U.S. Aerospace, Inc. (OTCBB: USAE), issues the following
letter.
Letter from the Chairman
Dear Fellow Stakeholders:
Our company is beginning an extraordinary transformation. In the
last few months, we have gone from what some have called a “small,
cash-strapped” defense subcontractor, to one of the most talked
about companies in the aerospace industry, bidding on the largest
defense contract in history: the KC-X Tanker Modernization Program.
But this first bid is only one step in effectuating our ongoing
long-term business strategy. Together we will continue seeking to
forge an improved path, creating both a new paradigm in modern
aviation, and extraordinary value for all of those who believe in
our strategic vision.
“You do things when the opportunities come along” – Warren
Buffett
Our first step was to assemble a world-class board of directors,
composed of leading businessmen with strong backgrounds in
building, financing and operating highly-successful companies, as
well as winning and implementing large government contracts with
the U.S. Department of Defense. We then turned our attention toward
restructuring our corporate governance and enact corporate
compliance procedures to ensure best practices.
Next, we began seeking new partners, partners who will join us
because they wish to make a long-term investment in a business with
common goals and a shared vision. Our representatives are meeting
with senior government, financial and business leaders in the
United States, China, India, and Eastern Europe. Our experience,
connections and relationships are just beginning to bear fruit.
The Global Opportunity
The changing world economy is creating an uncommon business
opportunity, for those agile enough to recognize and capitalize on
it. The fundamental circumstances relating to globalization in the
context of the aerospace industry were explained by Secretary of
Defense Robert M. Gates in his speech to the U.S. Air Force:
“An unconventional era of warfare requires unconventional
thinkers. That is because this era's range of security challenges,
from global terrorism to ethnic conflicts, from rogue nations to
rising powers, cannot be overcome by traditional military means
alone. Conflict will be fundamentally political in nature and will
require the integration of all elements of national power. Success,
to a large extent, will depend less on imposing one's will on the
enemy or putting bombs on targets, though we must never lose our
ability or our will to unsheathe the sword when necessary. Instead,
ultimate success or failure will increasingly depend more on
shaping the behavior of others, friends and adversaries, and most
importantly, the people in between.
“We need to be thinking about how we accomplish the missions of
the future, in the most affordable and sensible way. We must ask if
the ways we do business make sense” —Secretary of Defense Robert M.
Gates
“The Air Force procurement program that the President has
approved and requested and that I have supported is an appropriate
and responsible one that will allow the service to reset from
current operations and prepare for future challenges. Those
challenges will be immense and they will be diverse.
“To our international brothers in arms, I appreciate your
nations’ partnerships, and I hope we can find new, creative ways to
keep working together -- and in ways that capitalize on our
respective areas of expertise.
“We must expect continuing radical change and upheaval around
the world -- at times promising, at times frightening -- before the
form and patterns of a new era settle into place. As this new era
actually continues to unfold before us, the challenge that I pose
to you today is to become a forward-thinking officer who helps the
Air Force adapt to a constantly changing strategic environment.
“Other questions I would ask you to consider go to the heart of
how the service is organized, manned and equipped. What new
priorities should drive procurement? In addition, we need to be
thinking about how we accomplish the missions of the future, in the
most affordable and sensible way. We must ask if the ways we do
business make sense.
“For the good of the Air Force, for the good of the armed
services and for the good of our country, I urge you to reject
convention, and to make decisions that will carry you closer toward
rather than further from the officer you want to be and the thinker
who advances airpower strategy and meeting the complex challenges
to our national security.”
The U.S. Aerospace, Inc. Business Model
Our strategic vision is centered around the principles of
globalization and the efficiencies that can be offered to U.S.
aerospace consumers—both military and commercial—by taking
advantage of the engineering capability, manufacturing capacity,
and lower cost of production overseas.
Our goal is to leverage our U.S. customer relationships,
marketing capabilities, and high-technology manufacturing
expertise, by forming strategic relationships with international
concerns whose interest are to enter the U.S. aerospace markets by
offering products and services of superior or comparable quality,
while offering lower cost and greater value.
In addition, enabling the expanded utilization of foreign
subcontractors will provide the U.S. government with the unique
ability to utilize the defense budget in a new geostrategic role
that fosters economic cooperation among those who are and would
strive to be our allies.
