SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-SB A1
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
_______________________
LARGO VISTA GROUP, LTD.
(Exact name of Registrant as specified in its Charter)
Nevada 76-0434-540
(State of Incorporation) (IRS Employer ID No.)
4570 Campus Drive, Newport Beach, California 92660
(Address of principal executive offices)
(949) 252-2180
(Registrant's telephone number)
Securities to be registered pursuant to Section 12(g) of the Act:
211,582,554 Common shares
Securities registered pursuant to Section 12(b) of the Act: None
Title of Each Class Name of Each Exchange
to be Registered on which registered
Common Stock, $0.001 par value - OTC Bulletin Board
<PAGE>
Item 1. DESCRIPTION OF BUSINESS
INTRODUCTION
1. Largo Vista Group, Ltd., a Nevada corporation ("Largo Vista,"),
operates through its wholly owned subsidiary, Everlasting International
Ltd. ("Everlasting"), a Nevada corporation. Everlasting operates and owns a
66.67% interest in a joint venture company in China, operated under the
name "Kunming Xinmao Petrochemical Industry Co. Ltd." ("Xinmao or the
Company"). Xinmao is principally engaged in the business of purchasing and
reselling liquid petroleum gas ("LPG") in the retail and wholesale markets
to both residential and commercial consumers in Yunnan Province of South
China. Xinmao operates a storage depot and has office headquarters in the
City of Kunming. All of the Company's property and equipment is located in
China.
Largo Vista was originally incorporated on January 16, 1987 in Nevada under
the name, "The George Group". On January 9, 1989, The George Group
acquired Waste Service Technologies, Inc. ("WST"), an Oregon corporation.
On the same day The George Group filed a name change in Nevada and changed
its name to WST. WST's plan of business was to become an environmental
service company. It listed its stock and began trading on OTC Bulletin
Board.
On April 15, 1994, WST acquired Largo Vista, Inc., a California
corporation, and on the same day filed a name change in Nevada to change
WST's name to Largo Vista Group, Ltd. At the time of acquisition Largo
Vista filed a change of name with the OTC Bulletin Board and received a new
CUSIP number and symbol ("LGOV"). Largo Vista originally planned to
develop housing in China, but, after shipping two factory built homes to
China, never fully implemented the plans due to unanticipated financing,
environmental and regulatory complications.
On December 26, 1996, Largo Vista acquired Everlasting International Ltd.
("Everlasting"), a Nevada Corporation, which owns a 66.67% interest in
Kunming Xinmao Petrochemical Industry Co., Ltd. ("Xinmao"), mentioned
above. Everlasting acquired this asset from Proton Technology Corporation
Limited, a Bahamas Corporation ("Proton"), in which Mr. Deng Shan, a
director and principal shareholder of Largo Vista, is the principal
shareholder. The acquisition of the 66.67% interest in the Xinmao Joint
Venture by Everlasting was accounted for as an asset purchase transaction.
Everlasting compared the estimated fair market value of the assets acquired
to the depreciated book value of the assets on the Joint Venture's books
and records in China, and found no significant difference. As a result,
66.67% of the depreciated book value of the China Joint Venture assets were
taken on to Everlasting's books as the fair value for the stock issued.
Subsequently, Largo Vista acquired 100% of Everlasting from Proton in a
stock for stock exchange. In connection with this transaction, the assets
on the books of Everlasting were not adjusted, and these values are now
consolidated with Largo Vista's.
<PAGE>
The historical chain-of-ownership of the asset is as follows: The Hong
Kong Company, formed under the laws of Hong Kong, was initially owned by
one individual, Chan Mau Tak. On November 8, 1995, Deng Shan, an
individual, purchased the Hong Kong Company from Chan Mau Tak. On December
20, 1996, the Hong Kong Co. was acquired from Deng Shan by Proton with
majority shareholder being Deng Shan. On December 21, 1996, Proton
transferred 100% of its interest in the Hong Kong Company to Everlasting
International Ltd., a Nevada Corporation. On April 29,1997, Largo Vista
shareholders consented to an acquisition and plan of reorganization
executed on December 26, 1996, wherein Largo Vista purchased 100% of the
stock of Everlasting from Proton Technology in a stock exchange
transaction.
2. Organization of the Company and Subsidiary
Xinmao, in operation and providing uninterrupted service to consumers since
1992, is in its third year of operation as a subsidiary of Largo Vista.
Xinmao is the only company that has private majority ownership, and a
private majority Board of Directors; and, is one of the largest LPG
distribution companies in the Yunnan Province in terms of end users.
On October 12, 1999, Largo Vista entered into a joint venture agreement
with the United Arab Petroleum Corporation ("UAPC"), named Largo Vista/UAPC
Partners, wherein LVG shall hold 51% of the assets and liabilities, and
shall share 51% of the income and expenses of the JV; and, UAPC 49%. The
purpose of the JV is to combine the resources and talents of each party to
develop a market for the sale of petrochemical products to be supplied by
middle-east sources, and principally Dubai. The JV plans to sell petroleum
products to customers in China, Vietnam and other countries throughout the
Pacific Rim. See exhibit __.
On December 12, 1999, Largo Vista/UAPC Partners entered into a joint
venture agreement with Mr. Ahmed Hasan Abdul Qahir Al Shaibani, Dubai,
United Arab Emirates (UAE), named Largo Vista Group, Ltd. (LLC of Dubai,
UAE). Largo Vista/UAPC Partners will hold 49% (Largo Vista 25% and UAPC
24%) of the assets and liabilities, and shall share 491% of the income and
expenses of the JV; and, Al Shaibani 51%. The objective of the JV is to
carry-on the trade of crude oil and refined oil products. The JV will have
headquarters in Dubai, and plans to focus sales of petroleum products in
China, Indochina and other Pacific Rim customers. See exhibit __.
<PAGE>
3. Organization Chart
LVG
Largo Vista Group, Ltd.
Owns 100 % EIL
Owns 100 % LVI
Subsidiaries Joint Ventures
EIL LVI Joint Venture
Everlasting Largo Vista "Largo Vista/UAPC Partners"
International Inc.
Ltd. No Operations LVG owns 51%
Owns 66.67 % Presently UAPC owns 49%
Of "Xinmao"
To to
"Xinmao" Joint Venture
Kunming Xinmao Petrochemical "Largo Vista Group, Ltd."
Industru Co. Ltd., a (Limited Liability Company)
Chinese Joint Venture Dubai
JV Partners: Al Shaibani owns 51%
"Everlasting" - 66.67 %
Government Partner - 33.33 % LV/UAPC Partners = 49 %
Lvg owns 25 %
UAPC owns 24 %
LARGO VISTA GROUP, LTD.
EVERLASTING INTERNATIONAL, LTD.
(100% Owned Subsidiary of Largo Vista holding a)
66.67% Interest in the
<PAGE>
Joint Venture
KUNMING XINMAO PETROCHEMICAL INDUSTRY CO., LTD.
(in which a)
33.3% Interest
is held by KUNMING FUEL GENERAL CO.
(Chinese Government Joint Venture Partner)
B. FINANCIAL INFORMATION BY
INDUSTRY SEGMENT AND CLASSES OF PRODUCTS
Registrant is in the purchasing and reselling segment of the liquid
petroleum gas ("LPG") market in China.
<TABLE>
Year
1998 1997 1996
1 2 3
<S> <C> <C> <C>
Sales to $1,476,971 $2,472,378 $0
Unaffiliated Customers:
Operating Loss $(506,694) (1) $(1,413,763) (1) $0
Identifiable Assets, Net $ 831,882 $ 1,179,527 $0
</TABLE>
(1) The calculations of $506,694 and $1,179,527 operating losses for the
years 1998 and 1997, respectively, are net amounts reflecting deductions
for receivables write down of approximately $1,130,000 in 1997 versus
approximately $50,000 in 1998; and losses incurred in lawsuits of
approximately $400,000 in 1997.
C. BUSINESS
1. Terms of Xinmao Joint Venture
The Kunming Xinmao Petrochemical Co., Ltd. ("Xinmao") is a Joint Venture
formed under the laws of the People's Republic of China. The Xinmao Joint
Venture commenced business in August of 1992, but has yet to achieve
profitable operations.
Term: Twenty years, commencing on August 28, 1992.
Parties: Party A is the Kunming Fuel General Co. ("Government Partner ") as
to a 33.33% interest with a "registered capital" investment of US $641,000.
<PAGE>
Party B is Everlasting International, Ltd as to a 66.67% interest, with a
"registered capital" investment of US $1,283,400.
General Provisions: Government Partner has a general responsibility to
support Everlasting in its duties.
The Joint Venture is an independent entity with an independent accounting
system. An audit of the Joint Venture's financial records is conducted
annually by an auditor registered in China. Fiscal year of Joint Venture
is January 1 to December 31.
Everlasting is, subject to the terms and conditions of an operating
agreement set forth below, responsible for the general management of Xinmao
including: Procurement of equipment and raw materials, equipment
installation, testing and technical training, hiring a management staff,
production and technical processes and other duties entrusted to it.
This Operating Agreement was made between the Government Partner and the
Hong Kong Company on August 28, 1992, for a term of ten years, ending on
August 28, 2002. Everlasting, as purchasor of the Hong Kong Company, is
responsible to manage the day-to-day operations of Xinmao and assume sole
responsibility for its profits and losses.
Each party under Chinese law would normally participate in the profits and
losses of the Joint Venture according to its proportionate share of
contribution. However, this provision was changed by the Operating
Agreement, which provides that Xinmao is to pay the Government Partner 9
million Yuan (RMB) during the term of the Agreement as follows:
3.5 million Yuan for the first 3 years;
1.5 million Yuan per year for the 4th and 5th years;
500,000 Yuan per year from the 6th through the 10th years
The Company negotiated this agreement to provide flexibility and encourage
future investment and expansion by precluding the payment of large a sum of
money to the Government Partner. To date, the Government Partner has been
paid 4.1mm RMB, and the balance due is 3.4mm RMB. No payment has been made
since 1/24/98 due to several factors. Since the government partner has
recovered more than its initial capital contribution, it has not urged
Xinmao to make up past due payments due to the difficulties Xinmao has
faced during 1997 and 1998 including record high LPG prices and a chaotic
and unstable developing market. This liability has been accrued on the
books of Xinmao.
The Government Partner has indicated a willingness to sell to Largo Vista
an additional 28.33 % which would result in Largo Vista owning 95% and the
Chinese partner owning 5% of the joint venture. Largo Vista had negotiated
in July and August of 1998, an agreement with the Chinese Partner in the
Xinmao Joint Venture, to acquire an additional 28.33% interest in the
<PAGE>
Joint Venture for a cash purchase of 5mm RMB. Unfortunately, Largo Vista
was unable to raise sufficient funds to complete this acquisition at that
time. As a result, as of this date, Largo Vista continues to own 66-2/3%
interest in Xinmao. There is currently no binding contract in place to
acquire a further interest in Xinmao.
2. Government License Held
The Xinmao Company holds a unique license issued by Chinese Central
Government (National Industrial and Commercial Registration Administration
of China). This license is most valuable because it permits the Company to
operate across provincial borders; whereas, competitors of the Company are
restricted to the geographic area in which they are located. In addition,
the license permits the Company to process domestic crude oil and sell its
by-products; to process and sell LPG to retail domestic and industrial
customers; to manufacture cylinders, stoves, water heaters, and cigarette
lighters and their accessories; and to provide services in inspection and
maintenance of stoves and cylinders for safety and quality.
Xinmao is a Sino-Foreign Joint Venture registered with the government as
having foreign ownership. This registration permits foreign investment to
legally flow into China, and allows funds to legally flow out of China
including loan repayments, interest payments and dividends. Xinmao is one
of the few known Sino-Foreign Joint Ventures licensed to sell petroleum
products in the retail market.
Xinmao also holds a general contractors license intended for construction
of pipeline projects. As a part of its overall strategy to expand its LPG
market in China, management intends to expand its business in the future
beyond its current core business of purchasing and reselling LPG, utilizing
its various licensing authorities.
3. The Product
As of December 30, 1998, according to information published by the Yunnan
Gas Association, in Yunnan Province there are approximately 1,000,000
households using some form of gas utility (town gas, natural gas and LPG).
About 65% or 650,000 households use LPG, and the number is increasing.
Approximately 160,000 household users reside in Kunming; and, there are
30,000 pipeline household users, 60% of which are within Kunming City, with
the balance residing in smaller cities within the Province. The
metropolitan population in Yunnan is 5.9 million with 3.2 million using gas
(1 household equates to 3.2 people) as a utility - a city gasification rate
of 54.2%. This rate increased by 7% over 1997, but still lags the national
average by 20%. LPG use accounts for about 65% of this total.
LPG consumption in Yunnan was approximately 68,000 metric tons, a net
increase over 1997 of 13,000 metric tons.
<PAGE>
As a form of energy it is considered a very efficient fuel because in a
liquid state it provides a significant supply of energy in a comparatively
small volume. LPG is recognized for its transportability and ease-of-use.
It is a clean and environmentally friendly source of energy that has a
variety of residential, commercial, industrial and transportation uses. It
can be used at home for cooking and heating, replacing wood, kerosene, coal
and other environmentally unfriendly sources of energy. In fact,
environmental concerns have caused the outlaw of the use of coal in most
larger cities in China. Although LPG has some drawbacks such as high
combustibility, it requires great care in handling, and is subject to fire
and safety regulations, LPG remains one of the only viable sources of
energy for cooking and heating in Southern China. Management believes the
China LPG market is ripe for growth and expansion.
Most Chinese consumers have used of wood and coal all of their life
primarily for cooking only; however, they are slowly beginning to realize
the ease and convenience of also using LPG for heating and heating water.
Most consumers obtain LPG in 15 kg. cylinders, very similar to those used
for gas barbecues in the U.S. As LPG delivery systems, such as pipelines,
make use more convenient and simple, LPG consumption per capita should
increase significantly. In addition, management believes there will be
future opportunities in drying tobacco and operating factory machinery and
vehicles.
4. Markets
The China LPG market is broken down into three segments for purposes of
analysis:
1.Distribution method from the major LPG companies,
2.Method of delivery to the consumer, and
3.Black Market dealers
The Primary market segment is according to distribution method - that is
either retail-direct or wholesale-indirect. Retail distribution is
accomplished by the ten major LPG companies that deal directly with the end
user. Xinmao qualifies as one of the ten major LPG companies by its
ownership of rail tank cars; it is one of only five companies having depot
storage facilities of 1,000M3; and it has distribution of LPG to retail and
wholesale, and residential and commercial users.
The second market segment is according to the delivery vehicle used by the
user, such as bottle or cylinder, pipeline, or tank truck.
The bottle users may be either retail, purchasing directly from a major LPG
company, or wholesale, purchasing indirectly from a distributor of a major
LPG company. Bottle customers purchase LPG in 15 kg. cylinders or bottles
that must, by law, be filled to a minimum of 13.5 kg which is considered
full. Bottle users include residential, and commercial customers.
Residential consumption is by far the largest, with commercial restaurants
and caterers following second. There has been little industrial use of LPG
to date.
<PAGE>
Pipeline users are considered retail-direct users. LPG flows directly into
a household via pipes from a central storage tank that is replenished as
necessary by a major LPG company. Pipeline users are billed according to
usage based on a meter in their living unit.
Tank truck or bulk sales are made to wholesale distributors who operate
small bottle filling stations. These distributors represent lower profit
margins but volume makes-up some of the difference. Bulk sales are
encouraged to cultivate the small wholesale distributors because of the
potential of acquiring their customer base in the future.
A third market segment, although temporary, must be considered because of
the negative impact it has on the LPG market. This segment is comprised of
the many small independent distributors and individuals who operate
illegally in what is referred to as the "black market" - most operating
without a license, violating safety laws, and unfairly profiting by short-
filling LPG bottles. These abusers create problems of unfair competition
for the Company. The Kunming LPG Administration is aware of these abuses,
but, unless a blatant case is presented to it, it is ignoring the problems
until the market consolidates to a greater degree.
According to information presented at the China LPG Conference '98
(February 26-27, 1998), LPG consumption in China has been growing at a
remarkable rate since the beginning of 1990's. In 1990, LPG consumption
was slightly over 2 million tons, while in 1996, nearly 7.4 million tons.
The average annual growth rate in this period was more than 20%, and growth
from 1994 to 1995 reached almost 33%. In 1996 and 1997 consumption
maintained about 15% increase.
Even though LPG consumption has been developing very fast in the past
decade, LPG consumption per capita is still very low, partly due to the
large population in China. At present it is around only 6 kg nationwide
which is small in comparison to 100kg in its Asian neighbors such as Japan
and South Korea, for example. LPG development in China also shows
geographical variance. South China has led the nation in terms of per
capita consumption at nearly 35 kg. East China follows with per capita
consumption of about 10kg. North China is far less, only half of that in
East China. And still in many places inland, the LPG consumption per
capita is negligible. Since the Company operates in Southwest China,
management perceives a great opportunity to grow with the projected
expansion.
The majority of dollars invested in the China LPG market have been invested
in large "mega" depots by the major oil companies. Little to no focus has
been placed on the retail end-user market. Put simply, the LPG "storage"
infrastructure is in place, but it is overbuilt because the retail market
has not been cultivated at the same pace. Management's primary objective
is the development of this retail consumer base.
<PAGE>
From the mega-depots on the east and southeast coast of China, LPG is
shipped to smaller inland storage depots via railroad tank car. LPG is
then pumped into large storage tanks until it is distributed in bottles,
pipelines or tank trucks to end users and distributors.
Inland infrastructure development has not kept pace with coastal
development. Inland depot storage capacity must be expanded to serve the
customers in waiting for LPG service. More efficient distribution methods
are also needed. The bottle exchange system is labor intensive - a factor
that does not significantly affect overhead yet, but will have greater
future impact as salaries increase.
Distribution of LPG via pipelines directly to end-users is very efficient,
but one drawback is the cost to install pipeline service to each household,
which is approximately $185 US. Some more affluent customers can afford to
pay the installation fee up front, but most of these have already purchased
pipeline service. Some new construction projects permit the cost of
installation to be incorporated into the cost of the home. However, most
customers can not afford the up-front fee, but are willing and able to pay
extra each month based on usage. Xinmao has seven pipeline projects either
completed or under construction.
5. Distribution of LPG
There are four basic levels of LPG distribution:
Major LPG companies
Major LPG Distributors
Medium LPG Distributors
Small Independent LPG Distributors
The Major LPG companies are characterized by the following: they purchase
LPG directly from refineries or major oil companies, they must be licensed,
have railroad tank cars and storage depots, and typically serve over 10,000
retail customers. These companies depend on distribution networks to get
LPG to the consumers.
Major distributors are licensed and generally serve more that 4,000 but
less than 10,000 customers directly, but do not typically have any railroad
tank cars, and have little or no storage capacity.
Medium Distributors are licensed and generally serve more than 1,500 but
less than 4,000 customers directly, have no storage capacity.
Small Independent Distributors are those who may or may not be licensed,
and have no relationship or loyalty to any major company or distributor,
and usually serve less than 1,500 customers.
Since all of these distributors serve a customer base, Xinmao is actively
recruiting them on an ongoing basis.
<PAGE>
The majority of Xinmao's customer base is serviced with the help of agents
and entity users. Xinmao has eight agents that are independent dealers who
exclusively represent the Company in an outlying county area that is
difficult for the Company to access on a regular basis. The consumers
serviced by the agent pay retail prices. The Company pays the agent a fee
for his services and the agent carries his own overhead expenses.
As the LPG market was developing in the early 1990's, the Company was
seeking to develop a customer base in the most efficient and effective
manner possible; and, as a result, began to cultivate the "entity user".
Entity users were companies in other industries, already providing housing
for their employees, that desired to provide a convenience to their workers
by distributing LPG as an additional service. These entity users developed
into distribution outlets that benefited the Company by providing free
receiving, storage and LPG distribution service to consumers who paid
retail prices. As the market further developed, the entity user also began
to be a distribution outlet to other consumers in the local area that were
not affiliated with the entity company. Today, the Company is actively
seeking to cultivate and develop additional entity users to expand the
consumer base. Today Xinmao has 125 entity users.
In 1997, under the leadership of Largo Vista management, several
innovations were added to the distribution process. First, there was a
time delay between the sale of the LPG and receipt of the cash from the
sale. The Company responded with the "coupon program" whereby the
consumer, first purchased a special coupon from the bank and presented it
as payment as he exchanged an empty bottle of LPG for a full one. The bank
then remitted to the Company. The Bank of Agriculture, one of the largest
in China with over 1,000 branches in the province, has successfully worked
with the Company for over two years in this program and the bank is pleased
with exposure to a new customer base.
Second, also in 1997, the Company implemented the first consumer insurance
program. This insurance, written by the largest insurance company in China,
guaranteed the consumer who either made a non-refundable prepayment for LPG
by purchasing a coupon that the LPG would be at a fixed price, immediately
available, and a guaranteed quality and quantity.
These two innovations, the coupon program and the consumer insurance
protection program, were the first of their kind in China. In the future
the Company intends to implement a third innovation for the pipeline
distribution system which will be a prepaid "smart card", that will be
inserted into a meter in the consumer's home. This precludes cash flow and
collection problems. Distribution of the prepaid smart card will be
similar to the coupon program in concert with the Bank of Agriculture.
The bulk of Xinmao's retail customers are located in the Yunnan Province
central cities of Kunming, Lunan, Chengong, Yiliang, Jinnin, Annin, and
Eshan. As the population thins out in the suburbs, distribution networks
take-over and service most customers. The rural areas are exclusively
serviced by smaller distributors.
<PAGE>
Finally, there are a number of other minor distributors who purchase from
Xinmao and other major companies, who have solicited their own customer
base over a period of time and have generated customer loyalty through
relationship.
