Dear Friends and Investors: Last year was a year of excitement and disappointment. Although Armor Electric Inc. (ARMOR) made significant progress in the development of several potential new products, our expectations for prototype, and pre-production ramping did not come to fruition. This was due to several key obstacles – lack of funding, long cycle times for contract review and renegotiation, and restructuring of our electric propulsion systems (EPS) strategic partnership. During the past several months, the company has experienced significant delays with our associates in the Mexico City Taxi Cab project. Causes for these delays included engineering changes, warranty and service issues as well as finance issues with the Mexico City Management Group. Presently, we are in the process of working with our EPS strategic partner to restructure the licensing agreement for the Pedi-Cab product. In parallel with this effort, the Mexico City Management Group has obtained financing, and is ready for delivery of the prototype unit for stress test analysis during the first quarter of this calendar year. Our frame manufacturer, Hero Motors is prepared to complete the initial production ramp tooling for this product upon the certification of the prototype unit. The College Campus Electric Car Rental Program specifications have been reviewed and a viable prototype unit has been identified which meets the requirements of this new program. Accordingly, we are now working on obtaining the necessary funding to move forward with this promising program. These units will be tested at two college campuses. Upon successful completion of the demonstration phase, contracts will be negotiated and production ramp will begin. ARMOR is also in the process of researching a number of other projects involving electric powered vehicles which could develop into additional contracts for the company in the first quarters of this calendar year. In order to keep our shareholders and investors abreast of our progress, ARMOR will begin posting a monthly "Presidents Message" on our website. These messages are intended to supplement our news releases and our SEC filings. Stay in tune for future updates! Sincerely Yours, Merrill W. Moses
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