(2) 15,000 represent currently exercisable warrants.

(3) 30,000 represent currently exercisable stock options.

The Company's common shares trade on the TSX Venture Exchange in Vancouver, British Columbia, Canada, having the trading symbol PYT The shares began trading in April 1988 and have CUSIP# 746908-10-2

The Company's common shares trade on the OTC Bulletin Board in the United States having the trading symbol "PYNGF". The shares began trading in May 1998 and have CUSIP# 746908-10-2.

Table No. 2 lists the volume of trading and high, low and closing sales prices on the TSX Venture Exchange for the Company's common shares for the last two fiscal years. The closing price on 9/30/99 was CDN$2.10.

Quarter Canadian Dollars

Ended Volume High Low Closing

09/30/2002 312,000 35 .26 .32

06/30/2002 389,376 .38 .35 .45

03/31/2002 532,218 .45 .30 .45

12/31/2001

Table No. 3 lists the volume of trading and high, low and closing sales prices on the OTC Bulletin Board for the Company's common shares since listing. The closing price on 9/30/2002 was 27 cents.

Quarter

Ended Volume High Low Closing

6/30/2002 51,600 .29 .12

The Company's common shares are issued in registered form. C.I.B.C. Mellon Trust Company (located in Vancouver, British Columbia, Canada) is the registrar and transfer agent for the common shares.

On 30/9/2002, the shareholders' list for the Company's common shares showed 99 registered shareholders and 10,826,096 shares outstanding. Thirty-Five (3S) of these registered shareholders were U.S. residents, holding 1,467,392 shares or 13.56% of the outstanding shares.

The Company has researched indirect holdings and estimates that there were about 150 "holders of record" resident in the United States, holding the above shares.

Based on the above research and other research, the Company estimates that there are over 105O beneficial shareholders.

The Company's common shares are not registered to trade in the United States in the form of American Depository Receipts (ADRIs) or similar certificates.

The Company has not declared any dividends since incorporation and does not anticipate that it will do so in the foreseeable future. The present policy of the Company is to retain future earnings for use in its operations and the expansion of its business.

The following summary of the material Canadian federal income tax considerations generally applicable in respect of the common shares reflects the Company's opinion. The tax consequences to any particular holder of common shares will vary according to the status of that holder as an individual, trust, corporation or member of a partnership. The jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, according to that holder's particular circumstances. This summary is applicable only to holders who are resident in the United States, have never been resident in Canada, deal at arm's length with the Company, hold their common shares as capital property and who will not use or hold the common shares in carrying on business in Canada. Special rules, which are not discussed in this summary, may apply to a United States holder that is an issuer that carries on business in Canada and elsewhere.

This summary is based upon the provisions of the Income Tax Act of Canada and the regulations thereunder (collectively, the "Tax Act, or ITA") and the Canada-United States Tax Convention as amended by the Protocols thereto (the "Tax Convention") as at the date of the Registration Statement. The current administrative practices of Revenue Canada, Customs, Excise and Taxation this summary does not take into account Canadian provincial income tax consequences.

This summary is not exhaustive of all possible income tax consequences. It is not intended as legal or tax advice to any particular holder of common stock and should not be so construed. Each holder should consult his own tax advisor with respect to the income tax consequences applicable to him in his own particular circumstances.

The Investment Act was amended with the North American Free Trade Agreement (NAFTA) to provide for special review thresholds for Americans (including "American-controlled "entities" as defined in the Investment Act). Under the Investment Act, as amended: An investment in the Registrant's common shares by an American would be revisable only if it was an investment to acquire control of the Registrant and the value of the assets of the Registrant was equal to or greater than a specified amount (the "Review Threshold"), which increases in stages. The Review Threshold is currently $150 million.

If a non-resident were to dispose of common shares of the Company to another Canadian corporation which deals or is deemed to deal on a non-arm's length basis with the non-resident and which, immediately after the disposition, is connected with the Company (i.e., which holds shares representing more than 10% of the voting power and more than 10% of the market value of all issued and outstanding shares of the Company), the amount by which the fair market value of any consideration (other than any shares of the purchaser corporation) exceeds the paid-up capital of the common shares sold will be deemed to be taxable as a dividend paid by the purchasing corporation, either immediately or eventually by means of a deduction in computing the paid-up capital of the purchasing corporation, and subject to withholding taxes as described below.