6. Raw Materials
The Chinese market is unique compared to other Asian countries. Japan and
Korea seek security of supply through regular term contracts supported by
long-term relationships, but, in China, low price and bargaining is the
driving force for LPG purchases.
Xinmao has been able to consistently purchase LPG at low prices due to high
volume of orders. When purchasing LPG, Xinmao must weigh various factors
including quality of LPG, price, and transportation costs. It generally
purchases from domestic sources inside China where prices are very low, but
transportation costs are higher. On occasion Xinmao also purchases LPG
from foreign companies such as Mobil Oil Hong Kong and Caltex.
Since Xinmao is presently dependent upon both domestic and foreign sources
to supply its LPG and since domestic supply cannot be relied upon for all
of its needs, Largo Vista decided that the best interests of the Company
would be served by Largo Vista establishing a strategic relationship with a
supplier of petroleum products outside of the domestic China market both to
provide a greater guarantee of LPG in the future, and to expand its sale of
petroleum products both in and outside of China. Pursuant thereto, On
October 12, 1999, Largo Vista entered into a joint venture agreement with
the United Arab Petroleum Corporation ("UAPC"), named Largo Vista/UAPC
Partners, wherein LVG shall hold 51% of the assets and liabilities, and
shall share 51% of the income and expenses of the JV; and, UAPC 49%. The
purpose of the JV is to combine the resources and talents of each party to
develop a market for the sale of petrochemical products to be supplied by
middle-east sources, and principally Dubai. The JV plans to sell petroleum
products to customers in China, Vietnam and other countries throughout the
Pacific Rim. See exhibits.
To date, Largo Vista/UAPC Partners has accomplished the following:
Contract: November 25, 1999, Largo Vista/UAPC Partners seller; Mekong
Petroleum Joint Venture Co., Ltd. (PETROMEKONG) buyer; 20,000 metric tons
of diesel oil during the months of December 1999 and January 2000; total
contract price approximately $3,300,000 USD. See exhibits.
Contract: December 18, 1999, Largo Vista/UAPC Partners seller; Mekong
Petroleum Joint Venture Co., Ltd. (PETROMEKONG) buyer; 2,600 metric tons of
gasoil 1% sulphur and 3,000 metric tons of unleaded mogas 92 during the
month of December 1999; contract price approximately $430,000 USD for
gasoil, and approximately $560,000 USD for mogas 92. See exhibits.
<PAGE>
On December 12, 1999, Largo Vista/UAPC Partners entered into a joint
venture agreement with Mr. Ahmed Hasan Abdul Qahir Al Shaibani, Dubai,
United Arab Emirates (UAE), named Largo Vista Group, Ltd. (LLC of Dubai,
UAE). Largo Vista/UAPC Partners will hold 49% (Largo Vista 25% and UAPC
24%) of the assets and liabilities, and shall share 491% of the income and
expenses of the JV; and, Al Shaibani 51%. The objective of the JV is to
carry-on the trade of crude oil and refined oil products. The JV will have
headquarters in Dubai, and plans to focus sales of petroleum products in
China, Indochina and other Pacific Rim customers. See exhibits.
Cost of goods can fluctuate widely and rapidly and can cause cash flow
problems. The Company is researching the feasibility of obtaining a much
larger storage facility that would permit it to purchase large quantities
of LPG when prices are favorable, and sell it when prices are higher.
7. Pricing and Competition
The LPG industry in Yunnan Province consists of ten major LPG companies
that have railroad tank cars, depot storage facilities, and sell LPG in
both the retail and wholesale markets. All ten companies depend on a
network of distributors to help reach and serve the needs of their
customers. Competition is based principally on price and service, with
some based on relationship and reputation. Nine of these companies are
majority owned by the government, and are wholly operated by management
that is responsible to a government majority Board of Directors. These
companies are designated in China as "government owned and operated".
Xinmao is the only company that has private majority ownership, a private
majority on the Board of Directors which controls the Company. Only five
of the nine companies are in the same category as Xinmao in terms of
storage capacity of 1,000 cubic meters.
LPG retail market prices have been relatively unstable during the past two
years, characterized by over supply and cut-throat competition. This was
precipitated by environmental concerns that prompted the passing new
regulations by the Kunming City Government that outlaw the use of coal.
Other larger cities are following suit with similar clean air regulations,
leaving LPG as the major viable energy alternative for cooking, heating,
and hot water.
No companies were prepared to supply a sufficient amount of LPG to this new
consumer market, but all companies reacted to the huge new demand.
The difference between Xinmao and the other nine government companies is
that the primary objective of Xinmao is to make a profit while profit is
secondary to the government companies primary objective is to ensure supply
LPG. The nine government companies, whose primary objective was to supply
LPG to consumers, are characterized by a lack of management and financial
expertise, and by large work staffs that operate very inefficiently. These
entities ordered an excess supply of LPG and had to cut prices to deplete
the excess. This began the spiraling downward price market in which Xinmao
was forced to compete. These pressures have eased, and Xinmao is
negotiating with the government agencies and some companies in an effort to
bring stability back to the market along with higher prices and profitable
margins.
<PAGE>
Black Market. In the residential wholesale market, many independent,
"black market" dealers sprung-up and have been operating without a license,
and have ignored safety regulations that require inspection and pressure
testing of each bottle every five years. Another flagrant violation of
consumer fairness is the practice of short-filling bottles. The "black
market" dealer fills the bottle with 10 kg. of LPG, and sells it
representing it has 13.5 kg. of LPG. Short-filling has permitted the
Company's competition to charge lower prices and unfairly compete with
Xinmao. This practice of cheating the consumer has been prevalent over the
past several years. Xinmao is now challenging customers to be aware of
what they are paying for by implementation of a "weight comparison
program". The program permits the consumer to actually weigh the bottles
to expose the "short-fill" problem.
As of April 15, 1999, the Kunming LPG Administration established "minimum
pricing" regulations which set a base price for both wholesale bulk sales,
and wholesale and retail bottle sales. This regulation will help stop the
uncontrolled cut-throat pricing competition that occurred over the past 24
months. It will be incumbent upon the nine participating major LPG
companies to form task forces to assist the LPG Administrator in enforcing
these regulations. The "short-fill" practice is now illegal under new
"minimum price" regulations, which require all wholesalers to sell a 13.5
kg. bottle for no less than 36 RMB, and retail distributors for no less
than 42 RMB.
Xinmao competes with others on both reputation and service. To
differentiate itself from its competition, Xinmao stresses a long-term
relationship both with the residential user, and with the distributor, to
help them bring-in and keep new customers. The Company wants its
distributors and their customers to be a part of the "Xinmao Family". The
Company offers more than claims about its service. Its reputation is
excellent and is backed-up by a record of uninterrupted service since 1992.
Consumers and distributors know that they can rely on Xinmao to deliver and
that they will receive honest weights and measures.
8. Insurance
Xinmao sells a solid image of reliability, service, safety, and seven years
of uninterrupted service to its customers - and backs it up with insurance.
The Company provides consumer insurance, written by the Peoples Insurance
Company of China (PICC) which is owned by the government. The insurance
guarantees that a customer who paid in advance that the LPG would be at a
fixed price, immediately available, and a guaranteed quality and quantity.
This innovation has given the customer new confidence, since in the past
many companies collected in advance, and then went out of business, leaving
the customer empty handed.
<PAGE>
9. Government Regulation
The LPG industry is regulated on a day-to-day basis by the Kunming LPG
Administration, which oversees all companies licensed to do business, and
enforces rules and regulations in the market place. The LPG Administration
faces many problems in this rapidly emerging, chaotic market, including the
existence of many unlicensed small distributors, violations of safety
regulations, and bottles of LPG short-filled by as much as 25%. In April
1999, the local LPG Administration met with Xinmao and eight of the other
largest licensed companies in the area, and together set minimum price
policies intended to provide positive margins over cost. The LPG
Administration has also begun to correct some of the more flagrant
violations. The philosophy of the Chinese LPG Administration is to first
ensure LPG is available to all people requiring it, then to enforce
regulations so long as they don't interfere with the first priority.
10. Patents, Trademarks & Licenses
The Company maintains no patents or trademarks.
11. Seasonal Factors
Northern China is subject to a wide range of seasonality ranging from snow
in the winter to hot, humid summers. However, moving south, the seasons
and temperatures do not fluctuate as much as in the north. The Xinmao
Company operates in Yunnan Province which, being at an elevation of
approximately 5,500 feet, is known for its moderate and even climate year
around - being slightly cooler in the winter, requiring some heating, while
the summer weather is warm and pleasant. As a result, seasonal factors do
not play a significant role in the Company's business.
12. Inventory
Inventory, valued at cost, on the first-in, first-out basis, consists
primarily of liquid petroleum gas.
13. Firm Backlog
None.
14. Government Contracts
The Company has government approval for the exclusive development of
pipeline projects in the counties of Lunan, Fuming, Yiliang, Yuxi, and a
part of Kunming.
<PAGE>
15. Environmental Factors
Between 1996 and 1998, environmental concerns over clean air and streets,
have prompted a general movement within the Chinese Government from the
Central Government to the provinces and the major cities to phase-out the
use of coal as an energy source for cooking and heating. As coal is phased-
out a void is left which is being filled by liquid petroleum gas (LPG)
because it is a clean burning, efficient and transportable energy
substitute. It is expected that continued efforts will be made to replace
other unclean burning fuels with LPG, especially in automobiles and
industrial applications, since it is the only viable alternative fuel
resource available to Southern China.
16. Financial Information Relating to Foreign & Domestic Sales
All of the Company's sales are foreign, through Xinmao, its China
subsidiary. The Company has had no significant foreign currency
transaction gains or losses in connection with its activities.
17. Employees
Largo Vista Largo Vista is fully staffed with 2 employees, and relies on
five other outside service providers for legal, accounting and other
services as needed. The Chinese subsidiary, Xinmao, is fully staffed with
84 employees, including a full management staff, which is considered highly
competent and well qualified.
LARGO VISTA GROUP, LTD.
Item 2. A. FINANCIAL INFORMATION
The following table summarizes certain selected financial data for the
periods presented for the Company. The data for the year ended December 31
1998 and 1997 should be read in conjunction with the more detailed audited
statements for such years presented elsewhere herein.
<TABLE>
9/30/99 9/30/98 12/31/98 12/31/97
<S> <C> <C> <C> <C>
Revenues $ $ $ $
LP Gas Sales $ 831,660 $1,120,979 $1,476,971 $2,472,378
Other Income $ 6,932 $ 178,094 $ 141,229 $ 70,427
Total Revenue $ 838,592 $1,299,073 $1,618,200 $2,542,805
Cost of Sales $ 765,372 $1,081,888 $1,353,537 $2,449,902
Margin $ 73,200 $ 217,185 $ 264,663 $ 92,903
G&A & Other Exp. $2,238,983 $ 771,818 $ 959,143 $3,023,807
Operating (Losses)($2,165,763) ($ 554,633) ($ 694,480) ($2,930,904)
</TABLE>
<PAGE>
These net amounts reflect deductions for receivables write down of
approximately $1,130,000 in 1997 versus approximately $50,000 in 1998.
Management has determined that certain receivables would not be collected,
and has set-up a reserve to write-down in accordance with GAAP. In March,
1998, the Sichuan Peoples Court, P.R. China rendered a judgment against
Xinmao in the approximate amount of U.S. $452,000. As a result of this
judgment, during the fiscal year ended December 31, 1998, a significant
portion of the Company's physical assets were attached and executed upon,
including twelve of its eighteen rail tank cars (25MT capacity), three
service vehicles, six apartment units. The judgment is completely
satisfied.
B. Management's Discussion and Analysis of Financial Condition and Results
of Operation
1. Management's Discussion and Analysis of Financial Condition
And Results of Operations
Nine Months ended September 30, 1999 and September 30, 1998
Revenues and expenses are generated from the Company' s Chinese subsidiary,
Kunming Xinmao Petrochemical Industrial Co., Ltd. ("Xinmao"). The United
States entities produce no revenues, and experience expenses in conjunction
with management oversight of the Chinese entity, legal, accounting and
other professional services. The result of consolidated operations are
reported.
Revenues for the nine month period ending September 30, 1999 were $831,660,
decreased from $1,120,979 in the nine month period ending September 30,
1998; a decrease of $289,319 (25.8%). This reduction occurred primarily in
the bulk sales market segment and was the result of a management decision
to reduce sales in market segments exhibiting depressed prices and yielding
negative margins. Price pressures have also negatively affected sales
volume and profitability in the retail residential market segment. The LPG
market in Yunnan Province is a developing one that has been highly
competitive and unstable over the past two years. The Company anticipates
increases in revenue from expanded marketing efforts, price increases,
expansion into other lines of business, and mergers and acquisitions.
Cost of sales for the nine month period ending September 30, 1999 were
$765,372, decreased from $1,081,888 in the nine month period ending
September 30, 1998; a decrease of $316,516 (29.3%). Cost of sales
followed reduced sales, and on a percentage basis, has remained fairly
consistent over the last two years. The Company anticipates improving cost
of sales going forward by implementing cost containment procedures and
obtaining LPG at lower prices.
Margins for the nine month period ending September 30, 1999 were $73,220,
decreased from $217,185 in the nine month period ending September 30, 1998;
a decrease of $143,965 (66.3%). The decrease reflects extremely
competitive market conditions, and a decrease of other income of $171,162
(96.1%). Other Income consists primarily of realization and collection of
formerly written-off debts, sales of cylinders, stoves and accessories.
<PAGE>
Other Income decreased by 96.1% primarily due inability of management to
collect formerly written-down debt. The Company anticipates improving the
margin going forward by focusing sales efforts on more profitable market
segments and implementing measures to reduce cost of goods.
General and administrative expenses for the nine month period ending
September 30, 1999 were $2,238,983, increased from $771,818 in the nine
month period ending September 30, 1998; an increase of $1,467,165 (190.1%).
The increase reflects abnormally high expenses in the U.S. entity for
settlement for two and one-half years of unpaid compensation to officers
and key service providers (approximately $1.162mm), and the retirement of
debt (approximately $420,000). The Company intends to pay compensation and
retire debt on a regular basis in the future. The Company also is making
efforts to trim excess costs; and, it anticipates improving these expenses
going forward by implementing strict cost control measures both in China
and the United States.
Operating losses for the nine month period ending September 30, 1999 were
[$2,165,763], increased from [$554,663] in the nine month period ending
September 30, 1998; an increase of $1,161,130 (290.5%). This increase
reflects lower margins and abnormal G&A expenses discussed above.
Twelve months ended December 31, 1998 and December 31, 1997
Revenues and expenses are generated from the Company' s Chinese subsidiary,
Kunming Xinmao Petrochemical Industrial Co., Ltd. ("Xinmao"). The United
States entities produce no revenues, and experience expenses in conjunction
with management oversight of the Chinese entity, legal, accounting and
other professional services. The result of consolidated operations are
reported.
Revenues for the twelve month period ending December 31, 1998 were
$1,618,200, decreased from $2,542,805 in the twelve month period ending
December 31, 1997; a decrease of $924,605 (36.4%). This reduction occurred
primarily in the bulk sales market segment, a result of management's
decision to curtail sales activity in high volume, low to negative margin
market segments, especially in an environment of depressed prices and
oversupply conditions yielding negative margins. Price pressures have also
negatively affected sales volume and profitability in the retail
residential market segment. The LPG market in Yunnan Province has been
highly competitive and unstable over the past two years. It is a
developing market that reflects rapidly increasing consumer demand, low
cost of goods and temporary over supply placing downward pressure on
prices, and one that requires capital investment to improve delivery
systems to consumers. The Company anticipates increases in revenue from
expanded marketing efforts, price increases, expansion into other lines of
business, and mergers and acquisitions.
Cost of sales for the twelve month period ending December 31, 1998 were
$1,353,537, decreased from $2,449,902 in the twelve month period ending
December 31, 1997; a decrease of $1,096,365 (44.8%). Cost of sales followed
reduced sales, and on a percentage basis, has remained fairly consistent
over the last two years. The Company anticipates improving cost of sales
going forward by implementing cost containment procedures <PAGE>
and obtaining LPG at lower prices.
Margins for the twelve month period ending December 31, 1998 were $264,663,
increased from $92,903 in the twelve month period ending December 31, 1997;
an improvement of $171,760 (184.9%). The increase reflects focus of sales
activity on more profitable market segments, implementation of cost
reduction efforts, and improved management techniques. Extremely
competitive market conditions, were offset in part by increased other
income by $70,802 (100.5%). Other Income consists primarily of realization
and collection of formerly written-off debts, sales of cylinders, stoves
and accessories. About one-half of the increase is due to recovery of
formerly written-off debt, and management will continue its efforts in this
area. The Company anticipates improving the margin going forward by
continuing to focus sales efforts on more profitable market segments, and
implementing additional measures to reduce cost of goods.
General and administrative expenses for the twelve month period ending
December 31, 1998 were $959,143, decreased from $3,023,807 in the twelve
month period ending December 31, 1997; a decrease of $2,064,664 (-68.3%).
1998 reflects a more normal year in both U.S. and Chinese operations. The
decrease primarily results from a write-down of receivables in 1997 of
$1,131,288; higher depot costs in 1997; debt retirement in U.S. of $804,588
in 1997 versus $322,911 in 1998; better cost controls by management; and
lower business activity, i.e. lower revenues in 1998 equating to lower
general and administrative expenses.
Operating losses for the twelve month period ending December 31, 1998 were
[$694,480], decreased from [$2,930,904] in the twelve month period ending
December 31, 1997; a decrease of $2,236,424 (-76.3%). This decrease
reflects abnormal G&A expenses discussed above. This decrease also reflects
higher margins, cost containment efforts, and lower interest rates.
2. Liquidity and Capital Resources
Historically, the Company has been able to borrow funds as necessary to
pursue operations. However, neither Largo Vista nor Xinmao have written
letters of commitment from either commercial or private sources of credit.
The availability, source, amount and terms of any additional financing is
uncertain at this date, and by no means assured.
3. Trends, events or uncertainties that have or are reasonably likely to
have a material impact on the Company's liquidity.
The economic growth of China with its huge population, emerging middle
class, and growing consumer sector are trends that management anticipates
will increase the Company's revenues from Xinmao as well as other
anticipated projects. China's young, developing LPG market presents
challenges of improving sales strategies, seeking lowest-cost sources of
<PAGE>
goods, implementing efficient management techniques, and developing the
efficiency and effectiveness of human resources.
World geopolitical uncertainties, such as the United States bombing of the
Chinese consulate in Belgrade, Yugoslavia resulted in a short period (4-5
days) of unrest and negative reactions toward Americans in China; however,
no long term difficulties have been experienced and management does not
anticipate any serious detriment to prospects for the Company's success in
China because of the nature of the service a utility company provides that
is in continual demand, and the fact that foreign ownership is not readily
ascertainable by consumers.
In addition, even though Chinese management is optimistic of its ability to
obtain credit from private sources, the trend in China is for the banks to
tighten loan eligibility for businesses such as Xinmao that are
experiencing cash flow difficulties.
Additionally, the Company is searching for joint venture partners in
various potential LPG projects in the Yunnan Province and in other
provinces. Investment by joint venture partners will be perceived as
financial strength by the local LPG Administration, and management
anticipates stronger enforcement of licensing and safety regulations, which
should reduce unfair competition currently experienced by the Company.
Year 2000 Issue
Many computer Systems in use today may be unable to correctly process data
or may not operate at all after December 31, l999 because those systems
recognize the year within a date only by the last two digits. Some computer
programs may interpret the year "00" as 1900, instead of as 2000, causing
errors in calculations or the value "00" may be considered invalid by the
computer program, causing the system to fail.
In the U.S., the Company maintains its financial data on a PC system
utilizing generic accounting software, both of which have been guaranteed
by the manufacturer as Y2K compliant. In China, due to government
regulations, the Company maintains a manual record system. During first
quarter 2000, in China, management expects to begin maintaining financial
and other information on both a manual and PC system, totally shifting to a
PC system as government regulations permit. The Company does not believe
it will either experience, or that it has significant exposure to, Year
2000 problems, and neither does it expect that the Year 2000 issue will
have a material cost or impact on Company operations. The Company's
primary contingency plan depends upon the use of manual back-up systems,
and alternative supply sources such as major oil companies.
<PAGE>
These contingency plans are intended to mitigate the impact of third party
Year 2000 noncompliance. Outside of manual backup, the Company does not
plan to implement further contingency plans. The Company has not inquired
into the readiness of any of its key third party suppliers; however, as of
January 4, 2000, none of its key third party suppliers has reported any Y2K
problems. However, there can be no assurance that the systems of key
suppliers and other companies on which the Company relies will not have an
adverse effect on the Company including, (1) the inability to obtain
products or services used in business operations, (2) the inability to
deliver goods or services sold to customers.
Forward - Looking Statements
Investors are cautioned that certain statements contained in this document,
including but not limited to those under the caption Management's
Discussion and Analysis as well as some statements by the Company in
periodic press releases and some oral statements of Company officials
during presentations about the Company, are "forward-looking" statements.
Forward-looking statements include words such as "expects", "anticipates",
"intends", "plans", "believes", "estimates", or similar expressions. In
addition, any statements concerning future financial performance (including
future revenues, earnings or growth rates), ongoing business strategies or
prospects, and possible future company actions, which may be provided by
management are also forward-looking statements as defined by the Act.
Forward-looking statements are based on current expectations and
projections about future events and are subject to risks, uncertainties,
and assumptions about the Company, economic and market factors and the
industries in which the Company does business, among other things. These
statements are not guaranties of future performance and the company has no
specific intention to update these statements. Actual events and results
may differ materially and detrimentally from those expressed or forecasted
in forward-looking statements.
