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SAMSys TECHNOLOGIES INC. REPORT TO SHAREHOLDERS Toronto, February 4, 2003 Management Report It is remarkable that another year has passed so quickly since I last sat down to write my annual report; and I again do so with great pleasure and pride. In re-reading my last report, I cannot but be struck with the accuracy of many of the statements and predictions contained therein. Indeed, there are many excerpts from that document which almost warrant repeating! Undeniably, this past year has been a busy one; and one which has been more strategic than all others in our past. It has been an exceedingly difficult one from an economic and industry perspective; but an enormously rewarding one from both a product and corporate perspective. We have witnessed limited progress in the Standards arena; but have made huge strides with our strategic positioning. And, I am confident that we are finally beginning to witness the technology “traction” which has eluded us, as an Industry, for so long. Unfortunately, we have failed to see any significant commercialization activity directly associated with our technology development activities over the past couple of years. We remain extremely proud of the work done over that period, and particularly the opportunity it presented for us to establish well-defined and practical architectures which reflect “real-world” operating environment challenges and solutions. We continue to believe strongly that this effort has shaped much of our thinking and planning, and is the foundation of both our current and future product portfolio. However, we must also record the disappointment in the inability of all concerned to establish a sound commercial installation base for this technology. We do remain hopeful that we will witness a dramatic change in fortunes in this regard within the very near future. On the flip side however, those activities have allowed us to showcase our collective skills and establish a corporate philosophy which has held us in very good stead. It established the basis of a product and marketing strategy which drew the attention of many within the Industry. This culminated in what was certainly one of the most important developments in the Company’s history – the equity investment by BTG which was completed in April 2002. This investment has already had a significant impact on the Company. It had obviously provided us with the much needed working capital with which to continue to implement an operational vision which is both unique and multi-faceted. It has provided us the necessary financial strength with which to add very important skill sets to our team; and to attack the future aggressively. We have relocated our principal Technical Development Center to state-of-the-art facilities in Durham, NC and have added an all important Demo Center in order to better market our products and services. But, it has also resulted in the participation of David Armstrong and Bill McClean on our Board of Directors, and this contribution is enormously valuable; together with that of several of their respective colleagues. As a direct result of the financial stability the Company has enjoyed, it has freed us to focus on a long term strategy; and with it, to attract three very important members to our management team. Tres Wiley, our Chief Operating Officer, joined the company in May 2002; Pat Finn, our Director of Sales, in July 2002; and Marv Baker, our Director of Engineering, in December 2002. The contributions made to date are significant and the Company is being transformed through the processes and professionalism which they bring. We continue to advance our views and philosophies on the deployment of RFID into the practical operational environments we have encountered. We have continued to witness the growing acceptance of these views, and our relationships with many of the key suppliers to the Automatic Identification Industry have strengthened considerably. I believe we are fast approaching the point where our ideas and views are becoming almost “mainstream”. We see evidence of other companies including our key messages in their literature and marketing materials and with it comes the reinforcement of those messages, and the removal of our having to constantly assume the advocacy role. This is gratifying for us as it will not only establish greater value in our Intellectual Property, but it will add considerably to the value of our products and services. It should also have the effect on reinforcing a structure within the supply side of the Industry which addresses the needs of endusers through an approach which will ensure the greatest possible Return on Investment (ROI), and thus ensure the future prospects for widespread deployment of RFID. We are extremely proud of our track record of being innovative in our tactics. The RFID industry, as we know it, is still very immature and the need exists for greater structure to be introduced. As we emerge from a proprietary technology industry to one which supports and encourages far greater interoperability, we will no doubt witness a dramatic improvement in the reseller and integration areas. However, this continues to be the Industry’s greatest Achilles heel. We have repeatedly stated our concern with the lack of a delivery mechanism; and as the product vendors continue to expand their offerings, and the choices improve, this problem is becoming ever more evident. Instead of just continuing to lament the lack of structure, we have selected to address it “head-on” and to change the status quo. Accordingly, we have formulated a well balanced and compelling Value Added Reseller program in order to become proactive in this challenge. We have sought out the most effective, experienced and well established resellers in North America and Europe and have been extremely successful in convincing them to join our program. We are tremendously excited with the achievements to date, and we foresee this network of “delivery agents” and integrators being positioned to address the needs of the enduser community. We are equally excited about the inherent endorsement of not only our vision for the Industry, but our product range, as well. I am confident that we will shortly witness the tangible results which we have all anticipated for so long. There are other opportunities we have identified which are currently not being adequately served by existing practices or services. There can be little doubt that endusers are seeking “Solutions” not simply components of solutions; and there is an extreme shortage of expertise to address the more technical aspects of implementing the technology. We are witnessing both a need, and a demand for these elements and we will respond appropriately so as to provide both the service and support required.