Issue of Convertible Loan Stock

13 August 2010

                                  PipeHawk Plc
                         ("Pipehawk" or the "Company")

        Issue of £1 million Convertible Unsecured Loan Stock to Director

The  Company announces  that it  has issued  £1 million of Convertible Unsecured
Loan  Stock 2014 ("CULS") to Gordon Watt, the Chairman of the Company.  The CULS
have  been issued to replace loans made  by Gordon Watt to the Company amounting
to £1 million.

In March 2010, the Company's bankers gave the Company notice that it intended to
withdraw  all the  facilities that  it had  made available  to the Company.  The
Directors  sought to  obtain replacement  facilities from  other banks  but were
unsuccessful.   Gordon Watt  agreed to  advance further  funds to the Company on
similar  terms to  the loans  he has  previously advanced  to the Company on the
understanding that negotiations would commence on converting £1 million of loans
into convertible unsecured loan stock.

The principal terms of the CULS are as follows:

-       The CULS may be converted at the option of Gordon Watt at a price of 7p
per share at any time prior to 13 August 2014;

-       Interest is payable at a rate of 10 per cent. per annum on the principal
amount outstanding until converted, prepaid or repaid, calculated and compounded
on  each anniversary of the  issue of the CULS.   On conversion of any CULS, any
unpaid interest shall be paid within 20 days of such conversion;

-      The CULS are repayable, together with accrued interest on 13 August 2014
("the Repayment Date");

-             The Company  has the  option, after  one year,  to repay  the CULS
before  the Repayment Date, subject to the Company providing 10 days' notice and
paying a premium of 10 per cent. of the principal amount repaid;

-            Except as may be agreed with the Panel on Takeovers and Mergers, no
conversion  shall be  permitted which  would result  in Gordon  Watt and persons
deemed  to be acting in concert with him holding in excess of 29.99 per cent. of
the voting rights of the Company.

The  directors,  other  than  Gordon  Watt  who  took  no  deliberation  in  the
discussions,  consider, having consulted with  Merchant Securities Limited, that
the terms of the CULS are fair and reasonable insofar as the shareholders of the
Company are concerned.  Merchant Securities Limited has relied on the commercial
assessments of the independent directors.

Following  the  issue  of  the  CULS,  the  following  summarises  the amount of
indebtedness owing to Gordon Watt at 12 August 2010:

                                              £
CULS                                    1,000,000
Loans                                    1,607,597
Unpaid salary                                492,590
Accrued interest                              213,899
                                         -------------
                                        3,314,086
                                        =======

Other than the CULS, these loans have been made in accordance with a letter of
support dated 12 November 2009. The loans are unsecured and accrue interest at
an annual rate of base rate plus 2.15 per cent.






Enquiries:


 PipeHawk Plc

 Gordon Watt (Chairman)    01252 343018



 Merchant Securities Limited

 David Worlidge           020 7628 2200
 Simon Clements




[HUG#1437948]








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Source: Pipehawk PLC via Thomson Reuters ONE