Certain of the important factors that could cause actual results to differ
materially and negatively from the Company's expectations, among others,
include continued instability in pricing and unprofitable competition in
China, a slow down in the trend in sales of LPG during the remainder of the
year, an inability to obtain sufficient working capital, and new Government
regulations adverse to the Company's operations.
Item 3. PROPERTIES
A. Largo Vista
Currently Largo Vista has corporate offices in Newport Beach, California,
which include two office suites. The terms of this Lease provide for month
to month tenancy at $2,500 per month.
<PAGE>
B. Xinmao
Xinmao provides its primary service from its depot, which is adjacent to a
railroad terminal. The depot has a capacity of storing 1,000 cubic meters
(approximately 500 metric tons) of LPG. Assuming the depot is operating at
full capacity and turns-over twice per month, the depot is sufficient to
supply 83,000 users assuming consumption of 12 kg. of LPG per household per
month. In addition, Xinmao, formed in 1998, a new joint venture in Yuxi, a
city near Kunming. The joint venture has just been organized, is in the
development stage, and as of this date, has no assets or liabilities This
joint venture will have access to LPG storage facilities that management
believes may be capable of supplying LPG storage for up to 30,000 customers
per month should demand increase to these levels.
The depot also has ten service stations from which the 2, 15, and 50
kilogram bottles are filled, and loaded onto trucks for distribution. For
its retail-direct customers, Xinmao transports the full bottles to an
exchange shop where either the customer comes in personally, or Xinmao will
provide a delivery man to take the bottle to the customer who pays a
delivery fee.
In the case of a pipeline, 50 kg. bottles are used in cluster to service
residents in the housing complex. The advantage the pipeline customer has
over the bottle customer is convenience and service. There is no need to
spend valuable time exchanging bottles. The meter is read by the
serviceman each month who also collects the amount due. Xinmao is planning
to use "smart meters" in future pipeline developments that require the
customer to go to the Bank of Agriculture and purchase a prepaid card,
similar to a prepaid phone card commonly in use in the U.S. This will
improve cash flow and reduce "slow-pays" and "bad debts".
Xinmao leases a two story, 4,000 square foot facility in Kunming City,
where it operates a customer service and sales center, bottle exchange
shop, storage facility, and administrative offices, at an annual rental of
$1000 US per year, under a three year lease, with one year of the term
remaining. It also leases and operates a number of small bottle exchange
stores throughout key locations in the city.
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding beneficial ownership
as of September 30, 1999, of the Company's Common Stock, by any person who
is known to the Company to be the beneficial owner of more than 5% of the
Company's voting securities and by each director and by officers and
directors of the Company as a group.
<TABLE>
Beneficial Percentage
Name and Address Ownership of Class
<S> <C> <C>
Daniel Mendez 24,026,799 11.44%
4570 Campus Drive
Newport Beach, CA 92660*
Albert Figueroa 6,770,603 3.22%
Deng Shan 4,736,028 2.25%
Proton Technology Corp., Ltd. 91,461,246 43.53% (1)
All current directors and
officers as a group (3 persons) 126,994,676 60.44%
</TABLE>
(1) Mr. Deng Shan is the sole beneficial owner of the shares held by
Proton.
*This address also applies to all persons listed.
Item 5. DIRECTORS AND EXECUTIVE OFFICERS
The names, ages and positions of the directors and executive
officers of the Company as of September30, 1999, are as follows:
<TABLE>
Name Age Position Since
<S> <C> <C> <C>
Daniel J. Mendez 47 Acting President and a Director 4/94
Albert N. Figueroa 33 Acting Secretary/Treasurer, and 5/95
" " a Director
Deng Shan 48 Director 1/99
" " Chairman of the Board 4/99
</TABLE>
The Directors serve until the next annual meeting of shareholders, or until
their successors are elected.
Daniel J. Mendez, Acting President, is responsible for investor relations,
coordination of information with market makers and brokers and potential
partners, coordination of all agreements, corporate financing, and liaison
with Chinese operations. Mr. Mendez joined the Company in October of 1991
as a marketing coordinator. In April 1994 he became President and a
Director, and is responsible for investor relations, coordination of
corporate agreements, corporate financing, and liaison with Chinese
operations. Prior to 1991
Albert N. Figueroa, Acting Secretary and Treasurer, is the gatekeeper of
all corporate documents and information, maintains the minute book and all
corporate records and agreements, keeps the books, liaisons with all
outside service providers, and generally coordinates the flow of
information within the company and with the Chinese operations. Mr.
Figueroa was formerly involved in the construction industry as an
estimator.
<PAGE>
Deng Shan, Chairman of the Board and Director, is well versed in the
business practices of China. Early in his career Mr. Deng was a lecturer in
Wuhan Chemical Engineering School. Later he advanced to associate
professor at Huazhong University of Science and Technology. In 1989, Mr.
Deng became the Director, Science and Technology Commission, Nanshan
District Government, China. Since 1994, Mr. Deng has been appointed as
Chief Executive Officer/Chairman of the Board of four commercial companies.
In 1996, Mr. Deng acquired Kunming Xinmao Petrochemical Industrial Co.,
Ltd. Mr. Deng has established strategic networks in both business and
government arenas.
Item 6. EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid and accrued by
the Company during its last three fiscal years to the executive officers to
whom it paid in excess of $100,000, including cash and issuance of
securities.
<TABLE>
Summary Compensation
Annual Compensation Awards Payouts
Other Secur
Name Annual Restricted ities
All Other
And Compen- Stock UnderlyingLTIP Compen-
Principal Salary Bonus sation Award(s) Options/
Payouts sation
Position Year ($) ($) ($) ($) (SARs (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel
Mendez 1996 138,900 0 0 0 0 0 0
Daniel
Mendez 1997 220,000 0 0 0 0 0 0
Daniel
Mendez 1998 220,000 0 0 0 0 0 0
Daniel
Mendez 1999 137,500 0 0 0 0 0 0
Albert
Figueroa 1996 100,000 0 0 0 0 0 0
Albert
Figueroa 1997 100,000 0 0 0 0 0 0
Albert
Figueroa 1998 100,000 0 0 0 0 0 0
Albert
Figueroa 1999 91,666 0 0 0 0 0 0
Deng
Shan 1997 100,000 0 0 0 0 0 0
Deng
Shan 1998 100,000 0 0 0 0 0 0
Deng
Shan 1999 91,666 0 0 0 0 0 0
</TABLE>
<PAGE>
- -(1) Of the above compensation paid to Daniel J. Mendez, a portion of said
compensation was paid by the issuance of private placement stock in lieu of
cash in the following amounts and the agreed values in the respective years
indicated:
1996: 2,668,767 shares valued at $138,900
1997: 2,850,000 shares valued at $220,000
1998: 3,304,737 shares valued at $220,000
1999: 2,528,816 shares valued at $137,500
- -(2) Of the above compensation paid to Albert N. Figueroa, a portion of
said compensation was paid by the issuance of private placement stock in
lieu of cash in the following amounts and the agreed values in the
respective years indicated:
1996: 1,921,293 shares valued at $100,000
1997: 1,295,896 shares valued at $100,000
1998: 1,817,449 shares valued at $100,000
1999: 1,689,420 shares valued at $ 91,666
- -(3) Of the above compensation paid to Deng Shan, a portion of said
compensation was paid by the issuance of private placement stock in lieu of
cash in the following amounts and the agreed values in the respective years
indicated:
1997: 1,295,896 shares valued at $100,000
1998: 1,817,449 shares valued at $100,000
1999: 1,721,403 shares valued at $ 91,666
- -(4) No directors are paid compensation as directors. The persons serving
as directors also serve as officers or key consultants and the full
compensation for each has been set forth in Item 6 above.
Employment Contracts, Termination of Employment, and Change-in-Control
Arrangements
- -(5) Daniel J. Mendez, President, has an employment contract for a term of
one year commencing on January 1, 1999 with annual compensation of $150,000
per year payable $12,500 per month. It may be terminated upon 30 days
written notice of either party, and has a provision for change in ownership
or control of 30 days severance at the monthly salary set forth above. See
Exhibits.
<PAGE>
- -(6) Albert N. Figueroa, Secretary/Treasurer, has an employment contract
for a term of one year commencing on January 1, 1999 with annual
compensation of $100,000 per year payable $8,335 per month. It may be
terminated upon 30 days written notice of either party, and has a provision
for change in ownership or control of 30 days severance at the monthly
salary set forth above.
- -(7) Deng Shan, Consultant, has an Agreement for Services for a term of one
year commencing on January 1, 1999 with annual compensation of $100,000 per
year payable $8,335 per month. It may be terminated upon 30 days written
notice of either party, and has no protective provision for change in
ownership or control except for 30 days severance at the monthly
compensation set forth above. See Exhibits.
Options/SAR Grants in Last Fiscal Year
No options or SAR Grants have been made by the Company during its
last fiscal year.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A. In late December, 1996, the company entered into a Plan and Agreement
of Reorganization with Everlasting International, Ltd. ("Everlasting"), a
Nevada corporation, and Proton Technology Corporation Limited ("Proton"), a
Bahamas corporation, whereby the Company acquired 100% of the shares of
Everlasting, owned by Proton, in exchange for 123,850,139 shares of the
voting common stock of the Company. At the time of this transaction,
Everlasting owned two-thirds of Kunming Xinmao Petrochemical Industrial
Co., Ltd. ("Kunming Xinmao"), a Chinese entity, with the other third of
Kunming Xinmao owned by a Chinese Government corporation (this interest had
been transferred to Everlasting from Proton).
Mr. Deng Shan is currently a Director of Largo Vista and a majority
shareholder of Proton Technology Corporation, Ltd. A loan of $30,000.00 is
owed by the company to Proton Technology.
Other than discussed above, the Company has no knowledge of any transaction
or series of transactions, or any currently proposed transaction, or series
of transactions, to which the Company was or is to be party, in which the
amount involved exceeds $60,000, involving management, any person owning
10% or more of the common stock, or any member of the immediate family of
any of the foregoing persons.
<PAGE>
Item 8. LEGAL PROCEEDINGS
The Company has unpaid judgments totaling approximately $95,000, as a
result of disputes arising in the normal course of business.
In January, 1998, a breach of contract action was commenced in the Sichuan
Peoples Court, P.R. China by Claimant Panzhihua Petrochemical Industry Co.,
Ltd. ("Panzhihua") against Defendant Kunming Xinmao Petrochemical
Industrial Co. Ltd. ("Xinmao"), and Defendant Beihai Hi-Tech LPG Co., Ltd.
("Beihai"). Panzhihua brought the action for damages against Beihai for
failure to deliver LPG to Panzhihua as agreed, and against Xinmao as
guarantor of Beihai's performance under the agreement. Beihai defaulted in
the suit, and in March, 1998, the Court rendered a judgment against Xinmao
in the approximate amount of U.S. $452,000. As a result of this judgment,
during the fiscal year ended December 31, 1998, a significant portion of
the Company's physical assets were attached and executed upon, including
twelve of its rail tank cars (25MT capacity), three service vehicles, six
apartment units. The judgment is completely satisfied. The seizure of
these assets has had a negative impact on the Company to the extent that it
now must lease rail tank cars to replace those taken, and must lease
apartment units used for management personnel of the Company.
Action filed on May 14, 1998 in the High Court of Hong Kong Special
Administration Region, Case HCA14528/98 by Plaintiff Everlasting
International, Ltd. vs. Defendant Chan Mau Tak. Plaintiff brought the
action for breach of contract on the basis that the Defendant failed to
fulfill all of his obligations under the transfer agreement wherein
Everlasting purchased its ownership interest in Xinmao; specifically, the
Defendant failed to assist Xinmao to increase its customer base and
represented that certain receivable accounts were collectible, but were
deemed valueless by Everlasting. Everlasting asked for damages of HK$1mm.
The Court rendered judgment in favor of Everlasting in the amount of HK$1mm
plus damages plus 13.08% interest per annum. However, the Defendant has
appealed the judgment on the basis of failure of service of process.
Everlasting has provided evidence that service was made on the Defendant at
two addresses provided to the Plaintiff. The Defendant has not responded
to the Plaintiffs response, and the matter is still under consideration.
The judgment has not been accrued as an asset because its collectibility is
too speculative.
Aside from the above, there is no litigation outstanding, and management is
not aware of any potential claims which might be asserted.
Item 9. MARKET PRICE AND DIVIDENDS ON REGISTRANT'S COMMON STOCK
EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock trades on the NASD Bulletin Board,
under the symbol "LGOV". The closing sales price on December 31, 1999 was
$1.06 bid and $0.94 ask.
Set forth below is the high and low bid information for the Company's
Common Stock for each full quarterly period within the two most recent
fiscal years and the four quarters of 1999.
<PAGE>
<TABLE>
High Low
Period Bid Bid
<S> <C> <C>
4th Quarter 1999 $1.06 $.94
3rd Quarter 1999 $0.11 $.10
2nd Quarter 1999 $0.125 $.125
1st Quarter 1999 $0.12 $.10
4th Quarter 1998 $0.13 $.11
3rd Quarter 1998 $0.20 $.17
2nd Quarter 1998 $0.18 $.17
1st Quarter 1998 $0.20 $.18
4th Quarter 1997 $0.125 $.09
3rd Quarter 1997 $0.13 $.12
2nd Quarter 1997 $0.19 $.18
1st Quarter 1997 $0.20 $.18
</TABLE>
At December 31, 1999, the Company had approximately 519 Shareholders of
record.
The Company has not paid a dividend since its incorporation, and management
does not anticipate the Company will pay dividends in the near future.
Item 10. RECENT SALES OF UNREGISTERED SECURITIES
During its last three fiscal years, up through and including this date, the
Registrant has issued the following unregistered securities.
From January 1, 1997 through December 31, 1997, the Company issued
2,995,194 shares of its common stock that was valued at $139,619 as
follows:
<TABLE>
Date Amount Name or Class of Nature Amount Exempti
Shares Persons of Of on
issued to Whom Sold Consider- Consider-Claimed
ation ation
($)
<S> <C> <C> <C> <C> <C>
10/27/97 1,861,027 Daniel Mendez Conversion (1) 59,842 4(2)
of Loan
10/27/97 687,379 Albert Figueroa Conversion (1) 21,695 4(2)
of Loan
10/27/97 391,788 John Prentice Conversion (2) 50,932 4(2)
of Loan
10/27/97 55,000 William Vauthrin Conversion (2) 7,150 4(2)
of Loan
------------ ----------
Total 2,995,194 139,619
</TABLE>
<PAGE>
From January 1, 1998 through December 31, 1998, the Company issued
3,939,058 shares of its common stock that was valued at $322,912 as
follows:
<TABLE>
Date Amount Name or Class of Nature Amount Exempti
Shares Persons of Of on
issued to Whom Sold Consider- Consider-Claimed
ation ation
($)
<S> <C> <C> <C> <C> <C> <C>
2/4/98 373,224 Albert Figueroa Conversion (1) 7,065 4(2)
of Loan
2/4/98 1,553,921 Daniel Mendez Conversion (1) 29,414 4(2)
of Loan
7/21/98 422,345 Albert Figueroa Conversion (1) 17,950 4(2)
of Loan
7/21/98 1,039,568 Daniel Mendez Conversion (1) 44,182 4(2)
of Loan
9/24/98 350,000 Danilo Cacciamatta Settlement (2) 78,256 4(2)
of Claim
9/24/98 200,000 Equitrade Settlement (2) 146,045 4(2)
of Claim
------------- -----------
Total 7,939,058 322,912
</TABLE>
<PAGE>
From January 1, 1999 through September 30, 1999, the Company issued
26,236,524 shares of its common stock that was valued at $1,617,364 as
follows:
<TABLE>
Date Amount Name or Class of Nature Amount Exempti
Shares Persons of Of on
issued to Whom Sold Consider- Consider-Claimed
ation ation
($)
<S> <C> <C> <C> <C> <C> <C>
6/21/99 1,000,000 Daniel Mendez Settlement (3) 35,000 4(2)
of Claim
6/21/99 1,000,000 Albert Figueroa Settlement (3) 35,000 4(2)
of Claim
6/21/99 1,000,000 Deng Shan Settlement (2) 35,000 4(2)
of Claim
6/21/99 700,000 Bernard Kruer Settlement (2) 25,000 4(2)
of Claim
6/21/99 300,000 Gymar, Inc. Settlement (2) 10,500 4(2)
of Claim
7/20/99 100,000 Craig Saunar Settlement (2) 85,000 4(2)
of Claim
7/20/99 50,000 Fred Smith Services (2) 5,000 4(2)
9/23/99 700,000 Dan/Colette Seifer Cash Sale (2) 35,000 4(2)
9/23/99 100,000 John Prentice Conversion (2) 4,000 4(2)
of Loan
9/27/99 2,104,473 Daniel Mendez Settlement (4) 110,000 4(2)
of Claim
9/27/99 2,304,737 Daniel Mendez Settlement (4) 185,000 4(2)
of Claim
9/27/99 2,850,970 Daniel Mendez Settlement (4) 220,000 4(2)
of Claim
9/27/99 1,406,536 Albert Figueroa Settlement (4) 73,500 4(2)
of Claim
9/27/99 817,449 Albert Figueroa Settlement (4) 65,000 4(2)
of Claim
9/27/99 1,295,896 Albert Figueroa Settlement (4) 100,000 4(2)
of Claim
9/27/99 1,438,519 Deng Shan Settlement (4) 75,000 4(2)
of Claim
9/27/99 817,449 Deng Shan Settlement (4) 65,000 4(2)
of Claim
9/27/99 1,295,896 Deng Shan Settlement (4) 100,000 4(2)
of Claim
9/27/99 746,522 Bernard Kruer Settlement (2) 45,000 4(2)
of Claim
9/27/99 572,213 Bernard Kruer Settlement (2) 64,999 4(2)
of Claim
9/27/99 575,407 Gymar, Inc. Settlement (2) 30,000 4(2)
of Claim
9/27/99 245,234 Gymar, Inc. Settlement (2) 19,500 4(2)
of Claim
9/27/99 287,989 Albert Figueroa Conversion (5) 13,507 4(2)
of Loan
9/27/99 2,385,714 Daniel Mendez Conversion (5) 111,890 4(2)
of Loan
9/27/99 184,164 Deng Shan Conversion (5) 8,637 4(2)
of Loan
9/27/99 1,957,356 Proton Technology Conversion (5) 60,830 4(2)
Corporation, Ltd of Loan
11/24/99 424,343 Daniel Mendez Settlement (6) 25,000 4(2)
of Claim
11/24/99 282,884 Albert Figueroa Settlement (6) 16,666 4(2)
of Claim
11/24/99 282,884 Deng Shan Settlement (6) 16,666 4(2)
of Claim
11/24/99 169,737 Bernard Kruer Settlement (2) 10,000 4(2)
of Claim
11/24/99 113,147 Gymar, Inc. Settlement (2) 6,666 4(2)
of Claim
11/24/99 68,023 Daniel Mendez Conversion (7) 3,190 4(2)
of Loan
11/24/99 50,649 Albert Figueroa Conversion (7) 2,375 4(2)
of Loan
11/24/99 11,343 Deng Shan Conversion (7) 532 4(2)
of Loan
11/24/99 20,000 Todd Ream Services (2) 1,876 4(2)
11/24/99 60,000 Fred N. Smith Services (2) 5,628 4(2)
------------- ----------
27,719,533 1,699,866
</TABLE>
<PAGE>
The issued securities were valued as follows:
- -(1) Stock issuances signified by Footnote (1) to Daniel J. Mendez and
Albert N. Figueroa on 10/27/97, 2/4/98 and 7/21/98 were valued at the
closing market price on the date of issuance discounted by 75%.
- -(2) The stock issuances signified by Footnote (2) were negotiated at arms-
length, and not tied to any specific price per share value.
- -(3) Stock issuances signified by Footnote (3) on 6/21/99 were issued
pursuant to a contractual obligation requiring issuance of said shares on
1/30/98. The shares were valued at closing market price on 1/30/98 which
was $0.07, discounted by 50% ($0.035).
- -(4) Stock issuances signified by Footnote (4) on 9/27/99 were issued
pursuant to a settlement agreement for past services performed over the
period 1/1/97 through 9/30/99. The shares were valued at closing market
price of the stock at the end of each month during which services were
performed, discounted by 50%.
- -(5) Stock issuances signified by Footnote (5) on 9/27/99 for "conversion
of loan" were valued at closing market price on 9/30/99, discounted by 50%.
- -(6) Stock issuances signified by Footnote (6) on 11/24/99 were issued
pursuant to a settlement agreement for past services performed over the
period 10/1/99 through 11/30/99. The shares were valued at closing market
price of the stock at the end of each month during which services were
performed, discounted by 50%.
- -(7) Stock issuances signified by Footnote (7) on 11/24/99 for "conversion
of loan" were for loans made prior to 9/30/99 and were valued at closing
market price on 9/30/99, discounted by 50%.
- -(8) The individual employees or key service providers receiving these
shares in settlement of a claim, each performed substantial and necessary
services for the Company during fiscal 1997, 1998 and 11 months 1999, for
which they had not been compensated; and, with respect to which they had
continuing claims for compensation. The individuals on September 27, 1999,
entered into an agreement with the Company, wherein each claimant agreed to
accept, and the Company agreed to issue, the specified number of shares of
the Company's restricted common stock in full and complete satisfaction of
the claim.
<PAGE>
Item 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Company has only one type of security, Common Stock with par value
equal to $0.001. Prior to September 27, 1999, there were 200,000,000
authorized shares of Common Stock of which 186,013,021 shares were
issued/outstanding. However, on September 27, 1999, the Board of Directors
passed a resolution to increase the authorized shares to 400,000,000 with a
par value of $0.001. On October 4, 1999, shareholders representing a
majority of outstanding shares approved the resolution. A certificate of
amendment was filed in the public records of the State of Nevada on October
7, 1999. Management has no current plans to use additional authorized
common stock for the purpose of purchases or acquisitions.
