SHAREHOLDERS
If you are presently a Shareholder of Stavatti Heavy Industries, Ltd. or Stavatti Corporation, you may proceed directly to the Shareholder webpage for the latest information regarding your investment including Shareholder Meeting Notices, Proxies, Shareholder Forms, Corporate Bylaws, Shareholder and Board Meeting Minutes, Consolidated Financial Statements and much more. Archival information available only to Shareholders/Strategic Partners is also accessible through the Shareholder webpage.
The Shareholder webpage is password protected. If you are a Shareholder or Strategic/Royalty Partner and this is your first time visiting Investor Relations, you will need to apply for a username and password prior to accessing the Shareholder page. Please contact the Stavatti Investor Relations Manager by email to receive a unique user name and password permitting access to the site. Please include your full name and stock certificate number when requesting your username and password. Once your username and password is assigned, you may access the Shareholder page via the following Secure Link:
EQUITY STRUCTURE
Stavatti Heavy Industries, Ltd. is a privately held, Hawaii ‘C’ corporation. Stavatti Heavy Industries, Ltd. (SHI) is committed to remaining a closely held, private corporation. SHI is the majority shareholder of Stavatti Corporation, which functions as a division of SHI.
SHI is organized into multiple divisions which are structured as corporations, LLCs or LLPs. SHI maintains no less than 51% equity ownership in all divisions, with most divisions being Wholly Owned by SHI. SHI delegates the management of the design, development and production of all durable goods to its divisions and in so doing, serves as a holding company responsible for division strategic management and the total integration of all goods and services delivered by wholly-owned divisions and partially owned joint-ventures into a symphony of commercial deliverables.
Each division is a stand-alone business entity chartered with a clearly defined objective and core competency upon which to focus 100% of its energy. Each division is directly responsible for the management of the design, development, certification/ qualification and production of all products developed by either that specific division, or by joint-venture enterprises operating under the strategic management of that division. Each division is also responsible for the provision of services, which fall within the envelope of their specific core competency. Core competencies are not limited to a specific product, but a series or line of products which fall into a specific category. Each division is subdivided into internal Sector Enterprises to address particular aspects of its core competency, including the management of specific joint-venture enterprises which are owned in-part by the division. Each division is organized to benefit from the Stavatti Approach to Program Management.
All divisions for which SHI maintains 51% or greater equity ownership are considered “Wholly-Owned”. Wholly-Owned divisions are managed entirety by the SHI board of directors and executive officers and SHI receives a percent of the net profit (net earnings) of the division. In the event that SHI owns less than 100% (between 51% and 100%) of a division’s equity, each shareholder of the division, including SHI as a corporate entity, is entitled to receive a earning or royalty based Return-On-Investment (ROI) which permits the shareholder entity to receive a percent of the net profit (net earnings) of the division.
Stavatti Aerospace Vehicle and Defense System Programs, from development through production and support, are conducted by Division managed Sector Enterprises or Joint Venture Companies (JVCs) established by a SHI Division/Sector Enterprise in conjunction with a Specific Strategic Partner or a pool of Strategic Partners. The purpose of the JVC is to enable SHI Divisions/Sector Enterprises to develop and produce a variety of products using commercial practices which benefit from participation of key Strategic Partners while reducing unnecessary exposure to critical risk factors, including product liability. The JVC structure permits Strategic Partners to participate and benefit financially in the development of revolutionary new aerospace vehicles and defense product through direct equity ownership in the JVC.
JVCs are also formed for the purpose of mutual participation in the development and production of new aerospace vehicles and defense systems with established Prime Contractors (such as potential JVCs Boeing, Lockheed Martin or Northrop Grumman) or with National Aircraft Factories of major allied customers. The JVC system provides a mechanism for work-sharing, allowing for the formation of Stavatti Aerospace Production in potential allied nations including Australia, Canada, Germany, the Netherlands, India, Israel and Japan.
