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First Phase in Strategic Alliance Brings SRS WOW Technology To Tens of Millions of Consumers Worldwide

``Microsoft is leading the way in bringing the most advanced products to consumers around the world,'' said Tom Yuen, Chairman and CEO of SRS Labs, ``and we are excited that they have chosen SRS Labs as their ally in delivering the highest quality audio with Windows Media Player 7.''

SRS WOW creates a panoramic 3D sound image that extends beyond the speakers themselves. It produces deep rich bass from any speakers and headphones, creating a fuller and richer sound than is usually possible through small PC speakers or headphones. With WOW and the full range of the digital media capabilities of the Windows Media Player 7, including playback of CD audio and the downloading and streaming of Internet music and video, listeners can now enjoy the ultimate entertainment experience through their computer system.

``SRS Labs is a pioneer in the field of audio enhancement and WOW is a significant breakthrough,'' said Will Poole, vice president of the Digital Media Division at Microsoft. ``Windows Media Player 7 with integrated SRS technology offers an audio experience never before available on the PC.''

Windows Media is the leading digital media platform and the Windows Media Player is the fastest-growing digital media player. To date, there are over 100 million licensed copies of the Windows Media Player, growing by more than one every second. The newest Windows Media Player, version 7, is the first PC software integrated with the WOW audio enhancement. It includes four separate user controls that enable consumers to customize their listening experience based on audio preference and type of speaker system. Consumers who desire more detailed information on SRS WOW technology can simply click the SRS Logo that is included on the interface of the Windows Media Player to be directed to a custom technology page.

``We are working closely with Microsoft to transform the audio and video experience in all Windows Media technologies where entertainment and communications converge,'' said Chuck Cortright, president of SRSWOWcast.com, Inc., the Internet entertainment subsidiary of SRS Labs, Inc.

About SRS Labs

Founded in 1993, SRS Labs (www.srslabs.com) is the world's leading provider of audio and voice enhancement technologies. SRS Labs' technologies have been included in a wide variety of consumer electronics, automotive, cinema sound and telecommunications equipment from over 150 companies, including such industry giants as Sony, RCA, Pioneer, Philips, Kenwood, Dell, IBM, Samsung and Sennheiser.

Created under the Company's incubator strategy of forming separate business entities to target specific industry markets or geographies, SRSWOWcast.com, Inc. is focused on delivering the best sound and voice quality over the Internet and a personal computer. Currently operating the Company's e-commerce store, www.wowthing.com , SRSWOWcast.com will also be launching an entertainment destination site using Windows Media technologies this summer.

SRS, the SRS symbol, WOW Thing and WOW are either registered trademarks or trademarks of SRS Labs, Inc. in the United States and selected foreign countries. All other brand names and products mentioned herein are trademarks or registered trademarks of their respective holders.

Statements of Mr. Yuen in paragraph two and Mr. Cortright in paragraph six of this release include forward-looking statements and projections concerning the relationship announced herein, the goals of such relationship, and future collaborative efforts between SRS Labs, SRSWOWcast.com, Inc. and Microsoft Corp. These forward-looking statements 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 objectives and goals will be realized. Factors which may affect the company's expectations, as disclosed in the release, and which may cause results to differ materially from those expressed in forward-looking statements, include the acceptance of the company's Internet strategy and technologies, the ability of Microsoft to timely and effectively incorporate technology licensed from SRS Labs, the ability SRSWOWcast.com, Inc. to develop and deliver programming for Internet use and the impact of competitive technologies.

SOURCE: SRS Labs, Inc.