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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K/A
 (AMENDMENT No. 1)
 (Mark One)
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    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the period ended: December 31, 2005
 OR
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    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 000-26460
 SPATIALIZER AUDIO LABORATORIES, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    95-4484725(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 2025 Gateway Place, Suite 365
San Jose, California 95110   Telephone Number: (408) 453-4180   Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
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   DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS  PART IIIItem 10. Directors and Executive Officers of the RegistrantItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accountant Fees and ServicesPART IVItem 15. Exhibits and Financial Statement SchedulesSIGNATURESEXHIBIT 31.1EXHIBIT 32.1    Table of Contents   
 PART III
 
 Item 10.
    
    Directors and Executive Officers of the Registrant.
     
 Item 11.
    
    Executive Compensation.
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Long Term CompensationAnnual Compensation
    
    AwardsName and PrincipalPosition
    
    Year
    
    Salary
    
    Bonus
    
    Securities Under Options Granted (#)Henry R. Mandell(1)
    
    
    12/05
    
    
    $
    214,200
    
    
    
    N/A
    
    
    
    500,000
    (2)Chief Executive
Officer12/04
    
    
    $
    214,200
    
    
    
    N/A
    
    
    
    50,000
    (3)12/03
    
    
    $
    214,200
    
    
    
    N/A
    
    
    
    400,000
    (4)
 (1)
    
    Mr. Mandells base salary in each of the three fiscal years reported above was $214,200
and he was entitled to a bonus, as granted by the Compensation Committee, equal to five
percent (5%) of the Companys income after taxes (not to exceed $100,000). Mr. Mandell does
not receive any other cash compensation but did receive reimbursement for expenses and
benefits on the same terms as other employees.(2)
    
    Reflects an additional 500,000 options granted in conjunction with the extension in February
2005 (effective as of November 2004) of Mr. Mandells employment contract with the Company,
which options are exercisable at $0.10 per share.(3)
    
    Reflects 50,000 directors options granted annually at the Annual Meeting of Stockholders to
each director, exercisable at $0.09 per share.(4)
    
    Reflects 50,000 exercisable at $0.07 per share, an additional 100,000 options granted
for five (5) year Board service, exercisable at $0.05 per share, and 250,000 options at $0.05
per share granted in conjunction with the extension of Mr. Mandells employment contract in
November 2003.
 OPTION GRANTS DURING THE
LAST FISCAL YEAR
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POTENTIALREALIZABLEVALUE ATASSUMED ANNUALINDIVIDUAL GRANTS
    
    RATES OF STOCK% OF TOTAL
    
    
    
    
    
    
    
    
    
    PRICESECURITIES
    
    OPTIONS
    
    
    
    
    
    
    
    
    
    APPRECIATIONUNDER
    
    GRANTED TO
    
    EXERCISE OR
    
    
    
    
    
    FOR OPTIONOPTIONS
    
    EMPLOYEES IN
    
    BASE PRICE
    
    EXPIRATION
    
    TERMGRANTED
    
    FISCAL YEAR
    
    ($/SECURITY)
    
    DATE
    
    5%
    
    10%FebruaryHenry R. Mandell
    
    
    500,000
    (1)
    
    
    100.0
    %
    
    $
    0.10
    (2)
    
    
    2010
    (1)
    
    $
    0
    
    
    $
    0
 
 (1)
    
    All options are fully vested and expire by February 2010.(2)
    
    Market price on the date of grant. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
  SECURITIES
    
    
    
    
    
    UNEXERCISED
    
    VALUE OF UNEXERCISED IN-THE-MONEYACQUIRED ON
    
    AGGREGATE
    
    OPTIONS AT FISCAL
    
    OPTIONS AT FISCAL YEAR-END($)NAME
    
    EXERCISE
    
    VALUE REALIZED
    
    YEAR-END
    
    EXERCISABLE/UNEXERCISABLEHenry R.
Mandell
    
    
    0
    
    
    $
    0
    
    
    
    1,550,000
    
    
    $
    0
    (1)
 
 (1)
    
    Calculated at an average exercise price of $0.10 per share. Compensation of Directors
  Employment Agreement
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Compensation Committee
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Item 12.
    