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the holders of Capital Stock.
Holders of Common Stock are entitled to receive ratably such dividends as
may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities and the liquidation
preference of any preferred stock that might be issued in the future.
Holders of Common Stock have no preemptive or subscription rights, and
there are no redemption or conversion rights with respect to such shares.
All outstanding shares of Common Stock are fully paid and nonassessable.
Item 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada General Corporation Law,. (NRS 78.7502) under which the Company
is incorporated, gives a corporation the power to indemnify any of its
directors, officers, employees, or agents who are sued by reason of their
service in such capacity to the corporation provided that the director,
officer, employee, or agent acted in good faith and in a manner he believed
to be in or not opposed to the best interests of the corporation. With
respect to any criminal action, he must have had no reasonable cause to
believe his conduct was unlawful.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT
OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS AND CONTROLLING PERSONS OF
THE REGISTRANT PURSUANT TO THE FOREGOING PROVISIONS OR OTHERWISE, THE
REGISTRANT HAS BEEN ADVISED THAT IN THE OPINION OF THE SECURITIES AND
EXCHANGE COMMISSION SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS
EXPRESSED IN THE ACT AND IS, THEREFORE, UNENFORCEABLE, IN THE EVENT THAT A
CLAIM FOR INDEMNIFICATION AGAINST SUCH LIABILITIES (OTHER THAN THE PAYMENT
BY THE REGISTRANT OF EXPENSES INCURRED OR PAID BY A DIRECTOR, OFFICER OR
CONTROLLING PERSON OF THE REGISTRANT IN THE SUCCESSFUL DEFENSE OF ANY
ACTION, SUIT OR PROCEEDING) IS ASSERTED BY SUCH DIRECTOR, OFFICER OR
CONTROLLING PERSON IN CONNECTION WITH THE SECURITIES BEING REGISTERED, THE
REGISTRANT WILL, UNLESS IN THE OPINION OF ITS COUNSEL THE MATTER HAS BEEN
SETTLED BY CONTROLLING PRECEDENT, SUBMIT TO A COURT OF APPROPRIATE
JURISDICTION THE QUESTION WHETHER SUCH INDEMNIFICATION BY IT IS AGAINST
PUBLIC POLICY AS EXPRESSED IN THE ACT AND WILL BE GOVERNED BY THE FINAL
ADJUDICATION OF SUCH ISSUE.
<PAGE>
Item 13. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
<PAGE>
JAAK (JACK) OLESK
Certified Public Accountant
270 North Canon Drive, Suite 203
(310) 288-0693
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
Largo Vista Group, Ltd.
I have audited the accompanying consolidated balance sheet of Largo Vista
Group, Ltd. as of December 31, 1998, and the related consolidated
statements of operations, stockholders' equity <deficit> and cash flows for
each of the two years in the period ended December 31, 1998. These
consolidated financial statements are the responsibility of Company's
management. My responsibility is to express an opinion on these
consolidated financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that I
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. I believe that my audits provide a reasonable basis for my
opinion.
In my opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Largo Vista Group, Ltd. as of December 31, 1998, and results
of its operations and its cash flows for each of the two years in the
period ended December 31, 1998, in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed
in Note 2 to the consolidated financial statements, the Company has
suffered significant recurring losses from operations that raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.
Significant litigation uncertainties also exist as described in Note 6.
The consolidated financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
/s/ Jaak Olesk CPA
Beverly Hills, California
April 24, 1999
(except for note 6 which is dated June 15, 1999)
(except for note 7 which is dated October 7, 1999)
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Balance Sheet
December 31, 1998
ASSETS
<S> <C>
Current Assets
Cash (Note 5) $ 13,528
Inventories 226,385
Prepaid expenses and
advances to suppliers 62,486
Total current assets 302,399
Fixed assets
Property and equipment 1,109,669
<Less> accumulated depreciation <277,787>
Total fixed assets 831,882
Other Assets
Loans to officers 19,007
Deferred expenses 44,715
Other 215,568
Total other assets 279,290
$ 1,413,571
============
</TABLE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY <DEFICIT>
<S> <C>
Current Liabilities
Accounts payable $ 892,184
Accrued expenses 516,543
Taxes Payable 95,999
Notes Payable 1,645,146
Advances and Other 1,800,995
Total current liabilities 4,950,867
Litigation contingencies (Note 6)
Shareholders' Equity <Deficit>
Common Stock, 200,000,000 shares
authorized; .001 par value;
183,863,021 shares issued and
outstanding 183,863
Additional Paid-in Capital 8,138,245
Retained earnings <deficit> <11,859,404>
Total shareholders' equity <deficit> <3,537,296>
$ 1,413,571
=============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Operations
For the Year Ended
December 31, December 31,
1998 1997
<S> <C> <C>
Revenue $ 1,476,971 $ 2,472,378
Cost of sales 1,353,537 2,449,902
Gross profit 123,434 22,476
Expenses:
General and administrative
and Other 760,491 2,843,257
<Loss> From operations <637,057> <2,820,781>
Other income <expense>:
Interest <expense> <198,652> <180,550>
Other income 141,229 70,427
<Loss> before income taxes <694,480> <2,930,904>
Income taxes - -
NET <LOSS> $ <694,480> $<2,930,904>
============ ============
<LOSS> per share of
common stock $ <.01> $ <.02>
============ ============
Weighted average
shares outstanding 181,565,237 177,130,257
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Cash Flows
For the Year Ended
December 31, December 31,
1998 1997
<S> <C> <C>
Cash flows from <for>
Operating activities:
Net <loss> $ <694,480> $<2,930,904>
Adjustments to reconcile
net<loss> to cash flows
<for> operating activities:
Depreciation 67,926 73,530
Changes in assets and
liabilities:
Accounts payable <380,603> 672,787
Accrued expenses 452,284 51,505
Notes and taxes
payable and other 145,781 1,427,764
Net cash flows <for>
operating activities: <409,092> <705,318>
Cash flows from
investing activities: - -
Cash flows from
financing activities:
Issuance of
common stock 322,911 804,588
Increase <decrease> in cash <86,181> 99,270
Cash at beginning of year 99,709 439
Cash at end of year $ 13,528 $ 99,709
=========== ===========
Supplemental cash
flows information:
Cash paid for interest $ - $ -
=========== ===========
Cash paid for taxes
$ - $ -
=========== ===========
Non-cash financing
transactions:
Shares issued
for services and
debt extinguishment
(includes compensation
settlement of claims) $ 322,911 $ 804,588
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Shareholders' Equity <Deficit>
Additional Retained
Common Stock Paid-In Earnings
Shares Amount Capital <Deficit> Total
<D> <C> <C> <C> <C> <C>
Balance at
Dec. 31, 1996 173,219,068 $173,219 $7,021,390 $ <8,234,020> $<1,039,411>
Common shares
issued for
services
during year
ended
Dec. 31, 1997 6,704,895 6,705 797,883 - 804,588
Net<loss>for
Year ended
Dec. 31, 1997 - - - <2,930,904> <2,930,904>
___________ _______ __________ ____________ ___________
Balance at
Dec. 31, 1997 179,923,963 179,924 7,819,273 <11,164,924> <3,165,727>
Common shares
issued for
services
and debt
extinguishment
during the
year ended
Dec. 31, 1998 3,939,058 3,939 318,972 - 322,911
Net <loss>
for the
year ended
Dec. 31, 1998
- - - <694,480> <694,480>
___________ ________ __________ _____________ ____________
Balance at
Dec. 31, 1998 183,863,021 $183,863 $8,138,245 $<11,859,404> $<3,537,296>
=========== ======== ========== ============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements
December 31, 1998
Note 1 - Summary of Significant Accounting Policies
Nature of Operations and basis of consolidation
The consolidated financial statements include the accounts of Largo
Vista Group, Ltd. (the "Company"), a Nevada corporation, (date of
incorporation was January 16, 1987) its wholly-owned subsidiary, Largo
Vista, Inc., a California corporation (Largo Vista Inc. has had no
significant operations) (date of incorporation was October 12, 1988) its
wholly-owned subsidiary Everlasting International, Ltd., a Nevada
Corporation, and Kunming Xinmao Petrochemical Industrial Co., Ltd., a
Chinese entity (see Note 4). The Chinese entity operates a natural gas
distribution business. The United States entities have no operations.
Inter-company accounts and transactions have been eliminated. All amounts
in these financial statements and footnotes are in United States dollars
(See Note 5).
Cash and Cash Equivalents
Cash equivalents consist of funds invested in money market accounts
and in investments with a maturity of three months or less when purchased.
Loss per Share
The computation of loss per share of common stock is based on the
weighted average number of shares outstanding during the periods presented.
There are no common stock equivalents. The company only has common shares
outstanding; therefore a diluted presentation not shown.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in financial statements and
accompanying notes. Actual results could differ from those estimates.
Valuation of shares for services
Shares issued for services were valued based upon estimated fair
market value of services. The policy for "valuation of shares" applies to
transactions with both employees and non-employees. The policy is one of
negotiation between the parties. In the case of non-employees, final value
is approved by a majority of the Board of Directors; and, in the case of
employees, final value is approved by a majority of the Board of Directors
with the interested director abstaining. During the periods presented,
United States management's compensation has primarily been in the form of
issuance of shares by the Company.
<PAGE>
Inventory
Inventory, valued at lower of cost of market, on the first-in, first-
out basis consists primarily of liquid natural gas.
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
December 31, 1998
Note 1 - Summary of Significant Accounting Policies (continued)
Property and equipment and depreciation
Property and equipment consists of a building, storage tanks, railroad
cars and miscellaneous equipment. All property and equipment is located in
China. Depreciation is primarily by the straight line method over
estimated useful lives, generally of approximately five to thirty years.
Impairment of Assets - Long-lived assets used in operations are accessed
for impairment whenever changes in facts and circumstances indicate a
possible significant deterioration in the future cash flows expected to be
generated by an asset group. If, upon review, the sum of the undiscounted
pretax cash flows are less than the carrying value of the asset group, the
carrying value is written down to estimated fair value. Individual assets
are grouped for impairment purposes at the lowest level for which there are
identifiable cash flows that are largely independent of the cash flows of
other groups of assets.
The fair value of impaired assets is determined based on quoted market
prices in active markets, if available, or upon the present values of
expected future cash flows using discount rates commensurate with the risks
involved in the asset group. Long-lived assets committed by management for
disposal are accounted for at the lower of amortized cost or fair value,
less cost to sell.
Deferred Expenses
Deferred expenses consists primarily of deposits including on
telephone, utilities and office facilities.
Other Assets
Other assets consists primarily of slower moving inventory items,
which have the appropriate fair market value, but to be conservative have
not been classified as current.
Notes payable
Notes payable consists primarily of unsecured short-term loans, non-
interest bearing demand notes. A loan of $30,000 is payable to an entity
controlled by the Company's majority shareholder.
<PAGE>
Advances and other
Advances and other consists primarily of advances to suppliers and
miscellaneous payables, primarily non-interest bearing.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
December 31, 1998
Income Taxes
The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". (See Note 3).
Foreign currency translation
"During the periods presented the company had no significant foreign
currency transaction gains or losses."
Revenue recognition
The Company recognizes revenue upon delivery or pick up of natural
gas. There is not a significant amount of credit transactions.
Reclassifications
Certain prior year amounts have been reclassified to conform with 1998
classifications.
Note 2 - Basis of presentation and considerations related to continued
existence (going concern)
The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The
Company incurred net losses of $694,480 and $2,930,904 for the years ended
December 31, 1998, and 1997, respectively. Additionally, current
liabilities exceed current assets by $4,648,468 at December 31, 1998.
These factors, among others, raise substantial doubt as to the Company's
ability to continue as a going concern.
The Company's management intends to raise additional operating funds
through equity and/or debt offerings, and or institutional lines of credit
in China. However, there can be no assurance management will be successful
in this endeavor.
Note 3 - Income taxes
The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" which requires the use of the liability method of accounting for
deferred income taxes.
As the Company has not generated taxable income since inception no
provision for income taxes has been provided. At December 31, 1998, the
Company did not have any significant tax net operating loss carryforwards
(tax benefits resulting from losses for tax purposes have been fully
reserved due to the uncertainty of a going concern). At December 31, 1998,
the Company did not have any significant deferred tax liabilities or
deferred tax assets.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
December 31, 1998
Note 4 - December, 1996 Business Combination
In late, December, 1996 the Company entered into a Plan and Agreement
of Reorganization with Everlasting International, Ltd., ("Everlasting") a
Nevada corporation and Proton Technology Corporation Limited, ("Proton"), a
Bahamas corporation, whereby the Company acquired 100% of the shares of
Everlasting, owned by Proton, in exchange for 123,850,139 shares of the
voting common stock of the Company. At the time of this transaction,
Everlasting owned two thirds of Kunming Xinmao Petrochemical Industrial
Co., Ltd., ("Kunming Xinmao"), a Chinese entity, with the other third of
Kunming Xinmao owned by a Chinese government corporation (this interest had
been transferred to Everlasting from Proton). Both Everlasting and Proton
were paper entities created for the purpose of effectuating this
transaction.
The acquisition has been accounted for using the purchase method of
accounting, and accordingly, the purchase price has been allocated to the
assets purchased and the liabilities assumed based upon the fair values at
the date of acquisition. As there was no significant difference between
the book value and fair market value of the acquired no goodwill nor
negative goodwill has been recorded. Minority interest is not shown either
on the balance sheet or statement of operations since the consolidated
entity has losses and negative net assets (negative net worth). The
minority interest has no obligation to make good on any losses the company
incurs.
The operating results of the acquired business have been included in
the consolidated statement of operations from January 1, 1997.
Congruent with this transaction, the Company: changed its fiscal year
to a calendar year; changed the par value of its common stock from $0.002
to $0.001; and increased the authorized shares of its common stock from
100,000,000 to 200,000,000.
<PAGE>
Largo Vista Group, Ltd.Notes to Consolidated Financial Statements
(continued)December 31, 1998
Note 5 - Chinese subsidiary
Kunming Xinmao Petrochemical
Industrial Co., Ltd. ("Xinmao")
(Stated in United States Dollars)
Condensed Balance Sheet-December 31, 1998
(Separate Financial Statements)
<TABLE>
ASSETS
<S> <C>
Current Assets
Cash $ 13,528
Inventories 226,385
Prepaid expenses and
advances to suppliers 62,486
Total current assets 302,399
Fixed assets
Property and equipment 1,109,669
<Less> accumulated depreciation <277,787>
Total fixed assets 831,882
Other Assets
Other Receivable 19,007
Deferred expense 44,715
Other 215,568
Total other assets 279,290
$ 1,413,571
===========
</TABLE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY <DEFICIT>
<S> <C>
Current Liabilities
Accounts payable $ 668,656
Accrued expenses 126,554
Taxes payable 46,591
Notes payable 1,645,146
Advances and other 1,800,995
Total current liabilities 4,287,942
Shareholders' Equity <Deficit> <2,874,371>
$ 1,413,571
===========
</TABLE>
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
December 31, 1998
Note 5 - Chinese subsidiary (continued)
Kunming Xinmao Petrochemical
Industrial Co., Ltd.
(Stated in United States Dollars)
Condensed Statement of Operations
For the Year Ended December 31, 1998 and 1997
(Separate Financial Statements)
<TABLE>
1998 1997
<S> <C> <C>
Revenue $ 1,476,971 $ 2,472,378
Cost of sales 1,353,537 2,449,902
Gross profit 123,434 22,476
Expenses
Writedown of receivables 53,849 1,131,288
Selling, general and
administrative expenses 451,922 578,032
505,771 1,709,320
<Loss> from operations <382,337> <1,686,844>
Interest <expense> <198,652> <180,550>
Other income 141,229 70,427
NET <LOSS> $ <439,760> $ <1,796,967>
============ =============
</TABLE>
The financial information in Note 5 has been prepared in Renminbi, the
national currency of the People's Republic of China. Solely for the
convenience of the reader, the financial statements have been translated
into United States dollars at the rate of U.S. $1.00=RMB 8.28 quoted as of
September 30, 1999. No representation is made that the Renminbi could have
been, or could be, converted into United States dollars at that rate or at
any other certain rate on September 30, 1999, or any other date.
The Chinese Renminbi is pegged to the United States dollar, i.e. the
monetary authorities of the People's Republic of China tie the value of
their currency to the United States Dollar. There has been no significant
change in the exchange rate during the periods presented.
At December 31, 1998 the entire cash balance of $13,528 on the
consolidated balance sheet of Largo Vista Group, Ltd. was in Renminbi, a
currency which is not freely convertible into United States dollars. At
December 31, 1998 Largo Vista Group, Ltd., including all its subsidiaries,
had no United States dollars on hand or in banks, anywhere in the world.
<PAGE>
From inception (January 16, 1987) to date (April 24, 1999) the United
States entities of the Company have had no assets, no revenues and no
operations. During this period however, the United States entities have
incurred significant losses.
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements
(continued)December 31, 1998
Note 5 - Chinese subsidiary (continued)
Beginning Retained Earnings (at December 31, 1997) of Kunming Xinmao
Petrochemical Industrial Co. Ltd. included a loss carry-forward of
approximatly $2 million already on the books at the time the Company
acquired Xinmao. This item was a carry over from the acquisition by Largo
Vista Group, Ltd., and not a result of operations under the control of
Largo Vista Group Ltd..
Note 6 - Litigation Contingencies
Litigation in China
1. Sichuan Province Panzhihua Peoples Court
In January, 1998, a breach of contract action was commenced in the Sichuan
Peoples Court, P.R. China by Claimant Panzhihua Petrochemical Industry Co.,
Ltd. ("Panzhihua") against Defendant Kunming Xinmao Petrochemical
Industrial Co. Ltd. ("Xinmao"), and Defendant Beihai Hi-Tech LPG Co., Ltd.
("Beihai"). Panzhihua brought the action for damages against Beihai for
failure to deliver LPG to Panzhihua as agreed, and against Xinmao as
guarantor of Beihai's performance under the agreement. Beihai defaulted in
the suit, and in March, 1998, the Court rendered a judgment against Xinmao
in the approximate amount of U.S. $452,000. As a result of this judgment,
during the fiscal year ended December 31, 1998, a significant portion of
the Company's physical assets were attached and executed upon, including
twelve of its eighteen rail tank cars (25MT capacity), three service
vehicles, six apartment units. The judgment is completely satisfied.
2. YONGHENG (Everlasting) NEVADA INTERNATIONAL CO., LTD.,
Plaintiff vs. CHAN MAU TAK, Defendant
Action filed on May 14, 1998 in the High Court of Hong Kong Special
Administration Region, Case HCA14528/98 by Plaintiff Everlasting
International, Ltd. vs. Defendant Chan Mau Tak. Plaintiff brought the
action for breach of contract on the basis that the Defendant failed to
fulfill all of his obligations under the transfer agreement wherein
Everlasting purchased its ownership interest in Xinmao; specifically, the
Defendant failed to assist Xinmao to increase its customer base and
represented that certain receivable accounts were collectible, but were
deemed valueless by Everlasting. Everlasting asked for damages of HK$1mm.
The Court rendered judgment in favor of Everlasting in the amount of HK$1mm
plus damages plus 13.08% interest per annum. However, the Defendant has
appealed the judgment on the basis of failure of service of process.
Everlasting has provided evidence that service was made on the Defendant at
two addresses provided to the Plaintiff. The Defendant has not responded
to the Plaintiffs response, and the matter is still under consideration.
The judgment has not been accrued as an asset because its collectibility is
too speculative.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
December 31, 1998
Note 7 - Subsequent Event
On September 27, 1999 the Company's Board of Directors approved a
resolution increasing the authorized common shares to 400,000,000. On
October 7, 1999 this document was filed with the Nevada Secretary of State.
<PAGE>
Following are unaudited financial statements and footnotes as of September
30, 1999. (Management's assertion - these statements include all
adjustments, consisting of normal recurring accruals, which management
considers necessary for a fair presentation of the interim period.)
JAAK (JACK) OLESK
Certified Public Accountant
270 North Canon Drive, Suite 203
Beverly Hills, California 90210
(310) 288-0693
ACCOUNTANT'S COMPILATION REPORT
To the Shareholders and Board of Directors
Largo Vista Group, Ltd.
I have compiled the accompanying consolidated balance sheet of Largo Vista
Group, Ltd. as of September 30, 1999, and the related consolidated
statements of operations, stockholders' equity <deficit> and cash flows for
the nine months ended September 30, 1999, and the nine months ended
September 30, 1998, in accordance with Statements on Standards for
Accounting and Review Services issued by American Institute of Certified
Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed
in Note 2 to the consolidated financial statements, the Company has
suffered significant recurring losses from operations that raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.
Significant litigation uncertainties also exist as described in Note 6.
The consolidated financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
Beverly Hills, California
November 12, 1999
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Balance Sheet
September 30, 1999
ASSETS
<S> <C>
Current Assets
Inventories $ 251,822
Prepaid expenses and
advances to suppliers 65,365
Total current assets 317,187
Fixed assets
Property and equipment 1,111,456
<Less> accumulated depreciation <328,931>
Total fixed assets 782,525
Other Assets
Other receivable 93,510
Deferred expenses 35,108
Other 176,464
Total other assets 305,082
$ 1,404,794
=============
</TABLE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY <DEFICIT>
<S> <C>
Current Liabilities
Accounts payable $ 859,079
Accrued expenses 826,706
Taxes Payable 98,197
Notes Payable 1,669,526
Advances and Other 2,036,981
Total current liabilities 5,490,489
Litigation contingencies (Note 6)
Shareholders' Equity <Deficit>
Common Stock, 400,000,000 shares
authorized; .001 par value;
210,099,545 shares issued and
outstanding 210,100
Additional Paid-in Capital 9,729,372
Retained earnings <deficit> <14,025,167>
Total shareholders' equity <deficit> <4,085,695>
$ 1,404,794
=============
</TABLE>
<PAGE>
See accountant's compilation report.
