Ability to Continue as a Going Concern

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Note 1 - Ability to Continue as a Going Concern; Sale of Substantially All Assets

Until 2007, Spatializer was a developer, licensor and marketer of next generation technologies for the consumer electronics, personal computing, entertainment and cellular telephone markets. The Company’s wholly-owned subsidiary, Desper Products, Inc. (“DPI”), was in the business of developing proprietary advanced audio signal processing technologies and products for consumer electronics, entertainment, and multimedia computing. All Company revenues were generated from DPI. The Company and DPI entered into an Asset Purchase Agreement with DTS, Inc. and a wholly owned subsidiary thereof pursuant to which the Company and DPI agreed to sell substantially all of their intellectual property assets. The Asset Purchase Agreement was consummated with DTS on July 2, 2007. DPI was dissolved during December, 2008.

The foregoing financial statements have been prepared assuming that the Company will continue as a going concern. As a result of the sale of substantially all of the Company’s assets as discussed above, the Company is now a shell company and its future plans are uncertain. These circumstances raise substantial doubt about the likelihood that the Company will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company's two stockholder/officers have been advancing cash to the Company on a short-term non-interest bearing basis to pay for ongoing general and administrative expenses.  As of December 31, 2010, $40,000 had been advanced and was reflected as Loans from Stockholders. Additional advances of $27,451 were made during 2011.