10/26/2006

Pyng Medical Corporation

Newsletter

October 2006

Welcome to Pyng Medical Corporation’s newsletter. Published quarterly, our objective is to better provide our investors, clients and partners with information related to our award winning F.A.S.T.1™ Intraosseous System and other developments at Pyng Medical (TSX:PYT).

We are getting very positive feedback from our readers regarding our newsletter. Please pass the newsletter along to other parties you know who may be interested. Also let us know what other items you would to see us cover in the newsletter.

Investor Relations
As reported in our Oct 16 news release, total sales for fiscal year 2006 were $3,088,448 (FY2005 $2,797,744), a 10% sales increase. Fourth quarter sales were $ 979,300 (FY2005 $840,328), an increase of 17%. Q4 and Q3 sales were stronger and showed a marked increased over the previous 2 quarters and the same periods last fiscal.
Unfavorable changes to the US/CDN dollar exchange rates depressed revenues, although unlike many other Canadian corporations faced with the same reality, Pyng Medical maintains profitability. This was in part due to units sales increase of a healthy 15% over 2005. Management continues to diversify sales into other geographic regions and currencies, and to increase sales overall.
Pyng Medical has applied for TSX Venture Exchange Tier 1 classification (we are currently Tier 2) as a result of growth and success in achieving profitability, among other qualification factors required by the TSX. Our application is currently under review by the TSX. We expect this review to be complete later this year and will update investors as to our progress.
We’ve mentioned before that we are engaged in investigating additional products that Pyng Medical might manufacture and distribute. One of our criteria for product selection is that they be strategic and aligned with Pyng’s current business plan. This means that candidate products should be:

• targeted at the pre-hospital emergency market (civilian and military),
• distributed though Pyng’s fast growing international distribution network,
• make use of Pyng’s capabilities in engineering, manufacturing, QA/RA processes and certifications, and facilities such as our clean room
• leverage our intellectual property where possible, e.g. the F.A.S.T.1™ related patents

We are actively engaged in examining and qualifying potential products and look forward to updates as to new products in the near future.
Pyng Medical’s CEO was recently interviewed by the Wall Street Transcript. An excerpt can be read online. We will continue to promote Pyng Medical in various media to increase investor awareness.

CEO Search
Managed by Caldwell International, our search for a new CEO continues. We’ve advertised nationally and conducted an extensive search, nationally and in the USA. Excellent candidates have been located and we currently have a short list and are in the process of interviewing with a view to selecting the final candidate.

F.A.S.T.1™ to Feature on NBC’s ER
The F.A.S.T.1™ will feature on popular NBC TV show ER. We are all excited about the opportunity to see our life-saving product on this prime time show. The tentative air-date for the episode entitled "Heart of the Matter" is Thursday, November 2, 2006 on NBC. Our latest report was that filming was complete but the producers as yet had not committed to including the relevant F.A.S.T.1™ footage.
Again this demonstrates awareness of the growing importance of intra-osseous infusion in emergency care and more importantly, the F.A.S.T.1™’s leading role in being the standard of intra-osseous care.

Come Meet Us
Pyng Medical staff and representatives will be at the following upcoming conferences:
• MEDICA, Dusseldorf, Germany , Nov 15-18 2006
• Special Operations Medical Association, Nov 27 – Dec 1 2006
Come see the F.A.S.T.1™ in action and meet our team.

F.A.S.T.1™ In Use Video
The nature of the use of the F.A.S.T.1™ makes it extremely difficult to get a video of it in action, saving lives. John H. Hagmann, MD, LTC USA (Ret.), recently provided us of a short video from his training course where the F.A.S.T.1™ is used on volunteers. The volunteer in this instance was paramedic Mr Mel Vostry from Alaska who has kindly agreed to Pyng publishing the video. Thanks Mel.
The video can be viewed at our website at www.pyng.com/iousemovie.htm.

From the Field
We recently received this from ProSurgica, our South African distributor, regarding a very successful use of the F.A.S.T.1™ in a Johannesburg hospital emergency department
“Just to let you know the first FAST 1 was used on Saturday evening at Johannesburg General on a PVA patient who was admitted fractured pelvis, head and facial injuries and systolic of less than 70mm HG with no palpable pulses. Insertion went well and staff extremely happy and impressed. Administered drugs and able to re-hydrate patient sufficiently to put up a peripheral line, patient intubated with ease. Patient stable whole night.”
As always reports like this serve to remind us of the fact that we are saving lives.

Distribution Network Update
As reported earlier we are expanding our distribution network to address both the civilian and military opportunities. All of our recently appointed US distributors USA are generating sales. Recently we also reported that the San Francisco Fire Department had selected the F.A.S.T.1™ and initial training and roll-out there is underway. We anticipate initial annual sales of 400 units with potential growth to 1,000 plus per annum from this important and key California account.
We also have established additional international distributors.. Our initial appointments are in Australia, Austria, Germany, Spain, Slovenia, Switzerland, South Africa, South America, Asia, Barbados, Poland. We are also targeting other lead markets such as France and Italy.
Very encouraging sales results have already been reported by our Australian distributor, MidMed. We anticipate using our Australian distributor as a beach head to address geographic markets in close proximity such as New Zealand and Malaysia.
The first save of a human life using the F.A.S.T.1™ has also been reported by our South African distributor, ProSurgica, elsewhere in this newsletter. We believe this early success will result in significant sales in South Africa. South Africa is a leading economy in that region and will be our beach head to other sales there.
Pyng’s attendance at MEDICA in November 2006 is; targeted to establish increased market penetration by appointing additional new distributors to encompass the global market.
Elsewhere our UK, Austrian, and German distributors are reporting increased interest, sales and successful uses of the F.A.S.T.1™. We are seeing increased sales results from the these distributors. These sales are not only sales to new clients but also repeat orders as clients use the F.A.S.T.1™ and get to appreciate its effectiveness and see its life saving advantages.

Pyng Medical Passes Annual ISO Audit with Flying Colors
Pyng Medical Corporation is pleased to announce its continuing certification for and accreditation to ISO 13485:2003, ISO 9001:2000, Canadian Medical Device Regulations and the European Medical Device Directive MD 93/42/EEC Annex II (excluding section 4).
Pyng Medical Corporation was recently audited by SGS UK Ltd, their accredited third party registrar and notified body, as part of their regular annual surveillance audit. SGS UK Ltd. was impressed with Pyng Medical Corporation’s performance in implementing, maintaining and continually improving their Quality Management System and their adherence to national and international regulations.
We received one minor nonconformance, the corrective action for which was closed out a month ahead of schedule. SGS UK Ltd., notably, complimented Pyng Medical Corporation on their approach to Management Review.

Product Development
We have received an initial report from our joint study with the Cincinnati Children’s Hospital. This report is encouraging and provides some very early indications (ultimately to be confirmed) that the F.A.S.T.1™’s use could be extended into adolescents from the presently FDA approved adults and enlarging our addressable market.
We have commenced an end to end study of the F.A.S.T.1™ to develop plans for product enhancements. Many of these enhancements will be as a result to user feedback and new requirements. Initial results are promising and hold significant potential to not only to address this military need but also potential to reduce our costs of manufacturing.

75,000th F.A.S.T.1™ Sold
An important milestone occurred in early September 2006. Pyng Medical has manufactured and sold our 75,000th F.A.S.T.1™system. Unit sales continue to increase (15% in FY2006) and the company continues successfully on our plan to increase and diversify sales of the F.A.S.T.1™.