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Operations
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenue $ 301,834 $ 262,305 $ 831,660 $ 1,120,979
Cost of sales 270,646 291,904 765,372 1,081,888
Gross profit <loss> 31,188 <29,599> 66,288 39,091
Expenses:
General and
administrative
and Other 1,809,532 145,984 2,114,539 540,685
<Loss> From operations <1,778,344> <175,583> <2,048,251>
<501,594>
Other income <expense>:
Interest <expense> <40,049> <132,089> <124,444> <231,133>
Other income 971 105,867 6,932 178,094
<Loss> before
income taxes <1,817,422> <201,805> <2,165,763>
<554,633>
Income taxes - - - -
NET <LOSS> $<1,817,422> $ <201,805> $<2,165,763> $
<554,633>
=========== =========== ===========
===========
<LOSS> per share of
common stock $ <.01> $ <.01> $ <.01> $ <.01>
=========== =========== ============
============
Weighted average
shares outstanding 201,354,037 179,923,963 189,693,360 179,923,963
=========== =========== =========== ===========
</TABLE>
See accountant's compilation report.
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Cash Flows
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Cash flows from <for>
Operating activities:
Net <loss> $<1,817,422> $<201,805> $<2,165,763> $ <554,633>
Adjustments to reconcile
net<loss> to cash flows
<for> operating activities:
Depreciation 18,517 16,115 50,043 51,572
Changes in assets and
liabilities:
Inventories <23,768> 10,572 <25,437>
452,891
Accounts payable <25,716> 47,551 <33,105>
5,850
Accrued expenses 111,869 28,650 310,163
10,160
Notes and taxes
payable and other 103,723 94,757 233,207 <43,017>
Net cash flows <for>
operating activities: <1,632,797> <4,160> <1,630,892> <77,177>
Cash flows from
investing activities: - - - -
Cash flows from
financing activities:
Issuance of
common stock 1,617,364 - 1,617,364
- -
Increase <decrease> in cash <15,433> <4,160> <13,528>
<77,177>
Cash at beginning of period 15,433 26,692 13,528
99,709
Cash at end of period $ - $ 22,532 $ - $
22,532
============ ======== ===========
===========
Supplemental cash
flows information:
Cash paid for interest $ - $ - $ - $
- -
========== ========= ===========
==========
Cash paid for taxes $ - $ - $ - $
- -
=========== ========= ===========
==========
Non-cash financing
transactions:
Shares for services
or debt
(includes compensation
settlement of claims) $ 1,582,364 $1,582,364
=========== ===========
</TABLE>
See accountant's compilation report.
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Shareholders' Equity <Deficit>
Additional Retained
Common Stock Paid-In Earnings
Shares Amount Capital <Deficit> Total
<S> <C> <C> <C> <C> <C>
Balance at
December 31,
1998 183,863,021 $183,863 $8,138,245 $<11,859,404> $<3,537,296>
Net <loss>
for the Six
months ended
June 30,
1999 - - - <348,341> <348,341>
Balance at
June 30,
1999 183,863,021 183,863 8,138,245 <12,207,745> <3,885,637>
Common stock
sold for
cash on Sept.
23, 1999 700,000 700 34,300 - 35,000
Common Stock
issued for
services
during the
three months
ended Sept.
30, 1999 20,093,762 20,094 1,142,270 - 1,162,364
Common stock
issued to
extinguish
liabilities
during the
three months
ended Sept.
30, 1999 5,442,762 5,443 414,557 - 420,000
Net <loss>
for the three
months ended
Sept.
30, 1999 - - - <1,817,422> <1,817,422>
Balance at
Sept.
30, 1999 210,099,545 $210,100 $9,729,372 $<14,025,167> $<4,085,695>
=========== ======== ========== ============ ===========
</TABLE>
See accountant's compilation report.
See accompanying notes to consolidated financial statements.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements
September 30, 1999
Note 1 - Summary of Significant Accounting Policies
Nature of Operations and basis of consolidation
The consolidated financial statements include the accounts of Largo
Vista Group, Ltd. (the "Company"), a Nevada corporation, (date of
incorporation was January 16, 1987) its wholly-owned subsidiary, Largo
Vista, Inc., a California corporation, (date of incorporation was October
12, 1988) its wholly-owned subsidiary Everlasting International, Ltd., a
Nevada Corporation, and Kunming Xinmao Petrochemical Industrial Co., Ltd.,
a Chinese entity (see Note 4). The Chinese entity operates a natural gas
distribution business. The United States entities have no operations.
Inter-company accounts and transactions have been eliminated. All amounts
in these financial statements and footnotes are in United States dollars
(See Note 5).
Cash and Cash Equivalents
Cash equivalents consist of funds invested in money market accounts
and in investments with a maturity of three months or less when purchased.
Loss per Share
The computation of loss per share of common stock is based on the
weighted average number of shares outstanding during the periods presented.
There are no common stock equivalents. The company only has common shares
outstanding; therefore a diluted presentation not shown.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in financial statements and
accompanying notes. Actual results could differ from those estimates.
Valuation of shares for services
Shares issued for services were valued based upon estimated fair
market value of services. This policy applies to transactions with both
employees and non-employees. During the periods presented, United States
management's compensation has primarily been in the form of issuance of
shares by the Company.
Inventory
Inventory, valued at lower of cost of market, on the first-in, first-
out basis consists primarily of liquid natural gas.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
September 30, 1999
Note 1 - Summary of Significant Accounting Policies (continued)
Property and equipment and depreciation
Property and equipment consists of a building, storage tanks, railroad
cars and miscellaneous equipment. All property and equipment is located in
China. Depreciation is primarily by the straight line method over
estimated useful lives, generally of approximately five to thirty years.
Impairment of Assets - Long-lived assets used in operations are accessed
for impairment whenever changes in facts and circumstances indicate a
possible significant deterioration in the future cash flows expected to be
generated by an asset group. If, upon review, the sum of the undiscounted
pretax cash flows are less than the carrying value of the asset group, the
carrying value is written down to estimated fair value. Individual assets
are grouped for impairment purposes at the lowest level for which there are
identifiable cash flows that are largely independent of the cash flows of
other groups of assets.
The fair value of impaired assets is determined based on quoted market
prices in active markets, if available, or upon the present values of
expected future cash flows using discount rates commensurate with the risks
involved in the asset group. Long-lived assets committed by management for
disposal are accounted for at the lower of amortized cost or fair value,
less cost to sell.
Deferred Expenses
Deferred expenses consists primarily of deposits including on telephone,
utilities and office facilities.
Other Assets
Other assets consists primarily of slower moving inventory items, which
have the appropriate fair market value, but to be conservative have not
been classified as current.
Notes payable
Notes payable consists primarily of unsecured short-term loans,
primarily non-interest bearing demand notes. A loan of $30,000 is payable
to an entity controlled by the Company's majority shareholder.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
September 30, 1999
Advances and other
Advances and other consists primarily of advances to suppliers and
miscellaneous payables, primarily non-interest bearing.
Income Taxes
The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". (See Note 3).
Foreign currency translation
"During the periods presented the company had no significant foreign
currency transaction gains or losses."
Revenue recognition
The Company recognizes revenue upon delivery or pick up of natural
gas. There is not a significant amount of credit transactions.
Reclassifications
Certain prior year amounts have been reclassified to conform with 1999
classifications.
Note 2 - Basis of presentation and considerations related to continued
existence (going concern)
The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The
Company incurred net losses of $2,165,763 and $554,633 for the nine months
ended September 30, 1999, and 1998, respectively. Additionally, current
liabilities exceed current assets by $5,173,302 at September 30, 1999.
These factors, among others, raise substantial doubt as to the Company's
ability to continue as a going concern.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
September 30, 1999
The Company's management intends to raise additional operating funds
through equity and/or debt offerings. However, there can be no assurance
management will be successful in this endeavor.
Note 3 - Income taxes
The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" which requires the use of the liability method of accounting for
deferred income taxes.
As the Company has not generated taxable income since inception no
provision for income taxes has been provided. At September 30, 1999, the
Company did not have any significant tax net operating loss carryforwards
(tax benefits resulting from losses for tax purposes have been fully
reserved due to the uncertainty of a going concern). At September 30,
1999, the Company did not have any significant deferred tax liabilities or
deferred tax assets.
Note 4 - December, 1996 Business Combination
In late, December, 1996 the Company entered into a Plan and Agreement
of Reorganization with Everlasting International, Ltd., ("Everlasting") a
Nevada corporation and Proton Technology Corporation Limited, ("Proton"), a
Bahamas corporation, whereby the Company acquired 100% of the shares of
Everlasting, owned by Proton, in exchange for 123,850,139 shares of the
voting common stock of the Company. At the time of this transaction,
Everlasting owned two thirds of Kunming Xinmao Petrochemical Industrial
Co., Ltd., ("Kunming Xinmao"), a Chinese entity, with the other third of
Kunming Xinmao owned by a Chinese government corporation (this interest had
been transferred to Everlasting from Proton). Both Everlasting and Proton
were paper entities created for the purpose of effectuating this
transaction.
The acquisition has been accounted for using the purchase method of
accounting, and accordingly, the purchase price has been allocated to the
assets purchased and the liabilities assumed based upon the fair values at
the date of acquisition. As there was no significant difference between
the book value and fair market value of the acquired no goodwill nor
negative goodwill has been recorded. Minority interest is not shown
either on the balance sheet or statement of operations since the
consolidated entity has losses and negative net assets (negative net
worth). The minority interest has no obligation to make good on any losses
the company incurs.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
September 30, 1999
The operating results of the acquired business have been included in
the consolidated statement of operations from January 1, 1997.
Congruent with this transaction, the Company: changed its fiscal year
to a calendar year; changed the par value of its common stock from $0.002
to $0.001; and increased the authorized shares of its common stock from
100,000,000 to 200,000,000.
Note 5 - Chinese subsidiary
<TABLE>
Kunming Xinmao Petrochemical
Industrial Co., Ltd. ("Xinmao")
(Stated in United States Dollars)
Condensed Balance Sheet-September 30, 1999
(Separate Financial Statements)
ASSETS
<S> <C>
Current Assets
Inventories $ 251,822
Prepaid expenses and
advances to suppliers 65,365
Total current assets 317,187
Fixed assets
Property and equipment 1,111,456
<Less> accumulated depreciation <328,931>
Total fixed assets 782,525
Other Assets
Other receivable 93,510
Deferred expense 35,108
Other 176,464
Total other assets 305,082
$ 1,404,794
===========
</TABLE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY <DEFICIT>
<S> <C>
Current Liabilities
Accounts payable $ 615,121
Accrued expenses 237,556
Taxes payable 45,749
Notes payable 1,669,526
Advances and other 2,036,981
Total current liabilities 4,604,933
Shareholders' Equity <Deficit> <3,200,139>
$ 1,404,794
===========
</TABLE>
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
September 30, 1999
Note 5 - Chinese subsidiary (continued)
<TABLE>
Kunming Xinmao Petrochemical
Industrial Co., Ltd.
(Stated in United States Dollars)
Condensed Statement of Operations
For the Nine Months Ended September, 30 1999 and 1998
(Separate Financial Statements)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenue $ 301,834 $262,305 $ 831,660 $1,120,979
Cost of sales 270,646 291,904 765,372 1,081,888
Gross profit 31,188 <29,599> 66,288 39,091
Expenses
Writedown of receivables 16,763 - 16,763 47,206
Selling, general and
administrative expenses 83,284 119,377 262,117 365,954
<Loss> from operations <68,859> <148,976> <212,592> <374,069>
Interest <expense> <40,049> <132,089> <124,444> <231,133>
Other income 971 105,867 6,932 178,094
NET <LOSS> <107,937>$ <175,198> $ <330,104> $ <427,108>
========= ========== ========== =========
</TABLE>
<PAGE>
The financial information in Note 5 has been prepared in Renminbi, the
national currency of the People's Republic of China. Solely for the
convenience of the reader, the financial statements have been translated
into United States dollars at the rate of U.S. $1.00=RMB 8.28 quoted as of
September 30, 1999. No representation is made that the Renminbi could have
been, or could be, converted into United States dollars at that rate or at
any other certain rate on September 30, 1999, or any other date.
The Chinese Renminbi is pegged to the United States dollar, i.e. the
monetary authorities of the People's Republic of China tie the value of
their currency to the United States Dollar. There has been no significant
change in the exchange rate during the periods presented.
COMMENT 38.
From inception (January 16, 1987) to date (November 12, 1999) the
United States entities of the Company have had no assets, no revenues and
no operations. During this period however, the United States entities have
incurred significant losses.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
September 30, 1999
Note 5 - Chinese subsidiary (continued)
Beginning Retained Earnings (at December 31, 1997) of Kunming Xinmao
Petrochemical Industrial Co. Ltd. included a loss carry-forward of
approximately $2 million already on the books at the time the Company
acquired Xinmao. This item was a carry over from the acquisition by Largo
Vista Group, Ltd., and not a result of operations under the control of
Largo Vista Group Ltd..
Note 6 - Litigation Contingencies
Litigation in China
1. Sichuan Province Panzhihua Peoples Court
In January, 1998, a breach of contract action was commenced in the Sichuan
Peoples Court, P.R. China by Claimant Panzhihua Petrochemical Industry Co.,
Ltd. ("Panzhihua") against Defendant Kunming Xinmao Petrochemical
Industrial Co. Ltd. ("Xinmao"), and Defendant Beihai Hi-Tech LPG Co., Ltd.
("Beihai"). Panzhihua brought the action for damages against Beihai for
failure to deliver LPG to Panzhihua as agreed, and against Xinmao as
guarantor of Beihai's performance under the agreement. Beihai defaulted in
the suit, and in March, 1998, the Court rendered a judgment against Xinmao
in the approximate amount of U.S. $452,000. As a result of this judgment,
during the fiscal year ended December 31, 1998, a significant portion of
the Company's physical assets were attached and executed upon, including
twelve of its eighteen rail tank cars (25MT capacity), three service
vehicles, six apartment units. The judgment is completely satisfied.
2. YONGHENG (Everlasting) NEVADA INTERNATIONAL CO., LTD.,
Plaintiff vs. CHAN MAU TAK, Defendant
Action filed on May 14, 1998 in the High Court of Hong Kong Special
Administration Region, Case HCA14528/98 by Plaintiff Everlasting
International, Ltd. vs. Defendant Chan Mau Tak. Plaintiff brought the
action for breach of contract on the basis that the Defendant failed to
fulfill all of his obligations under the transfer agreement wherein
Everlasting purchased its ownership interest in Xinmao; specifically, the
Defendant failed to assist Xinmao to increase its customer base and
represented that certain receivable accounts were collectible, but were
deemed valueless by Everlasting. Everlasting asked for damages of HK$1mm.
The Court rendered judgment in favor of Everlasting in the amount of HK$1mm
plus damages plus 13.08% interest per annum. However, the Defendant has
appealed the judgment on the basis of failure of service of process.
Everlasting has provided evidence that service was made on the Defendant at
two addresses provided to the Plaintiff. The Defendant has not responded
to the Plaintiffs response, and the matter is still under consideration.
The judgment has not been accrued as an asset because its collectibility is
too speculative.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
September 30, 1999
Note 7 - Increase in Authorized Shares
On September 27, 1999 the Company's Board of Directors approved a
resolution increasing the authorized common shares to 400,000,000. On
October 7, 1999 this document was filed with the Nevada Secretary of State.
Item 14. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
No Change in accounting or in accountants in the last 3 years.
Item 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Report of Independent Certified Public Accountants
Consolidated Financial Statements
Notes to Consolidated Financial Statements
(b) Exhibits Required by Item 601 of Regulation SK
3(i) Articles of Incorporation of Largo Vista Group, Limited
3(ii) Bylaws of Largo Vista Group, Limited
3 (iii) Articles of Incorporation of Largo Vista Inc.
3 (iv) Bylaws of Largo Vista Inc.
3. (v) Articles of Incorporation of Everlasting International Limited
3 (vi) Bylaws of Everlasting International Limited
4. Instruments defining rights of security holders, including
indentures.
None.
9. Voting Trust Agreements
None
<PAGE>
10 Material Contracts
- -(a)Contract: November 25, 1999, Largo Vista/UAPC Partners seller; Mekong
Petroleum Joint Venture Co., Ltd. (PETROMEKONG) buyer; 20,000 metric
tons of diesel oil during the months of December 1999 and January
2000; total contract price approximately $3,300,000 USD. See
exhibits.
- -(b)Contract: December 18, 1999, Largo Vista/UAPC Partners seller; Mekong
Petroleum Joint Venture Co., Ltd. (PETROMEKONG) buyer; 2,600 metric
tons of gasoil 1% sulphur and 3,000 metric tons of unleaded mogas 92
during the month of December 1999; contract price approximately
$430,000 USD for gasoil, and approximately $560,000 USD for mogas 92.
See exhibits.
- -(c)Joint Venture Agreement, On October 12, 1999, Largo Vista with the
United Arab Petroleum Corporation ("UAPC"), named Largo Vista/UAPC
Partners, wherein LVG shall hold 51% of the assets and liabilities,
and shall share 51% of the income and expenses of the JV; and, UAPC
49%.
- -(d)Joint Venture Agreement, on December 12, 1999, Largo Vista/UAPC
Partners Mr. Ahmed Hasan Abdul Qahir Al Shaibani, Dubai, United Arab
Emirates (UAE), to form Largo Vista Group, Ltd. (LLC of Dubai, UAE).
Largo Vista/UAPC Partners will hold 49% (Largo Vista 25% and UAPC 24%)
of the assets and liabilities, and shall share 49% of the income and
expenses of the JV; and, Al Shaibani 51%.
- -(e) No other material contracts.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Signature Title Date
Acting President/ CEO /s/Daniel J. Mendez January 13, 2000
Daniel J. Mendez
Acting Secretary/Treasurer/s/Albert N. Figueroa January 13, 2000
Albert N. Figueroa
Director /s/ Deng Shan January 13, 2000
Deng Shan
<PAGE>
FOLLOWING EXHIBITS WERE IN THE ORIGINAL FILING
Memorandum of Understanding
Wuhan minyi Fuel Gas Petrochemical Co. Ltd (Hereinafter
referred to as Minyi)
Memorandum of Understanding
Guilin Municipal Garden Fuel Gas Pipelines. Ltd.
(Hereinafter referred to as Guocheng)
EX-2.C Articles of Incorporation Xinmao
EX-2.D AGREEMENT AND PLAN OF REORGANIZATION
EVERLASTING INTERNATIONAL, LTD. (hereinafter "Everlasting")
PROTON TECHNOLOGY CORPORATION LIMITED, a Bahamas
Corporation (hereinafter "Proton");
LARGO VISTA GROUP, LTD.
(hereinafter "Largo"),
CERTIFICATE OF AMENDMENT OF
RESTATED ARTICLES OF INCORPORATION OF
(after issuance of stock)
Largo Vista Group, Ltd.
RESTATED ARTICLES OF INCORPORATION
As Amended December 7, 1998
LARGO VISTA GROUP, LTD.
EX-3.II
AMENDED BY-LAWS OF
(Amended 12/7/98)
LARGO VISTA GROUP, INC.
EX-3.III
CERTIFICATE OF SECRETARY
By Laws Certificate
EX-10.A.I
APPROVAL CERTIFICATE OF ENTERPRISES WITH FOREIGN INVESTMENT IN THE
PEOPLES REPUBLIC OF CHINA
EX-10.A.II
BUSINESS LICENSE OF ENTERPRISE IN THE
PEOPLE'S REPUBLIC OF CHINA
REGISTERED NO. 000010
EX-10.A.III
BUSINESS PERMIT TO ENGAGE IN LPG
BUSINESS IN YUNNAN PROVINCE
<PAGE>
EX-10.B
AGRICULTRUAL BANK OF CHINA YUNNAN
PROVINCIAL BRANCH DOCUMENTS
No.477(1996)
NOTICE OF SUBSIDIARIES OF THE
AGRICULTURE BANK OF CHINA, YUNNAN
PROVINCIAL BRANCH ACTING AS THE AGENTS
FOR THE COLLECTION AND RECEIPT OF
PAYMENT FOR KUNMING XINMAO
PETROCHEMICAL INDUSTRIAL CO., LTD.
EX-10.C
Agreement On Supply of Liquefied Petroleum Gas
EX-10.E
Method of Insurance for LPG Credit
EX-21
ARTICLES OF INCORPORATION OF KUNMING
XINMAO PETROCHEMICAL INDUSTRIAL CO.,LTD.
NEW EXHIBITS FILED WITH 10-SB A/1
EX - 3. IV
EMPLOYMENT AGREEMENT
Daniel J. Mendez
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is by and between
DANIEL J. MENDEZ ("Employee") and Largo Vista Group, Ltd. ("Employer").
1. Employment. Employer employs Employee and Employee accepts
employment under the terms and conditions of this Agreement.
2. Term. The term of this Agreement shall be for Twelve (12)
months. Upon mutual agreement of the parties, this Agreement may be
extended for an additional period upon written notice given to Employee not
less than one month prior to the termination of this Agreement.
3. Compensation. For all services rendered by Employee,
Employer shall pay Employee a salary commencing on the date written above
of $150,000 per year, payable in equal monthly installments due and payable
by the first day of each month in the amount of $12,500 each. Salary
payments shall be subject to withholding and other applicable taxes.
a. Earned Bonuses. Employee shall be entitled to bonuses
according to net sales productivity of Employer as set forth in Exhibit
"A".
