commission generating revenue stream from sales of CDs, DVDs and consumer electronics equipment by third party affiliates. Moreover, it provides an infrastructure upon which Spatializer can link its OEM and chip licensees together to offer new products both in and outside the traditional OEM licensing model.

``We're not simply opening an on-line store,'' stated Henry R. Mandell, Chairman and CEO of Spatializer Audio Laboratories, Inc. ``Rather, we are launching a platform upon which we believe we can both increase and diversify our future revenue streams in the highly competitive consumer electronics and PC environments. The intense pressure on OEMs to drive costs lower makes it much more difficult for OEMs to license new technology on a wider scale, even if the technology creates a superior customer experience. For example, PCs today are being called upon to perform as home entertainment centers, yet audio reproduction often remains not quite up to this task. Now consumers can take control of their audio environment with our wide array of virtual audio enhancement software and we can reach out directly to consumers to better educate them on what they are missing out on.''

Spatializer e-Store will initially offer three audio enhancement products for downloadable purchase by consumers; Spatializer VSP-11(TM), Spatializer StreamFX(TM) for Winamp and Spatializer StreamFX(TM) for Linux XMMS.

Spatializer VSP-11 allows consumers to enjoy the benefits of the renowned Spatializer audio enhancement technologies on all leading media players, soft DVD players and file sharing programs. This means that Spatializer VSP-11 is truly a universal audio enhancement software package that will enhance output from the Microsoft® Media Player, Real Player®, Real Jukebox®, WinAmp®, WinDVD®, PowerDVD®, among others, without any special modification. It will run in conjunction with any sound card, as well as with USB audio. These technologies are combined into a striking full color GUI that features a whimsical retro radio design with an animated ``stars and bubble window'' effect. Spatializer VSP-11 offers all four of the Company's leading technologies:

        Spatializer(R) 3-D Stereo provides a dramatic, surround sound effect
        with just two speakers.  A patented technology, Spatializer 3-D Stereo
        compensates for the limitations of computer audio, by making small,
        inexpensive speakers produce more realistic and dramatic sound.
        Spatializer 3-D Stereo also makes 2-speaker home systems sound like
        there are speakers all around, providing the end-user with the
        intensity and drama of surround sound.

        Spatializer Natural Headphone(TM) is the ideal solution for all stereo
        headphone applications.  A two channel enhanced algorithm provides
        natural quality sound effects over headphones as well as a realistic
        mobile theater experience while avoiding the cost of multi-channel
        royalties.  Extensive modeling of both Head Related Transfer Functions
        (HRTF) and room reverberation provides a low cost solution that is
        both effective and innovative.

        Spatializer Vi.B.E.(TM) provides a dramatic bass enhancement
        experience through even the most inexpensive "frequency response
        challenged" speakers or headphones.  Spatializer Vi.B.E is no mere
        bass boost.  It uses Spatializer's proprietary psychoacoustic and
        harmonics techniques to generate the impression of realistic bass
        frequencies that would ordinarily be difficult to discern in small PC,
        laptop or portable headphone devices.  The result for the consumer is
        a richer and warmer listening experience.

        Spatializer PCE(TM) delivers high frequencies that are clearer,
        crisper and more brilliant while low frequencies are more dramatic,
        tighter and have more impact.  Spatializer PCE is ideal for improving
        the quality of Internet audio, which can sound rather lackluster and
        dull due to compression or low bit rates.  Spatializer PCE gives the
        manufacturer an inexpensive way to dramatically improve the sound of
        low-end loudspeakers, such as the kind found in monitors, notebook and
        desktop computers.

Spatializer StreamFX for Winamp and Spatializer StreamFX(TM) for Linux XMMS deliver both Spatializer® 3-D Stereo and Spatializer Vi.B.E.(TM).

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, video and DVD products from global brand leaders including Toshiba, JVC, Panasonic, Hitachi, Samsung, Sharp, Sanyo, SONICblue, Zenith and Kenwood, in PC multimedia systems and peripherals from Apple and Labtec, in silicon from Matsushita, Texas Instruments, Cirrus Logic, New Japan Radio Corporation, Zoran, Motorola, LSI/C-Cube, Tvia, VM Labs, LinkUp and Acer Laboratories Inc, and in MP3 players such as Sanyo and embedded with RISC cores from MIPS Technologies. Spatializer stock is traded on the OTC Bulletin Board under the symbol: SPAZ. The company is headquartered in Santa Clara, CA, with 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.

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 and Spatializer VSP-11(TM). Spatializer Vi.B.E.(TM), Spatializer Natural Headphone(TM) Spatializer PCETM and the ``retro radio design with stars and bubble window'' are trademarks of Desper Products Inc. All other trademarks are the property of their respective owners. Copyright (C) 2002 Spatializer Audio Laboratories, Inc.

SOURCE: Spatializer Audio Laboratories Inc.