It is my pleasure to update you with respect to recent developments at your company.

The last six months have been unquestionably turbulent in North American equity markets. Unfortunately, Audiotech's stock price has not been immune to the overwhelming selling pressure caused by panicking technology investors, despite several recent positive corporate developments. We are encouraged by the improving outlook for the equity markets, as evidenced by the considerable rebound in major North American stock indexes in recent weeks. It appears that the worst may be over and we believe we have emerged from the turbulence in a stronger position than ever before.

During 2000, we continued to build a solid foundation for future growth, including the strengthening of Audiotech's balance sheet and financing capabilities, the advancement of negotiations with numerous acquisition candidates, and the initiation of our Internet strategy. While these long-term investments detracted from our earnings in recent quarters, they were necessary to secure Audiotech's position as a dominant hearing care provider in Western Canada and the Pacific Northwest U.S. I am pleased to report that these investments have been successful and are beginning to bear fruit.

In early April, Audiotech acquired the balance of the shares of Audiology & Hearing Aid Services Inc. (AHAS), our primary U.S. business unit. As a result of the transaction, Audiotech now owns100% of AHAS, which has proven to be one of our most profitable operations. Audiotech had originally acquired a 50% interest in AHAS in July 1998. We fully anticipate that this transaction will have a meaningful positive contribution to Audiotech's operating earnings in fiscal 2001 and beyond. Of equal importance, we feel that we have proven the success of our U.S. acquisition model from both an operational and financial perspective. The experience derived from our acquisition of AHAS will be employed as we continue to seek further acquisitions in the Northwest U.S.

To this end, we have entered into a letter of intent to acquire additional clinics in the U.S. This acquisition, which will be the largest in our history in terms of revenue, will mark the culmination of many months of hard work. I am confident that it will have a significant contribution to our growth in 2001 and beyond. We are particularly pleased that a major hearing aid manufacturer has agreed to finance a large portion of the acquisition cost. We are delighted to expand our relationship with this manufacturer and feel that its support is a strong endorsement of our business model. Further details regarding the acquisition will be announced as soon as possible.

As always, Audiotech continues to examine additional acquisition opportunities to enhance shareholder value. We are also undertaking initiatives to improve the efficiency of our existing operations to boost profitability. With the majority of the costs of our infrastructure building having been expensed in 2000, I believe we are well positioned to produce the operational earnings demanded by today's savvy investor.

I would like to thank you for your support during what has proven to be a difficult time for many investors. We truly hope you see value in the business we are building. Audiotech will continue to take its story to the investment community and we are confident that investors will begin to appreciate our past growth and the tremendous opportunity that that lies before us.

Regards,