Ultimately, making quality products at lower prices will benefit
the U.S. taxpayer by delivering the most value for the money, the
U.S. warfighter by conserving limited defense spending for more
capabilities, the U.S. worker by preserving and creating more of
the most desirable U.S. jobs, and U.S. Aerospace, Inc. by
accelerating increased growth and profitability.
We believe that our growing relationships in Asia and Eastern
Europe will provide us with numerous competitive advantages when
entering into aerospace manufacturing contract competitions
solicited by commercial and government sectors.
Our Challenges and Opportunities
Our ongoing efforts have met with strong initial success,
resulting in a Strategic Cooperative Agreement with Antonov Company
of Ukraine, which designs and manufactures the largest military
transport aircraft in the world. Together we have submitted our
first bid to the U.S. Air Force—to supply 179 refueling tankers at
a total cost of $29.5 billion.
This historic and unprecedented event represents only the first
of what will be many bids for military and commercial aerospace
projects that we intend to submit in cooperation with our strategic
partners. We anticipate this process will be both challenging and
rewarding.
Changing the status quo will not be easy, and will not take
place over night. Our success has already met with its share of
detractors. As President Barack Obama said, “The impulse in
Washington is to protect jobs back home, building things we don't
need at a cost we can't afford. The special interests, contractors,
and entrenched lobbyists—they're invested in the status quo, and
they're putting up a fight.” We accept this challenge, and will
continue to drive forward over any such “bumps in the road,”
implementing our long-term strategic vision, and expanding our
company’s manufacturing and sales capabilities.
U.S. Aerospace, Inc. is organized and able to attain the higher
performance that current and future business environments will
demand. We believe that the more rational economy, coupled with a
stronger emphasis on corporate governance and ethical business
practices, create an even a more favorable environment for success
at U.S. Aerospace, Inc. Our integrated operations offer the ability
to secure an expanded breath of manufacturing advantages and scale
our production capacities through diverse enterprise relationships
with multi-national providers. We believe that the fundamental
foundations of our strategies will be successful in meeting
government and commercial needs for the aerospace industry.
Conclusions
U.S. Aerospace, Inc. has a deep respect for the inventions and
accomplishments in aviation over the last century, as well as great
enthusiasm for the innovation and creativity that will lead us into
the next hundred years.
We thank our shareholders, partners, and customers for your
continuing support, as we look to grow and profit together into the
future.
Sincerely yours,
Jerrold S. Pressman Chairman of the Board
July 26, 2010
About U.S. Aerospace, Inc.
U.S. Aerospace, Inc. is a publicly traded aerospace and defense
contractor based in Southern California. U.S. Aerospace is an
emerging world-class supplier on projects for the U.S. Department
of Defense, U.S. Air Force, Lockheed Martin Corporation (NYSE: LMT
- News), L-3 Communications Holdings, Inc. (NYSE: LLL - News), the
Middle River Aircraft Systems subsidiary of General Electric
Company (NYSE: GE - News), and other aerospace companies,
commercial aircraft manufacturers and prime defense contractors.
The Company supplies aircraft assemblies, structural components and
highly-engineered, precision-machined details for commercial and
military aircraft. It is also a leading manufacturer and
remanufacturer of specialized aircraft machining tools, including
vertical boring mills and large Vertical Turning Centers used to
manufacture the largest jet engines, airplane landing gear, and
other precision components. U.S. Aerospace has offices and
production facilities in Santa Fe Springs and Rancho Cucamonga,
California.
For further information please visit the Company’s website at
http://www.USAerospace.com.
Forward Looking Statements
Except for statements of historical fact, the matters discussed
above are forward looking and made pursuant to the Safe Harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements reflect numerous assumptions and
involve a variety of risks and uncertainties, many of which are
beyond the Company's control, that may cause actual results to
differ materially from stated expectations. These risk factors
include, among others, dependence on its key supplier, limited
capital resources, intense competition, government regulation, and
difficulty in aerospace product and parts manufacturing; as well as
additional risks factors discussed in the reports filed by the
Company with the Securities and Exchange Commission, which are
available on its website at http://www.sec.gov. Except as required
by law, the Company undertakes no obligation to update any
information.
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