Under the Tax Act, a gain from the sale of common shares by a non-resident will not be subject to Canadian tax, provided the shareholder (and/or persons who do not deal at arm's length with the shareholder) have not held a "'substantial interest" in the Company (25% or more of the shares of any class of the Company's stock) at any time in the five years preceding the disposition. Generally, the Tax Convention will exempt from Canadian taxation any capital gain realized by a resident of the United States, provided that the value of the common shares is not derived principally from real property situated in Canada.

Dividend

In the case of any dividends paid to non-residents, the Canadian tax is withheld by the Company, which remits only the net amount to the shareholder. By virtue of Article X of the Tax Convention, the rate of tax on dividends paid to residents of the United States is generally limited to 15% of the gross dividend (or 5% in the case of certain corporate shareholders owning at least 10% of the Company's voting shares pending ratification of the Protocol amending the treaty. The Protocol has been ratified by the USA and is awaiting ratification in Canada). In the absence of the Tax Convention provisions, the rate of Canadian withholding tax imposed on non-residents is 25% of the gross dividend. Stock dividends received by non-residents from the Company are taxable by Canada as ordinary dividends and therefore the withholding tax rates will be applicable.

Where a holder disposes of common shares to the Company (unless the Company acquired the common shares in the open market in the manner in which shares would normally be purchased by any member of the public). This will result in a deemed dividend to the U. S. holder equal to the amount by which the consideration paid by the Company exceeds the paid-up capital of such stock. The amount of such dividend will be subject to withholding tax as described above.

A non-resident of Canada is not subject to tax under the ITA in respect of a capital gain realized upon the disposition of a share of a class that is listed on a prescribed stock exchange unless the share represents "'taxable Canadian property" to the holder thereof. A common share of the Company will be taxable Canadian property to a non-resident holder if, at any time during the period of five years immediately preceding the disposition. The non-resident holder, persons with whom the non-resident holder did not deal at arm's length, or the non-resident holder and persons with whom he/she did not deal at arm's length owned 25% or more of the issued shares of any class or series of the Company. In the case of a non-resident holder to whom shares of the Company represent taxable Canadian property and who is resident in the United States, no Canadian tax will be payable on a capital gain realized on such shares by reason of the Tax Convention. Unless the value of such shares is derived principally from real property situated in Canada or the non-resident holder previously held the shares while resident in Canada. The Company believes that the value of its common shares is not derived from real property situated inside Canada.

The following is a discussion of certain possible United States Federal income tax consequences, under the law, generally applicable to a U.S. Holder (as defined below) of common shares of the Company. This discussion does not address all potentially relevant Federal income tax matters and it does not address consequences peculiar to persons subject to special provisions of Federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In addition, this discussion does not cover any state, local or foreign tax consequences.

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended ("the Code"), Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. In addition, the discussion does not consider the potential effects, both adverse and beneficial, of recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. The following discussion is for general information only and is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of common shares of the Company and no opinion or representation with respect to the United States Federal income tax consequences to any such holder or prospective holder is made. Accordingly, holders and prospective holders of common shares of the Company should consult their own tax advisors about the federal, state, local, and foreign tax consequences of purchasing, owning and disposing of common shares of the Company.

As used herein, a ("'U.S. Holder") includes a holder of common shares of the Company who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States, or of any political subdivision thereof and any other person or entity whose ownership of common shares of the Company is effectively connected with the conduct of a trade or business in the United States. A U.S. Holder does not include persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker, dealers, non-resident alien individuals or foreign corporations whose ownership of common shares of the Company is not effectively connected with the conduct of a trade or business in the United States and shareholders who acquired their stock through the exercise of employee stock options or otherwise as compensation.

