Looking for who said what in the sound world? Well there is no better place to find every audio related press release than 3DsoundSurge.!

For the third quarter, operating profit was $100,000 or $0.01 per share as compared to a loss of $239,000 or $0.01 in 1999.

Net loss for the quarter, after deducting acquisition-related costs of $760,000 and other non-operating costs in accordance with generally accepted accounting principles, was $818,000 or $(0.03) per share as compared to $1,902,000 or $(0.08) per share in 1999. In 1999, the Company incurred a one-time charge of $1,489,000 for purchased, in-process research and development.

Revenues for the nine months ended September 30, 2000 increased by 32% to $3,236,000 as compared to $2,446,000 for the same period in 1999. The operating loss was $68,000 as compared to $454,000 in 1999. Net loss for the nine month period, which includes one-time charges of $ 897,000, was $2,436,000 or $(0.09) per share as compared to a net loss of $2,200,000 or $(0.09), which included one-time charges of $1,489,000, for the comparable period in 1999.

``We are satisfied with the progress made in the third quarter,'' stated David Gallagher, President and CEO, QSound Labs, ``the audio business segment continues to be profitable and has now earned $760,000 in net income over the past year. With respect to our e-commerce business segment, we made significant progress in building the marketing team, implementing our plans and integrating and rationalizing the operations of our web properties.''

BUSINESS OUTLOOK

The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially.

As stated in the previous quarter, management is forecasting revenue growth for the audio business segment in the second half of FY2000 based on the existing strategic relationships with Real Networks, Philips, Starkey and Mitsubishi and the establishment of more distribution channels and partnerships for our software products. For FY2001, management expects additional growth contributions from new initiatives targeted at the exploding digital music revolution and the increasing use and adoption of soft audio solutions for PC's and Internet appliances.

For the e-commerce business segment, marketing programs have been put in place to increase the merchant base and management continues to develop further relationships in order to acquire merchants. The planned launch of ChoiceWorld.com, an online shopping mall, in the fourth quarter, will broaden the revenue base for QCommerce, from only ASP (``Application Service Provider'') service income to also include listing, directory and advertising fee income, while maintaining the existing cost structure.

About QSound Labs, Inc.

QSound Labs, Inc., founded in 1988, is a 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, through its wholly-owned subsidiary, QCommerce, Inc., 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, 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, commercialization of the Company's technologies, consumer acceptance of the Company's products and services, dependence on the performance of third parties who have licensed the Company's technologies, manufacturing uncertainties, uncertainties relating to product development and commercial introduction, dependence on intellectual property, rapid technological change and competition, continued growth of the Internet and other risks that may be detailed from time to time in the Company's filings 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.

QSOUND LABS, INC.
Consolidated Balance Sheets
As at September 30, 2000 and 1999
Unaudited
(Expressed in United States Dollars
 under United States GAAP)            September 30,  September 30,
                                               2000           1999
-------------------------------------------------------------------
ASSETS
Current assets:
 Cash and cash equivalents              $ 2,545,485    $ 1,802,798
 Accounts receivable                      1,117,561      1,275,622
 Inventory                                   95,308        256,510
 Deposits and prepaid expenses              117,479        274,114
-------------------------------------------------------------------
                                          3,875,833      3,609,044

INVESTMENTS                                 924,800              -
CAPITAL ASSETS                            1,279,931      1,015,164
INTANGIBLE ASSETS                         8,463,828      5,957,826
-------------------------------------------------------------------
                                        $14,544,392    $10,582,034
-------------------------------------------------------------------
-------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable                       $   352,644    $   568,690
 Accrued liabilities                      1,523,865         92,428
 Deferred revenue                           383,908         24,448
-------------------------------------------------------------------
                                          2,260,417        685,566
Long-term liability                       1,000,000              -
-------------------------------------------------------------------

                                          3,260,417        685,566
-------------------------------------------------------------------
Shareholders' equity:
 Common Shares
  (29,051,671 common shares)             44,952,036     38,963,062
 Deficit                                (33,297,161)   (29,066,594)
 Accumulated other comprehensive income    (370,900)             -
-------------------------------------------------------------------
                                         11,283,975      9,896,468
                                        ---------------------------
                                        $14,544,392    $10,582,034
-------------------------------------------------------------------
-------------------------------------------------------------------

QSOUND LABS, INC.
Consolidated Statements of Operations and Deficit
For the Nine Month Periods Ended September 30, 2000 and 1999

(Expressed in United States Dollars under United States GAAP)

Unaudited        For three    For three    For nine     For nine
               months ended months ended months ended months ended

                  Sept. 30,    Sept. 30,    Sept. 30,    Sept. 30,
                       2000         1999         2000         1999
-------------------------------------------------------------------