<PAGE>
4. Duties. Employee is engaged as president of Employer.
Employee shall have authority to those decision making and managerial
duties regarding the business of Employer and shall supervise and direct
all of the business of Employer according to business plans and strategies
provided by Employer, reporting only to the board of directors. The
precise services of Employee may be extended or curtailed by mutual written
agreement of Employer and Employee from time to time.
5. Extent of Services. Employee shall devote his entire
productive time, ability and attention to the business of the Company; and
shall perform all duties in a professional, ethical and businesslike
manner. Employee will not, during the term of this Agreement, directly or
indirectly engage in any other business, either as an employee, employer,
consultant, principal, officer, director, advisor, or in any other business
capacity, which is competitive with the business of the Company, without
the express written consent of the Company.
6. Working Facilities. Employer shall provide offices,
stenographic help and such other facilities and services as are suitable to
Employee's position and appropriate for the performance of his duties.
7. Health Insurance. Employer shall provide health insurance
for Employee and his family with an insurance carrier of Employer's choice.
8. Expenses. Employee may incur reasonable expenses for
promoting and operating Employer's business, including expenses for
entertainment, travel and other items. Employer will reimburse Employee
for all such reasonable expenses upon Employee's presentation of an
itemized account of such expenditures. If the Company advances cash or
credit to Employee, Employee shall provide an itemized account of such
expenses.
9. Employee as a Shareholder of Employer. Employer recognizes
that Employee may be a shareholder of Employer pursuant to the "1999
Employee Stock Purchase Plan".
10. Products. All products and/or services designed, improved
or enhanced by Employee, will be the sole property of Employer and Employee
will not be allowed to possess or use them unless Employer agrees in
writing thereto.
11. Vacations. Employee shall be entitled each year to a
vacation of twenty (20) work days during which time his compensation shall
be paid in full. Vacation days shall be earned and accrue on a pro rata
basis each month. Vacation days accrued by the Employee and unused on
December 31st of each year may be carried forward and used during the next
12 month period provided, however, that no vacation days may accrue beyond
24 months. Upon termination of employment, Employee shall be entitled to
pay, at the then current salary, for all unused vacation days accrued
and/or carried forward to a maximum of forty (40) days.
<PAGE>
12. Disability. If Employee is unable to perform his services
by reason of illness or incapacity for a period of more than two months,
the compensation thereafter payable to him during the continued period of
such illness or incapacity shall be reduced by fifty percent (50%).
Employee's full compensation shall be reinstated upon his return to full
employment and discharge of his full duties. Subject to all applicable
federal and state laws, and notwithstanding anything to the contrary,
Employer may terminate this Agreement for cause at any time after Employee
shall be absent from his employment, for whatever cause, for a continuous
period of more than three (3) months, and the obligations of Employer
shall thereupon terminate. If it is determined, pursuant to the terms of
this Agreement, that Employee is disabled or incapacitated and cannot
discharge the duties and responsibilities contemplated hereunder, Employee
shall have the right to hire an employee to replace him in whatever
position he may have at that time.
13. Termination without Cause. Without cause, Employer or Employee may
terminate this Agreement at any time upon thirty (30) days' written notice
to Employee; and, if requested by Employer, shall continue to render his
services, and shall be paid his regular compensation according to paragraph
3 above, up to the date of termination. In addition, there shall be paid
to Employee on the date of termination a severance allowance equal to One
(1) month full salary at his then current annual salary.
14. Termination With Cause. Employer may terminate Employment
"with cause" without notice, and Employee shall be paid his regular
compensation up to the date of termination according to paragraph 3 above.
For purposes of this Agreement, termination "with cause" shall be
for any of the following:
a. Any breach of any material obligation owed to the
Company;
b. Any breach of any term of this Agreement or neglect of
his duties described hereunder;
c. Any act of insubordination, or failure to follow the
directive of the Company's board of directors; or
d. Any dishonest conduct, conviction of a felony or any
act involving moral turpitude.
15. Termination Upon Sale of Business. Notwithstanding anything
to the contrary, Employer may terminate this Agreement upon thirty (30)
days' written notice upon the happening of any of the following events
which any one event will be treated as a termination without cause for
purposes of severance allowance pursuant to this Agreement.
a. The sale by Employer of substantially all of its assets
to a single or a group of associate purchasers;
b. The sale, exchange or other disposition, in one
transaction, of at least two-thirds of the outstanding common shares of the
Employer;
<PAGE>
c. A decision by Employer to terminate its business and
liquidate its assets; or the merger or consolidation of Employer in a
transaction in which the shareholders of Employer receive at least fifty
percent (50%) of the out- standing voting shares of the new or continuing
corporation.
d. Notwithstanding the foregoing, should Employer agree to
sell all or substantially all of its assets, Employer shall ensure that the
shares of common stock then owned by Employee are sold at the same price
and upon the same terms as that of other shareholders; and Employer shall
make a reasonable effort to ensure that the purchasing person and/or entity
shall retain Employee as its employee upon the same
terms and conditions as contained in this Agreement.
16. Notices. Any notice required or desired to be given under
this Agreement shall be deemed given if in writing sent by certified mail
to the parties at the address hereinbelow.
17. Waiver of Breach. The waiver by Employer of breach of any
provisions of this Agreement by Employee shall not operate or be construed
as a waiver of any subsequent breach by Employee. No waiver shall be
valid unless in writing and signed by an authorized officer of Employer.
18. Death During Employment. If Employee dies during the term
of employment, Employer shall pay to the estate of Employee the
compensation which would otherwise be payable to Employee up to the end of
the month in which death occurs.
19. Assignment. Employee acknowledges that the services to be
rendered by him are unique and personal. Accordingly, Employee may not
assign any of his rights under this Agreement. The rights and obligations
of Employer under this Agreement shall inure to the benefit of and shall be
binding upon the successors and assigns of Employer.
20. Entire Agreement. This Agreement contains the entire
understanding of the parties. It may not be changed orally but only by an
Agreement in writing signed by the party against an enforcement of any
waiver, change, modification, extension or discharge as sought.
21. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California.
22. Integration Clause. This instrument contains the entire
agreement between the parties hereto and supersedes any and all prior
written and/or oral agreements. This Agreement may be altered or modified
only in writing signed by the parties hereto.
<PAGE>
23. Arbitration. The parties agree that they will use their
best efforts to amicably resolve any dispute arising out of or relating to
this Agreement. Any controversy, claim or dispute that cannot be so
resolved shall be settled by final binding arbitration in accordance with
the rules of the American Arbitration Association and judgment upon the
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. Any such arbitration shall be conducted in
Orange County, California. Within fifteen (15) days after the commencement
of the arbitration, each party shall select one person to act as
arbitrator, and the two arbitrators so selected shall select a third
arbitrator within ten (10) days of their appointment. Each party shall
bear its own attorney's fees, costs and expenses and an equal share of the
arbitrator's expenses and administrative fees of arbitration.
24. Attorneys' Fees. Should any party seek the enforcement of
any term of this Agreement, the prevailing party thereunder shall be
entitled to attorneys' fees and costs for the enforcement of such term or
provision.
25. Confidentiality. Employee hereby acknowledges that he has
received information regarding the business of Employer, including but not
limited to customer lists, product information, business strategy, employee
agreements, which information is confidential information (the
"Confidential Information"). The parties hereto recognize and acknowledge
that the Confidential information is proprietary and integral to Employers
business and agrees to keep such Confidential Information confidential and
not disclose the same to any third person, corporation and/or entity for a
period of three (3) years subsequent to the termination of this Agreement
or termination of Employee as an Employee of Employer, whether such
termination is with or without cause. Information gained by Employee prior
to employment and provided to Employer by Employee at inception of
employment shall not be confidential for purposes of this Agreement.
Effective Date. The effective date of this Agreement is January
1, 1999. IN WITNESS WHEREOF, the parties have executed this Agreement on
this _________ day of _________________, 1999.
EMPLOYEE:
_________________________________
Daniel J. Mendez
EMPLOYER: Largo Vista Group, Ltd.
By:_____________________________
Albert N. Figueroa, Secretary/Treasurer
<PAGE>
EX -3. V
CONSULTANT AGREEMENT
Deng Shan
AGREEMENT FOR SERVICES
This Agreement is made and entered into as of the 1st day of January,
1999 ("Effective Date"), by and between Deng Shan ("Consultant"), and Largo
Vista Group, Ltd., a Nevada Corporation ("Client").
In consideration of the mutual covenants contained herein the parties agree
as follows:
1. Services to be Rendered by Consultant:
a. Consultant shall be available, from time to time as required by
Client to provide general business consultation services to
Client regarding business in China.
b. As required by Client, Consultant shall perform research and
analyses pertinent to the purchase of any business entity or real
estate in China in which the Client contemplates involvement;
make recommendations concerning legal issues, financing, and
other terms and conditions pertaining to the transaction.
c. As required by Client, Consultant shall perform research and
analysis pertaining to investment opportunity in China with a
focus on LPG companies needs and requirements; utilities,
communications; manufacture, marketing and sale of water
purification systems and components, consult with potential
merger candidates in China, and assist as far as possible in
negotiations with Chinese companies pursuant to formation of
strategic alliances with Largo Vista
2. Compensation to Consultant:
a. Consultant's compensation and remuneration for services performed
under this Agreement shall be $100,000 per year.
b. Consultant may, at the option of the Consultant, elect to accept
common stock of the Company in lieu of cash. The value of the shares shall
be subject to negotiation and agreement between the Consultant and the
Client.
c. Client shall reimburse the Consultant for all expenses incurred in
connection with the performance of his duties and responsibilities for
Client including, but not limited to, air travel, car rental, hotel
accommodations, meals, and other expenses directly related to the rendering
of services pursuant to this Agreement.
3. Confidentiality and Non-Disclosure:
a. Consultant has executed a separate Confidentiality Agreement
which is incorporated by reference herein.
b. The obligations stated in this paragraph shall survive the
termination of this agreement for a period of one year.
<PAGE>
4. Term and Termination:
a. This agreement shall continue from the effective date hereof for a
term of one year. It may be terminated or cancelled by either party giving
not less than 30 days written notice thereof.
b. In the event the agreement is terminated by Client without cause prior
to the end of the term set forth above, Client shall pay Consultant the
equivalent of One (1) month minimum retainer as set forth in paragraph 2.a.
above.
5. Assignment:
a. No assignment of this agreement, or of any right or obligation
hereunder, shall be made by either party without the written
consent of the other party.
6. Miscellaneous:
a. Time is of the essence of each provision of this Agreement.
b. Whenever consent or approval of either party is required, that
party shall not unreasonably withhold such consent or approval.
c. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, representatives,
administrators, successors and assigns.
d. All sums payable under this Agreement shall be paid in lawful
money of the United States of America.
e. This Agreement shall be construed and interpreted in accordance
with the laws of the State of Nevada.
f. This Agreement contains all the agreements of the parties and
cannot be amended or modified except by a written agreement
signed by a duly authorized officer of Client and Consultant and
the same shall then be effective only for the period and on the
conditions and for the specific instances and purposes specified
in such writing.
g. The definitions contained in this Agreement shall be used to
interpret this Agreement.
h. The captions of this Agreement shall have no effect on its
interpretation.
i. When required by the context of this Agreement, the singular
shall include the plural.
j. All notices provided in this Agreement shall be in writing and
shall be sufficient if sent by registered United States mail or
by personal service to the address of each party as set forth
below or any other address provided by each party to the other in
writing subsequent to the execution of this Agreement.
k. The unenforceability, invalidity, or illegality of any provision
shall not render any other provision of this Agreement
unenforceable, invalid, or illegal.
l. Neither any failure nor any delay on the part of either party
hereto in exercising any right, power, or privilege under this
Agreement or at law shall operate as a waiver thereof, nor shall
a single or partial exercise thereof preclude any other or
further exercise of any other right, power or privilege.
<PAGE>
m. The parties shall execute and deliver all documents and perform
all further acts that may be reasonably necessary to effectuate
the provisions of this Agreement.
n. If any party to this Agreement is in default, and the non-
defaulting party commences legal action against the defaulting
party, the non-defaulting party shall be entitled to have and
recover from the defaulting party reasonable Consultant's fees
and costs of bringing the action.
The Agreement set forth above is based on an oral understanding on the
effective date evidenced by past services rendered by the Consultant to the
Corporation. The effective date of this Agreement is January 1, 1999. IN
WITNESS WHEREOF, the parties have executed this Agreement on this _________
day of _________________, 1999.
Consultant Largo Vista Group, Ltd.
By:_____________________________ By:______________________________
Deng Shan Daniel J. Mendez, President
<PAGE>
EX - 10.D
CONTRACT (TEN YEAR LEASING CONTRACT)
Contract
Owner (Party A): Kunming Xinmao Petrochemical Industry Co. Ltd.
Contractor (Party B): Hong Kong De Xiang Tuo Yi Industry Co.
For the purpose of taking the advantage of joint venture company, implement
the Contract of Kunming Xinmao Petrochemical Industrial Co., Ltd. and
protect the economic interest of two parties, and under the leadership of
the Board of Directors of Kunming Xinmao Petrochemical Industrial Co.,
Ltd., the Chinese party (Kunming Municipal Fuel Company) recommends Party B
(Hong Kong De Xiang Tuo Yi Industrial Company) to contract for the whole
operation, and Party B accepts this recommendation. Therefore, the Board
of Directors of Kunming Xinmao Petrochemical Industrial Co., Ltd. has
agreed through discussion that Party B is contracted and responsible for
conducting all business activity of Xinmao Co. and the following agreement
has been thus reached:
I. Term of Contract: ten years from the issuing date of business license,
i.e. from August 28, 1992 to August 28, 2002.
II. Content of Contract: Party B 1. has the full operational power; 2. is
solely responsible for the profits or losses; 3. guarantees Party A's
profit preservation.
III. Target of profit preservation: during the contract period, Party B
shall pay periodically a profit of nine million RMB to the Chinese party.
<PAGE>
IV. Calculation method for profit preservation:
1. The calculation time shall start from August 28, 1992, after three
years, Party B shall return the investment of 3.5 RMB to the Chinese party.
2. From August 28 of the fourth year to August 28 of the fifth year,
Party B shall pay a profit of 1.5 million RMB to the Chinese party each
year.
3. From August 28 of the sixth year to August 28 of the tenth year, Party
B shall pay a profit of 500,000 RMB to the Chinese party each year.
4. The Chinese party shall enjoy the contracted profit paid by Party B
according to the regulations of this contract, and shall not participate
the profit distribution of Party B.
V. Withdrawal and use of Depreciation Expense:
After the return of the investments of both parties, Party B shall
withdraw a depreciation expense at a rate of 10% of the booked fixed assets
as costs. The depreciation expense shall be used for purchasing and
renewing fixed assets of the company or for other costs. The items for
purchase and renewal shall be proposed by Party B and submitted to board of
directors for approval. The assets purchased and renewed should be managed
by Party B.
VI. Rights and Obligations of two parties:
1. The rights and obligations of Party A:
(1) Have the right to supervise Party B to operate legally;
(2) Have the right to check and urge both Chinese and foreign parties in
paying their investments; and
(3) Coordinate the Chinese party to lease to Party B at favorite prices
the operational places and offices. Lease agreements should be signed
through discussion between Party B and Chinese party.
2. Rights and obligations of Party B:
(1) After signing the contract, Party B has the full right to operate the
company independently, including the use of production funds and decide
all production activities;
(2) According to the Articles of Incorporation of the company, has the
right to decide the wages, distribution of bonus, personnel system and
employment of all staff members of the company;
(3) Has the right to determine the mode of interior economic
responsibility system and organization all setting-up;
(4) Has the right to borrow loans from banks independently;
(5) With the consent of board of directors, may apply to the Registration
Bureau for altering business scopes;
(6) Reports the conditions of the company to Party A, submits financial
statements and statistic statements regularly, pays profits to the Chinese
party according to the regulations of this contract and accepts the
leadership of the Board of Directors;
(7) During the contract period, the fixed assets purchased by Party B with
the funds other than the registered capital shall be owned by Party B.
<PAGE>
VII. Modification, dismissal and obligations for breach of contract:
1. From the date of the contract coming into effect, both parties shall
completely fulfill their rights and obligations according to the
regulations of the contract. None of the parties shall modify or dismiss
this contract arbitrarily, or modify or dismiss the contract due to the
alteration of legal representatives of the two parties.
2. Should one of the followings occur, the contract may be dismissed or
modified:
(1). The contract can not be fulfilled due to the force majeure or
natural calamity; and
(2). Party B can not make any profit from the operation due to the
adjustment of national policies and regulations and law.
3. Should either party fail to fulfill the contract, it shall bear the
obligations for breach of contract according to the regulations of economic
laws of the People's Republic of China.
VIII. Others:
1. Any unforeseen matters to this contract shall be solved through
friendly negotiation by Parry A and Party B.
2. The original contract is in quadruplicates, Party A and Party B hold
two copies respectively. Five duplicated copies shall be submitted to the
board of directors.
Party A: Kunming Xinmao Petrochemical Industrial Co., Ltd. (sealed)
(signed by)
Chan Mau Tak Li Kaixin
Xu Ming Huang Youhua
August 28, 1992
Party B: Hong Kong De Xiang Tuo Yi Industrial Company (sealed)
(signed by) Chan Mau Tak and Xu Ming
August 28, 1992
<PAGE>
EX - 10.F
JOINT VENTURE AGREEMENT
LARGO VISTA/UAPC PARTNERS
JOINT VENTURE AGREEMENT
This Agreement is made and entered into as of the 12th day of October,
1999 ("Effective Date"), by and between United Arab Petroleum Corporation
with registered offices located at 4336 Covington Hwy, Suite 107, Decatur,
Georgia 30036 (hereinafter referred to as "UAPC"), and Largo Vista Group,
Ltd. with offices located at 4570 Campus Drive, Newport Beach, California
92660 (hereinafter referred to as "Largo Vista"), and collectively referred
to as "Parties". Each Party, by this "Joint Venture Agreement", agrees to
engage in and carry on as joint venturers in the business of the objectives
set forth below.
OBJECTIVE:
The primary objectives of this Joint Venture is the establishment of a
group that may purchase and sell crude oil, refined petroleum products and
contracts; and to establish and/or operate a petroleum refinery in China.
The business office for this Joint Venture operation may be established at
a location that is mutually agreeable to the parties
TO CARRY OUT the objectives of the joint venture, the parties mutually
agree as follows:
1. The name of the Joint Venture shall be Largo Vista/UAPC Partners. The
parties hereto may enter into agreements that shall be legally binding upon
the Joint Venture provided that the non-contracting party consents to the
agreement in writing.
2. The Term of this Agreement shall commence on the Effective Date above
and continue for Ten (10) years, unless sooner terminated by mutual
agreement or in accordance with the terms herein.
3. The assets and business of the Joint Venture shall be jointly owned by
UAPC and Largo Vista with ownership percentages being designated as
UAPC 49%, and Largo Vista 51%. All profits and operational expenses
shall be shared in the same 49% and 51% proportionate basis.
4. The parties shall each mutually share in the responsibility of the
management of this Joint Venture.
5. The Parties shall mutually agree upon the employment of a general
manager and chief financial officer. The duties of the general manager
shall include, but not be limited to, the following:
(a) Responsibility for hiring, placement, and supervision of all
employees of the Joint Venture, except the chief financial
officer/controller, and all personnel relations requirements
associated with the Joint Venture.
(b) Purchase or acquisition of any and all personal property necessary for
operation of the Joint Venture. Title to all acquired property shall be
taken in the name of the Joint Venture.
<PAGE>
(c) Planning, scheduling, and conduct of all business incidental to
operation of this Joint Venture, including purchase of all supplies,
materials, and services required. The manager shall be responsible
for the sale of the sale of the products or services of the Joint
Venture.
(d) Receipt of and responsibility for all income realized by the Joint
Venture, and the manager shall hold all funds received as a trustee
for the exclusive benefit of the Joint Venturers.
(e) Establishment of a bank account at a bank established and operated
under the laws of any location or jurisdiction that is mutually agreeable
to the Parties.
(f) Disbursement of any funds belonging to the Joint Venture that are on
deposit in the Joint Venture account, for the satisfaction of all debts,
obligations, and expenses of the Joint Venture. The manager shall be
authorized to sign all checks and drafts for these purposes. The
countersignature of the chief financial officer/controller shall be
required for any check in excess of $3,000.
6. The Joint Venture shall keep and maintain a complete set of records
and books of account concerning the operation of the Joint Venture,
which shall be open at all reasonable times for inspection and
examination upon receipt by the General Manager of Five (5) Days
written notice of a request for such inspection or examination by the
inspecting party. An annual financial statement shall be prepared by
the Joint Venture within Sixty (60) days after the end of the fiscal
year of the Joint Venture which shall be December 31st of each year.
7. No assignment of this agreement, or of any right or obligation
hereunder, shall be made by any party without the written consent of
the other parties.
8. UAPC will provide clients and source of products for the trading
operation.
9. The UAPC has authorized Largo Vista, through it's subsidiary (Kunming
Xinmao Petrochemical Industry Ltd.,) to negotiate the purchase or
lease of the refinery located in the P.R.China.
10. UAPC shall be responsible for providing a technical group to
rehabilitate any refinery in P.R. China and coordinate financing for said
project.
11. Full Disclosure And Records: Each party shall at all times be fully
obligated to fully and completely disclose, in a timely manner, any
and all information (written and/or oral) which may exist concerning
the proprietary information developed or acquired in connection with
the operations of the Joint Venture, especially the procuring of
products and sales to clients. This information shall include
accounting and accounts related to the Joint Venture operation.
