Ofex-traded Newlands Scientific, which develops technology using 'smart' magneto-elastic materials (which respond to movements of magnetic fields), pushed sales from £16,200 to £578,500 in the year to July as it launched products, but its losses rose from £776,000 to £1.7 million in the process. Robert Tyerman reports.

Newlands' turnover came from licence fees, royalties and the sale of component parts arising from Soundbug, the company's first audio product, which was launched in March. Soundbug, which acts as a speaker when attached to a solid surface and plugged into a CD player, is made with Terfenol-D, a material which contracts and expands when an electrical current is passed through it.

Sales of Soundbug are going well, says the company, and the number of sales outlets is growing. Newlands has established a cross-trading relationship with Strema Products Inc, which supplies Terfenol-D, and sees a range of further applications for the product, such as hands-free mobile phone kits and washing machines.

Newlands, which is developing new product ideas with a number of partners, says the current year began well. Investors, however, are disappointed that the company postponed a planned move to Aim, which would have been accompanied by a fresh fund-raising.

A group of shareholders did put up £535,000 in a placing at 25p in October. The company says it will need between £1 million and £1.5 million for working capital between now and spring 2004.

Newlands Scientific was floated on Ofex in 1999 at 30p. Over the past year it has soared to 92.5p, but fallen back to today's 22.5p.