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Company Reports Quarterly Earnings $.05 Per Share; YTD Earnings of $.01/Share Revenue Increases 52% Over Comparable Quarter Last Year and Consolidated Gross Margins Exceed 72%

For the third quarter ended September 30, 2002, the Company reported revenues of $5,411,613, with net income of $595,774, or $0.05 per share, compared to revenues for the third quarter of 2001 of $3,549,129 and a net loss of $802,299, or $0.06 per share. For the nine months ended September 30, 2002, the Company reported revenues of $12,995,353, with net income of $109,597, or $0.01 per share, compared to revenues during the same period in 2001 of $12,724,385 and a net loss of $3,347,721, or $0.27 per share. The Company's cash position improved by $1.6 million from the year ended December 31, 2001 with cash, cash equivalents and investments totaling $21.2 million for the nine months ended September 30, 2002.

As a result of the resignation of the Company's independent accountant on October 24, 2002, the Company's financial statements for the third quarter ended September 30, 2002 have not yet been reviewed by an independent accountant. The Company today filed with the Securities and Exchange Commission a Notification of Late Filing on Form 12b-25 with respect to its Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2002 seeking an additional five calendar days to make a timely filing of such Quarterly Report. The Company is in the process of engaging a new independent accountant to serve as its auditor. At such time when a new independent auditor is engaged, such new auditor will review the Company's financial statements for the third quarter ended September 30, 2002.

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.

For further information please contact: Investors, Tami Yanito of SRS Labs, Inc., +1-949-442-1070, ext. 3093, tami@srslabs.com .

                                SRS LABS, INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)
                           Three Months Ended          Nine Months Ended
                              September 30,              September 30,
                           2002          2001          2002          2001
    Revenues:
      Semiconductor
       revenue          $2,945,687    $1,574,728   $6,782,127    $4,158,247
      Licensing
       revenue           2,008,554     1,303,523    5,240,117     4,093,805
      Component and
       distribution rev    433,100       651,196      875,297     4,322,170
      Product revenue        8,510        17,519       53,979       134,007
      Internet and
       broadcast
       revenue              15,762         2,163       43,833        16,156
         Total revenues  5,411,613     3,549,129   12,995,353    12,724,385
    Cost of sales        1,505,290     1,274,288    3,413,450     5,910,643

    Gross margin         3,906,323     2,274,841    9,581,903     6,813,742
    Expenses:
      Sales & marketing    995,759       935,189    3,188,978     3,480,605
      Research &
       development         992,839       872,998    2,895,436     2,647,976
      General &
       administrative    1,272,031     1,418,192    3,385,737     4,549,058
    Income (Loss) from
     operations            645,694      (951,538)     111,752    (3,863,897)
    Other income, net      295,332       186,300      611,883       665,350
    Minority interest       19,178        39,241       59,207       156,879
    Income before income
     tax exp.              960,204      (725,997)     782,842    (3,041,668)
    Income tax expense     364,430        76,302      673,245       306,053
    Net Income (Loss)     $595,774     $(802,299)    $109,597   $(3,347,721)
    Net Income (loss)
     per common share:
      Basic                  $0.05        ($0.06)       $0.01        ($0.27)
      Diluted                $0.05        ($0.06)       $0.01        ($0.27)

    Weighted average
     number of shares used
     in the calculation of
     net income (loss)
     per common share
      Basic             12,623,339    12,672,707   12,659,347    12,627,393
      Diluted           12,737,915    12,672,707   12,863,807    12,627,393

                                SRS LABS, INC.
                         CONSOLIDATED BALANCE SHEETS
                                                 September 30,   December 31,
                                                     2002           2001
                                                 (Unaudited)
                                      ASSETS
    Current Assets
      Cash and cash equivalents                  $13,941,720    $19,011,167
      Investments available for sale                      --        582,556
      Accounts receivable, net                       733,894        870,016
      Inventories, net                             1,325,609      1,624,067
      Prepaid expenses and other current assets      358,735        631,844
      Deferred income taxes                          219,429        219,429

                     Total Current Assets         16,579,387     22,939,079

      Investments available for sale               7,297,809             --
      Furniture, fixtures & equipment, net         1,717,904      1,672,801
      Intangible assets, net                       2,605,914      2,852,009
      Deferred income taxes                          799,499        799,499

                             Total Assets        $29,000,513    $28,263,388

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities
       Accounts payable                             $855,951       $822,698
       Accrued liabilities                         1,829,358      1,357,105
       Income taxes payable                        1,458,654      1,144,493

                Total Current Liabilities          4,143,963      3,324,296

    Minority interest                                343,871        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;
        12,838,769 and 12,789,644 shares
        issued; and 12,622,469 and 12,664,744
        outstanding at September 30, 2002 and
        December 31, 2001, respectively               12,839         12,790
       Additional paid-in capital                 55,847,259     55,745,867
       Cumulative other comprehensive loss           (66,224)       (74,055)
       Accumulated deficit                       (30,586,998)   (30,696,595)
       Less treasury stock at cost,
        216,300 and 124,900 shares at
        September 30, 2002 and
        December 31, 2001, respectively             (694,197)      (451,994)

                Total Stockholders' Equity        24,512,679     24,536,013

                     Total Liabilities and
                      Stockholders' Equity       $29,000,513    $28,263,388