Trader’s Nation CEO Interview September 4, 2008
Interview Transcript
Interview Date: September 4, 2008
Welcome to Traders Nation and I'm your host Kurt Schemers today we have
another original broadcast interview this time with Mary Yang, spokesperson for
Monarc Corporation (MONA:PK)
Mary, welcome to Traders Nation. How are you today?
Schemers :
We’ve noticed that Monarc has been trading very actively, and there’s been a lot of news
coming out of the company as well. Can you give us a brief insight asto the recent
developments that have been driving this market for the company?
Answer:
Frankly, we have had a lot of new and exciting business opportunities come our way in
recent months. It goes back to MonArc’s original acquisition of Good Life China
Corporation late last year.
Good Life was a chain of convenience stores bringing modern retail methods to rural
areas of China, and had grown from 1 store in 1998 to 1,600 stores at the close of 2007.
They were seeking to become a public company in North America, with the intent of
raising capital to fund a very aggressive growth plan. In the first quarter of 2008, it
became evident that Monarc wasn’t quite the right vehicle to provide the large funding
capabilities the chain needed to grow the business. It was decided to spin off the
Company. At the time, MONA shareholders received a stock dividend in GLCC.
MONA then acquired a couple of Nano cap type financial companies in the Canadian
market, but frankly, the business results were disappointing.
However, the door to China had been opened, and the Company more recently acquired
PP365.com. PP365 has been doing a lot of good things, and has accomplished some
major business milestones in recent weeks.
Yet the Company was approached with even more exciting acquisition opportunities, and
in recent weeks, senior management has been tied up in planning to sort out the best
strategy to maximize value for the Company, which we believe will provide the greatest
value for our shareholders.
The result has been to reinvent the business model of the Company, which is just
beginning to the communicated to our key stakeholder groups.
Schemers :
Can you describe the new business model, and how that might affect Monarc
shareholders?
Answer:
The new business model is something of a hybrid, of a SPAC or a Special Purpose
Acquisition Company, taking parts of a traditional business incubator and marrying it
with a consultancy to take companies public. We have realized one of the core
competencies we have developed within Monarc, is the process of taking private
companies public, providing growth opportunities to help them forward their business,
and once they are ready to spread their wings, we can spin them off individually to
generate their own long-term success.
As each company is spun off, our shareholders will, in turn, be rewarded with equity in
the new companies. As such, Monarc is not a traditional business – we are in the
business of providing the knowledge, experience and capabilities to bring deserving
companies into the public forum, and share in their success once they are in a position to
go it alone.
One of the key lessons we learned in the past year, is that we don’t want to place our
efforts in unproven companies. We have been very fortunate in the very recent past to
have a number of excellent acquisition opportunities. This includes our most recent
announcements of regarding the Chinese based oil company, Hubei Chuguan Industry
Co. Ltd , and most recently, MCD, a very well established and successful Chinese based
direct marketing company active in 18 countries worldwide. Both of these companies
have several million dollars in assets and revenues. These are real companies with real
assets, revenues and are true small and midcap companies that are able to stand alone on
an exchange such as OTCBB or even AMEX for example.
Schemers :
Well, I tell you Mary, that’s an awful lot to digest. First, can you tell us a bit more how
this new approach is beneficial to Monarc Shareholders? Also, tell us a little bit more
about the companies you just mentioned as acquisition targets spinning these companies
off? Plus, the timeframe to complete this process
Answer:
Let’s start with a little information about the companies we just mentioned.
Hubei Chuguan Industry Co. Ltd., the Chinese oil company, is part of a large
conglomerate with top line revenues of over 80 million dollars and assets valued at over
400 million. Hubei Chuguan Industry Co. Ltd. specializes in the mitigation of
environmental factors generated by the oil industry. Current revenues are 10 million
dollars. That in itself speaks volumes.
MCD is an International enterprise group that operates a direct marketing company
specializing in natural herbal based cosmetics. Currently MCD has over 7,000 members
in China alone, whose families enjoy the high quality products offered by the company.
Total gross sales are projected to reach $2.5 billion US worldwide by the end of 2010,
generating gross margins in the several million dollar range – after accounting for
product costs, marketing and down-line commissions. The company is active in 18
different countries around the world.
PP365 is doing some terrific things in online gaming and content sharing in the Chinese
market, which are relatively new concepts in China.
We also hold interest in Inotrek Inc a Chinese based Broadband ISP for the hotel industry
with its own proprietary technology.
Schemers :
OK. So if I understand correctly, Mary, you are in the process of acquiring them, or you
own some of them already either in a majority or a minority position, and then
subsequently plan to spin them off? How does that benefit Monarc shareholders yet
again?
