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CONFERENCE TRANSCRIPT
*** cmih_ceo has joined #value-stock.com
* TJ^ Good afternoon Mr. Rojek and welcome to www.value-stock.com. We
appreciate you taking time to talk with us.
Hello Mr Rojek
welcome, Ross
Welcome Mr. Rojek
Welcome Mr. Rojek
* TJ^ At this time the floor is yours.
Ok, where are you interested in starting?
Ross, feel free to give a little presentation of the company,
Ok, I started in the comic business 12 years ago. I opened my own store in
1991, and ran that as a sole prop for several years. In 1995, I went consulting for tower
Records, helping them get into comic and card games that lasted about one year. At
that point I left working directly for them and started directly selling product as a
distributor. I've been doing that ever since. In 1997 I purchased Comics & Comix, a
nine store comic chain on the west coast. I consolidated several stores and expanded
their product base. in 1998 we began a private spin off selling comic products online
called TheComicStore.com. That progressed over the following year or so, and then as
a round of funding, was merged with a pink sheet shell called Northwind Management.
Since then we've been expanding what we do from selling comics and games online
into fulfillment, warehousing and more sales to other retailers. We also have developed
one other company from site to database and all fulfillment services. Last month we
changed our name to CMI Holdings, to reflect our changing focus from selling comics
to developing new companies and taking equity stakes in companies that we are
working with. That may take us up to the current time.
TJ - How was that?
Teriffic
TT our moderator will field the questions that are prepared.
Ok with me.
TT, floor is yours.
Thank you.
Our first question is regarding your OTC status...
You have stated that The Lebrecht Group will be assisting the company in
obtaining fully reporting status with the SEC through either a Form 10SB filing, or a
merger with a fully reporting company, which will allow CMI Holdings to assume and
maintain an OTC reporting status. What is the status of that process?
We are simultaneously pursuing both options, and are in discussions and
negotiations with several possible acquisition/merger candidates. We are doing careful
due diligence, to assure that we protect shareholders interests. We would like to move
to the OTCBB as soon as reasonably practical. We have three options.
1. We can merge/acquire an already reporting OTC company.
2. We can file out own 10SB and go through the question & answer process ourselves.
3. We can acquire a fully reporting/non-trading shell and fill an 8K.
We are exploring all three of these options right now.
So you are still in the exploration stage. Are you looking down the road, say 2 to
6 months or longer?
TT - We'll have a plan within the next couple of months. We're working
through all three options at the same time. So, which ever way we go, we won't have
wasted time.
Are you in the process of doing any filing with SEC?
We have been working with our CPA firm and a public auditing firm in
order to make that part of the process happen as soon as we are ready. Most of the
disclosure for a 8K or 10SB is pretty much the same so the work we are doing getting
those outlined will go any way we need it.
Do you have a time frame for SEC filing?
I'd like to have whatever we are doing filed by end of Q2.
thank you, end of Q2 would be?
End of June.
Regarding your press release on March 28th, don't you think that investing or
acquiring any company or product in any industry is a bit much as far as
diversification. How can management be experienced in everything? Thank you. Scott
Morris
Well we're not going to hop into something we can't do. So while I'll look
at anything, there are areas more suited to us than others. But most of it boils down to
sales and fulfillment. Doesn't matter what's on the shelf (unless we're selling cars)...
You still have to track it, pack it and ship it. At a profit.
Your most recent press release states that CMI will provide management
expertise in several disciplines including "venture capital". Can you please expound on
this statement and explain how an online e-tailer and fulfillment business will be
expanding into the venture capital arena? Will CMI be bringing in another division to
perform this function? Any information would be helpful. Thanks, Jim Pyc
Shareholder Denver, CO
Venture capital is a function of being able to find and develop good
businesses. Several of my team have run businesses at various levels of development.
Together we can find promising businesses and plans and help them grow.
From what I understand from your recent press release you are changing the
company's business focus to that of a "holding Company." Can you elaborate on
that? How will this change in direction affect the ongoing business you already have
established?
Each business has it's own focus and goals. However, each also has some
of the same management needs. So we combine the overhead of each division, freeing
them of that and allow them to focus on the core needs of their business. No major
change for us. We were already handling it that way. Now it's more obvious to others
that we're doing that.
What business areas are you exposed in?
We really don't have much exposure in this business. The companies we
fulfill for are responsible for their own liability. Did that answer that question the way
you were looking for?
