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Post# of 54376
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KauaiPI

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KauaiPI

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Re: Mr. Ed post# 3463

Wednesday, 05/07/2003 5:12:33 PM

Wednesday, May 07, 2003 5:12:33 PM

Post# of 54376
Mr. Ed~(DFNS.OB --Aerospace & Defense Industry--)... I noticed that you were watching it last year (in it?) and they finally released their 10K which was better than I expected although some items of concern embedded as well.

About Defense Industries International, Inc.

Defense Industries International, Inc. is a leading manufacturer and global provider of personal military and civilian protective equipment and supplies. Defense Industries' subsidiary, Export Erez Ltd., was formed and registered in 1983. Defense Industries' main products include body armor, bomb disposal suits and bullet-resistant vests and jackets; ballistic wall covers, helmets, plates and one-way protective windows; personal military equipment, battle pouch units and combat harness units; dry storage units, liquid logistics, tents and vehicle covers; and winter suits, sleeping bags and backpacks.

Defense Industries' products are used by military, law enforcement, border patrol enforcement and other special security forces, corporations, non-governmental organizations and individuals throughout the world. Customers include the Israel Defense Forces, the North Atlantic Treaty Organization (NATO), the United Nations Peacekeeping Forces and other U.N. organizations.

Defense Industries manufactures its own products, thereby enabling it to offer highly competitive pricing and to fulfill product orders on a rapid and efficient basis. Its manufacturing facilities meet American EQNET and international ISO 9002 standards. Quality control in the Company's manufacturing facilities is performed according to ISO 9002; MIL.STD.105D; MIL-I-45208A (for the U.S. Armed Forces); AQAP (for the German Armed Forces and NATO); and the National Institute of Justice (N.I.J.).

Defense Industries' strategic objective is to be the leading global provider of personal military and civilian protective equipment and supplies. Defense Industries intends to realize its strategic objective by, amongst other methods, selectively pursuing strategic acquisitions that enhance its product lines and geographic presence in an effort to consolidate its highly fragmented industry and to create a more diverse and global reach in its marketplace.
-----------------------------------------------

They were up yesterday 44% and some profit taking today it seems. I started my research yesterday... 5-6-03...

They seem to be using their corporate currency well although dilution seems to be something to keep an eye on.

Authorized 250,000,000
Outstanding 25,550,000

As of March 31, 2003 there were 25,550,000 shares outstanding, an increase of approx 1.285M shares in first Q +5.275% in Q1 '03

While Defense Industries is authorized to issue 250,000,000 shares of $.0001 par value common stock and 50,000,000 shares of $.0001 par value preferred stock, no preferred is outstanding. Year ending showed an increase of 3.748291M shares, year to year '02 vs '01 and an increase of 18.269% in '02. As I said, Dilution is a FACTOR but what I saw was not too scary;

General and administrative costs for the year ended December 31, 2002 increased to $1,955,727 from $1,260,094 for the year ended December 31, 2001. This increase is explained partially by the acquisition of Achidatex and $724,000 in expenses to various consultants and public relations firms. Of the $724,000, $178,000 is a cash payment and $546,000 is paid through the issuance of 370,000 shares of our common stock, valued at about $1.48 per share.

For the period ended December 31, 2002 24,265,479 basic and diluted shares outstanding, compared with based on 20,516,709 basic and diluted shares outstanding for the period ended December 31, 2001. In June 8, 2001, the Company issued 657,900 shares of common stock to acquire Achidatex Nazareth Elite (1977) Ltd. The Company acquired assets totaling approximately $6,240,000 and assumed liabilities of approximately $5,250,000. Additionally, effective June 18, 2001 they issued 1,050,008 shares of its common stock valued at $1.50 per share resulting in a total purchase price of $986,850. Achidatex was a private company (incorporated in Israel in 1977) that manufactures and markets ballistic shields. The acquisition has been accounted for as a purchase, and accordingly, the consolidated financial statements have been prepared to include the results of operations of Achidatex beginning from the date of acquisition. The excess of the total net fair value of the assets acquired of $1,471,314 over the purchase price of $986,850, in the amount of $484,464, has been recorded as a reduction in the fair market value assigned to the fixed assets of Achidatex.