Answer:
It’s a relatively simple value proposition. As I noted previously, these companies are
established, proven, profitable and have critical mass. With the exception of MCD, what
they don’t have is the broad shareholder base of a public company, or awareness from the
investment community, especially in Western markets. We bring them public inside of
Monarc, which provides significantly broader exposure to investors than they could even
achieve on their own in a similar timeframe. We nurture them to grow their businesses to
the next level. Once they are ready, and a suitable buyer is located we spin them off, and
our shareholders receive dividends in the newly minted public companies. In essence, if
we achieve our objectives, our shareholders can now expect to receive dividends in
stream of good solid companies on a regular basis. Our projections are 4 and 6 a year.
Schemers :
What about the Company management. You’ve got a lot of companies under one
umbrella. How do you manage all of those different companies? And two, obviously,
there has to be a core management team to manage this process.
Answer:
That is a very astute question. Mr. Garr Winters started us of down this road in the past
few months. We will be appointing a new CEO to guide the company in its new mission.
We have a new CEO in mind who is a professor of economics at a major University. He
is frequently approached for advice by small and mid cap companies, meaning companies
in the 10-20 million dollar revenue range with assets of 20-50 million dollars. He
maintains a very strong influence in the Asian market force especially China. As for
managing so many different businesses, the simple answer is that we can’t and we won’t.
We want each company to continue managing their core business. After all, they are
already proven and successful. We will, however, structure operating agreements where
Monarc takes control of corporate governance issues, regulatory issues and management
of the companies with respect to capital markets in North America, and possibly Europe,
where appropriate.
Schemers :
What kind of time frame are you looking at in terms of the companies you mentioned?
Answer:
We’re on the clock with most of these deals. We want to complete the new acquisitions
within a 30 – 45 day time frame. We are also lining up groups interested in buying them,
once they are established in North America. We expect to complete at least most of the
divestitures like PP365 within the quarter. The oil company may be a very quick
turnaround, as their numbers are great from what we’ve seen, and they are relatively
mature. MCD may take a little longer, as there is more that can be done to add value to it
once it is vended into Monarc.
Schemers :
Alright Mary, let’s talk about the share structure, how does that look?
Answer:
There are 650m million shares authorized, with roughly 350 million outstanding. The
company has recently entered into a lock up agreement with all of its Chinese and North
American majority shareholders whereby amongst other things the Company agreed that
no further financing will take place, or any other form of dilution until dividends are spun
out, The Oil Company deal has been closed, and the China based MCD marketing
Company has been closed.
Schemers :
The market cap of the company is relatively modest, alright, under a million dollars? Is
that a fair valuation?
Answer:
Not any more. Not by any stretch of the imagination. We hit a few speed bumps over the
last year, and frankly, we just weren’t achieving our potential. We knew we were on the
right road, but it took some tinkering to develop this new corporate vision. We think
there is a lot of upside potential in the stock valuation at this point in time. With the lock
up agreement in place and the existing majority shareholders increasing their positions in
the Company, we feel we can finally restore the majority of the eroded value of MONA.
Schemers :
Alright now, we’ve talked about a lot of things here today without a doubt Mary, where
can investors get more information on the company, and can you summarize MONA’s
concept and the business model.
Answer:
We’re getting as much information out to the market as we can. We’ll be issuing
additional press releases, and filings as well as posting information on the Pink Sheets to
get information into investors’ hands as quickly as possible. Our corporate web site
www.monacorporation.com is also a great source of information. We also update our
records on www.pinksheets.com frequently.
Our webmaster will unfortunately have to play catch-up, as modifying our website is a
little more complex, and business developments are happening in a very compressed
time-frame.
To summarize the MONA’s concept and the business model, what I will say is that once
we get our program rolling one would be hard pressed to find a Pink Sheet listed
company with so much to offer in terms of assets, revenues and operating subsidiaries
which over time will all be spun out to either other Pink Sheet companies, OTCBB or
AMEX companies. When an investor makes their decision to become a MONA
shareholder they will, by default, become a beneficiary shareholder in several publicly
listed Chinese or European companies trading in the US markets over the course of the
next year or so. We anticipate that this pattern can continue into the foreseeable future.
Wrap up:
Let me give that web address out again, that’s www.monacorporation.com. And also
www.pinksheets.com, also right here at www.tradersnations.com/mona.sctml. My name
is Kurt Schemers your host of Traders Nation and this has been an original broadcast
interview this time with Mary Yang, spokesperson for
Monarc Corporation (MONA:PK). Always remember keep your eyes on your radar and
your ears on us.
Mary... Thanks for being on Traders Nation today
