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Award Winning Software Positions QSound as a Full-Service E-commerce Solutions Enabler

CALGARY, Alberta - August 3, 1999 - QSound Labs, Inc. (Nasdaq: QSND) today announced that it has finalized its acquisition of privately held Virtual Spin, Inc. a pioneer in E-commerce site development services for small and medium sized businesses. Under the terms of the acquisition, QSound Labs will issue approximately 1.5 million shares of restricted common stock for all of the assets and liabilities of Virtual Spin, Inc. In addition, all outstanding options of Virtual Spin, Inc. will be converted into QSound options.

Virtual Spin's software is engineered to operate on the Microsoft® WindowsNT® operating system. Virtual Spin was an early pioneer in browser-based E-commerce software and its flagship product, Internet Store, allows non-technical users to instantly create, publish and manage high quality, secure on-line stores. Today, more than 1,000 clients use Internet Store to create and host their on-line stores.

David Gallagher, President and CEO of QSound Labs stated, "The acquisition of Virtual Spin complements QSound's two-year focus on becoming a full-service E-commerce solutions enabler. It provides us with a suite of E-commerce products that greatly enhances our offerings for on-line merchants and positions us for growth in the rapidly expanding E-commerce industry. Combined with QSound's affiliateDirectTM Program, our E-commerce division now represents one of the Company's most valuable assets."

The agreement, previously announced on June 15, expands QSound's existing E-commerce product line and combines the technological expertise of both companies, creating a full service E-commerce solutions enabler with the ability to refine new and existing business solutions for the Internet. The acquisition also better positions QSound to bring its core software development expertise to the Internet marketplace.

   About QSound Labs, Inc.

QSound Labs, Inc. is a software development company specializing in audio and E-commerce applications for the Internet, PC/Multimedia, Consumer Electronics and Healthcare industries. For more information, visit our Web sites at http://www.qsound.com and http://www.virtualspin.com.

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 and 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 successful completion of the acquisition, electronic commerce offerings and the effective integration of Virtual Spin's operations into the company, commercialization of the Company's technologies, dependence on the performance of third parties who have licensed the Company's technologies, dependence on intellectual property, uncertainties relating to product development and commercial introduction, rapid technological change and competition, manufacturing uncertainties 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.

SOURCE: QSound Labs Inc.