The JVC structure enables Stavatti Aerospace to build revolutionary new airplanes while allowing for the participation of a variety of Strategic Partners including pooled investment vehicles, established aerospace prime contractors and, as applicable, allied customers who desire direct sharing and participation in the RDT&E and production of the wings of their nation.
PROGRAM & RDT&E FINANCING
The Stavatti Aerospace Defense business model differs from the models currently implemented by competing prime contractors Lockheed Martin and Boeing in that Stavatti undertakes most new unclassified, aerospace vehicle and defense development programs as privately financed, corporate ventures. Stavatti does not typically seek funds to develop a new aerospace vehicle or weapon from the US DoD or alternate government user agency. Instead, Stavatti uses internal RDT&E (Research, Development, Test & Evaluation) funds to finance new system requirements and specifications generation, conceptual design, advanced design, integration and detail design, demonstration and validation, qualification and certification, and low rate initial production. Stavatti recovers the RDT&E funds invested and begins generating both a revenue and profit stream from a program once the program’s product is in full-rate production.
The practice of developing advanced weapon systems as corporate ventures is not a new concept, but a proven method which has resulted in some of the finest and most effective weapon systems ever devised. Beginning with the first aircraft to see military service, the Wright Flyer, the litany of military aircraft developed as corporate ventures and then sold to either the AAF, USN or USAF includes, but is hardly limited to, the Douglas DT-2, Curtis PW-8, Boeing PW-9, Boeing F4B/P-12 (built as a company venture because Boeing could envision a pursuit aircraft that was much better than any thing asked for at the time by the Army or Navy), Boeing B-9, Martin Model 123 (B-10), Boeing B-17, Bell P-39, Boeing KC-135, Republic F-105, McDonnell Douglas F-4, and Northrop F-5. In many cases, aircraft manufacturers have bet-the-company on radical new military aircraft which ultimately resulted in impressive sales domestically and abroad. A more in-depth discussion of the philosophy and historical basis behind Stavatti aircraft development as a corporate venture is provided in the STAVATTI APPROACH available as an Adobe Acrobat PDF file.
Stavatti’s programs are highly advanced, leading edge undertakings which result in products that are often well beyond what customers envision. Stavatti’s SM-27 Machete and SM-72 Transport series for example, are of the caliber of equivalent systems produced by any of the three remaining domestic airframe producing prime contractors. The SM-27 MACHETE is a sophisticated platform, priced at $8-$16 million and sold as a successor to OA-10As, competing with Super Tucanos, PC-21s and T-6 Texan IIs. The SM-72 is a C-130 class aircraft designed to significantly improve military airlift capability while offering ASW and Regional Airliner variants. These programs cost Stavatti hundreds to thousands of millions of dollars and tens of thousands of engineering man-hours The SM-27/47 program will cost approximately $1.0 billion to develop while the SM-72 development program exceeds $4 billion. Stavatti’s programs are substantial endeavors which require great dollar values for realization.
Participating within an industry which requires billions of dollars to create a new product, Stavatti does not always maintain the funds necessary to complete an RDT&E program as a corporate venture. Similarly, Boeing and Lockheed Martin usually don’t have the $2 to $20 billion necessary to develop a new military aircraft either. While aerospace prime contractors once relied heavily upon internally financed corporate ventures to create new aircraft for the defense market, most contractors today focus upon Making What They Sell, rather than Selling What They Make. Lacking adequate RDT&E reserves, Stavatti competitors seek out DoD development contracts whereby the DoD pays for all stages of new military aircraft development. Occasionally this process works and programs like the F-15, F-16 and F/A-22 result. Recently, this process of relying upon DoD funds for total contracts encompassing concept to producible article has had drastically negative effects. Due to dwindling DoD funding, of the eight aircraft producing domestic prime contractors that were in business in 1990, three survive today. Of the three survivors, only one, Lockheed Martin, has contracts to develop new manned fighter aircraft (the F/A-22 and F/A-35). Simply put, the DoD needs new, advanced military aircraft more than ever which are actually affordable to procure, maintain and operate. And the DoD no longer has the budget to develop them.
