EA ARMAMENT & SURVEILLANCE TECHNOLOGIES (EA Tech)
AIMS TO REVAMP AND RESTRUCTURE
AMERICAN DEFENSE SYSTEMS (OTC:ADFS)

The outgoing-CEO of EA Tech (USA), Mr. Osita Iroku, has presented a report on the achievements during his tenure, and plans for the future of both the parent company and its new investment in ADFS.

“Based on my recent discussions with and instructions from our parent board of directors, we are pretty much resolute on what our goals and strategies will be for the next two years, both for EA Tech and our new potential partner, American Defense Systems, traded on the OTC.”

“The following is the sum and substance of our vision, and we have every intent to pursue these goals to a final conclusion. As usual, these are all forward-looking statements and there are no guarantees of performance. No one is encouraged to buy or sell any publicly traded stock based on these statements. Everyone is encouraged to do their own research and due diligence.”

1.0 EA Tech Nigeria: In nigeria we have a company named EA Tech Nigeria (EA Armament & Surveillance Technologies Ltd.) and that company makes security and defense products exclusively for the Nigerian defense industry. We produce everything from armored vests to armored cars all the way up to new high tech military bases.

1.1 Select Products: One of our first in-house developed products is the “BRAV Plate” for body armor. Our BRAV Plate Model 13 weighing 3:2kg passed the Nigerian Army’s “Level IV” testing with flying colors, several times, for the past one year. Our newer Model 14 plates, weighing 3.1kg, passed only 50% of the time. We are working to improve this product. Our newest Model 15 plates, which are flexible and weigh only 1kg each, passed the small arms fire test (“Level III”) 50% of the time. We are also working to improve this product.

1.2 Contract and Payments: Although we have correspondence, invitations, approvals, permits and quality certifications from the defense agencies for our body and vehicle armor, we do not yet have a supply order or contract. We expect that documentation may not be signed till March of next year.

Given the current economic situation, we anticipate that, if we succeed in securing the contracts we have rendered for, our payments from the Nigerian agencies will be in “euro bonds” that currently have a “junk bond” rating (i.e. a “B” rating). If and when we are cash strapped, these bonds can be sold at a discount of about 40-50%. This strategy may erode our profit margin, and make performance tight-budgeted; but it ensures that we retain market share, and will have the liquidity as and when needed to perform until completion.

1.3 Subsidiaries: EA Tech Nigeria currently owns 100% of EA Tech USA, but anticipates selling up to 40% equity in the near future through a private placement. No schedule or deadline for such private placement has been made as of yet.

2.0 EA Tech USA: In New York we have EA Tech USA (EA Armament & Surveillance Technologies Inc.) which primary function is to hold shares in ADFS.

2.1 New Board and Management: We have identified a short list of candidates to serve on this Board as of December 15th, 2019. This new board will be comprised of industry professionals. All previous directors and officers will be stepping down on that date. We also intend to appoint a new executive team on the same date. The new board and executive team will be responsible for ensuring a new board and executive team is inaugurated for ADFS before the end of January 2020; supervising fundraising and asset acquisitions; and ensuring all regulatory compliance on the parts of EA Tech and ADFS.

2.2 Fundraising: Our initial plan, for EA Tech USA, was to raise $5m this year, $50m next quarter, and up to $250m by next December, to assist with the securing, updating and upgrading of ADFS. We have now adjusted our plan, so that ADFS will do its own fundraising, and EA Tech USA will only render supervision.

2.3 Subsidiaries: EA Tech USA currently owns 21% of ADFS.

3.0 ADFS: ADFS produced armored glass, armored vehicles, and various other defense-industry products, from 2003 till 2014. ADFS does not currently produce anything, although, to the best of our knowledge, it still has a small inventory of assets available for sale.

Our strengths are threefold: (1) our shareholders and stakeholders already have viable businesses in a few different countries; each of which is being made available to ADFS for ADFS to secure short term contracts if and when needed. So, right from the start, ADFS should not have to employ marketing staff or incur advertising expenses in the search for new clients or retaining old ones; (2) Since ADFS was established as a public company back in 2003, according to reports from the previous management, it has successfully completed over $500m worth of defense contracts here in the United States, Iraq, Afghanistan, and Colombia. It also currently still has its market access and delivery network still in place. So, revamping old operations will be fairly easy, and with minimal risk; (c) Our current roster of potential directors, executives and advisors are career money and asset managers. Collectively they have immediate access to both industry specific investors and emerging market funds. Our fundraising goals are therefore generally considered to be conservative when compared to our fundraising capacity.

3.1 New Board and Executive Team: American Defense Systems will be administered by a new board of directors and executive team, by December 15th, 2019, if all goes according to the best case scenario. Otherwise, a new board and executive management may not be in place until sometime in January 2020.

3.2 Operations and Divisions: EA Tech Nigeria plans to work with ADFS to restructure it operations into four new divisions: (1) ADFS Technologies: for law enforcement and defense products and services
(2) ADFS Real Estate: for buying and holding cash flow producing properties; (3) ADFS Hospitality: for buying and holding cash flow producing tourism and hospitality assets; (4) ADFS Exploration & Acquisition Fund: this is where we shall raise and keep funds for the exploration for new assets, or development of new businesses, as the company grows.

3.3 Fundraising: The last few days of discussions and meetings have led us to conclude we can raise between $300m to $500m by end of March 2020. About 25% of this money is to be from equity (the $75m equity contribution shall be raised by selling some of the 44 million shares we have left, from the authorized share capital), and we intend to borrow the balance of 75%.

We set an arbitrary figure ($300m) as our fundraising goal for the first quarter simply because we had three categories of properties to buy, and we wanted an even number for each type. The total therefore was $300m in total purchase and closing costs, with $100m being allocated to each property type. But this is not a hard rule, the $300m can be spent as efficiently as possible based on the opportunities still available when we start purchasing.

On average, we expect the debt to be amortized over 25 years, with an interest rate around 4.7%. We expect the equity funding to be raised through an offering of shares. We do not anticipate the need to increase share capital at this time or to dilute existing shares at this time. There is no plan or interest in diluting shares in the foreseeable future.

We have engaged financial advisors with excellent track records in Connecticut, Maryland, Florida and New York, to guide EA Tech and the old and new CFOs of ADFS, on how to choose the right investors for the right properties and projects.

3.4 Asset Management: Each property will have its own local management and such local property managers will be paid their respective management fees. Aside from that, it is our intent that EA Tech USA will play an active role in protecting its investment, by supervising ADFS for both regulatory compliance and best practices. As such, if approved by the new board, 10% of the net income from each property will be remitted to EA Tech USA, for its supervision and executive guidance services. This will cover EA Tech’s travel and other expenses, as it closely monitors the activities of the various asset managers, and reports findings and recommendations to the ADFS Board of Directors. To this end, we will be proposing that EA Tech will maintain “observer status” on the ADFS Board of Directors, aside from any other rights and privileges EA Tech May have as a shareholder of common stock.

3.5 Asset Selection Criteria: As we set out the objectives for ADFS Real Estate and Hospitality holdings, we are currently intentionally narrowing our focus to just four states in the NE (CT/NY/NJ/PA) so as to make it easier for us to supervise during the first two years. We have also tried to diversify risk by choosing the three properties types that on average yield the hugest cap rates in the NE (office, franchises, and hotels).