U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Company are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions to the extent that the Company has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder's United States Federal Income tax liability or, alternatively, may be deducted in computing the U.S. Holder's United States Federal taxable income by those who itemize deductions. (See more detailed discussion at "Foreign Tax Credit" below). To the extent that distributions exceed current or accumulated earnings and profits of the Company, they will be treated first as a return of capital up to the U.S. Holder's adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Preferential tax rates for long-term capital gains are applicable- to an U.S. Holder, which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder, which is a corporation.

Dividends paid on the common shares of the Company will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from the Company (unless the Company qualifies as a "'foreign personal holding company" or a "passive foreign investment company", as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of the Company. The availability of this deduction is subject to several complex limitations which are beyond the scope of this discussion.

A U.S. Holder will recognize gain or loss upon the sale of common shares of the Company equal to the difference, if any, between (I) The amount of cash plus the fair market value of any property received, and (ii) The shareholder's tax basis in the common shares of the Company. This gain or loss will be capital gain or loss if the common shares are capital asset in the hands of the U.S. Holder, which will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder. Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year. Deductions for net capital losses are subject to significant limitations. For U.S. Holders which are individuals, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

In the following four circumstances, the above sections of the discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of common shares of the Company. However, on the basis of (A) the number of shareholders of its common shares (B) the majority ownership of its shares by Canadian residents and (C) the majority of its assets are actively managed (not passively held), the Company believes that its is neither a "Foreign Personal Holding Company", ""Foreign Investment Company", "Passive Foreign Investment Company", nor a "Controlled Foreign Corporation".

If at any time during a taxable year more than 50% of the total combined voting power or the total value of the Company outstanding shares is owned, actually or constructively, by five or fewer individuals who are citizens or residents of the United States and 50% or more of the Company's gross income for such year was derived from certain passive sources (e.g. from dividends received from its subsidiaries), the Company would be treated as a "foreign personal holding company." In that event, U.S. Holders that hold common shares of the Company would be required to include in gross income for such year their allowable portions of such passive income to the extent the Company does not actually distribute such income.

If 50% or more of the combined voting power or total value of the Company outstanding shares are held, actually or constructively, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31)). And the Company is found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that the Company might be treated as a "foreign investment company". As defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging common shares of the Company to be treated as ordinary income rather than capital gains.

As a foreign corporation with U.S. Holders, the Company could potentially be treated as a passive foreign investment company ("PFIC"), as defined in Section 1297 of the Code, depending upon the percentage of the Company's income which is passive, or the percentage of the Company's assets which is held for the purpose of producing passive income.

Certain United States income tax legislation contains rules governing PFICs which can have significant tax effects on U.S. shareholders of foreign corporations. These rules do not apply to non-U.S. shareholders. Section 1297(a) of the Code defines a PFIC as a corporation that is not formed in the United States and, for any taxable year, either (I) 75% or more of its gross income is "passive income", which includes interest, dividends and certain rents and royalties or (ii) the average percentage, by fair market value (or, if the company is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of "passive income" is 50% or more. The taxation of a US shareholder who owns stock in a PFIC is extremely complex and is therefore beyond

the scope of this discussion. US persons should consult with their own tax advisors with regards to the impact of these rules.

If more than 50% of the voting power of all classes of stock or the total value of the stock of the Company is owned, directly or indirectly, by citizens or residents of the United States, United States domestic partnerships and corporations or estates or trusts other than foreign estates or trusts, each of whom own 10% or more of the total combined voting power of all classes of stock of the Company or the total value of the stock of ("'United States shareholder"), the Company could be treated as a controlled foreign corporation" under Subpart F of the Code.

This classification would effect many complex results including the required inclusion by such United States shareholders in income of their pro rata share: of "Subpart F Income" (as specially defined by the Code) of the Company; of the Company's earnings invested in U.S. property; and of earnings invested in excess passive assets" (as specifically defined by the Code) . the Company, In addition, under Section 1248 of the Code, gain from the sale or exchange of common shares of the Company by a U.S. person who is or was a United States shareholder (as defined in the Code) at any time during the five years period ending with the sale or exchange is treated as ordinary dividend income to the extent of earnings and profits of the Company attributable to the stock sold or exchanged. Because of the complexity of Subpart F, and because it is not clear that the Company is a controlled foreign corporation, a more detailed review of these rules is outside of the scope of this discussion.

