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Spatializer enCompass AV Convincingly Delivers Up to 7.1 Channels of Surround Sound Audio from Mono and Stereo Sources

Spatializer enCompass AV transforms ordinary stereo into a virtual concert hall, transporting the listener beyond average dual-channel sound, to the exceptional sound experience of a movie theater. Utilizing the latest Head Related Transfer Function (HRTF -- physical cues to locate a sound source) and Spatializer's proprietary psycho-acoustic and channel distribution technology, enCompass AV converts two channel audio inputs to correctly drive up to 7.1 channels of audio outputs. Spatializer's enCompass AV also provides full compatibility with mono, stereo, Dolby Pro logic (R), Dolby Surround (R) and DTS®, as well as terrestrial and satellite broadcast television.

"Technologies from Spatializer Audio Laboratories have been used by some of the most famous names in music to help articulate the vocals while widening the sound stage," stated Michael Wood, Executive VP Business Development of Spatializer Audio Laboratories. "Those same principles are now available to the home entertainment manufacturer. Spatializer enCompass AV immerses the listener in rich, vivid, heart-pounding sound, even from ordinary two channel sources. It maximizes the utility and performance of surround sound systems when playing from such sources, as well as taking DVD audio to an even higher level of enjoyment. Beyond delivering a great audio experience," continued Wood, "Spatializer enCompass AV is much less expensive than comparable solutions. Indeed, enCompass AV actually helps the consumer electronics market OEM stay competitive while successfully fighting off margin pressure caused in part by unrealistic license fees."

Spatializer enCompass AV includes Spatializer's new Advanced Communications Enhancer (ACE) (TM) technology to more clearly define and focus dialog by separating speech from background noise. Spatializer enCompass AV can be further refined through the use of two of the latest speaker enhancement technologies from the engineers at Spatializer Audio Laboratories, Spatializer PCE(TM) or Phase Corrected Equalization (improves speaker performance) and Spatializer VirtuaLFE(TM) (greatly improves bass performance). Spatializer PCE adds definition to both dialog and music by improving higher frequencies, while Spatializer VirtuaLFE creates the impression of lower frequencies, without diving below the frequency response of the bass speakers.

"Spatializer is renowned for its industry leading virtual surround sound solutions," concluded Henry R. Mandell, CEO of Spatializer Audio Laboratories, Inc. "Now, Spatializer enCompass AV builds upon our expertise by delivering an astonishing, high definition audio experience to full, multi-speaker home theater surround sound systems. By offering the widest array of audio enhancement solutions on the market, Spatializer convincingly delivers the kind of high definition audio discerning customers want; whether listening through two television speakers, a home theater system, a video game system, in their cars or through headphones on the go."

Availability

Spatializer enCompass AV will be available for third party incorporation into consumer electronics Q1/2003 on DSPs from Zoran, Mediatek and other leading processor providers.

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 products from Toshiba, JVC, Panasonic, Hitachi, Samsung, Sharp, SANYO, Fisher and Kenwood and in PC multimedia systems from Apple. Spatializer stock is traded on the OTC Bulletin Board under the symbol: SPAZ. The company is headquartered in Santa Clara, CA, with executive and marketing offices in Westlake Village, CA and 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 Messrs. Wood and 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 enCompass AV(TM), Spatializer PCE(TM), Spatializer VirtuaLFE(TM) and Spatializer ACE(TM) are trademarks of Desper Products Inc. All other trademarks are the property of their respective owners.