Press Release



QSound Labs Presents Business Update at Shareholders Meeting



Management confident in growth strategy presented at last years' meeting



CALGARY, CANADA - June 19, 2003 - QSound Labs, Inc. (NASDAQ: QSND), a leading supplier of software solutions for audio, voice and e-commerce, held its Annual Meeting of Shareholders today. At the formal portion of the meeting, resolutions re-electing the board of directors and appointing the auditors were passed. Afterwards, CEO David Gallagher provided an update on the Company's current business opportunities.

"At last year's shareholders meeting, management outlined its product roadmap for growth given the market conditions then prevailing," stated Gallagher. "In the past twelve months, we have focussed on executing this strategy. Significant progress has been made in our audio business through in-house product development and the recent IP telephony technology acquisition has added to our product portfolio. The Company has strengthened its financial position as evidenced by its financial reports over the past year and is now in a position to benefit from the product development efforts of the past year."

Audio Business Unit:
"Today, we offer audio solutions to four different industries; Consumer Electronics, PC Hardware; Streaming/Digital Media & Mobile/Handheld Devices. The catalysts for QSound's revenue growth in each of these markets are independent of each other but in general terms the consumer's adoption, use and comfort in dealing with digital media is a common growth driver to each of them," continued Gallagher. "In the CE market, consumers have embraced DVD technology and QSound has benefited by licensing to well known brands such as Toshiba, Sanyo & RCA as well as major OEMs based in China. The emergence of DVD recorders and digital amplifiers will provide new opportunities in this sector. Our development agreement with Philips, to develop PC software audio solutions, positions us well in an industry that ships in excess of 100 million units annually. At a retail level in Europe & North America, the Philips branded products have been well received; the challenge continues to be gaining an initial design win from one of the major PC OEMs. Efforts to achieve this continue."

"Our software for the streaming media market continues to sell well, primarily due to our distribution agreement with RealNetworks. For the mobile marketplace, the Company recently introduced microQ, a software engine optimized for playback of ringtones, enhanced music and game audio on cellular phones and PDAs. Marketing efforts for the remainder of this year will be focussed on this product. For more information, please visit"

IP Telephony Business Unit:
"The Company has established a new business unit to market the recently acquired IP telephony technology. Management believes that this is an opportune time to be entering this market," added Gallagher. "Our customer support and product development competencies will assist us in building on the existing customer base of dealers and OEMs. Our focus will be on adding value through software for various Internet telephony applications. Since the acquisition we have established relationships with hardware vendors to ensure full support for our distribution channel. For more information, please visit"

eCommerce Business Unit:
"QCommerce continues to operate on a positive cash flow basis but as stated at last year's AGM, the optimum method to achieve growth is through acquisition. During the year, no attempts were made to acquire similar companies as the Company opted strategically to preserve cash. For more information, please visit"

This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 concerning, among other things, expectation of increasing royalties from existing licensees including Philips, continued self-sustainment from QSound's audio and e-commerce businesses, and QSound's business relationship with a private company including planned development and commercial introduction of new products for telephony and networking industries. Investors are cautioned that such forward-looking statements involve risk and uncertainties, which could cause actual results, performance or achievements of QSound, 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 QSound, successful product development, introduction and acceptance, QSound'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 QSound's periodic reports filed with the Securities and Exchange Commission. Forward-looking statements are based on the current expectations, projections and opinions of QSound's management, and QSound 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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