The selected financial data in Table No. 4 for Fiscal 1999,1998, 1997, and 1996 ended September 30th was derived from the financial statements of the Company. These statements are included elsewhere in this Annual Report and have been audited by Jung and Lee, independent Chartered Accountants, as indicated in their report.

The selected financial data was extracted from the more detailed financial statements and related notes included herein and should be read in conjunction with such financial statements and with the information appearing under the heading ITEM #91 " Management's Discussion and Analysis of Financial Condition and Results of Operations".

Reference is made to notes to financial statements of the Company included herein for a discussion of the material differences between Canadian GAAP and U.S. GAAP, and their effect on the Company is financial statements.

(1) Under US GAAP, the Company would have expensed research and development

costs in the period incurred and would have reduced the net loss by the

minority interest in losses of a subsidiary.

(2) Under US GAAP, the Company would not have included the contingent

cancellable escrowed principal (750,000 shares) and property shares

(3,000,000 shares) in the calculation of the weighted average number of

shares.

In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$). The government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).

Table No. 5 sets forth the rate of exchange for the Canadian Dollar at the end of the five most recent fiscal periods ended September 30th, the average rates for the period, and the range of high and low rates for the period.

For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. The table sets forth the number of Canadian Dollars required under that formula to buy one U.S. Dollar. The average rate means the average of the exchange rates on the last day of each month during the period.

The exchange rate was 1.58 Canadian Dollars to one U.S. Dollar at Sept. 30, 2002.

The following discussion and analysis should be read in conjunction with the financial statements and notes thereto contained elsewhere in this Annual Report. The financial statements of the Company are prepared in conformity with Canadian GAAP, which do not materially differ from US GAAP (except as disclosed in the notes to the financial statements).

During the past five years, the Company has financed its operations and development primarily through sales by its subsidiary and the issue of share capital.

The Company believes that its existing cash, cash generated from operations and the exercise of outstanding stock options and share purchase warrants will be sufficient to meet its cash requirements for the foreseeable future.

Fiscal 2002 Highlights.

We would like to overview fiscal 2002 and the results for the year. The full financial details are attached with audits performed by Jung and Lee, Chartered Accountants. Attached you will also find disclosures for the Annual General Meeting and Proxy generated by Lang, Michener, Lawrence and Shaw our attorneys and set for February 15 ^th , 2002. We are planning on having the meeting at Lang Michener located on the 15 ^th floor, 1055 West Georgia Street, Vancouver, British Columbia, V6E4N7 604-689-9111. This will enable shareholders who come to the meeting the opportunity to view our presentation in the boardroom. Anyone that is planning on attending, please notify our office at 604-303-7964 , so that we might determine how many are expected.

There have been significant changes with the CDNX market since the Toronto Exchange acquired it. Significant changes also take effect this year, which is proposed, in the new regulations along with a significant number of proposed changes to the CDNX. These changes are a very important issue for shareholders including management and will have to be voted on by shareholders through a Proxy Vote. Please be sure to fill out your Proxy and send it in.

This Annual Report to the Shareholders and the attached financials covers fiscal period October 1 ^st 2001 to September 30 ^th 2002. Our discussion will cover Pyng Medical Corp. and provide an overview of what our business plans are for fiscal period 2003. The Financial Statements are consolidated and which includes Pyng Technologies, and Pyng Medical Corp.

The company also issued 65,718 shares, with no share purchase warrant attached, at 45 cents per share for total proceeds of $29,573. These proceeds were used to pay off the company's legal fees.

FILINGS/ Other Matters

All regulatory Filings for British Columbia, Alberta, and the US Securities Commission have been filed and are up to date.

Pyng Medical has arranged a Line of Credit from the Pacific Coastal Credit Union totaling 400,000, $200,000 is for capital equipment and $200,000 for a revolving line of credit. As of September 30 ^th 2002 we had utilized $145,900 in our operating line of credit and had a balance on our capital equipment loan of $182,254.