    Security Ownership of Certain Beneficial Owners and Managementand Related Stockholder Matters.
  AMOUNT AND NATUREOF
    
    PERCENTBENEFICIAL
    
    OFNAME OF BENEFICIAL OWNER
    
    OWNERSHIP
    
    CLASSCarlo Civelli(1)(2)
    
    
    5,763,780
    
    
    
    11.75
    %Henry Mandell(1)(3)
    
    
    2,212,875
    
    
    
    4.4
    %All directors and executive officers as a
group (2 persons)(1)(2)(3)
    
    
    7,976,655
    
    
    
    16.15
    %
 
 (1)
    
    The persons named in the table have sole voting and investment power with respect to all
shares shown to be beneficially owned by them, subject to community property laws, where
applicable, and the information contained in the footnotes to this table.(2)
    
    Carlo Civelli controls Clarion Finanz AG, a non-reporting investment company. Holdings of Mr.
Civelli and Clarion Finanz AG are combined, and include all shares of the Company held of
record or beneficially by them, and all additional shares over which he either currently
exercises full or partial control, without duplication through attribution. Includes 300,000
options held by Mr. Civelli, all of which are vested and currently exercisable. Mr. Civellis
address is Gerberstrasse 5, 8023 Zurich, Switzerland.(3)
    
    Includes 1,550,000 options held by Mr. Mandell, of which all are vested and are exercisable
at various prices from $0.05 to $0.30. This includes options granted on February 21, 2005,
and exercisable at $0.10 per share, relating to the extension of Mr. Mandells employment
agreement. The options have varying expiration dates of which the final such expiration date
is February 21, 2010. - 6 -




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Equity Compensation Plan Information
 Number of securitiesremaining available forNumber of securities to
    
    
    
    
    
    futurebe issued
    
    Weighted-average
    
    issuance under equityupon exercise of
    
    exercise price of
    
    compensation plansoutstanding options,
    
    outstanding options,
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    warrants and rights
    
    reflected in column (a))(a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    
    2,100,000
    (1)
    
    $
    0.10
    (1)
    
    
    2,776,339Equity compensation
plans not approved
by security holders
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    
    2,100,000
    
    
    
    
    
    
    
    2,776,339
 
 (1)
    
    Represents options to acquire the Companys common stock under the Companys 1995 Stock
Option Plan (the 1995 Plan) and 1996 Incentive Plan approved by the Companys stockholders
in 1995 and 1996, respectively. The 1995 Plan authorizes grants of options to purchase
authorized but unissued common stock in an amount of up to ten percent (10%) of total common
shares outstanding at each calendar quarter or, 4,876,339 as of December 31,
2005. Stock options are granted with an exercise price equal to the stocks fair market value
at the date of grant. Stock options have five-year terms and vest and become fully exercisable
as determined by the Compensation Committee on date of grant. The 1996 Plan supplements the
1995 Plan by allowing for stock appreciation, incentive shares and similar accruals
aggregating not more than the equivalent of 500,000 shares and the re-grant of any performance
shares that become available for re-grant. The 1995 Stock Option Plan expired in June 2005 and
no new options were granted after that date. 
 Item 13. Certain Relationships and Related Transactions.
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Item 14. Principal Accountant Fees and Services.
  December 31,2005
    
    
    2004Audit Fees (1)
    
    $
    24,815
    
    
    
    34,865Audit Related Fees (2)
    
    $
    10,050Tax Fees (3)
    
    
    6,895
    
    
    
    6,895All Other Fees
    
    
    
    
    
    
    Total Fees
    
    $
    41,760
    
    
    
    41,760
 
 (1)
    
    Audit Fees are fees for professional services rendered for the annual audit, the reviews of
the Companys financial statements included in Form 10-Qs and services normally provided in
connection with statutory and regulatory filings.(2)
    
    Audit Related Fees are for assurance and related services that are reasonably related to the
performance of the fiscal 2005 audit and not reported under Audit Fees.(3)
    
    Tax Fees are fees for professional services rendered for tax compliance, tax planning and tax
advice.  - 8 -




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PART IV
 
 Item 15. Exhibits and Financial Statement Schedules.
   Exhibit No.
    
    Description31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Certification will not be deemed filed for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended)
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SPATIALIZER AUDIO LABORATORIES, INC.By:
    
    /s/Henry R. MandellHenry R. MandellChairman & Secretary
  /s/Carlo Civelli
    
    April 28, 2006Carlo Civelli, Director/s/Henry R. Mandell
    
    April 28, 2006Henry R. Mandell,Director, Chairman of the Board andSecretary (Principal executive officer andprincipal financial officer)
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