This might help.
Jan 2, 2001
TO OUR STOCKHOLDERS, PARTNERS AND EMPLOYEES
In evaluating 2000, the past twelve months has been a tremendous challenge - hard on
some, less difficult on others, but a definite test of character for all. One of the highest
priorities was to obtain approval from the SEC, a prerequisite to LGOV stock qualifying
to continue enjoying the benefits of trading on the OTC Bulletin Board. This milestone
was achieved as the SEC officially approved Largo Vista as a reporting company in July.
The task was arduous and time consuming, and required a great deal of diligence and
commitment of resources; however, during the process, we were treated quite
respectfully by the SEC, and I acknowledge the magnitude of their task which was much
more difficult than our obligation to comply.
Thus far the year 2000 has been one of setting the stage for future events. It has taken
longer than we anticipated establishing relationships in certain key areas to permit
execution of our plans and accomplishment of our objectives. Company resources are
totally focused on the overall objectives of:
1 Becoming the largest LPG company in China;
2 Leveraging off unique China licensing advantages to establish key relationships
globally in the petroleum industry, to seek new customers outside of China, and to obtain
LPG at lower cost to improve our profit margins.
3 Seeking other opportunities related to our key and unique presence in the China
market; and,
4 Building a strong management team that can leverage off our accomplishments to
propel us toward achieving our objectives in China and worldwide.
Management development, being a primary ingredient in our future success, requires a
great deal of diligent searching. It has been difficult to find people who can comprehend
our Corporate concept and formulate workable plans to access the vast, untapped
potential of the Chinese consumer base. The company seeks qualified individuals who
desire compensation based on accomplishment of company goals and objectives.
CHINA OPERATIONS
Largo Vista is committed to become the largest LPG company in China. Chinese laws
continue to be in our favor, being as far as we know, the only foreign joint venture allowed
to legally retail petrochemicals throughout China. Although there are no guarantees, we
are not aware of any factors that might cause anticipation of changes in the near future.
WTO will bring changes eventually, we feel China will ease up the telecommunications
arena before the energy side. We believe China will officially join WTO the first half of
2001.
Largo has proven with many years of front line experience that certain dynamics must be
understood and integrated into operations for success in China's market environment.
With the ultimate objective of controlling the LPG retail market, our primary strategy has
been to gather new customers through acquisition of competitors and by providing higher
standards of reliability and service to engender greater consumer reliance in our privately
owned and operated company. Chinese authorities estimate that demand for LPG will
not be met until 2010. The minimum LPG price law of April 1999 has helped Xinmao to
better compete with the state-owned companies, and we plan to continue maintaining
very lean operations during our efforts to expand.
Largo Vista will continue to seek strategic alliances with outside entities that may enable
a combination of talent and resources for a more efficient and synergistic approach in
accessing the Chinese consumer base.
Many large petroleum companies have invested well over a billion US dollars in China
and yet it does not appear that any of them have control over any retail operations. As
Largo Vista moves into 2001 we anticipate communications with these companies to
consider mutually advantageous options.
AMERICA'S GATEWAY TO VIETNAM
Interest in Vietnam arose initially due to Xinmao's selling LPG on a small scale at the
Vietnam border. A study of Vietnam indicated that, with over 90% of its population able to
read and write, Vietnam is rapidly moving toward a more efficient market-based system.
Currently Vietnam imports over 7 million metric tons per year of petroleum products, and
estimates 11 million MT per year will be needed by 2003.
After receiving an invitation from several Vietnamese petroleum companies, we decided
to investigate the feasibility of a strategic partnership with Vietnam realizing that if Largo
Vista could obtain petrochemicals from the Gulf, further expansion into Vietnam was a
natural extension of business. We were encouraged to discover many similarities to our
10-year experience in China. We met with key people and were encouraged to enter into
an agreement to supply shipments of fuel oil. Largo's licenses permit a broad base of
activities that include wholesale, retail, import and export of all by- products of crude oil
throughout Mainland China. The results indicate a viable and lucrative opportunity for
product worldwide.
DUBAI, U.A.E.
Before confirming any transactions in Vietnam, we wanted to ensure a source, so we
traveled to U.A.E., where we had made some initial contacts. A strategic alliance with a
source of crude oil there offers many exciting advantages to Largo Vista. The concept of
world distribution seems to be evolving into a reality. We investigated a strategic
partnership with two private companies. The potential partnership was to be one of a
sponsorship with Largo Vista, a requirement under the laws of the U.A.E. We attended
several meetings with related banks and top international securities firms in Dubai. We
discussed the possibility of a blending plant and land storage tank farms for bulk storage.
