CEO
LEO H. BARLOW

Dear Shareholders of Seldovia Native Association;

The fiscal year ending December 31, 2008, was by far a successful one for your Corporation.  As evidenced by the financial statements presented in this annual report, your company had a healthy net income that exceeded last year by 54%.  In addition to this strong financial performance, the transition process that began last year with the retirement of former CEO, Michael Beal, has been successfully completed.  Although these major benchmarks were positively accomplished, the past year proved to be challenging, particularly in light of the significant economic turbulence that began mid-year and continues today.

Our core business, the Dimond Center Hotel LLC performed exceptionally well despite a weakening economy and finished out the year with its best return since operations began.  We are thankful to our strong Alaska customer base that continues to patronize the hotel that many call their “home away from home”.   The year 2009 will be challenging, as most Alaska hotel properties are seeing reduced bookings for the coming summer season with some economists predicting a 40% decline in advance bookings.    This is why it is vitally important for us to continue to market to and provide a quality stay to our main customer base—Alaskan’s who we count on as repeat guests.

Controlling our costs is critical in managing our operations at all levels.  Over the past year we have seen tremendous increases in energy and related utility costs. These increases greatly impacted our Main Street Market operations in Seldovia; the Market finished the year with a loss, but the loss was less than that projected in our operating plan for 2008.  We have taken steps to mitigate these losses by reducing hours of operation and consolidating our product lines as we assess the long term future of the Main Street Market.

The Seldovia Bay Ferry project entered a pivotal phase this past year when actual construction of the vessel began in August at a Bellingham, Washington shipyard.  The project which we manage under terms of an agreement with the the vessels owner, the Seldovia Village Tribe, is being administered under our Red Mountain LLC; a designated US Small Business Administration 8(a) company.  Although the ferry project is not an 8(a) set-aside, it does fit within the maritime designation we have under Red Mountain LLC, which also has designations in general contracting and hospitality management. The new vessel, named the KACHEMAK VOYAGER, will be launched in summer of 2009. The ferry is scheduled to begin service in 2010 from its homeport in Seldovia to Homer.

In addition to ferry construction, Red Mountain LLC began a new phase late in 2008 focusing on general contracting on US Military bases.  We have identified a proven contracting firm in Southern California that we will work with to secure construction contracts on area military bases.  Red Mountain LLC opened a field office in Santa Maria, California, which will serve as our base of operations in developing this new business.  It is anticipated that significant government contracting opportunities lie ahead as the US Government funnels economic stimulus monies into the economy. This is an exciting growth opportunity for Seldovia Native Association and Red Mountain LLC and one which will require a good deal of hard work for us to be successful.

All of us at Seldovia Native Association and its operating entities appreciate the support Shareholder’s have afforded us this past year;  by  working closely together as a team we will continue to strive to achieve results that all of you can be proud of.  Our strength has always been in our people, and it is that strength that guides us into the future.  We must be diligent enough to preserve capital for growth and determined enough to provide the best possible returns to our Shareholders for the long term.