REVENUE
 Royalties, license
  fees and product
  sales         $ 1,201,357 $    854,662  $ 3,235,628  $ 2,446,046
 Cost of
  product sales      71,368       28,872      148,903      242,322
-------------------------------------------------------------------
                  1,129,989      825,790    3,086,725    2,203,724
-------------------------------------------------------------------

EXPENSES:
 Marketing          509,767      506,424    1,268,153    1,149,378
 Product
  engineering       348,184      334,525    1,304,979    1,070,528
 Administration     171,721      223,748      581,811      438,145
-------------------------------------------------------------------
                  1,029,672    1,064,697    3,154,943    2,658,051
-------------------------------------------------------------------

OPERATING PROFIT
 (LOSS)             100,317     (238,907)     (68,218)    (454,327)

OTHER ITEMS
 Depreciation and
  amortization     (739,170)    (180,630)  (1,410,710)    (314,072)
 Write-off of
  acquired in-process
  research and
  development             -   (1,489,460)    (446,639)  (1,489,460)
 Investment
  write-down       (200,000)           -     (450,000)           -
 Other               21,025        7,382      (60,535)      57,992
-------------------------------------------------------------------
NET INCOME (LOSS)
 FOR PERIOD        (817,828)  (1,901,615)  (2,436,102)  (2,199,867)

DEFICIT BEGINNING
 OF PERIOD      (31,380,645) (28,654,439) (30,861,059) (28,356,187)
-------------------------------------------------------------------
DEFICIT END
 OF PERIOD     $(32,198,473)$(30,556,054)$(33,297,161)$(30,556,054)
-------------------------------------------------------------------
-------------------------------------------------------------------
INCOME (LOSS) PER
 COMMON SHARE
 UNDER UNITED
 STATES GAAP          (0.03)       (0.08)       (0.09)$      (0.09)
-------------------------------------------------------------------
-------------------------------------------------------------------
NET INCOME (LOSS)
 UNDER CANADIAN
 GAAP              (887,510)    (412,154)  (2,171,923)$   (710,407)
-------------------------------------------------------------------
-------------------------------------------------------------------
INCOME (LOSS) PER
 COMMON SHARE
 UNDER CANADIAN
 GAAP                 (0.03)       (0.02)       (0.08)$      (0.03)
-------------------------------------------------------------------
-------------------------------------------------------------------

Operating Income
 (loss) per share      0.00        (0.01)       (0.00)


QSOUND LABS, INC.
Consolidated Statements of Cash Flows
For the Nine Month Periods Ended September 30, 2000 and 1999

(Expressed in United States Dollars under United States GAAP)

Unaudited        For three    For three    For nine     For nine
               months ended months ended months ended months ended

                  Sept. 30,    Sept. 30,    Sept. 30,    Sept. 30,
                       2000         1999         2000         1999
-------------------------------------------------------------------
Cash provided by
 (used in)

Operations

 Income (loss) for
  the period    $  (817,828)$   (412,155) $(2,436,102) $  (710,407)
 Items not requiring (providing) cash:
  Depreciation and
   amortization     739,170       74,241    1,410,710      207,682
  Gain on sale of
   capital assets      (135)           -         (255)     (20,500)
  Write-off of
   acquired in-process
   research and
   development            -            -      446,639            -
  Investment
   write-down       200,000            -      450,000            -
  Options granted
   for services           -      129,131            -      193,131
 Changes in working
  capital balances (161,081)     475,334    1,075,483      402,697
-------------------------------------------------------------------
                    (39,874)     266,551      946,475       72,603
-------------------------------------------------------------------
Financing

 Issuance of
  shares, net      (136,168)   5,331,645    2,604,243    5,830,299
 Increase in long-
  term liability   (500,000)                1,000,000
-------------------------------------------------------------------
                   (636,168)   5,331,645    3,604,243    5,830,299
-------------------------------------------------------------------
Investments

 Purchase of
  capital assets       (910)    (185,817)    (451,781)    (288,391)
 Purchase of
  intangible assets (20,103)  (5,957,826)  (3,078,070)  (5,957,826)
 Proceeds from sale
  of other assets         -      743,688            -            -
 Proceeds from sale
  of capital assets     135            -          255       20,500
-------------------------------------------------------------------
                    (20,878)  (5,399,955)  (3,529,596)  (6,225,717)
-------------------------------------------------------------------

Increase (decrease)
 in cash           (696,920)     198,241    1,021,122     (322,815)
Cash and cash
 equivalents
 beginning of
 period           3,242,405    1,604,557    1,524,363    2,125,613
-------------------------------------------------------------------

Cash and cash
 equivalents end
 of period      $ 2,545,485  $ 1,802,798  $ 2,545,485  $ 1,802,798
-------------------------------------------------------------------
-------------------------------------------------------------------

Contact:

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