Web Site; http://www.defenseindustries.net
(under construction)

Charts;

3 month chart= http://charting.finsight.com/ext/charts.dll?2-6-8-0-0-53-03NA000000DFNS

12 month= http://charting.finsight.com/ext/charts.dll?2-6-9-0-0-512-03NA000000DFNS


DEF INDUS INTL (OTC BB:DFNS.OB) - 5-6-03
last Trade 3:57pm · 0.36 Change +0.11 (+44.00%)
Prev Cls 0.25 Open 0.25 Volume 48,200
Day's Range 0.25 - 0.38 Bid 0.32 Ask 0.38
52-wk Range 0.27 - 2.92
Bid Size 5,000 Ask Size 5,000
EPS (ttm) -0.03

Time & Sales (5-6-03) most recent
Rec. Time Action Price Volume Exch.
3:57:12 PM Trade 0.36 6000
3:57:10 PM Trade 0.38 4000
1:55:30 PM Bid 0.32 5000
1:53:54 PM Bid 0.31 5000
1:53:44 PM Ask 0.38 5000
1:53:44 PM Bid 0.3 5000
1:53:44 PM Trade 0.33 5000
1:52:14 PM Bid 0.31 5000
1:52:14 PM Bid 0.32 5000
1:52:14 PM Ask 0.33 5000
1:52:14 PM Trade 0.32 6200
1:50:38 PM Bid 0.31 5000
1:50:38 PM Trade 0.32 5000
1:49:26 PM Bid 0.3 8100
1:49:26 PM Bid 0.3 5000
1:49:26 PM Trade 0.3 5000
1:48:36 PM Ask 0.32 5000
1:48:36 PM Trade 0.3 5000
1:46:22 PM Bid 0.29 8100
1:36:18 PM Bid 0.28 5000
1:34:56 PM Bid 0.27 8400
1:19:16 PM Bid 0.26 5000
1:19:16 PM Trade 0.265 5500
1:17:44 PM Ask 0.3 5000
12:13:04 PM Trade 0.25 1500
11:03:26 AM Ask 0.265 5000
11:03:26 AM Trade 0.25 5000
================================

IR; CONTACT:
KCSA, New York

Evan Smith, 212/896-1251 esmith@kcsa.com

Lee Roth, 212/896-1209 lroth@kcsa.com

About KCSA Public Relations Worldwide:

For more than 30 years, KCSA Public Relations Worldwide has helped scores of public and privately held companies and institutional organizations to orchestrate communications strategies supporting their primary business goals. Currently one of the largest independent communications counseling firm in the United States, with one of the largest independent practice in Financial IR and PR, the company has clients and partnerships throughout the U.S., Europe, the Middle East and Asia. KCSA specializes in corporate guidance, integrated financial/investor relations, global technology and sophisticated business marketing communications services.

(see link below for the full PR, ~snip~ Defense Industries International Retains KCSA Public Relations Worldwide for Investor Relations Support Wednesday, April 30, 2003)

http://www.quicken.com/investments/news/story/?story=NewsStory/BW/20030430/a5280_1051715463.var&...

The Company intends to use its highly regarded international reputation and the acquisition of United States companies to expand its United States market.

Industry statistics are difficult to quantify however, we believe that the number of active police officers has increased significantly over the past years. In 2002 there were approximately 900,000 law enforcement personnel and over 20,000 law enforcement agencies in the United States. It is reasonable to expect this number will continue to increase as a partial response to the September 11, 2001 terrorist attacks. As a result of these attacks, the United States government has created the Office of Homeland Security; and although this office's mandate is still being finalized, a homeland security infrastructure will be developed. At the very least, the United States government has identified homeland security issues as a potential long-term issue.

