The net loss for the quarter ended June 30, 2000, is expected to be approximately $2.0 million, or about $0.14 per share. Revenues are expected to be more than 20% below last year's first quarter revenue of $14.1 million. The company's fiscal first quarter results will be impacted by a shortfall in revenues derived from sales of the company's Dual-Deck(TM) VCRs as well as a $315,000 bad debt charge relating to a Canadian customer.

"We held off lowering Dual-Deck VCR prices on our older models as we closed them out, however the downward movement of VCR prices affected our sell-through velocity at retail during the first quarter, and as a result our overall sales came in below expectations. With the new line of Dual-Deck VCRs now shipping to stores we anticipate that we will regain our sales momentum," said Roger Hackett, Sensory Science's chairman and chief executive officer. "This shortfall was compounded by a write-off due to bad debt as well as the continued investment in our future with the development of new digital products. As we move to introduce some of these new products and as we expand our distribution, we expect this quarter's results to be offset by stronger earnings forecasted for the balance of the fiscal year."

Company Set To Introduce Industry's First Combination DVD/VCR Dual-Deck Product, First Shipments Scheduled For August

Building on its reputation and expertise in designing, developing and marketing innovative home theater solutions, the company is preparing to introduce the Go-Video DVR-5000, the industry's first combination DVD/VCR offering consumers the convenience of purchasing one device that takes care of their home theater needs. With a variety of patents pending, the DVR-5000 sports a Dolby Digital® 5.1 channel surround sound decoder as well as dts digital output for dts-enhanced DVDs, and has the ability to playback MP3 files from CD-ROM. The built-in Hi-Fi stereo VCR contains four heads for superior slow motion and stop action, VCR Plus+ C3(TM), and S-VHS playback.

The company plans to announce more on this exciting new product shortly, and to date has received strong orders from major retailers throughout the United States. The DVR-5000 is expected to begin shipping to retailers in August.

"This product, the first of its kind in the world, has received significant interest from retailers and we already have strong advance orders in hand," said Hackett. "Consumers want the convenience of purchasing one product that solves their home theater needs that is intuitive to use, versatile, and affordable."

Dual-Deck Distribution Expands With Rollout To Kmart Stores In July

In a move to capture an increasing share of the VCR market, the company will introduce Go-Video branded monaural Dual-Deck VCRs in approximately 800 of Kmart's highest volume electronics stores throughout the United States, with shipping scheduled to begin next month. Kmart customers will now be able to personally view the numerous advantages that Dual-Deck VCRs have over ordinary VCRs, including the advanced editing and copying features and enhanced recording capabilities.

"The rollout of our Dual-Deck VCRs in Kmart stores is clear evidence of the mass appeal that Dual-Deck VCR technology has, as well as the affordability of the best value in the category," added Hackett. "Our Dual-Deck VCR distribution continues to grow as more people become aware of the numerous benefits that this exciting technology offers, and early feedback suggests that this introduction will be well received by Kmart's loyal customers. With our distribution expanding and our product lines growing, we expect this quarter's revenue and earnings shortfall to be a temporary setback as we work to complete our transition into a digital entertainment products leader."

About Sensory Science

Sensory Science (formerly Go-Video) is a rapidly growing consumer electronics company specializing in developing and marketing innovative digital audio and video products, including digital televisions, Internet media players, DVD players, and high-end home theater components. The company holds patents on the Dual-Deck VCR as well as other electronics products and systems, and is expanding into new product categories to take advantage of the transition from analog to digital technologies. Sensory Science also markets its products under the Go-Video, California Audio Labs, rave:mp, CineVision, and Loewe brand names. For additional information on Sensory Science on the Internet, visit www.sensoryscience.com.

This press release contains forward-looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially from those expected are the following: business conditions and general economic conditions; competitive factors, such as pricing and marketing efforts of rival companies; timing of product introductions; ability of contract manufacturers to meet product price objectives and delivery schedules; legislative, regulatory, and industry initiatives that may affect planned or actual product features and marketing methods; and the pace and success of product research and development. For more information on the potential factors that could affect the company's financial results, please review the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K, the company's quarterly reports on Form 10-Q, and the company's other filings with the Securities and Exchange Commission.

SOURCE: Sensory Science Corporation