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Governance

Compliance with the Combined Code

The maintenance of effective corporate governance is a key priority of the Board. Under the rules of AIM, a market operated by the London Stock Exchange, the Company is not required to comply with the detailed requirements of the Combined Code. The Board fully supports the principle of openness, integrity and accountability on which the Combined Code is based and has, in its first period as a new AIM traded company, applied those principles that are appropriate to the Company's size, board structure, stage of development and resources. As the business matures, so procedures will be reviewed and considered by the Board.

The Directors, as was stated in the Admission Document, are committed to complying with all corporate governance regimes in the United States as should properly be applied to a company of our size and type. The Company is not required to register under the Exchange Act and so is not currently subject to SOX (Sarbanes-Oxley).

Board of Directors and Executives

During the period under review the Board comprised of four Executive and three Non-Executive Directors with a fourth Non-Executive Director being added in January 2009. Further Board changes took place in June 2009 with the appointment of Philip A. Clement as Interim CEO following the resignation of Mr. Snyder, and Craig Johnson as Acting CFO following the resignation of Mr. Seaton. Mr. Craig Johnson is currently not a Board member. The Executive Directors are: Dr. James St. Ville, Philip A. Clement, Ardeshir Sidhwa and the Non-Executive Directors are now: Sir Richard Johns, Nicholas Smith, General Alfred Valenzuela, John Cronin and recent appointee, William Roper. Biographies of the Directors are provided on the Board page and set out the broad range of commercial, technical and financial expertise possessed by Board members.

Effective April 2008, the roles and responsibilities of Chairman and Chief Executive Officer were separated, ensuring an appropriate division of responsibilities at the head of the Company.

Meetings of the Board

The Board, which convenes regularly, but in any event not less than 6 times a year, has overall responsibility for the strategic direction and management of the Company's business. All key decisions affecting the Company are considered by the Board as a whole. There is a schedule of specific matters reserved for Board considerations and the Company provides regular information to brief the Directors in advance of these meetings.

Audit Committee

The members of the Audit Committee as at 31 December, 2008 were Alfred Valenzuela (Chairman), Sir Richard Johns, and Charles Snyder. On 15 January, 2009 Nicholas Smith was appointed Audit Committee Chairman on Alfred Valenzuela stepping down as Chair but remaining as a member of the Committee. Executive Directors are permitted to be members of the Committee and those executives who are not members of the Audit Committee are permitted to attend meetings at the discretion of the Chairman of the Audit Committee. The Audit Committee meets at least 3 times a year and its prime responsibility is the reviewing of the effectiveness of the Company's financial reporting, internal control policies and procedures for the identification of risk. It is also responsible for keeping the relationship with the Company's auditors under review. The Committee can invite a representative of the Company's auditors to attend Committee meetings. It is expected that once a year the Committee will have a meeting with the Company's auditors without any Executive Director or senior manager being in attendance.

Remuneration Committee

The members of the Remuneration Committee as at 31 December, 2008 are: Dr. James St. Ville (Chairman), Sir Richard Johns and Alfred Valenzuela. On 15 January, 2009 Alfred Valenzuela was appointed Chairman of the Remuneration Committee on Dr. James St. Ville stepping down as Chair but remained as a member, John Cronin joined the Committee and Sir Richard Johns retired from the Committee. The Remuneration Committee meets at least twice a year and at such other times as its Chairman shall require and its terms of reference and areas of delegated responsibility are:

• The specific remuneration packages and the conditions of employment (including pension rights, if applicable) for Executive Directors;
• The terms of any contract of employment or related contract with Executive Directors and senior executives on behalf of the Company;
• The terms of any compensation package in the event of early termination of the contract of any Executive Director or executive senior; and
• The granting of any options/warrants or share grants under the Company's Omnibus Incentive Plan.

Members of the Remuneration Committee are not involved in any decisions in meetings at which their own remuneration is discussed.

Share Dealing Code

The Directors have adopted a Share Dealing Code to ensure so far as it practicable that all reasonable steps are in place to ensure that all applicable employees comply with Rule 21 of the AIM Rules. The Share Dealing Code is substantially on the same terms as the Model Code.

Communication with Shareholders

The Board is committed to constructive dialogue with its shareholders and will in future use the Annual Meeting of the Company's shareholders ('Annual Meeting') as an opportunity to communicate with them. The Company's Annual Meeting is provisionally scheduled to be held in Phoenix on 29 September, 2009. Formal notice of the Annual Meeting will be provided to the Company's shareholders in compliance with applicable law and the Company's governing documents prior to the date of the Annual Meeting.

The Company's website (www.armordesigns.com) is the primary source of information on the Company and includes an overview of the activities of the Company and details of all recent Company announcements.

Internal Control

The Board has overall responsibility for ensuring that the Company maintains a system of internal controls to provide them with reasonable assurance regarding the reliability of financial information used within the business and for publication. The Board is also responsible for ensuring that assets are safeguarded and risk is identified as early as practically possible. As noted above, the Audit Committee has a significant role in this area. The internal controls systems established are designed to manage rather than completely eliminate risk and can only provide reasonable but not absolute assurance against misstatement or loss. As such the Company's internal control systems are continually under review and are expected to evolve as the Company grows.

The Company does not have an internal audit function at present and is unlikely to have one in the foreseeable future due to its size and structure. The need for an internal audit function will however be regularly reviewed by the Audit Committee and implemented as and when the Company's structure and complexity require it.

The Board is cognisant of the need to maintain unpublished price sensitive information secret and has made all of its senior management and advisors aware of their duty to ensure such information is not divulged to those that do not need to know or is used inappropriately by themselves. As part of its controls the Company has ensured that its IT systems restrict access to sensitive information to only senior executives on a need to know basis.

The Board reviews the effectiveness of the systems of internal control and its reporting procedures and augments and develops these procedures as required to ensure that an appropriate control framework is maintained at all times. The transition from development company to one of commercial manufacture has demanded a complete review of the Company's internal control systems with appropriate changes and actions implemented during the period.

The principal control mechanisms deployed by the Company are:

• Board approval for all strategic and commercially significant transactions;
• Detailed scrutiny of the monthly management accounts;
• Board reports on business performance and commercial developments;
• Standard accounting controls and reporting procedures; and
• Regular liaison with the Company's auditors and other professional advisors as required.

Statement of Directors' Responsibility

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

The Company's governing documents generally require the Directors to prepare statements for each financial year which give a true and fair view of the state of affairs of the Company as at the end of the financial year and the profit or loss of the Company for the financial year. The Directors have elected to prepare the Company financial statements in accordance with United States Generally Accepted Accounting Principles (US GAAP). In preparing these financial statements, the Directors are required to:

• Select suitable accounting policies and then apply them consistently;
• Make judgments and estimates that are reasonable and prudent;
• State whether applicable US Accounting Standards have been followed, subject to any material departures disclosed and
• explained in the financial statements; and
• Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue business.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with US GAAP and applicable law. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In so far as the Directors are aware:

• There is no relevant audit information of which the Company's auditors are unaware; and
• The Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the Auditors are aware of that information.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company website.

Auditors

A resolution to reappoint Grant Thornton LLP as Auditors for the ensuing year will be proposed at the Annual Meeting in accordance with Section 211 et seg. of the General Corporation Law of the State of Delaware.

Dr. James St. Ville
Chairman
23 June 2009