DFNS has a licensing agreement with Smith and Wesson to further their aim in entering the U.S. market;

STRATEGIC BUSINESS PARTNERS

In October 2002, we signed a licensee agreement for a period of three years with Smith & Wesson Holding Corporation that enables us to use the Smith & Wesson trademark on several of our bullet-proof vests. The Company believes that the Smith & Wesson brand name will be extremely helpful for introducing its protective products into the American market, and particularly to the market segment known as Law Enforcement, and another segment of the private market.

The Law Enforcement segment includes all police units in the various states and counties of the US, and represents a potential of tens of thousands of units each year. The private market segment refers primarily to "fast response" units such as fire brigades and the Red Cross, of which there are about 180,000 of various types.

In December 2002, we signed a one year distribution agreement with Freedom Medical, a Pennsylvania corporation, for the distribution of its products in the United States market on a nonexclusive basis. We are in the process of determining which products will be distributed under the agreement. We anticipate that the final details of this agreement will be made within the second quarter of 2002. [meant '03 I think and is a typo!)

----------------------------------
http://www.quicken.com/investments/news/story/?story=NewsStory/BW/20030506/a5679_1052252251.var&...
Defense Industries International Reports Full-Year 2002 Financial Results Tuesday, May 6, 2003 01:17 PM ET
ASHKELON, Israel--(BUSINESS WIRE)--May 6, 2003--Defense Industries International, Inc. (OTCBB: DFNS ), a leading manufacturer and global provider of personal military and civilian protective equipment and supplies, reported financial results for the year ended December 31, 2002 in its annual report on form 10-KSB, filed with the Securities and Exchange Commission on May 2, 2003.

For the twelve months ended December 31, 2002, revenues increased approximately 19% to $10.62 million, as compared with $8.94 million reported for the twelve months ended December 31, 2001. Local Israeli sales accounted for approximately $8.03 million, an increase of 5.6% over sales of $7.61 million to the Israeli market in 2001. Net sales from exports increased 95% from $1.32 million in 2001 to $2.59 million in 2002. The Company attributed the increase in export sales to expanded marketing efforts, in an attempt to create broader worldwide awareness for Defense Industries and its products.

Gross profit for the year was $3.84 million, an increase of 47% compared with $2.71 million reported during 2001. Operating income increased approximately 9% during 2002 to $1.20 million from $1.11 million during 2001. Net income for the year was $243,394 or $0.01 per share based on 24,265,479 basic and diluted shares outstanding, compared with $572,714 or $0.03 per share based on 20,516,709 basic and diluted shares outstanding for the period ended December 31, 2001. The Company noted that the decrease in net income for 2002 was largely the result of an increase in general and administrative expenses, which included $724,000 in cash and issued stock paid for various consulting services. The retention of these services was directly related to a concentrated marketing effort in an attempt to build increased global awareness of Defense Industries and its products and to further penetrate the U.S. market.

Gross margins for the year improved to 36.1%, compared with gross margins of 30.3% in 2001. (ALMOST 6%)

Commenting on the results, Joseph Fostbinder, CEO of Defense Industries said, "Overall, 2002 was a very good year for Defense Industries. During the year, we were able to increase our total sales, including nearly doubling sales from exports over 2001. We grew local revenues modestly, despite the political uncertainty and economic weakness that faced the Israeli market throughout 2002, and which has continued into 2003. Our operating income increased slightly compared with 2001, and we were able to improve our gross margins significantly during 2002. While net income decreased in 2002, it was largely the result of a significant investment geared toward increasing Defense Industries' penetration of the U.S. market that began during the year. We believe that this investment has proven beneficial thus far, as evidenced by our significant increase in worldwide export sales, and plan to continue working toward our strategic goals throughout 2003."
-----------------------

Currently they have a strong relationship with the Israeli Military but current orders are on hold...