BPI Industries was a minority shareholder in Pyng Medical Corp. and had a commitment to pay 8.2 percent of the expenditures for the fiscal period October 1 ^st 2001, to September 30 ^th , 2002

BPI has indicated that they will not be participating in any further expenditure and we will enter into negotiations to acquire a 100 percent interest in Pyng Medical Corp. Subsequently we have entered into an agreement with Unicorn Medical Systems Inc. that Pyng Technologies Corp. will purchase all of their outstanding interest in Pyng Medical Corp., subject to TSX approval owned by Unicorn Medical Systems Inc. This agreement is described in detail in the information circular.

Legal Proceedings

As Reported in a news release Pyng Tech and Pyng Medical Corp. along with its directors has been issued a Writ from a former employee who was dismissed in 1994. The basis of the lawsuit is for wrongful dismissal. Our Attorneys believe this to be void due to time limitations, spurious at best and will proceed to respond as the need exist to this lawsuit. The Claim is for unspecified damages, stock options, escrow shares, and other compensation as the Court sees fit. We fully stand behind the dismissal for cause of this consultant to the company and will fully defend our position.

Pyng Medical Corp.

Sales for Pyng Medical reached $579,148.00 for this fiscal period.

Gross Margin was $304,524 while Costs of Sales was $274,624. Costs of sales comprised opening inventory, Purchases, less closing inventory. Deferred Research and Development costs accumulated on the FAST1 System is $ 3,798,071 with patent expenses of $76.146 at the end of the fiscal period, adjusted for depreciation.

Capital Assets were $345,741.00 less accumulated depreciation of $75,611 - Net Capital Assets were $270,130 Cash at the end of the fiscal period was minimal with inventory, accounts receivable, other receivables, and prepaid totaling $$459,231.00.

Amortization and depreciation accounted for $89,870

Cash flow since September 30 ^th has increased substantially with $247,000 invoiced in the first 90 days plus invoiced sales of $148,000 in January with booked orders exceeding $211,000.

We have subsequently raised $167,000 in a small private placement, which will add to cash balances and reduce payables. Financing Activities included issuance of capital stock from a Private Placement for $320,000

Net Loss for the Fiscal Period was cut in half to $593,976 after adjustments for amortization, depreciation, losses on Subsidiary C.C.P. and adjustments for Canadian and US GAAP now that Pyng Medical Corp. has moved from the Rand D stage to Production.

Sales and Significant Distribution Changes

It should be noted that the sales for this fiscal period represented only our first full year in production and were in fact 60 percent above fiscal 2001 with total sales of $579,148

These sales were distributed at 80 percent to the civilian market and 20 percent to the military

Our distribution network continues to grow. We had established the following as initial distributors for the F.A.S.T.1 System

BoundTree, Parr, Southeastern, Life Assist, and Biologix all of which are emergency medicine distributors with sales forces concentrated on the EMS market.

BoundTree and Parr joined forces during this period and they have acquired PMX Medical to form the largest Emergency Medical Distributorship in the Continent.

Military.

We have entered into a U.S. Department of Veterans Affairs World Wide Contract under Contract #V797P4335A

Ion the 31 ^st of January of 2003 the US Army has notified us that the F.A.S.T.1 System was approved for inclusion in all Combat Medics Kits, Ground Ambulance Kits and Field Hospital Kits. This stemmed from over 8 years of work that we have put into the US Military. Michael W. Jacobs led the effort to have the System approved by the US Army and we are gratified by the fact that our hard efforts and the performance of the F.A.S.T.1 System have culminated in the announcement from the US Army.

We are also working on the US Navy and Airforce and have already supplied some Systems to the US Marines.

Future Sales Projections

Final Statement

In a final comment to this years report I wish to thank all who have supported our goal of bringing the F.A.S.T. 1 System full circle. This life saving device is now gaining solid support in the emergency medical environment worldwide. Pyng Medical Corp. has been active both with sales and training with the US and foreign Military Forces. We are shipping to our expanding distribution base and each day new inquiries are received. Our distributors have a strong commitment to increasing the penetration of the F.A.S.T.1 System into the Emergency Medical Market Place.