<PAGE>
12. Non-Circumvention-Disclosure: The parties agree that during the
course of this agreement and for a period of two (2) years commencing
with the effective date set forth above, and in the period leading to
the execution of the trading activities, as contemplated hereunder,
that certain names, telephone and facsimile numbers, and other
electronic addresses or personal or mail introductions that will be,
or already have been, disclosed by each party to others. It is
understood that the foregoing information is furnished by the
introducing/disclosing party to this agreement, and that the other
party shall not make any further contact or transact any business
without prior written consent of the disclosing party.
The above non-circumvention-disclosure provision is intended to ensure
employment of common sense and good faith and fair dealing in its
application and meaning given the sensitive nature of information and
the great but undeniable economic detriment that would befall the
applicable party. Therefore, the parties hereto, each agree to keep
confidential the information in whatever form or manner it is
acquired, for a period of two (2) years from the date of this
agreement, first set forth above.
13. Counterparts: The parties may execute this Agreement in two or more
counterparts, which shall be deemed signed by all the parties, and
each counterpart shall be an original instrument against any party who
has signed it.
In consideration of the mutual promises of the Parties to the terms set
forth in this agreement, each Party has set its hand and seal on date first
recorded above.
____________________________ _____________________________
Daniel J. Mendez Uthman Shakr
President, Largo Vista Group, Ltd. Vice President Operations,
UAPC
Date: _______________________ Date: ________________________
<PAGE>
EX-10. G
JOINT VENTURE AGREEMENT
LARGO VISTA GROUP, LTD., LLC, DUBAI, UAE
MEMORANDUM OF
ASSOCIATION
LIMITED LIABILITY
COMPANY
This memorandum is entered into on the day 12/12/99 Between the parties
as follows:
1. Mr. AHMED HASAN ABDUL QAHIR AL SHAIBANI. U.A.E. Nationality, place &
date of birth Yaghrus, 1957, Holder Passport No. A0013129, Address: Dubai
- Merdif -Pvt. Villa - P.O. Box: Dubai. Hereinafter referred to as:
FIRST PARTY (PARTNER)
2. MR. DANIEL JOHN MENDEZ - U.A.E. Nationality, Place of Birth
(CALIFORNIA) 1952 Holder Passport No: 0344883705 Address Dubai - Deira - Al
Rigga Al Hady Building - Sixth Floor - Flat No: 603, Tel: 267958 - P.O.
Box: 4146 Dubai. Hereinafter referred as:
SECOND PARTY (PARTNER)
3. MR. UTHMAN A. SHAKR - U.A.E. Nationality, place of Birth (GEORGIA)
1957 Holder Passport No: 045004969, Address Dubai - Diera - Al Rigga Al
Hady Building - Sixth Floor - Flat No: 603, Tel: 267958, P.O. Box: 4146
Dubai, Hereinafter referred to as:
THIRD PARTY (PARTNER)
The above mentioned parties agreed to establish a Limited Liability COMPANY
in the Emirate of Dubai under the provisions of UAE Federal law No. (8) of
1984 concerning Commercial Companies and its amendments and in accordance
to the following provisions and terms
ARTICLE (1): DEFINITIONS
1. In this Memorandum, the word shall have the following meanings:
1.1 "THE COMPANY" shall mean the Company formed pursuant to this
Memorandum.
1.2 "Commercial Register" shall mean the commercial register at the
Department.
1.3 "THE COMMERCIAL COMPANIES LAW" means the federal law No. 8 of 1984
concerning commercial companies and its amendments.
1.4 "DIRECTOR(S)" means the director or the directors of the company
appointed pursuant to this memorandum.
1.5 "THE ECONOMIC DEPARTMENT" shall mean the Economic Department of the
Emirate of Dubai.
1.6 "THE MINISTRY" shall mean the ministry of Economy and Commerce in the
Emirate of Dubai.
1.7 "THE PARTNER(S)" shall mean the parties to this memorandum and any
person or legal entity which becomes the holder of a share in the capital
of the company in accordance with the term of this memorandum.
<PAGE>
ARTICLE (2): NAME OF THE COMPANY:
2. "The name of the Company is "LARGO VISTA GROUP, LTD." (Limited
Liability Company) (Hereinafter referred to as The Company).
ARTICLE (3) OBJECTS OF THE COMPANY
3.1 The objective of the company is caring on the trade of: "Crude Oil,
Refined Oil Products"
3.2 The company may not carry on the business of insurance banking or
investment of funds for the account of third parties.
ARTICLE (4): HEAD OFFICE OF THE CO.
4. The head office of the COMPANY shall be in Emirate of Dubai, should be
permissible for the COMPANY to other establish branches, offices
and/or agencies in the United Arab Emirates and abroad.
ARTICLE (5)" DURATION OF THE CO.
5. The duration of the COMPANY shall be ten (10) years Gregorian years,
Commencing on the date of the registration of the COMPANY in the Commercial
Register. Such period will be renewable automatically for similar periods
except if one party informed either party in writing of his wish to
terminate this contract before three months at least of expire date.
ARTICLE (6) THE CAPITAL OF THE CO.
6.1 The capital of the COMPANY in Durham's is three hundred thousand
(300,00) only divided into three hundred equal cash shares (300), the value
of cash share is Dhs one thousand Durham's (1,000.00)
6.2 The capital of the COMPANY is divided among partners in the following
manner:
First Name Share in Cash Percentage
of Partners No. Value of the capital
1) Mr. Ahmed H. Abdul Qahir Al Shaibani
153 153.000 51%
2) Mr. Daniel John Mendez
75 75.000 25%
3) Mr. Uthman Ahmed Shakr
72 72.000 24%
Total: 300 300,000 100%
<PAGE>
6.3 The partners declare that: The value of cash shares has been fully
paid and has been deposited in the COMPANY'S account.
ARTICLE (7): TRANSFER OF SHARES
7.1 Any Partner may transfer his shares in the COMPANY to one or more
partners or to a third party by way of an written instrument notarize by
the concerned authorities.
7.2 If one of the partners intends to transfer his shares with or without
a price to a person who is not a partner, he must notify the other Partners
through the Company's Director about the terms of transfer and the
Company's director must notify the rest of Partners soon to his receiving
of such transfer notice. Any partner may apply to acquire the shares at the
agreed price, in the event of a disagreement on the price, Article 231 of
the Commercial Company Law shall be applied.
7.3 If within thirty days from the date of the notice, none of the
partners exercise their rights to acquire the shares, the partner shall be
free to dispose his shares.
7.4 If more than one of the partners exercise their rights to acquire the
shares under transfer question, this shares shall be divided between them
in proportion to the share which each of them holds in the capital subject
to provisions of Article 227 of the Commercial Companies Law.
7.5 No transfer shall be valid as against the COMPANY or third party until
it is recorded in the Register of Partners and Commercial register. The
COMPANY may not refuse to record transfer in the Register of partners
unless it contravenes the provisions of this Memorandum.
7.6 In all events, the transfer must not result in the reduction of the
shares of the national partners in the capital of the COMPANY to less than
51% of the total shares nor increase the number of partners to more than
fifty nor decrease it to less than two.
ARTICLE (8): REGISTER OF PARTNERS:
8.1 Special Register of Partners shall be prepared by the COMPANY and kept
at its main office which should include the following:
a) Full Name of each Partner:
b) Nationality:
c) Profession:
d) Domicile:
e) Address:
f) Number and value of the shares owned by each of them.
g) Details of all dealings carried out with regard to the shares,
together with the dates thereof.
8.2 The DIRECTOR shall be jointly liable for maintaining the register and
for accuracy of its content, the partners and any interested party shall
have the right to review such register.
<PAGE>
8.3 The COMPANY shall provide both the Ministry and the Economic
Department in January of each year with the particulars recorded in the
register referred to the above and amendments thereto.
ARTICLE (9): MANAGEMENT OF THE COMPANY:
9.1 The Partners have agreed that the Managing director shall be:
1) Mr: Daniel John Mendez - U.S.A. Nationality.
9.2 1. The Director shall be appointed for a period(1) Year (Gregorian)
commencing from the date of registration of the Commercial Register.
Renewable automatically It shall be permissible to reappoint the director
whose period of appointment have or has expired the director shall be
subject to removal in accordance with the Commercial Companies Law or in
such manner as the partners shall agree at a General Assembly.
9.3 The Director shall have all of the powers necessary for the management
of the Company, representing the company and signing on its behalf and
carrying out all acts required by its objects. The Powers of Managing
Director include the following:
1.) The power of the director include representing before all local
authorities, government departments, ministries, all companies,
establishments or other business and documents papers and contracts with or
before them. To represent with the banks to open and close accounts in the
name of the company and to operate such bank U.A.E. accounts to borrow on
behalf of the company and sign all necessary documents, guarantee required
for bank facilities, without responsibility on the first party and signed
papers and documents and guarantee for bank required . Such authorities
shall not be restricted except as provided for by the Commercial Companies
Law and by resolution by the General Assembly.
2.) To acquire, dispose assign, sell, pledge, etc. of any of the assets
of the company.
3.) To sign all documents relating with the labor Department, Immigration
Department, Traffic Department of Commerce.
4.) To appoint and terminate the employees and fix their remuneration.
5.) To do all other acts and deeds in the company's name and for its
interest and benefits.
6.) To borrow funds from third parties or out of own personal source on
behalf of the company, at such terms and conditions as he may deem
reasonable and repay the principal, interest and other financial charges
thereon and to execute all relevant documents supporting the transactions.
7.) To delegate any of this authorities to employees or third parties
where such delegation are expressly not prohibited by the Commercial
Company Law or other regulating or by the General Assembly.
<PAGE>
9.4 The Board of Directors shall convene its meeting in Dubai at the
invitation of the Managing Director or request of any member of the Board
of Directors of the Company.
9.5 Meeting of Board of Director(s) shall not be valid unless the majority
of Directors are present and decision shall be taken by the majority of the
votes of those present at the meeting. Managing Directors shall have a
casting vote in case of tie votes.
9.6 The minutes of the meeting of Board of Director(s) shall be recorded
in a separate register kept at the head office. The minutes shall be signed
by the Directors attending the meeting.
ARTICLE (10): FINANCIAL MANAGEMENT
10.1 The Company's Director shall prepare the Company/s balance sheet
profit and loss account. He shall also prepare a annual report of the
Company's activities, its financial position and the proposal for the
distribution of profits. All the above should be completed within three
months of from the end of the Company's financial year.
10.2 The balance sheet and the profit and loss account shall be submitted
to the annual General Assembly for approval.
10.3 The Director shall within ten days of receipt of the Partners approval
of the balance sheet and the profit and loss account, provide the Ministry
and the Department of Economic Development with the aforesaid documents.
ARTICLE (11): THE GENERAL ASSEMBLY
11.1 The company shall have a General Assembly composed of all the
partners. The General Assembly shall be convened at the invitation of the
director at least once yearly on the date and the place to be determined by
the director during the four months following the end of financial year.
Invitations to attend the General Assembly shall be given by the Director
and the Director must call a General Assembly if so required by the Board
of Supervision, if any, or by a number of Partners holding not less than
one quarter of the capital.
11.2 Invitation to attend the General Assembly if so required by the board
of Supervision, if any, or number of Partners holding not less than one
quarter of the capital. Invitations to attend the General Assembly shall be
sent by registered mail with acknowledgement of receipt addressed to each
Partner at least twenty one days before the date of the meeting. The
invitations must include the particulars of the agenda and place, date and
time of the meeting.
11.3 Every Partner shall have the right to attend a General Assembly
irrespective of the number of shares he owns. A partner may, by proxy,
delegate another partner other than the director to represent him in a
general assembly. Each Partner shall have an number of votes equal to the
number of shares he owns or represents
<PAGE>
11.4 The agenda for the Annual General Assembly must include the following
maters:
a) Review of the report of the director on the Company's activities and
financial position during the year, the report of the board of Supervision,
if any and the auditor's report.
b) Discussion and adoption of the balance sheet and profit and loss
account.
c) Determination of the share in the profits to be distributed among the
partners
d) Appointment of the Director or members determination of their
remuneration.
e) Any other matter within its competence in accordance with the
provisions of the Commercial Companies Law or this Memorandum.
11.5 The General assembly may not deliberate matters not include in the
agenda unless serious issues are disclosed at the meeting which require
discussion. Should any one of the partners request the inclusion of a
specific matter on the agenda, the Director must do so, but if he fails to
do so, the partner has the right to appeal to the General Assembly.
11.6 Every Partner shall have the right to discuss matters included in the
agenda. The Director is obligated to reply to any Partner/s question,
provided that, it is not detrimental to the Company's interest. Should one
of the partners consider the reply of the Director to be insufficient, he
may appeal to the General Assembly, whose resolution shall be binding.
11.7 Resolution of the General Assembly shall not be valid unless adopted
by a number of partners representing at least half of the capital of the
Company. If such majority is not achieved during the first meeting, a
second meeting shall be convened within the twenty one days following the
first meeting. Resolution at this meeting shall be adopted by half of the
votes represented thereat.
11.8 The Director(s) may not participate in voting in on resolutions
relating to discharge of his responsibility for the management.
11.9 Minutes adequately summarizing the discussions of the General Assembly
should be prepared . The minutes and resolutions of the General assembly
should be recorded in a special register kept at Company/s head office. Any
of the partners may review the register personally or through an attorney.
They may also review Company's balance sheet, profit and loss account and
annual report.
<PAGE>
11.10 Without prejudice to the rights of the third parties acting in
good faith, a resolution adopted at a general assembly in violation of the
provisions of the Commercial Companies Law or this Memorandum, benefiting
certain Partners or causing damage to other partners without due
consideration to the Company, shall be void. In this event, only the
partners who had objected to adoption of the said resolution or those were
unable to object thereto for acceptable reasons, may request the
nullification of the resolution. A nullification resolution shall be
considered as void for all partners.
11.11 A resolution of General Assembly to dismiss a Director shall be
valid only if passed by a number of partners representing at least 75% of
the shares in the Company.
ARTICLE (12): THE FINANCIAL YEAR:
12. The Financial year of the Company shall commence after 31st, December
each year, with the exception of the first year, which shall commence on
the date of the registration of the Company in the Commercial Register and
end on 31st December of the same year.
ARTICLE (13): PROFITS AND LOSSES:
13.1 The Company shall allocate 10% of its net profit to create a statutory
reserve. The Partners in the General Assembly may allocate additional
reserves as they see fit. The Partners may resolve that allocation of net
profits be discontinued when the reserve reaches half of the capital.
13.2 The profit shall be distributed between the partners in proportion of
shares which each partners holds in the capital as follows:
1) Mr. Ahmed H. Abdul Qahir Al Shaibani 51%
2) Mr. Daniel John Mendez 25%
3) Mr. Uthman Ahmed Shakr 24%
100%
13.3 Each of the partners shall only liable to the extent of his share(s)
in the capital.
ARTICLE (14): THE AUDITOR
14. The Company shall have one or more Auditors registered in Dubai to be
selected by the Partners at the General Assembly. The Auditor shall be
subject to the same provisions concerning auditors of joint stock
companies.
ARTICLE (15): VARATIONS ON THE MEMORANDUM:
15. It shall not be permissible to amend this Memorandum nor to increase
or reduce the capital in the Company unless it is approved by a number of
Partners holding 75% of the Capital of the Company, nor shall it be
permissible to increase the obligations of the Partners save by their
unanimous consent. A resolution to reduce the capital of the Company shall
not be valid unless it is approved by the Economic Department. The
Director(s) of the Company must serve and deposit the legal documents
relating to the above and any amendments thereto with the Commercial
Registry.
<PAGE>
ARTICLE (16): DISSOLUTION OF THE COMPANY:
16. The Company shall be dissolved for any of the following reasons:
a) The expire of the period specified in this Memorandum unless this
period is renewed.
b) Fulfillment of the object for which the Company was established with
another.
c) Company Amalgamation company.
d) The Partners holding more than a half of the capital of the Company
deciding to terminate the duration of the Company.
e) Depletion of all or most of the assets of the Company making
beneficial investment of the remainder of the assets, if any,
impracticable.
f) Upon the rendering of the decision from the court to dissolve the
Company.
ARTICLE (17): LIQUIDATION OF THE COMPANY:
17. One or more liquidates shall be appointed by the partners at a General
Assembly and in accordance with the provisions of the Commercial Companies
law, unless the partners agree otherwise, upon the dissolution of the
Company. If the liquidation is by decision of the court, the court shall
determine the manner of the liquidation and powers of the director shall
cease when the liquidator is appointed.
ARTICLE (18): NOTICES:
18. Notices sent by the Company to the Partners shall be in the form of
registered recorded delivery letters to the address of each Partner as
shown in this Memorandum, and recorded in the register of partners.
ARTICLE (19): COPIES
19. This Memorandum has been made and signed by the parties, one copy
given to each of the parties, and the other copies for registration
purposes as required by the Commercial Companies Law.
ARTICLE (20): MISCELLANEOUS
20.1 The Company shall not have been a corporate personality and shall not
be allowed to perform its until it is registered in the Commercial
Register. Individuals shall jointly liable for all acts or transactions
performed on behalf of the Company by them prior to its registration.
<PAGE>
20.2 Matters not provided for in this memorandum shall be subject to the
provision of the Commercial Companies Law and its amendments and
ministerial decisions made in implementation therefor.
20.3 This Memorandum and any amendments thereto shall be written in Arabic
Language and notarized by the concerned authority, otherwise the memorandum
and any amendments thereto shall be void. Should there be any amendment,
such amendments must be annexed hereto.
ARTICLE (21): DEVOLUTION IN CASE OF DEATH OR INCAPACITY:
21.1 In case of death of shareholder, title to his shares shall be
transferred to his heirs or legatees according to his personal law. The
heirs or legatees shall choose one of them act their representative in all
dealings with the Company.
21.2 In case a shareholder becomes legally incompetent due to tenancy,
physical disability, insolvency, bankruptcy, winding up or any other cause,
his legal representative shall carry on his rights and obligations in the
company.
21.3 In the event that shareholder dies or a prodigal order is made against
him or his bankruptcy is declared, his heir or personal representative or
creditors shall have no right under any circumstances to demand placing
seals on the assets or property of the company or to divide the same and
shall not interfere with his management. However the heirs of the deceased
shareholder or his representative may continue in the company and appoint
others to represent them or withdraw from the company, in which case the
shares of the deceased shareholders at price to be agreed upon and in case
of failure to reach such agreement then the auditor shall determine the
price. In case of share(s) belonging to UAE shareholder, such transfer
shall be effected strictly in accordance with Article 7.7
IN WITNESS WHEREOF the parties hereto signed this Memorandum of
Association, on the day, month and year herein above mentioned.
Signature of:
First Party
MR. AHMAD H. ABDUL QAHIR AL SHAIBANI
Signature of:
Second Party
MR. DANIEL JOHN MENDEZ
Signature of:
Third Party
MR. UTHMAN AHMED SHAKR
<PAGE>
EX - 10. H
CONTRACT
MEKONG PETROLEUM JOINT VENTURE CO., LTD. (PETROMEKONG)
NOV 25, 1999
CONTRACT
Ref. No. PetroMekong- United Arab /004- 1999
Date. Nov 25th, 1999
Can Tho city' Vietnam
This contract (Reference number PetroMekong- United Arab /004- 1999) made
between: Mekong Petroleum Joint Venture Co., Ltd. (hereinafter called the
"Buyer') and United Arab Petroleum Corporation (hereinafter called the
"Seller".
This Contract witnesseth as follows:
1. Buyer:
Mekong Petroleum Joint Venture Co., Ltd. (PETROMEKONG)
204 Tran Phu Street, Can Tho city, Vietnam,
2. Se11er:
United Arab Petroleum Corporation
4336 Covington Hwy, Suite 107 Decatur Georgia 30035
Te1 (404) 691 7580
Fax: (404) 696.8683
Account Number:
3. Product: Low Su1phur Diesel
4 Quality:
Base on shore tank or ships composite at: load port with specifications as
follows
Item Guarantee Method
- Specific Gravity 60/60 DF 0 82 - 0.86 ASTM
D-1298
- Viscosity Kin Cst 40 DC 1.80 - 5 00 ASTM
D-445
- Plash Point (P.M.C.C), DC Min 60 ASTM D-93
- Water and Sediment, % vol. Max 0.05 ASTM
D-2709
- Ash Content Max 0.01 ASTM D-482
- Carbon Residue, % wt Max 0.05 ASTM D-l89
- Cetane Index Min 48 ASTM D-976
- Distillation 90 %, DC Max 370 ASTM D-86
Sulphur Content, % wt Max 1.0
ASTM D-4294
Copper Strip Corrosion Max No 1
ASTM D-130
Pour Point, DC Max 9 ASTM
D-97
Colour ASTMMax 2.0 ASTM D-1500
<PAGE>
5.Quantity: 20,000 MT Low sulphur Diesel plus/minus 10 % at Seller's
option
6. Quantity and Quality Determination:
Quantity and quality shall be determined by mutually independent inspector
named SGS, Veritas.
Cost and expenses of such inspection at loadport shall be the Seller's
account,
inspection result shall be final and binding upon both the Seller and the
Buyer.
7. Delivery:
Product shall be delivered CIF one safe mooring, at Cantho city, Vietnam
during
26th Nov, 99 to 10th Jan, 2000. Cargo will be discharged by ship-to-ship
transfer at
one of Buyer's nominated mooring points:
(A) Mooring point no. 9:
CC-N1: 09 Deg 59' 34'' 2 N
105 Deg. 50' 14'' 6 E
CC-N2: 09 Deg. 59' 40'' 7 N
105Deg 50' 09" 4 E
B) Mooring point no. 10:
CC -N2:09 Deg. 59' 40" 7 N
105 Deg 50' 09" 4 E
CC-N3: 09 Deg 59' 47" 4 N
105 Deg 50' 04"5E
The partial shipments are allowed as following:
.