CUSTOMERS

We have customers throughout the world including in the United States of America, Israel, and several other countries in the Mediterranean, Europe, Latin America, South America, Africa and Asia. In 2002, we sold approximately 75% of our products in Israel, with the balance sold internationally. The primary end users of our products can be divided into four groups.

o MILITARY DEFENSE AND SECURITY FORCES. This group is in need of personal military and protective equipment such as body armor, bomb disposal suits, bullet proof vests and jackets, ballistic helmets and plates, battle pouch and combat harness units, backpacks, dry storage systems, liquid logistics systems, clothing, tents, vehicle covers and sleeping bags. These types of equipment must meet developed "human engineering" requirements, providing comfort as well as maximum protection, preventing penetration by bullets and knives, protection against fire, collisions and other hazards.

o CIVILIAN DEFENSE CUSTOMERS. This group includes members of civilian security forces such as law enforcement, private security firms, airport security, personal bodyguards, and event security guards. The requirements of these customers for protective equipment are similar to those of military defense and security forces. However, since their work is mainly in a civilian environment, there is a greater need to pay attention to the esthetic appearance of these products, with protective features made as unobtrusive as possible.

o CIVILIAN CUSTOMERS. This group includes campers and hikers of all ages who need equipment such as sleeping bags, tents, backpacks, and clothing adapted for specific needs such as mountain climbing, hiking and camping in all types of climates. This customer group also includes those civilians in need of automobile covers for cars, trucks, buses and other large vehicles.

o ANIMAL SPORTS FANS AND ANIMAL OWNERS. This category divides into two subgroups of: individual pet owners, for whom animal accessories are supplied at three price levels and qualities and animal sport groups who buy equipment for specific animal sports. In the case of horse riding equipment, "human engineering" is very important to ensure maximum comfort for the animal and the rider.

Due to the sensitive nature of our business and the products we supply, specifically the products supplied to military defense and security forces, we are often required to sign non-disclosure agreements with our customers which preclude us from specifically identifying them in this report. Our three largest customers accounted for approximately 60% of our total sales for the year ended December 31, 2002.


BACKLOG

At December 31, 2002, we had unfilled customer orders of approximately $3.5 million. This backlog is due to the Intifada that broke out in September 2000 in which the Arab population, both in the areas held by Israel and in the areas of the Palestinian Autonomy, rose up against Israel. The uprising led to an economic downturn in the economy and heavier than expected current security expenditures.

Over the past year the Ministry of Defense has reduced its orders from all Israeli companies, including companies in Defense Industries. During the last quarter of 2002 purchase orders intended for the purchase of equipment from the Company were placed on hold. At the beginning of the first quarter of 2003, $1.2 million of the orders placed on hold in the last quarter of 2002 were released.

However, in view of the installation of a new government in February 2003, all remaining orders have been placed on hold until a new economic plan is in place.
----------------------------
Our manufacturing practices have obtained ISO 9002 certification. This international certification harmonizes and establishes minimum standards for quality manufacturing throughout the world. Through the years, ISO standards have expanded beyond the quality system and now confirm conformity into environmental issues, safety and occupational health. This voluntary certification process is designed to provide consistency in the manufacturing process and quality control. Other quality control standards pertaining to our manufacturing facilities consist of the following:

1) MIL.STD: 105D, MIL-I-45208A (for the United States Armed Forces)

2) AQAP: (for the German Armed Forces and NATO)

In 2001, we sent proprietary ballistic ceramic boards to Germany for laboratory testing. As a result of these tests, the products were deemed to have met the German qualification standard. Obtaining this standard allows us to sell these products throughout the German and European markets.

--------------------
There is more I could post but I guess I should leave some DD for others to post. I have a pretty good feel for this company and the industry so if any questions, I will try and answer them. They are NOT DHB but are well on their way IMO to becoming a strong player in this field. Overall I like the way they seem to be running the company at the present. They have a well credentialed Board of Directors and between the CEO and his wife (Vice President of Financing, Secretary, Treasurer and
Director) they control over 76% of the outstanding stock, the directors as a group control about 78% or ALMOST 20M of the 25M outstanding shares.

Hope others found this DD post to be of benefit!

best!
kp

"When you look at things differently,

things look different"
--Wayne Dyer--


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