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May 30, 2003

Hearing gets boost with Enhancement of orders

From: Edinburgh Evening News, UK - May 30, 2003


HEARING Enhancement, the Livingston-based developer of mobile phone products for hearing aid wearers, has reported "encouraging" order levels and said its existing shareholders are willing to inject £300,000 of new funds.

The news comes four months after the firm warned of a "significant" cash shortfall which led to its shares being suspended on the Ofex market for junior companies.

Hearing Enhancement's products allow hearing aid wearers to use mobile phones without generating interference. The firm has also been appointed as an airtime services provider by Vodafone to provide mobile airtime services for the hearing impaired.

But the company suffered the cancellation of two major contracts and slower than expected sales, which lead to all its staff - who had already agreed to a 25 per cent pay cut to stem the losses - being made redundant, with the exception of chairman Roderick Matthews and managing director Jeremy Scuse.

However, Mr Roderick said: "I and the managing director have waived all salaries due."

While shares in Hearing Enhancement will remain suspended for the next four months, the firm has called an extraordinary meeting for June 13, at which shareholders will be asked to approve the issue of up to ten million new shares.

Mr Matthews said: "A small number of existing shareholders have indicated a willingness to invest approximately £300,000 of new funds through a private placing."

He also said some of Hearing Enhancement's creditors had agreed to a debt-for- equity swap in order to reduce the company's debt, while its bankers have agreed to continue its current overdraft facilities.

Hearing Enhancement's PicoLoop and NanoLoop systems use tiny induction loops that transmit signals from a mobile phone to a hearing aid. They connect to the handset by a cable and can either be held to the ear like a standard phone, or used "hands free".

Hearing Enhancement is a client company of Adaptive Venture Managers, the Livingston-based technology incubator which earlier this month de-listed from London's Alternative Investment Market (Aim).

The move followed a disastrous downturn in Adaptive's key investments, including Hearing Enhancement, which was eyeing a move to Aim before shares were suspended.

Adaptive was forced to abandon plans to transform itself into an investment fund and last month announced pre-tax losses for the year to September 30 had soared to £1.075 million, up from £154,000 the previous year.

Other firms under Adaptive's wing include DC Heat, which makes heat generating material and has signed a deal to supply one of the world's largest ski-boot manufacturers; Full Immersion Television, which is developing technology to transmit and display three-dimensional images; and Pneumetrica, which makes remote pressure sensors for applications such as car tyres.

Hearing Enhancement made a loss of £574,000 in the first half of the year, but Mr Matthews said he was confident the company has a profitable future given the current demand in the UK "and the indications of interest for both business-to-business and personal products from overseas buyers".

He added: "This view is supported by the institutional shareholders, the company's bankers and a number of creditors, including those converting their debt for equity."