Official Minutes

of the

Transnational Research Associates Meeting

Held December 21, 1999

Present were: Z.Y. A.M., V.S. Absent were: H.A., H.S. and K.M.

1. The meeting was called to order at 9:00pm by A.M. who briefly outlined the nature and purpose of the proceedings. The main objective of this meeting was to discuss the probable structure of an import-export branch of Transnational and to explore a number of transactional options for the generation of profit to be shared by all members. Attention was devoted to a list of almost twenty possibilities (attached), prepared in advance by A.M., for creating capital flow and income for Transnational. In view of the absence of three members of the group, certain introductory remarks were deferred until mid-January when all members will be present.

2. Discussion focused, however, on the importance of being able to contact the properly empowered person or persons in a position of authority to make binding purchase decisions in the country importing goods and merchandise. Z.Y. pointed out that he had spent up to six months in Juarez attempting to finalize a business transaction related to Chinese-fabricated medical supplies and failed to locate the authorized individual, although many false promises were made by low and mid-ranked Mexican Health Ministry officials. It is important to avoid useless efforts and lost time, all agreed.

3. V.S. explained that his uncle from Guatemala City was arriving in Las Cruces for the New Year Holiday. V.’s uncle is employed as Executive Vice-President in charge of Finance for Avicola Corporation, a major purveyor of food and food services throughout all of Latin America. V.’s uncle is, in fact, one of the top five executives in the corporation, he confirmed, and will be in a position to authorize purchase of a wide variety of merchandise.

4. Z.Y. expressed optimism that his contacts in Shanghai could easily supply any type of manufactured products required by Avicola and could do so at the lowest cost per unit in the world, given the availability of manpower and low costs in Mainland China. Manufacturers’ costs quoted out of Shanghai would be on the order of from 1/6^th to 1/10^th of normal world market prices. This highly favorable cost/price structure would enable Transnational to realize significant profits on the sale of medium and large quantities of merchandise to V’s uncle, and would still provide high quality, reliable goods to Avicola at extremely attractive prices.

5. V.S. expressed reservations about the possibility of Transnational being ‘cut-out’ of any contractual deal if the client preferred to deal directly with Shanghai suppliers and manufacturers. Z.Y. explained that most executives in positions of authority honor their word and feel bound to any contractual agreement they may sign with intermediaries such as Transnational. Furthermore, they are often too busy with other corporate matters to spend the time and effort necessary to circumvent a firm like Transnational, which is providing them a useful service in (1) locating reliable suppliers and in (2) expediting shipment at low cost.

6. Those present then discussed the wide range of merchandise that could be shipped, cost effectively, from Shanghai directly to Avicola in Guatemala City. In particular,

1. Computers and computer software were enthusiastically raised as a distinct possibility. Mainland China is able to provide all components, such as printers, monitors, hard-drives, CPUs, software and accessories at very low prices, and still guarantee high-quality performance. This type of merchandise could generate substantial profits for Transnational and would also result in a high degree of customer-satisfaction.
2. Restaurant supplies, food service equipment and other items were also considered likely to generate high profit margins in large quantities.

7. Z.Y. confirmed that catalogs of all merchandise could be provided, along with samples for inspection by V’s uncle or, later, by Avicola directly in Guatemala City.

8. Discussion ranged over past experience in the local area. A.M. noted that, if merchandise were to be shipped through the USA, complications could arise in terms of customs duties, transportation taxes and so forth.

9. Z.Y. confirmed that as a rule of thumb one sealed container shipped from Los Angeles to El Paso would incur a $900 to a $1,000 shipping cost. He noted that this rate was minimal in comparison to the potential $100,000 profit that could be generated per container of merchandise, depending, obviously, on the type of equipment or merchandise being shipped, and the cost/price differential. However, $100,000 was a reasonable expectation on many types of shipments; this profit could be repeated as often as containers continued to flow to the client in Mexico or Guatemala.

10. The meeting drew to a close at about 10:30pm with a pledge to discuss the actual structure of Transnational, the profit-sharing methodology to be put in place, and the remaining 15 or more transactional options (notably those involving Kuwait, Japan and the USA) in mid January.

Copies of these December 21st minutes are being circulated to the six authorized members of Transnational.

A.M./12-23-99.