Stavatti does not compete for dwindling DoD development dollars. Instead, Stavatti’s solicits external, private sector participation to create the products both the DoD and allied militaries need. Stavatti programs are financed by private investors, strategic partners and pooled investment vehicles. The result is a company that provides products which customers can afford to procure in the volumes necessary to adequately address mission needs.
PRIVATELY HELD
As a privately held concern, Stavatti will:
1) Develop products with a minimum amount of bureaucracy
2) Maintain consistent product requirements and specifications
3) Achieve greater creative freedom and the ability to take necessary risks
4) Concentrate upon core competencies and not Wall Street whims
5) Create new products which satisfy mission requirements
6) Perform Special Access work in a bona fide restricted environment
7) Maintain corporate ownership of all concepts, products and prototypes
8) Remain financially solvent independent of the military industrial complex
9) Benefit from the talents of a workforce in a forward thinking environment
10) Assure that the job gets done
Stavatti maintains a very distinct business philosophy and corporate culture which is not conducive for public ownership. Stavatti is not developing defense products for the US DoD per say, but for NATO member armed forces and nations allied with the United States. Stavatti focuses primarily upon export sales. Selling military systems on the export market is different than selling products primarily to the DoD. Most US allies cannot afford the $100 to $200 million F/A-22 and they probably will not be able to afford the $40 to $70 million F/A-35 JSF either. US contractors have not adequately addressed the needs of the allied export market. Stavatti focuses upon markets which other US contractors and the DoD are neglecting. By default, Stavatti requires alternative sources of program development funding to address these markets. It is for these reasons and numerous others that Stavatti desires to remain privately owned by a special breed of investors who are interested in the unique Stavatti structure.
Stavatti is not driven by quarterly financial statements. Stavatti is in the business of building the best aircraft possible and assuring that our military customers will survive. Profit and returns on investment are a by-product of Stavatti’s ability to do its job extremely well. Once the customer is satisfied, alive and well then all of Stavatti, from its assembly workers to its owners, will benefit.
It is a matter of where ones priorities are. Stavatti is not attempting to become the model investment opportunity. Stavatti is a high risk endeavor which centers upon creating very highly advanced products for a limited customer base. Investors looking for the next technology company to go IPO need not consider Stavatti as a potential investment. Stavatti is a heavy manufacturing concern in an established industry with a very flat growth projection. Investors looking for a low risk, twenty to two hundred-fold return on investment over the next one to six months need not consider Stavatti. There are Dot Coms for you. Arn't There?
Stavatti does provide an exciting opportunity for unique investors, strategic partners and pooled investment vehicles. Stavatti investors must be patient and interested in bringing advanced products to market. They must be committed to the defense of free sovereign nations. Stavatti investors must be willing to place investment dollars into a high risk venture which will not begin to generate returns for three to six years. If the venture is successful, investors are looking at a five to twenty fold Return on Investment (ROI) over the production life of the Stavatti product. Once in production, a product like the SM-27 Machete may remain in production for twenty to thirty years, generating a constant return on investment from the profits associated with the aircraft. Stavatti can provide continuous, steady returns on a strategic investment which requires three to six years to begin realizing its potential.
Committed to remaining a privately held company, Stavatti investors take the form of private equity shareholders or private investors who take a royalty position in a specific Stavatti Joint Venture Company.
INVESTOR INQUIRIES
Contact Stavatti Investor Relations to discuss strategic partnerships with Stavatti Aerospace Joint Venture Companies or a division of Stavatti Heavy Industries, Ltd:
Christopher R. Beskar
Stavatti Chairman & CEO
Tel: 651-238-5369
Fax: 651-905-0504
Email:investor.relations@stavatti.com
