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Industry's First 5.1 Channel Sound Card to Provide the Ultimate Home Theater, PC Gaming and Music Experience

``Philips' promotion of our technology in its first sound card is a great boost for the ThunderBird project,'' said David Gallagher, President and CEO, QSound Labs. ``As a global leader in digital audio, Philips can leverage its strength in consumer audio to bring the power of the home entertainment center experience to the PC with the ThunderBird Avenger.''

QSound Labs' most advanced algorithms are incorporated into Philips' Thunderbird Q3D DSP and feature:

QSound3DInteractive(TM)
Positional 3D hardware DSP processing for maximum performance
- stereo speaker, headphone & quad speaker algorithms
- eliminates crosstalk cancellation and broadens "sweet spot"

QSound Multi-Speaker System(TM)
Stereo-to-quad processing
- transforms ordinary stereo application to quadraphonic
- non-3D games become immersive quad 3D games
- enhances DVD movie playback
- provides true quadraphonic music playback from CD's MIDI files & MP3
  players
- is effective with both stereo & Dolby Pro-Logic(TM) encoded material

QSound Environmental Modeling(TM)
- adds reverb as a additional positional queue
- EAX(TM) compatible
- Reverb presets can be applied to any DirectSound(TM) 3D application

QXpander(TM) Stereo Expansion & Stereo to 3D remapping
- enhances stereo games to 3D

The ThunderBird Avenger is the first sound card that transforms the PC into a home theatre providing 5.1 speaker playback of music CDs and videos, digital audio and MIDI files. Previously, only 5.1 encoded DVDs and 3D audio games could be enjoyed in a home theatre 5.1 speaker format while other sources including music and most games could only be experienced in stereo. Using QSound's unique algorithms, any game or other interactive application can now also be experienced in a deeply immersive theater-like environment surrounding the player in 5.1 channels of sound effects and music. Even movies designed for 5.1 playback can be dramatically enhanced by the ThunderBird Avenger. The product provides a similar theatre experience on four-channel speaker systems and, in addition, offers two speaker and headphone 3D virtualization making it the most flexible technology available. About Philips Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of $33.5 billion (EUR 31.5 billion) in 1999. It is a global leader in color television sets, lighting, electric shavers, color picture tubes for televisions and monitors, and one-chip TV products. Its 226,900 employees in more than 60 countries are active in the areas of lighting, consumer electronics, domestic appliances, components, semiconductors, medical systems, and IT services. Philips is quoted on the NYSE (symbol: PHG), London, Frankfurt, Amsterdam and other stock exchanges. About QSound Labs, Inc. QSound Labs, Inc., founded in 1988, is a world leader in audio technology, multimedia software, Internet audio and e-commerce solutions. Utilizing its proprietary patented technology, the Company has developed audio solutions for virtual surround sound, positional audio, stereo enhancement and the Company's area of specialty - 3D audio.

QSound's cutting-edge 3D audio technology allows consumers to enjoy high quality, realistic three-dimensional stereo surround sound in a number of applications with just two speakers. In recent years, QSound has leveraged its extensive Internet marketing expertise by also providing e-commerce solutions and complimentary multimedia software applications. The Company's various technologies are incorporated into many products in the consumer electronics, multimedia PC, Internet, entertainment and healthcare markets. Visit the QSound Labs web site at www.qsound.com for more information. This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 concerning, among other things, the anticipated introduction of new products, projected shipment dates of products and future financial results.

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 the Company's ability to carry out its business strategy and marketing plans, including availability of sufficient resources for the Company to do so timely and cost effectively, dependence on the performance of third parties who have agreed to market the Company's technologies, manufacturing uncertainties, dependence on intellectual property, uncertainties relating to product development and commercial introduction, rapid technological change and competition, and other risks which may be 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.

Contact:

     Investor:
     Paula Murray, QSound Labs, Inc.
     954/796-8798
     paula.murray@qsound.com