ANNUAL REPORT TO SHAREHOLDERS FOR FISCAL 2002.
Dear Shareholder:
I would like to report on the affairs of Pyng Technologies Corp. and Pyng Medical Corp. for our upcoming Annual General Meeting. Proxy
materials for the meeting are enclosed and I urge you to take the time to read the materials and submit your proxy vote, as we are proposing
several major changes that will affect your company.
Pyng Technologies Corp. and it’s operating subsidiary, Pyng Medical Corp., have now become well established as world leaders in the field
of Adult Intraosseous Infusion with our trademark F.A.S.T.1™ System. This is quite an achievement for your company, as more and more
civilian and military sites have started using our life saving products. In fact, over 500 sites are now actively using the System and more
are being added each month through our distribution channels.
From our production launch in November, 2000, the company has experienced ever-increasing demand for our medical products. This
demand is driven in part by the level of service of our customers and distributors, including emergency medical systems customers, and
ultimately the paramedic, EMT, i.e. the end use operator.
Training throughout the United States has been and will be necessary as part of the introduction of the F.A.S.T.1 System, and with
knowledge of the life saving advantages that our product offers expanding, we continue to push hard for better financial results.
Our products should continue to gain acceptance by both civilian and military customers in the future. We have also successfully marketed
to the Special Operations Command, US Army Rangers, US Airforce, Navy Seals, and the Marines and we expect that this market will
broaden.
We are very pleased to announce that Pyng Medical Corp. has recently been notified that the US Army has approved the use of the
F.A.S.T.1 System into all Combat Medics Kits, Ground Ambulance Kits, and Field Hospital Kits. Nevertheless the realities of September
11th, 2001 and recent U.S. corporate fraud on a massive and unprecedented scale have had a dramatic effect on the capital markets. Pyng
Technologies Corp. stock did not escape the carnage.
Our ability to raise capital needed to achieve our fiscal 2002 objectives was hampered. We did however, manage to raise approximately
$321,000 net of offering costs, which, while not enough to fully implement our business plan, helped somewhat.
Pyng Medical Corp. under the direction of Dr. David Johnson, President, and Judy Findlay C.E.O., coped well with cut backs including
wages, overhead, and expenses in order to preserve capital and live within much restricted budgets. All those involved in the company
pulled together, and while there is still a capital need that must be addressed, we see the light at the end of the tunnel.
No greater satisfaction can be achieved by a small medical device company than to realize that its products are directly responsible for
saving lives in its selected field of pre-hospital emergency medicine. I believe I speak for all at Pyng Medical Corp. when I say that we are
truly gratified by the accolades the F.A.S.T.1 System has received.
News Releases over the year charted our progress as we moved from average sales of $35,000 per month in December 2001, to over $585,000
in sales for the year ending September 2002.
· Record sales of $106,600 were reported in March, 2002
· Sales to Puerto Rico of $22,300 were reported in April, 2002
· A Worldwide Federal Supply Schedule Contract with the U.S. Department of Veterans Affairs was announced in May, 2002.
· Pyng Medical Corp. met with the U.S. Army Medical Command in March, 2002
· In September, 2002 we reported that Pyng Medical Corp. achieved five International Standards for Quality Standards, ISO 9001,
ISO 13485:1996, EN 46001:1996, Canadian Medical Device Regulations 1998, and Medical Device Directive 93/42/EEC Annex II for
CE marking in Europe.
These are some of the highlights from fiscal 2002.
Subsequent to September 30, 2002, we entered into an agreement to purchase all the remaining shares of Pyng Medical Corp. owned by
Unicorn Medical Systems Inc., a subsidiary of BPI Industries.
In January, 2003 we also reported record sales of $247,800 for the quarter ending December 31, 2002.
(2)
We reported in February, 2003 that the U.S. Army announced the inclusion of the F.A.S.T.1 System in all Combat Medics Kits, Field Hospital
Surgical Supply Sets and Ground Ambulance Medical Kits. This is a major announcement that will have a dramatic effect on future sales.
