The Kitty Hawk Aeronautics 2007-2010 Strategic Plan includes the following goals:

• Increase profit by at least 7% per year

• Establish a customer base in Asia/Europe for the Commercial Aviation line of business

• Establish a "General Aviation Systems" line of business

• Control costs by establishing activity based cost accounting in all lines of business

• Improve the value of investments in information technology

The current strategic-level initiatives that fit the strategic goals in each of the LOBs are as follows:

Increase Profitability

• Reduce average warehouse handling time by 10% per year

• Minimize spending on research and development by 10% per year

• Sell non-profitable Line of Business

• Create competitive advantages through innovation and investigative research driven by customer requirements.

• Ensure all LOBs are operating at optimum levels (within their area of expertise) and are proficient with their product lines and services.

Commercial Aviation

• Open a Sales & Marketing European branches in London, Paris and Frankfurt

• Open a Sales & Marketing Asian branches in Bangalore, Beijing and Singapore

• Start on product promotion campaign in Asia and Europe in July 2008

• Sell after-market electronic assemblies and parts for airline fleets in Europe and Asia.

General Aviation Systems

• Roll-out a new commercial component manufacturing plant in San Diego, California (200 new employees).

• Expand avionics product line to include Boeing MD-80.

• Improve electrical harness product line quality and cost competitiveness.

Control Cost

• Establish an enterprise-wide cost accounting system and migrate from separate legacy finance, payroll, and general ledger accounting systems.

• Integrate financial information with sales and warehouse data, and establish access controlled data marts that push pre-formatted reports daily.

• Implement a performance-based contracting approach that uses standard on-line templates and a document tracking/correspondence control system

• Integrate contracting information with finance and accounting information.

Investment in Information Technology

• Establish and maintain an enterprise architecture program and on-line repository of actionable EA information.

• Establish an IT capital planning program to improve the value of investments in IT.

• Expand the IT Common Operating Environment (IT-COE) to host all front-office and back-office applications at each company location, and expand LAN/WAN capabilities.

• Develop and implement a follow-on IT Security solution for the IT-COE.

• Establish a Knowledge Warehouse for the KHA enterprise.

The following LOBs are on-going programs and other measures that are not aligned with current strategic-level initiatives:

Defense Systems

• Deliver the MH53J Pave-Low IV Tactical Communications Radio for the USAF.

• Deliver FA-18 Block-III VHF radios to Naval Aviation Systems Command.

• Support Northrop Grumman outfitting of USCG Deepwater Cutter UHF/VHF radios.

Space Systems

• Deliver the recently-awarded USAF Ultra-Low-Latency Satellite Communications System, and migrate functionality and data from the legacy USAF GeoTalk System.

• In partnership with the Jet Propulsion Lab, develop the telemetry system for the Mars Lander IV Program.

• Support Raytheon as subcontractor in delivering the Challenge Athena III Wideband Satellite Communication System.

Research and Development

• As a subcontractor to Boeing, support research and development activities for the Next

• Generation Space Shuttle Avionics Program (NGSSAP).

• Develop multi-function electronics busses for the Boeing Dreamliner.

 Shipping and Receiving

• Expand the Warehouse and Shipping Department at the San Diego facility.

Contacts and Legal

• Upgrade legacy Lexus/Nexus on-line legal library system, make available in San Diego.