As shareholders, I believe, you can see the many changes that have taken place in our company in the last year. We are now posed to move rapidly forward to reach the goal of profits and dividends for our shareholders.

As our company grows so will the opportunities for potential alliances and new product development. We will not only be "Saving Lives / Saving Time" but we are committed to profit as well.

The Company expensed $608,160.00 during this period on Research and Development on the F.A.S.T.1 System for Adult Intraosseous Infusion inclusive of $20,893 in acquisition of patents, under US GAAP, these costs would be expensed in the year occurred. However at the end of the fiscal period had $1,635,000 in working capital.Net loss for the year was ($249,174.) Total income for the year was $148,542 inclusive of $93,146 in interest and expenses total $416,535.

Deficit at the beginning of this fiscal period was ($1,332,185) with the deficit at the end of this fiscal period ($1,581,359) which equated to a net loss per share of $(0.02)

A private placement of 420,393 shares was completed at $1.96 per unit netting $823,970 with each unit consisting of one common share and one warrant to purchase an additional share at $1.96 in the first year and at $2.26 in the second year. Warrants for 320,381 were exercised during this fiscal period raising $490,586.

The Company continued to advance the F.A.S.T. 1 to market with announcements that it had concluded its field trials and was organizing and planning for production which was expected in the first quarter to the second quarter of 2000.

The Company's wholly owned subsidiary Canadian Custom Profiles Ltd. generated sales of $118,131 with a gross profit of $55,396 after costs of sales of $62,735. The Company will actively market this subsidiary for sale in 2000. The spent $608,160 inclusive of acquisition of patents, on Research and Development during this fiscal period. The Company is confident that sales for the F.A.S.T. 1 System will start in fiscal period 2000 and has hired a full time Marketing Director to organize distribution. Twenty three news release were sent out during this fiscal period and are attached to the financial section. All financials have been audited by Jung and Lee accountants and have been converted to US GAAP for this fiscal period. Effective December 12th, 1999 Pyng Technologies Corp. is now on the Canadian Venture Exchange which is an amalgamation of the Vancouver and Alberta Stock Exchanges. The Symbol in Canada remains at PYT.. The Company also is listed on OTC Bulletin Board under PYNG-F.

The Company continued to advance its F.A.S.T. 1 System with additional field trials, additional patent protection, and studies of the system by hospitals, the military and various conferences.

The Company's wholly owned subsidiary, Canadian Custom Profiles Ltd., generated sales of $125,777 with a gross profit of $47,834. Sales fell 37% during Fiscal 1998 reflecting the impact of the recession effecting British Columbia, especially in the construction trades, which the subsidiary serves. Management is considering all aspects of this subsidiary and anticipates making a decision during Fiscal 1999 as to the viability of selling the subsidiary to concentrate all efforts on the F.A.S.T. 1 System.

The Company invested substantial time and funds on bringing the F.A.S.T. 1 System closer to market. During Fiscal 1998, $611,625 was invested in research/development inclusive of international patent pursuit and trademarks. The Company is in the final stages of its field trial evaluations in preparation for mass production. To-date, the Company has spent over $2.2 million on research/development over a four-and-one-half-year period.

During the year:

- F.A.S.T. 1 featured at International Conference on Emergency Medicine

All of the Company's sales and revenues during Fiscal 1997 continued to be produced by its subsidiary, Canadian Custom Profiles, Ltd. No sales were made during this period of the Company's F.A.S.T.1 technology.

Sales for Fiscal 1997 were $197,695, down from Fiscal 1996 by $57,438 or 22.5%. This was due to increases in raw material costs and the accompanying price increase the Company had to impose. Gross margin for Fiscal 1997 was 36%, greater than the 31. 6% gross margin for Fiscal 1996, reflecting a price increase that

was made during Fiscal 1997 that exceeded the escalating material costs for the year.

Total expenses for Fiscal 1997 ended 9/30/97 were $337,451 compared to $267,069 for Fiscal 1996 ended 9/30/96, an increase of 26%. Overall this increase reflects the increased financing activities of the Company, the preparation and finalizing of U.S. FDA and Canadian health authorities, and the preparation to begin market field trials for the F.A.S.T.I technology.