Sales have grown substantially in fiscal 2003 - $211,000 in January, 2003 following sales in December, 2002 of $138,500.
The future looks bright and we are working hard to continue the up trend but I must add a word of caution: we still need to raise capital to
achieve our business plan. We intend to do that and I believe that as we continue to see increased sales from all sources, this will become
easier. Borrowing or bridge financing options will also be explored.
In summary I would like to thank all of the hard working, dedicated people at Pyng Medical Corp. for the success they achieved in difficult
economic times. They have always been up to the task and I am confident that our future is bright.
I urge the shareholders again to make sure that they take the time to review the proxy materials that are attached and complete and return
their proxy form. Several important issues are to be voted on and your participation is expected in order that we have a clear mandate to
continue with the growth of your company.
The Board of Directors and the Executives of both Pyng Medical Corp. and Pyng Technologies Corp. are proposing several changes to
the Board of Directors so that we can comply with new corporate governance rules in both Canada and the United States. The slate that
we have nominated possesses the talent to move your company forward. We are striving to become a more mature, well governed
organization.
We are also proposing that Pyng Technologies Corp. and Pyng Medical Corp. be amalgamated into one company called Pyng Medical Corp.
This will, if deemed to be beneficial to the shareholders, be acted upon by the Board of Directors effective October 1, 2003. This should
result in cost savings and more effective governance.
We are also requesting that shareholders consider and vote favourably on the extension of the time to earn-out the 3,750,000 performancebased
escrow shares by 5 years so that management can continue to perform under an incentive based system. The escrow agreement
requires cash flow of $2.66 in order to release one share from escrow. This is a strong incentive for management. The escrow shares also
represent a potentially important asset that could be utilized in negotiations with a strategic partner. Details are outlined in the proxy
materials. The proposed extension has the consent of The TSX Venture Exchange, subject to the approval of the disinterested shareholders.
In the event the shareholders fail to approve the proposed amendment to the Escrow Agreement, the escrow shares will be cancelled on
May 10, 2003, the result being that the number of shares outstanding will be reduced from 12,219,083 to 8,469,083. This will have the effect
of increasing each shareholder’s proportionate interest in Pyng Technologies; however, it will also result in management losing control of
Pyng Technologies as these shares, while not tradable, do carry a vote. Management, in particular Michael Jacobs, David Johnson and Judy
Findlay, have led the Pyng companies to its success to date. It is this team of individuals that is needed to lead the company to future
prosperity.
Elimination of the escrow shares in 2003 would come at precisely the wrong time, as management’s prior efforts, contacts, experience and
reputation in the medical device industry are now yielding positive results. A new phase of management commitment and continuity is
needed. The best and most recent example of the need for management continuity is the recent decision by the U.S. Army, the greatest
ground force in the world, to include the System in all Combat Medic bags and Ground Ambulance Medical Equipment sets used by the
U.S. Army. Mr. Jacobs has developed and is continuing to develop business relationships with major buyers of the System in the military
organizations. David Johnson and Judy Findlay who, along with Michael Jacobs, have developed the technology and led the company
which is now producing and marketing the F.A.S.T.1 System are needed to realize the market potential, expand production, manage the
companies growth, and support the F.A.S.T.1 product and its evolution as it continues to enter the market. The escrow shares form an
important part of the motivation of this team of individuals in leading the company. The escrow shares are released ONLY as the company
performs and cash flow is realized. Allowing the escrow shares to expire prior to full market realization of the F.A.S.T.1 System will
significantly and deleteriously affect the success of your company if the key individuals are deprived of this motivation.
I have attached highlights of the financial affairs of your company in fiscal 2002 as well as legal and other matters that warrant discussion.
On Behalf of the Board,
“Michael W. Jacobs” (signed)
Michael W. Jacobs, Chairman/President
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