Press Release



QSound Labs Announces Future Roadmap at AGM



Offering Complete Suite of Software Solutions is Key for Growth



CALGARY, CANADA - June 27, 2002 - QSound Labs, Inc. (NASDAQ: QSND), a leading supplier of audio software solutions, held its Annual Meeting of Shareholders today. After the passing of all resolutions presented at the formal portion of the meeting, CEO David Gallagher spoke about QSound’s plans for the future.

Audio Business Unit:
“Over the years, QSound has expanded its core competencies from our original algorithm development to our current status of providing complete audio software solutions,” stated Gallagher. “Today, this positioning benefits the Company in several ways. First, it opens up strategic relationships and markets not previously accessible. Examples are the recent announcement with Philips to develop software audio solutions and the potential for these products in the growing market of next-generation wireless entertainment devices. Second, it allows QSound to position itself outside of the current 3D audio competition in markets that are substantially bigger. These next-generation devices need audio engines, preferably software, which may or may not require audio enhancement algorithms. This leads to new markets and greater opportunity.”

This quarter, QSound has delivered two products to Philips pursuant to the development agreement and has additionally developed two products for its own distribution, AudioPix 2.0 for XP and discGO!. Both will be submitted to Microsoft for Windows XP logo certification and insertion in their catalog.

eCommerce Business Unit:
“The business model adopted by QCommerce in FY2001 has proven viable and the emphasis now is on sustaining through growth,” said Gallagher. “Management believes the keys to success in this arena are breadth of services offered and customer support. QCommerce targets small business owners for its services, and this customer base typically has a high fall-off rate when the Internet does not deliver as their expectations. Since consolidating the customer support operations in-house last year, QCommerce has maintained a quarterly retention rate of 90% among its merchants and achieved significant cost savings. Moving forward, QCommerce will evaluate all opportunities to add merchants to its community of services.”

QSound has evaluated several opportunities to increase shareholder value through M&A activity and will continue to do so.

To view the AGM presentation, please visit

About QCommerce Inc.:
In 1999 QSound Labs, Inc. (NASDAQ: QSND) formed QCommerce Inc., a wholly owned subsidiary, to leverage its extensive Internet marketing expertise to provide complete e-commerce solutions to small and medium sized businesses. Through a series of strategic partnerships and acquisitions the Company has established itself as the "Complete Internet Retailing Resource", offering a comprehensive portfolio of e-business tools and marketing solutions.


This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 concerning, among other things, QSound's business relationship with Philips, development and commercial introduction of new products, and possible new strategic relationships and market opportunities. Investors are cautioned that such forward-looking statements involve risk and uncertainties, which could cause actual results, performance or achievements of the Company, or industry results to differ materially from those reflected in the forward-looking statements. Such risks and uncertainties include, but are not limited to, risks associated with loss of relationships with companies that do business with the Company, successful product development, introduction and acceptance, the Company’s ability to carry out its business strategy and marketing plans, including availability of sufficient resources to do so timely and cost effectively, dependence on intellectual property, rapid technological change, competition, general economic and business conditions, continued growth of the Internet and other risks detailed from time to time in the Company’s periodic reports filed with the Securities and Exchange Commission. Forward-looking statements are based on the current expectations, projections and opinions of the Company’s management, and the Company undertakes no obligation to publicly release the results of any revisions to such forward-looking statements which may be made, for example to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.





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