Loading dateDischarging date
The first shipment: 26 - 28 Nov, 99 28-31 Nov, 99
The second shipment: 7- 9 Dec.99 9 - 12 Dec, 99
The third shipment 20 - 22 Dec, 99 22 - 25 Dec, 99
The last shipment 5 - 7 Jan,2000 7 - 10 Jan,
2000
The quantity of each shipment 5.000 MT Low Sulphur Diesel
8. Price: CIF Can Tho Port
<PAGE>
The fix price (CIF) is USD 168/MT of Low Sulphur Diesel (US dollars one
hundred and sixty eight per metric ton)
Price shall be quoted up to three (3) decimal points with normal arithmetic
rules of rounded off to apply.
9. PAYMENT.
9.1 In U.S. dollar for full invoice value by Irrevocable Letter of Credit
issued by bank acceptable to Seller payable 60 (sixty) days from actual
B/L date (B/L date count as day one) without withhold, deduction,
discount, counterclaim or offset of any kind against presentation of
Seller's invoice and usual shipping documents.
No interest apply for the first 30 (thirty) days from B/L date. Seller
will charge the Buyer an interest rate of 0.4% per month (fixed rate) for
the rest days if any.
All Banking charges at the Buyer's banking; for the Buyer's account and at
the seller's bank for the seller's account.
If the due date falls on Saturday or banking holiday other than Monday in
New York, payment shall be made on the immediately preceding banking day.
If due date falls on Sunday or Banking Holiday on Monday in New York,
payment shall be made on the immediately following day.
9. 2 The payment shall be made when and only when these shipping documents
are available.
9.2-1 Documents for VietComBank Branch in Cantho (for payment):
Document(s) Pieces Type
Clean on board B/L marked "Freight 03
2 Originals, 1 copy
repaied ".
Signed Commercial Invoice 03 2
Originals, 1 copy
Manifest 02 1 Original, 1 copy
Certificate of Origin 03 1 Original, 2 copy
- Certificate of Quantity (at loadport)02 1 Original, 1 copy
- Certificate of Quality (at load,port)02 1 Original, 1 copy
- Ullage report 021 Original, 1 copy
- Time sheet/ time log, 021 Original, 1 copy
- Master's receipt of documents 02 1 Original, 1 copy
- Master's receipt of samples 02 1 Original, 1 copy
Ship tanks' inspection report or dry and 02 1 Original, 1
copy
cleanliness certificate of loadport.
- Beneficiary's certificate. 01 Copy
- Shipping advise 01Original
-Certificate of Insurance with 021 Original, 1 copy
endorsement "to the order of
petromekong"
<PAGE>
9-2-2 Documents to be presented to the Buyer (for custom clearance):
Document(s) Pieces Type
- Clean on board B/L marked "Freight 03
1 Original, 2 copy
repaied".
- Signed Commercial Invoice. 03 l
Original, 2 copy
- Manifest. 03 Copy
- Certificate of Origin 02 1 original, 1
Copy
- Certificate of Quantity (at loadport)
01 Copy
- Certificate of Quality (at loadport) 01
Copy
- Ullage report 02 Copy
- Time sheet/Time log 02 Copy
- Master's receipt of documents 01 Copy
- Master's receipt of samples 01 Copy
- Ship tanks' inspection report or dry or
01
cleanliness certificate of loadport.
Copy
- Shipping advise. 01 Copy
- Charter party 01 Copy
-Certificate of Insurance with 02 1 Original, 1 copy
endorsement "to the order of
Petromekong "
The documents for custom clearance are sent by fax to the Buyer before the
discharging. One set of originals (original B/L, original invoice and the
other copy shipping documents) is sent directly to the Buyer through the
Vessel's Master.
10. LAYTIME, AND DEMURRAGE:
10.1 . Laytime at discharge places is 36 (thirty six) hrs per 5.000 MT
cargo.
SHINC Laytime commences 6 (six) hrs. after NOR tender or when all fast to
first lightering vessel whichever occurs first and cease upon hose
disconnection.
10.2. Time loss by any of the following shall not count as laytime:
- - Waiting for pilot, tide, daybreak.
- - Time loss by vessel or machine broke down.
- - Shifting Time from anchorage to places of discharging.
- - Any time losses that cause by Crew's fault.
- - Time loss due stormy weather shall be counted as half laytime.
<PAGE>
10.3. Vessel arrives before the first day of the agreed date range, laytime
shall commence when 1st barge along side or 06.00 hrs on the first day
of the date range whichever occurs first. If vessel arrives after the
agreed date range laytime shall conmence when first barge is along side.
10.4. Demurrage rate as charter party rate or max USD 5,000 PDPR. The
demurrage computation to he finalized and reconciled by Buyer and Seller
within 30 (thirty) days from the date of completion of discharge.
Payment of demurrage is settled immediately upon completion if
reconciliation, or on or before 30 (thirty) days from presentation of final
invoice, whichever is earlier.
11 VESSEL NOMINATION AND CONDITION:
The seller at his own costs and expenses shall arrange shipment to the
discharge ports (places) instructed by the Buyer. Any vessel nominated
shall satisfy the following minimum requirements:
Any vessel nominated must have P & I certificate issued by West of England
P & I Club or other International P & I clubs.
Any- vessel nominated must meet the requirements stipulated in the
International Safety Management Code latest issue and amendments
Vessel's age shall not exceed 20 (twenty) years. In case if vessel's age
exceeds 20 years, it could be accepted by the Buyer case by case basis, and
this case the price shall be discounted by US DLR.0.05/BBL.
Before loading cargo, due diligence shall be made the vessel seaworthy and
in every way fit for the voyage with her tanks, values, pumps and pipelines
tight, strong and in good order and conditions and with a full and
efficient complement of master, officers and crew for a vessel of her type,
tonnage and flag.
Seller shall by written notice inform Buyer in advance of the vessel's
information such as vessel's name, class, draft' measurements, flag etc.
for Buyer's verification and acceptance. A copy of' Charter Party shall be
attached for Buyer's reference as well.
12. NOTICE OF SHIPMENT:
12-1Where applicable, at least 5 (five) days prior to vessel's
arrival, Seller
shall advise by fax or telex ETD, ETA and cargo particulars
to buyer.
12-2.36 hours, 24 hours, 12 hours', 6 hours prior to vessel's arrival,
the Seller
shall ask the Vessel's Master to inform by fax or telex to the Buyer or
shipping agent about ETA and other concerned information.
<PAGE>
12-3. Seller shall, at Buyer's request, provide other information for
Buyer's convenience in performing the obligations under the contract.
13. TITLE AND RISK:
Title and risk of loss contamination of the cargo shall pass form seller to
Buyer as the cargo passes the Vessel's permanent flange connection of the
vessel at loadport or when the cargo passes receiving vessel's manifold if
loading via Ship-to-Ship operation.
14. INSURANCE
Insurance shall be for the Seller's account and responsibility.
15. FORCE MAJEURE:
Neither party shall be liable to the other for the delay or failure in
performance of its obligations under this agreement and to, the extent such
delay or failure in performances arise from any cause or causes beyond the
reasonable control of the party affected (hereinafter referred to as "Force
Majeure"), including, but not limited to act of God, acts of government or
government authorities compliance with law, regulations or storm, flood or
earthquake, war (declared or not), rebellion, revolution or riots, strike
or lockouts.
In the event of force majeure, the party so affected shall immediately
provide written notice to the other party of such date and the nature of
such force majeure and the anticipated period of time during which the
force majeure conditions are expected to persist
16. Law and Arbitration:
English law and arbitration in Vietnam in accordance with the Arbitration
rules of
the Vietnam International Arbitration Center (VIAC rules) shall be applied.
17. Ship to Ship transfers:
1n case of S-T-S operation please note as follows:
(A) The entire S-T-S operation is to be approved by the relevant port
authorities in Vietnam, and will be conducted at an approved location as
stipulated by them within the anchorage.
(B) Vessel Master have the right, provided with reasonable explanation, to
suspend S-T-3 operation if He considers it to be unsafe and continue only
after he is satisfied of the safety aspects of the operation.
<PAGE>
(C) All risks and costs in connection with such transfers shall be Buyer's.
18. Other Terms and Conditions:
Other terms and Conditions shall be in accordance with Incoterms 1990 for
CIF sale with latest amendment.
This contract and any amendment or modification shall become effective
immediately upon mutual consents between parties, which shall be evidenced
conclusively by each party's execution hereof or of a written amendment or
modification hereof.
In witness whereof, the parties hereto have executed this Contract by their
authorized representatives as of the date first above written.
Seller Buyer
United Arab Petroleum Corporation Mekong Petroleum J/V Co.,
Ltd.
Mr. Uthman Shakr Dr. Nguyen Thanh Hai
V.P. Operations
General Director
ASSIGNMENT
THE UNDERSIGNED, hereby assigns all rights, benefits and privileges,
and delegates all duties and obligations in that certain agreement by and
between the undersigned and Mekong Petroleum Joint Venture Company Ltd.
(Petromekong), 204 Tran Phu Street, Can Tho City, Vietnam, dated November
25, 1999, attached hereto and incorporated herein as Exhibit "A", to the
Largo Vista/UAPC Partners Joint Venture established on October 12, 1999.
Said assignment shall be legally binding upon the Joint Venture upon
execution of the Approval below.
Uthman A. Shaker 11/26/99
Name Date of Assignment
Vice President Operations
Title
<PAGE>
All terms and conditions of the above referenced agreement are accepted and
approved.
Daniel J. Mendez Uthman Shakr
Largo Vista/UAPC Partners Largo Vista/UAPC Partners
Date: 11/26/99 Date: 11/26/99
<PAGE>
EX - 10. I
CONTRACT
MEKONG PETROLEUM JOINT VENTURE CO., LTD. (PETROMEKONG)
DEC 18, 1999
CONTRACT
Ref. No. PetroMekong- United Arab /004- 1999
Date. Dec 18th, 1999
Can Tho City, Vietnam
This contract (Reference number PetroMekong- United Arab /004- 1999) made
between: Mekong Petroleum Joint Venture Co., Ltd. (hereinafter called the
"Buyer") and United Arab Petroleum Corporation (hereinafter called the
"Seller".
This Contract witnesseth as follows:
1. Buyer:
Mekong Petroleum Joint Venture Co., Ltd. (PETROMEKONG)
204 Tran Phu Street, Can Tho city, Vietnam,
2. Se11er:
United Arab Petroleum Corporation
4336 Covington Hwy, Suite 107 Decatur Georgia 30035
Te1 (404) 691 7580
Fax: (404) 696.8683
Account Number:
<PAGE>
3. Product: Gasoil 1% Su1phur and unleaded Mogas 92 Ron
4 Quality:
Base on shore tank or ship's composite at loadport with specifications as
follows: Gasoil 1% sulphur
Item Guarantee Method
- Specific Gravity 60/60 DF 0 82 - 0.86 ASTM
D-1298
- Viscosity, Kin Cst 40 DC 1.80 - 5.00 ASTM
D-445
- Plash Point (P.M.C.C), DC Min 60 ASTM D-93
- Water and Sediment, % vol. Max 0.05 ASTM
D-2709
- Ash Content Max 0.01 ASTM D-482
- Carbon Residue, % wt Max 0.05 ASTM D-189
- Cetane Index Min 48 ASTM D-976
- Distillation 90 %, DC Max 370 ASTM D-86
Sulphur Content, % wt Max 1.0
ASTM D-4294
Copper Strip Corrosion Max No 1
ASTM D-130
Pour Point, DC Max 9 ASTM
D-97
Colour ASTMMax 2.0 ASTM D-1500
Mosgas 92
Item Guarantee Method
- - Octane number RON Min 92 ASTM D-2699
- - Lead contant, g/l Max 0.013 ASTM D-3341
- - Distillation 10 pct. D.C. Max 70 ASTM D-86
Distillation 50 pct. D.C. Max 120
Distillation 90 pct. D.C. Max 190
FBP. D.C. Max 210
Residue, pct.Vol. Max 2.0
Dry Vapor Pressure at 37.8 D.C., KPA 43-80
ASTM D-5191
Sulfer Content, pct wtMax 0.15 ASTM D-1266
Existent Gum mg/ 100 mlMax 4 ASTM D-381
Induction period, min (s) Min 240 ASTM D-525
Copper Strip Corrision 3 hrs at 50 D.C. Max
No 1 ASTM D-130
Colour UndyedVisual
Density at 15 deg,c0.7 - 0.74
5.Quantity: 2600 MT gasoil 1% sulphur and 3000MT mogas 92 plus/minus 10%
at Seller's option.
6. Quantity and Quality Determination:
<PAGE>
Quantity and quality shall be determined by mutually independent inspector
named SGS, Veritas.
Cost and expenses of such inspection at loadport shall be the Seller's
account,
inspection result shall be final and binding upon both the Seller and the
Buyer.
7. Delivery:
Product shall be delivered CFR one safe mooring, at Thieng Lieng, Vung Tau,
Vietnam during 27th Dec, 99 to 30th, Dec. 99. Cargo will be discharged by
ship-to-ship transfer at
Thieng Lieng, Vietnam .
8. Price: CFR Thieng Lieng Port
The fix price (CFR) is USD 166/MT of gasoil 1% Sulphur (US dollars one
hundred and sixty six per metric ton); USD 188/MT of mogas 92 (US dollars
one hundred and eighty eight per metric ton)
Price shall be quoted up to three (3) decimal points with normal arithmetic
rules of rounded off to apply.
9. PAYMENT.
9.1 In U.S. dollar for full invoice value by Irrevocable Letter of Credit
issued by Vietcombank Can Tho, VietNam payable 30 (thirty) days from actual
shipment reveiving date at discharging port without withhold, deduction,
discount, counterclaim or offset of any kind against presentation of
Seller's invoice and usual shipping documents.
All Banking charges at the Buyer's banking for the Buyer's account and at
the seller's bank for the seller's account.
If the due date falls on Saturday or banking holiday other than Monday in
New York, payment shall be made on the immediately preceding banking day.
If due date falls on Sunday or Banking Holiday on Monday in New York,
payment shall be made on the immediately following day.
9. 2 The payment shall be made when and only when these shipping documents
are
available.
9.2-1 Documents for VietComBank Branch in Cantho (for payment):
Document(s) Pieces Type
Clean on board B/L marked "Freight 03
2 Originals, 1 copy
repaied ".
Signed Commercial Invoice 03 2
Originals, 1 copy
Manifest 02 1 Original, 1 copy
<PAGE>
Certificate of Origin 03 1 Originals, 2 copy
- Certificate of Quantity (at loadport)02 1 Originals, 1 copy
- Certificate of Quality (at load,port)02 1 Originals, 1 copy
- Ullage report 021 Originals, 1 copy
- Time sheet/ time log, 021 Originals, 1 copy
- Master's receipt of documents 02 1 Originals, 1 copy
- Master's receipt of samples 02 1 Originals, 1 copy
Ship tanks' inspection report or dry and 02 1 Originals, 1
copy
cleanliness certificate of loadport.
- Beneficiary's certificate. 01 Copy
- Shipping advise 01Original
9-2-2 Documents to be presented to the Buyer (for custom clearance):
Document(s) Pieces Type
- Clean on board B/L marked "Freight 03
1 Originals, 2 copy
repaied".
- Signed Commercial Invoice. 03 l
Originals, 2 copy
- Manifest. 02 Copy
- Certificate of Origin 02 1 original, 1
copy
- Certificate of Quantity (at loadport)
01 Copy
- Certificate of Quality (at loadport) 01
Copy
- Ullage report 02 Copy
- Time sheet/Time log 02 Copy
- Master's receipt of documents 01 Copy
- Master's receipt of samples 01 Copy
- Ship tanks' inspection report or dry or
01 Copy
cleanliness certificate of loadport.
Beneficiary's certificate 01 Copy
- Shipping advise. 01 Copy
The documents for custom clearance are sent by fax to the Buyer before the
discharging. One set of originals (original B/L, original invoice and the
other copy shipping documents) is sent directly to the Buyer through the
Vessel's Master.
10. LAYTIMF, AND DEMURRAGE:
10.1 . Laytime at discharge places is 40 (forty) hrs. SHINC Laytime
commences 6 (six) hrs. after NOR tender or when all fast to first
lightering vessel whichever occurs first and cease upon hose disconnection.
<PAGE>
10.2. Time loss by any of the following shall not count as laytime:
- - Waiting for pilot, tide, daybreak.
- - Time loss by vessel or machine broke down.
- - Shifting Time from anchorage to places of discharging.
- - Any time losses that cause by Crew's fault.
- - Time loss due stormy weather shall be counted as half laytime.
10.3. Vessel arrives before the first day of the agreed date range, laytime
shall commence when 1st barge along side or 06.00 hrs on the first day
of the date range whichever occurs first. If vessel arrives after the
agreed date range laytime shall conmence when first barge is along side.
10.4. Demurrage rate as charter party rate or max USD 5,000 PDPR. The
demurrage computation to be finalized and reconciled by Buyer and Seller
within 30 (thirty) days from the date of completion of discharge.
Payment of demurrage is settled immediately upon completion if
reconciliation, or on or before 30 (thirty) days from presentation of final
invoice, whichever is earlier.
11 VESSEL NOMINATION AND CONDITION:
The seller at his own costs and expenses shall arrange shipment to the
discharge ports (places) instructed by the Buyer. Any vessel nominated
shall satisfy the following minimum requirements:
Any vessel nominated must have P & I certificate issued by West of England
P & I Club or other International P & I clubs.
Any- vessel nominated must meet the requirements stipulated in the
International Safety Management Code latest issue and amendments
Vessel's age shall not exceed 20 (twenty) years. In case if vessel's age
exceeds 20 years, it could be accepted by the Buyer case by case basis, and
this case the price shall be discounted by US DLR.0.05/BBL.
Before loading cargo, due diligence shall be made the vessel seaworthy and
in every way fit for the voyage with her tanks, values, pumps and pipelines
tight, strong and in good order and conditions and with a full and
efficient complement of master, officers and crew for a vessel of her type,
tonnage and flag.
Seller shall by written notice inform Buyer in advance of the vessel's
information such as vessel's name, class, draft' measurements, flag etc.
for Buyer's verification and acceptance. A copy of' Charter Party shall be
attached for Buyer's reference as well.
<PAGE>
12. NOTICE OF SHIPMENT:
12-1Where applicable, at least 5 (five) days prior to vessel's
arrival, Seller
shall advise by fax or telex ETD, ETA and cargo particulars
to buyer.
12-2.36 hours, 24 hours, 12 hours', 6 hours prior to vessel's arrival,
the Seller
shall ask the Vessel's Master to inform by fax or telex to the Buyer or
shipping agent about ETA and other concerned information.
12-3. Seller shall, at Buyer's request, provide other information for
Buyer's convenience in performing the obligations under the contract.
13. TITLE AND RISK:
Title and risk of loss contamination of the cargo shall pass form seller to
Buyer as the cargo passes the Vessel's permanent flange connection of the
vessel at loadport or when the cargo passes receiving vessel's manifold if
loading via Ship-to-Ship operation.
14. INSURANCE
Insurance shall be for the Seller's account and responsibility.
15. FORCE MAJEURE:
Neither party shall be liable to the other for the delay or failure in
performance of its obligations under this agreement and to, the extent such
delay or failure in performances arise from any cause or causes beyond the
reasonable control of the party affected (hereinafter referred to as "Force
Majeure"), including, but not limited to act of God, acts of government or
government authorities compliance with law, regulations or storm, flood or
earthquake, war (declared or not), rebellion, revolution or riots, strike
or lockouts.
In the event of force majeure, the party so affected shall immediately
provide written notice to the other party of such date and the nature of
such force majeure and the anticipated period of time during which the
force majeure conditions are expected to persist
16. Law and Arbitration:
English law and arbitration in Vietnam in accordance with the Arbitration
rules of
the Vietnam International Arbitration Center (VIAC rules) shall be applied.
<PAGE>
17. Ship to Ship transfers:
1n case of S-T-S operation please note as follows:
(A) The entire S-T-S operation is to be approved by the relevant port
authorities in Vietnam, and will be conducted at an approved location as
stipulated by them within the anchorage.
(B) Vessel Master have the right, provided with reasonable explanation, to
suspend S-T-3 operation if He considers it to be unsafe and continue only
after he is satisfied of the safety aspects of the operation.
(C) All risks and costs in connection with such transfers shall be Buyer's.
18. Other Terms and Conditions:
Other terms and Conditions shall be in accordance with Incoterms 1990 for
CIF sale with latest amendment.
This contract and any amendment or modification shall become effective
immediately upon mutual consents between parties, which shall be evidenced
conclusively by each party's execution hereof or of a written amendment or
modification hereof.
In witness whereof, the parties hereto have executed this Contract by their
authorized representatives as of the date first above written.
Seller Buyer
United Arab Petroleum Corporation Mekong Petroleum J/V Co.,
Ltd.
Mr. Uthman Shakr Dr. Nguyen Thanh Hai
V.P. Operations
General Director
ASSIGNMENT
THE UNDERSIGNED, hereby assigns all rights, benefits and privileges,
and delegates all duties and obligations in that certain agreement by and
between the undersigned and Mekong Petroleum Joint Venture Company Ltd.
(Petromekong), 204 Tran Phu Street, Can Tho City, Vietnam, dated December
18, 1999, attached hereto and incorporated herein as Exhibit "A", to the
Largo Vista/UAPC Partners Joint Venture established on October 12, 1999.
Said assignment shall be legally binding upon the Joint Venture upon
execution of the Approval below.
<PAGE>
Uthman A. Shaker 12/18/99
Name Date of Assignment
Vice President Operations
Title
All terms and conditions of the above referenced agreement are accepted and
approved.
Daniel J. Mendez Uthman Shakr
Largo Vista/UAPC Partners Largo Vista/UAPC Partners
Date: 12/18/99 Date: 12/18/99