Legal and accounting expenses were up $24,382 in Fiscal 1997 compared to Fiscal 1996, investor relations was up $12,594, transfer agent and shareholder information were up $9,761, and licenses, insurance and filing fees were up $8,174; all reflecting the increase in financing and regulatory activities during the year.

Travel expenses were up $16,196 for Fiscal 1997, and wages and benefits were up 21,389; reflecting primarily an increase in the Company's marketing and regulatory activities.

Some expenses were reduced for Fiscal 1997 compared to Fiscal 1996, principally advertising and promotion, bad debts, commissions, and consulting fees; reflecting primarily the downturn in sales of the Company's extruded baseboard molding products.

The Company's principal activities continued to center on the preparation of the F.A.S.T.1 technology for the marketplace including engineering, research and development of the product, various regulatory approvals, and preparation for the pre-commercial field trials that began in September 1997.

Accounting under United States and Canadian generally accepted accounting principles is substantially the same with respect to the accounting principles used by the Company except the following items.

Research and Development Costs. Under Canadian GAAP, research and development costs incurred by companies in the development stage may be deferred. Under US GAAP, these expenditures must be expensed as incurred. Research and development costs incurred by a subsidiary company, Pyng Medical Corp., have been deferred under Canadian GAAP and recorded on the Company's consolidated balance sheet. Expensing these costs in accordance with US GAAP would result in increased expenses of $587,267, $583,213, $589,794, and $337,795 in Fiscal 1999/1998/1997 respectively. Net loss for these years under US GAAP would be ($760,305) ($842,914), ($749,096) and ($562,809) for Fiscal 1999/1998/1997/, respectively.

Property and Principal Escrow Shares. Under Canadian GAAP, the property and principal escrow shares are included in the calculation of the weighted average number shares for the earnings (or loss) per share calculation. Under US GAAP these shares are not included in the weighted average number of shares. Since the 3,000,000 property escrow shares and 750,000 principal escrow shares represent over one-half of the shares outstanding in the Company and the loss with research and development costs included is much higher, the result is a considerably larger loss per share under US GAAP when compared to Canadian GAAP. Under US GAAP the loss per share would have been ($0.12), ($0.17) and ($0.20) for Fiscal 1999/1998/1997, respectively.

Shareholders' Equity. If, according to US GAAP the $2,785,568 of Fiscal 1999 and $2,198,301 of Fiscal 1998 deferred research and development costs had been written off during the years. incurred (offset by an adjustment for the non-controlling interest of (326,260), the balance sheet of the Company as of 9/30/99 and (250,124)9/30/98 under US GAAP would reflect shareholders' equity as ($1,581,359) and ($1,332,185), respectively.

Statement of Cash Flow. Under US GAAP, the statements of cash flows reflects only cash transactions affecting financing and investing activities whereas under Canadian GAAP, the statement includes non-cash activities in financing activities. This results in a difference only in the form of presentation. In addition, under US GAAP, term deposits assigned as security for demand loans are to be excluded from the cash balance on the balance sheet and in the statement of cash flows. on the balance sheet as of 9/30,2002, 9/30/2001,9/30/2000,9/30/99 and 9/30/98, this reclassification would result in a "Cash and Term Deposits" balance of $1,486,908 and $1,045,380 under US GAAP compared to a balance of $1,592,913 and $1,113,972 under Canadian GAAP.

Table No. 6 lists as of 3/31/99 the names of the Directors of the Company. The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting of Shareholders or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company.

(1) Resident/citizen of Canada.

(2) Member of Audit Committee.

As of 3/31/2002, the only Executive Officer of the Company was Michael W. Jacobs, President/CEO, who has served in this capacity since September 1985. The Executive officer serves at the pleasure of the Board of Directors and devotes full time to the affairs of the Company.

No Director and/or Executive Officer has been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court or competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he is a Director and/or Executive Officer, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he is an officer or director from engaging in or continuing any conduct, practice, or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.

