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Technology Licensing Revenue Highest in 16 Consecutive Quarters; Consolidated Gross Margin Increases 30.8 Percentage Points Over Q1 2001

``I am pleased with our Q1 2002 accomplishments,'' said Thomas C.K. Yuen, SRS Labs' chairman and CEO. ``Our increased revenue in both licensing and ASIC segments, reduction in expenses and improved margins provide a clear indication of our successful progression toward profitability and adheres to our business model. The first quarter licensing revenue was strong due to overall increasing demand for our technologies and annual contract renewals. During the first quarter of 2002, we were able to increase our research and development activities while at the same time further reduce overall operating expenses, when compared to first quarter 2001. Our ValenceTech subsidiary also had a strong first quarter as a result of a more diversified customer base and increased demand for its ASIC chips.''

Yuen continued: ``We are experiencing positive momentum in our high margin business segments. In the first quarter of 2002, the significant increase in overall margin over the first quarter of 2001 can be directly attributed to our continued phasing out of the low margin ValenceTech distribution business and a shift of our revenue mix toward the higher margin licensing and ASIC businesses. The combination of revenue mix along with continued revenue growth in high margin areas enabled us to record exceptionally higher gross margin of over 77 percent. However, looking forward we are targeting a more modest consolidated gross margin target of approximately 70 percent. Our task is to continue focusing on execution and in doing so, we are confident we will reach our goal of increasing annual consolidated revenue by 20-25 percent and return to profitability.''

SRS Sound Design Group - IP Licensing & Products

During Q1 2002, increased business activity, recent design-wins and new product approvals contributed to the increase in licensing revenue. As previously disclosed, one of the key aspects of the company's business strategy is to make its technologies available on a wide range of semiconductor platforms. The company's technologies are imbedded in an increasing number of semiconductor platforms for high growth products including DVD players, set-top boxes and televisions. The company's licensees including Aiwa, Sony, Pioneer, and Sharp continued to expand their use of SRS Labs' technologies, especially TruSurround®. The company also entered the growing software market for DVD players through its recently announced licensing agreements with two leading providers of software DVD players, Cyberlink and InterVideo. In February 2002, the company announced the adoption of its technologies by Sharp Corporation for J-PHONE in Japan, furthering its partnerships in the telecommunications market.

In January 2002, SRS Labs demonstrated its proprietary line of flat panel speakers to the industry at the Consumer Electronics Show, where it received tremendous response and was acknowledged with the CES Innovations Award for its speakers. The speakers are targeted toward consumers looking for high-end home theater equipment and the first limited production run of the Klayman Signature Series(TM) speakers is expected to be available for distribution to key retail buyers and industry press by the end of June 2002.

ValenceTech Ltd. - Semiconductor Sales

ValenceTech experienced solid ASIC growth and growing demand from the consumer electronics and video game markets during the first quarter of 2002. ValenceTech diversified its customer base with global companies, streamlined expenses and continued to phase out the low margin distribution business. ValenceTech has completed development of the SRS technology-embedded chips, which became available for sampling earlier this month.

SRSWOWcast Technologies - Internet and Broadcast Business

The SRSWOWcast subsidiary markets hardware and software solutions to the Internet and broadcast industries. SRSWOWcast's business model is to derive revenue through product sales, content encoding fees and per-event usage fees. SRSWOWcast announced a licensing and distribution agreement with National Mobile Television (NMT) in January 2002 for its Broadcast Phase Protector(TM) and Broadcast Sports Processor(TM) units. These units were successfully tested on the air by major networks including ABC and CBS. Over the coming months, NMT's fleet of 45 mobile broadcast vehicles are expected to be outfitted with additional units. The anticipated usage of these units by broadcasters is expected to result in per-event usage fees as well as on-air or on-screen logo visibility for the company.

In conjunction with SRS Labs' (Nasdaq: SRSL) year end results, you are invited to listen to its conference call that will be broadcast live over the Internet http://www.videonewswire.com/event.asp?id=4329 today, April 23, 2002 at 4pm EDT at or link to the conference from SRS Labs' website at www.srslabs.com .

About SRS Labs, Inc.

SRS Labs, Inc. ( www.srslabs.com ) and its subsidiaries provide advanced technology solutions for high growth consumer markets, including home theater, DVD, portable audio, wireless devices, game consoles, automotive, broadcast, Internet and personal computer software. SRS Labs, the parent company, develops the core audio and voice technologies and licenses these patented technologies to over 200 well-known manufacturers and semiconductor companies, including Sony, RCA, Philips, Kenwood, Mitsubishi, Hitachi, Microsoft, and Pioneer. ValenceTech, Ltd., ( www.valencetech.com ), SRS Labs' Hong Kong- based subsidiary, is a leading fabless application specific integrated circuit (ASIC) design and manufacturing company providing analog and digital ASIC solutions to the world's leading manufacturers of consumer electronics, gaming, telecommunications and computer products. SRS Labs' subsidiary, SRSWOWcast Technologies, ( www.srstechnologies.com ), focuses on the Internet and broadcast markets by developing and licensing customized hardware and software products incorporating SRS Labs' patented technologies. The information on the above-referenced websites is not incorporated by reference into this press release.