It soon became apparent that although those in power would not allow any of the major oil
companies in to compete against them; there was a genuine interest in the participation
of Largo Vista, especially with its inroads to the Chinese market and with our stock
movement during this period. Largo Vista was showing NASDAQ potential with positive
feedback for a future role.
BEIJING
In Beijing we met with Unipec, China Oil and Petro China. Unipec a division of Sinopec
which is one of Largest companies in China. Sinopec's activities range from upstream
exploration of oil and gas, to downstream products, refining, sales and marketing. Unipec
controls all the import and export of crude oil in China, and Sinopec controls the refineries
operated by China oil. Our meetings were to cover the processing side of our operation.
And of informing the government we had no intention of competing with their existing
customers, and confirming the status of Xinmao's licenses to ensure that any non
-domestic oil purchased by us could be processed under agreement in China's
refineries. As result, the meetings were very successful, and the door is now open to
trade crude oil from the Gulf for refined products in China. Trading for LPG could become
a reality once we confirm our sources of supply.
VIETNAM BIDS
Based on certain promises received from sources in the U.A.E. we made a bid to
Vinapco (Vietnam Air Petrol Co), which supplies fuels to factories, companies and
industrial parks, and is the sole supplier to all domestic and international airlines in
Vietnam, which was accepted. After entering into an agreement with Vinapco, we began
to arrange for purchase and delivery from the U.A.E. At this point we began to experience
problems with our sources in securing product for delivery. Some things represented to
us were not accurate, including several promised banking relationships that turned out to
be weak. During this critical period, we could not afford to make any major mistakes, so
Largo Vista's management spent three months in Dubai working toward establishing a
presence there, setting up operations that could be used as a platform for delivery to
Vietnam, China and other potential customers.
During this time we also re-evaluated our original U.A.E. partnership, and after many
meeting with other groups, we decide to form a new partnership with the Hadher Group.
The agreement which is being finalized, will provide official registration of Largo Vista in
the U.A.E., a license to trade petroleum products in the Emirates, and a link to the
legitimate petroleum traders.
The time spent on this learning experience propelled us forward, permitting us to meet a
tight delivery deadline to Vietnam. However, a choice had to be made to either renege on
the contract and abandon opportunities in Vietnam, or solidify and prove our reliability by
delivering product even though it was at a loss. Largo Vista made the decision to
establish its trustworthiness by making the delivery. This difficult decision was similar to
one we made a few years ago in China. The China decision proved fruitful. Likewise, we
determined that the results in Vietnam should be positive in the long-term.
WORLD TRADE ORGANIZATION
When China officially joins the WTO, it will be extremely beneficial to Largo Vista over the
long-term. We are continuing to develop relationships in parallel stages that are intended
to enable us to interact to changes in political, social and economic policies internally and
internationally. As China continues to open markets, new opportunities continue to fall
into place. Largo Vista is positioned to benefit from its market development.
WUHAN, LARGO'S REPRESENTATIVE OFFICE
The opening of our new office in Wuhan, in the Hubei Province, centrally located in China,
will function as the hub of operations for Largo Vista. Wuhan, the fifth largest city in China
is home to a major deep water port on the Yangtze River.
Wuhan is taking the lead on WTO opportunities, as a major center of education and
technology it is well on its way to becoming the "Optical Valley of China" Our office paves
the way for opportunities in both directions as Largo's "China's Gateway to the U.S.A." is
officially opened. With the help of Proton which is strategically set as the Chinese side of
opportunity for Largo Vista, we can start to bring opportunities to the USA.
The opportunities considered will be opened for comments from our shareholders
through our website. (www.largovista.com) Knowing our shareholders come from various
backgrounds and experience we could effectively save time and money doing due
diligence and market comparison through a shareholder or associate with a related
background to the considered product. This could open an opportunity for any
shareholder or associate involved.
OUR COMMITMENT
The months spent with the SEC, Vietnam the U.A.E. has not stopped our progress, but
merely slowed us down. Buy early 2001 Largo Vista should be up to speed. Looking
ahead, we will continue to strive for world wide opportunities that present financial growth
that can be integrated into a business plan. Largo Vista is well positioned to aggressively
move ahead. With Largo Vista's headquarters centrally located in China and through
successful execution of our strategies, we will form strategic alliances with foreign entities
with the objective of delivering maximum value to you. We appreciate your trust as we
complete our design for growth and begin to capitalize on its advantages.
I personally want to thank everyone for your support during this challenging time. I realize
how much discipline and strength it took for some to hold the stock through this period,
and I truly respect those individuals with the fortitude and discipline to continue with us. To
all the journey is just beginning!
Daniel Mendez
President and CEO
R |