There are no arrangements or understandings between any two or more Directors or Executive Officers, pursuant to which he/she was selected as a Director or Executive officer.

There are no material arrangements or understandings between any two or more Directors or Executive Officers.

The Company has no formal plan for compensating its Directors for their service in their capacity as Directors. Directors are entitled to reimbursement for reasonable travel and other out-off pocket expenses incurred in connection with attendance at meetings of the Board of Directors. The Board of Directors may award special remuneration to any Director undertaking any special services on behalf of the Company other than services ordinarily required of a Director. Other than indicated below no Director received and/or accrued any compensation for his services as a Director, including committee participation and/or special assignments.

The Company grants stock options to Directors, Executive Officers and employees; refer to ITEM #12, "Options to Purchase Securities from Registrant or Subsidiary".

The Company has no plans or arrangements in respect of remuneration received or that may be received by Executive Officers of the Company in Fiscal 1999 to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds US$60,000 per Executive Officer.

During Fiscal 2002, no funds. were set aside or accrued by the Company to provide pension, retirement or similar benefits for Directors or Executive Officers.

Except for the stock option program discussed below, the Company has no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to the Company's Directors or Executive Officers.

No Executive Officer/Director received compensation in excess of the lesser of US$25,000 or 10% of such officer's cash compensation. All Executive Officers/ Directors as a group did not receive other compensation, which exceeded US$25,000 times the number of persons in the group or 10% of the compensation.

During Fiscal 2002, a total of two Executive Officers /Directors received a total of $156,000 (Can.) in cash compensation for both individuals.

There are no written employment agreements with any Director or Executive Officer.

Stock Options to purchase securities from Registrant can be granted to Directors and Employees of the Company on terms and conditions acceptable to the regulatory authorities in Canada, notably the TSX Venture Exchange and the British Columbia Securities Commission. The Registrant has no formal written stock option plan.

Under the stock option program, stock options for up to 10% of the number of issued and outstanding common shares may be granted from time to time, provided that stock options in favor of any one individual may not exceed 5% of the issued and outstanding common shares. No stock option granted under the stock option program is transferable by the optionee other than by will or the laws of descent and distribution, and each stock option is exercisable during the lifetime of the optionee only by such optionee. .

The exercise price of all stock options granted under the stock option program must be at least equal to the fair market value (subject to regulated discounts) of such common shares on the date of grant, and the maximum term of each stock option may not exceed five years.

The exercise prices for stock options are determined in accordance with TSX Venture Exchange guidelines and reflect the average closing price of the Registrant's common shares for the ten trading days on the TSX Venture Exchange immediately preceding the day on which the Directors grant and publicly announce the stock options (subject to an regulatory-acceptable discount), and/or at a price no lower than $0.15 exercise price per share.

The names and titles of the Directors and Executive Officers of the Registrant to whom outstanding stock options have been granted and the number of common shares subject to such stock options are set forth in Table No. 6 as of 9/30/99, as well as the number of stock options granted to Directors and all employees as a group.

Table No. 7 lists, as of 3/31/99, share purchase warrants outstanding, the date the share purchase warrants were issued, the exercise price, and the expiration date of the share purchase warrants.

Number of Number of

Share Share Expiration

Purchase Purchase Date of

Effective Warrants Warrants Exercise Price Share

Date of originally Still First Second Purchase

Issuance Granted Outstanding Year(1) Year(2) Warrants .55 9/30/2002

9/30/2001 420,393 420,393 .55 .66 9/30/2000

During Fiscal 2002 the Company incurred no management fees, office overhead, and salary to Michael W. JacobsThere is no formal lease agreement with Jacob Bros. Machine Works for the rent paid by Pyng Medical. In addition

Other than as disclosed above, there have been no transactions since 9/30/94,or proposed transactions, which have materially affected or will materially affect the Company in which any Director, Executive officer, or beneficial holder of more than 10% of the outstanding common stock. Any of their respective relatives, spouses, associates or affiliates has had or will have any direct or material indirect interest. Management believes the transactions referenced above were on terms at least as favorable to the Company as the Company could have obtained from unaffiliated parties.