Except for historical information contained in this release, statements in this release, including those of Mr. Yuen, are forward-looking statements and projections (which include statements concerning plans and objectives of management for future operations) 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 goals and strategy will be realized. Numerous factors (including risks and uncertainties) 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. Some of these factors include the general market conditions concerning the semiconductor business, the acceptance of new SRS Labs' products and technologies, the impact of competitive products and pricing, the timely development and release of technologies by the Company, general business and economic conditions, especially in Asia, and other factors detailed in the Company's Form 10-K and other periodic reports filed with the SEC. SRS Labs specifically disclaims any obligation to update or revise any forward-looking statement whether as a result of new information, future developments or otherwise.

SRS, TruSurround, CircleSurround, Klayman Signature Series, Broadcast Phase Protector, Broadcast Sports Processor and the SRS symbol are either trademarks or registered trademarks of SRS Labs, Inc. or SRSWOWcast Technologies.

For further information, please contact: investors, Tami Yanito, ext. 3093, tami@srslabs.com, or media, Jennifer Drescher, ext. 5110, jenniferd@srslabs.com, both of SRS Labs, Inc., +1-949-442-1070.

                                SRS LABS, INC
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (unaudited)
                                                         Quarter Ended
                                                            31-Mar
                                                    2002              2001
    Revenues:
      Semiconductor revenue                     $1,471,142         $1,083,913
      Licensing revenue                          1,795,722          1,164,481
      Component and distribution revenue           234,931          2,064,428
      Product revenue                               24,919             14,255
      Internet and broadcast revenue                28,666              3,804
         Total revenues                          3,555,380          4,330,881
    Cost of sales                                  793,345          2,301,290
    Gross margin                                 2,762,035          2,029,591
    Expenses:
      Sales & marketing                          1,260,440          1,391,380
      Research & development                       965,076            878,094
      General & administrative                   1,233,525          1,561,926
    Loss from operations                          (697,006)        (1,801,809)
    Other income, net                               87,963            234,041
    Minority interest                               19,748             72,828
    Loss before income tax expense                (589,295)        (1,494,940)
    Income tax expense                             101,438             70,594
    Net loss                                     ($690,733)       $(1,565,534)
    Net loss per common share:
      Basic and Diluted                             ($0.05)            ($0.12)
    Weighted average number of shares used
      in the calculation of net loss per
      common share
      Basic and Diluted                         12,669,407         12,582,262


                                SRS LABS, INC.
                         CONSOLIDATED BALANCE SHEETS

                                             March 31, 2002       December 31,
                                               (Unaudited)            2001
                              ASSETS
    Current Assets
      Cash and cash equivalents                $18,947,180       $19,011,167
      Investments available for sale               578,214           582,556
      Accounts receivable, net                   1,187,803           870,016
      Inventories, net                           1,528,261         1,624,067
      Prepaid expenses and other
       current assets                              389,211           631,844
      Deferred income taxes                        219,429           219,429

               Total Current Assets             22,850,098        22,939,079

      Furniture, fixtures & equipment, net       1,599,390         1,672,801
      Intangible assets, net                     2,666,760         2,852,009
      Deferred income taxes                        799,499           799,499

                       Total Assets            $27,915,747       $28,263,388

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities
      Accounts payable                            $802,344          $822,698
      Accrued liabilities                        1,693,146         1,357,105
      Income taxes payable                       1,151,969         1,144,493

          Total Current Liabilities              3,647,459         3,324,296

      Minority interest                            383,331           403,079
      Commitments and contingencies

    Stockholders' Equity
      Preferred stock - $.001 par value
       2,000,000 shares authorized;
       no shares issued and outstanding
      Common stock - $.001 par value
       56,000,000 shares authorized;
       12,818,769 and 12,789,644 shares
       issued; and 12,693,869 and 12,664,744
       outstanding at March 31, 2002 and
       December 31, 2001, respectively              12,819            12,790
      Additional paid-in capital                55,787,922        55,745,867
      Cumulative other comprehensive
       (loss) income                               (76,462)          (74,055)
      Retained deficit                         (31,387,328)      (30,696,595)
      Less treasury stock at cost,
       124,900 shares at March 31, 2002
       and December 31, 2001, respectively        (451,994)         (451,994)

         Total Stockholders' Equity             23,884,957        24,536,013
              Total Liabilities and
               Stockholders' Equity            $27,915,747       $28,263,388

SOURCE: SRS Labs, Inc.