HMSG .006 Text of Letter to Shareholders (March 7,2007)
HOMELAND SECURITY GROUP INTERNATIONAL
PROTECTING FREEDOM’S WARRIORS
March 1, 2007
To Our Shareholders:
Once again I’d like to start by thanking each of our shareholders for your loyalty and faith in our company and our goals for securing the safety and lethality of our forward deployed troops. It would not be possible to carry on without your continued support.
This is my second letter to be published on the website with the intention of keeping our
shareholders up to date on the progress of our company. We will continue to issue press
releases, but only when we have substantial news to report. The practice of sending out open
letters to stock holders allows for communication without too many press releases going out.
We are continuing our focus on our core business which is the procurement and sales of medical
bags and load bearing equipment for forward deployed military and first responders here at
home. Our current strategy is to focus on the sale of medical bags. Not just to the military
however. we have conducted numerous meetings with the US Border Patrol and Emergency
Management Agencies and introduced them to variations of medical “rolls” that would
standardize the way equipment is carried by medical and non-medical first responders. We are
currently in negotiations to provide over one thousand pre-stocked medical kits to the US Border
Patrol in the San Diego Region. The acceptance of our bag would lead to orders from the entire
Border Enforcement Section of the Department of Homeland Security. We are very excited
about these talks and are doing everything we can to meet the needs of those brave watch
standers.
Other load bearing equipment designed by or joint venture partner Recon Mountaineer has
continued to receive acceptance throughout the military and Special Operations community. We
reported earlier that the SOF-SLM SUITE was being considered by SOCOM for purchase as the
accepted load bearing pack for operational special operations forces. This is still the case and
we have started to receive orders from that community for our bags. As the recognition grows we
will expect to see follow on orders from both coasts.
We have made great strides in the area of lightweight ballistic armor. Our manufacturing
partner reached level IV certification through HP White Laboratories for all of the newest
lightweight plates and ballistic blanket model variants. I have introduced the blankets and
lightweight plates to the Light Armored vehicle community on the west coast to include
Amphibian Assault Vehicles. The ballistic blankets have been assigned National Stock Numbers
by the US Army and Marine Corps. We have been assigned nineteen different NSNs covering
each type of configuration of Light Armored Vehicle.
Special Operations Command is also evaluating the lightweight ballistic level III plates for use
due to their neutral buoyancy characteristics. We actually have Underwriters Laboratory
Certification as flotation devices for these plates. This will aide in acceptance for use in small
boat and coast guard operations.
We are continuing our testing and evaluation of the Neptune EBD-1. Like I mentioned in my first
letter, I am a former combat diver and I am so excited about the many uses we see for this
product ranging from emergency egress to emergency response uses for Public Safety Divers to
recreational use by scuba enthusiasts. We have been working closely with Survival Systems USA
in the area of testing the device. We have established that the unit has a shelf life of over 15
years without the need for any maintenance. We recently successfully tested a unit that was filled
in 1992. We have the bench drawings and specifications for EBD-2 and are anxiously awaiting
delivery of prototypes so we can get that unit in the water. We have also had great reception
from the mine safety community for using Neptune EBD in emergency egress from mines.
We are still a relatively new company with a goal of positioning ourselves as a major supplier of
security equipment and supplies to the US Government. We are primed for success and
remaining focused on or core business. Our business model is the sales of products through Joint
Venture Partners. The income derived from those sales provides us with the working capital
required to support our main effort, bags.
I am convinced that we have the potential for unlimited growth in a market that continues to
expand daily. We have seen great improvement in our stock price lately and we will continue our
efforts to increase the value of our company by pursuing government contracts. We are still
terribly undervalued.
Many stockholders call us on a regular basis and continue to voice the fear that we
will participate in a reverse split. Once again, I have no plans for such an action and I would
have informed the stockholders immediately if such thoughts were occurring. We are still
committed to reducing the number of shares outstanding. We will keep the shareholders
informed of plans to reduce the number of shares outstanding.
We want to increase our stock price as much as you do. The fastest way to success is buy selling
bags, ballistics and bottles and show a profit in our financial reports. Mr. Doug Scott has
committed to getting our products and services before the eyes of those that can buy them. He
has so far done a great job by setting up meetings and demonstrations with emergency managers
across the United States.
Shareholders continue to request specifics of joint venture agreements and structure of profit
sharing arrangements. My policy is to not disclose the specific profit agreements so as not to tip
off current and potential competitors. As I explained in my first letter, each of our agreements is
very favorable towards our company and all are above market standards.
I am proud of the accomplishments of the company. We have established ourselves as the go-to
agency for fast tracking equipment procurement for our troops. We are gaining credibility
throughout the military establishment and I see a bright future for our company and our stock.
Jeffrey A. Powers
CEO
Homeland Security Group International
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