Im sure the asker of that question will let me know.
What is the status of your upcoming acquisitions and business developments?
Have you succeeded in your negotiations with any online and off-line retailers to
acquire the online portion of their businesses?
I cannot comment to SPECIFICS (Fair disclosure rules), but can say we
expect to announce several important NEW developments just ahead.
You have added two key positions to the company. Are you seeking to add
others and to what positions?
Yes, both additional Board Members & Management and Sales.
Who are your major competitors? How are your product services different?
For fulfillment, Diamond Comics is our only direct competitor. They have
an exclusive agreement with 'Next Planet Over,' and cannot take any new client
accounts at this time. There is no one else in our field.
You recently announced the company is currently working with, and fulfilling
orders for, companies such as: Amazon.com (AMZN), Barnesandnoble.com (BNBN),
Syconet.com (SYCD), Vstore (hosting over 125,000 web sites), a multitude of web
companies, several hundred bricks and mortar customers, and libraries around the
country. How has this contribute to your revenue stream?
Our fulfillment sales have been about 20% of our revenue stream. I’m
attempting to expand those sales to 40% of current revenue total. Some of our new
initiatives will change those numbers, but at this time, we're expanding that area faster
than anything else.
Are there any other factors contributing to your revenue? What are your
revenue drivers?
Web development and fulfillment are the two largest currently.
Do you foresee any cash flow problems regarding products and/or marketing
plans? What is your current cash on hand and what is the status of your burn rate?
Cash on hand is always several weeks of expenses, and we don’t run the
company with a burn rate. I always hated that expression anyway. Brings up images of
an oil barrel full of money being burned.
lol!
lol
I've always wondered why so many of these dotcoms got money without
some kind of plan to actually make some kind of profit.
Where can one get a current balance sheet of the company's operations?
Balance sheet - We haven’t released one yet. I don’t want to have one
out publicly until auditors have approved it.
Q from Oivehs: What are your earnings projections for next quarter?
Next Q question - Until we finish several pending projects, we can’t
accurately project next quarter yet.
What are your biggest fixed expenses?
Biggest Fixed - Payroll. Controllable due to sharing it with Comics &
Comix.
What are your biggest controllable expenses?
Biggest Controllable - Marketing and Promotion. We try and only do
that we can show has a direct profitable impact on the company.
Are there mechanisms in place to control them?
Controls? - Yup. We have regular reviews of finances and upcoming cash
flow.
Have you found an appropriate Point of Sale system for your inventory?
We are currently using a system we’ve developed in-house. We have been
looking at the Great Plains software, and some of the third party Point of Sale
add-ons.
What is the status of your new ordering platform?
We should be able to have it launched this summer on all our platforms.
What is the status of Big Monster Toys website?
Big Monster was a contract we entered into with a development stage
company. Some of their funding dried up during the market meltdown during the last
year. We’ve been waiting for them to finish getting that together before we finish
developing the rest of the web site. I'm pretty confident that they'll be on track with a
month or so. Part of that VC work we do is helping people raise money as well.
Besides the $2M agreement from private placement, do you have other financial
agreements in the works?
We have funding in place for current needs. In the event we have need for
more, we have several sources for financing.
Q from Traderhugh: Recent financing, please explain if you used convertible
debenture, straight loan, etc.
Current financing - It was a private placement through an option
agreement. There are several strike prices over the next year. Not a convertible note
or sale of free trading stock at a discount.
Please explain your authorized and outstanding share breakout.
900,000,000 authorized
650,000,000 issued
300,000,000 Owned by Ross Rojek
250,000,000 Free Trading Shares
135,000,000 owned by top 6 shareholders.
47,000,000 owned by 29 people
73% is owned by Friends of the Company.
27% is various holdings including FOC.
I just got the new NOBO list and was starting to go over it just before this
chat. From the looks of it, the top 24 shareholders increased their overall position by
10% or so. By friends of the company, I mean people that either I know personally,
people who have held their stock over the last year, or people who have a vested
interest in seeing us do well.
Are there plans to offer more shares? Equity dilution?
As far as using treasury stock for acquisitions, we won't enter into
anything that doesn't provide shareholder value and protection to our existing
shareholders.
Can you comment on enumeration of executives and stock options o/s?
Only a couple of our execs have shares, and they all purchased them
through options.
You were at one time co-ceo for Syconet. There were suppositions made
regarding your departure from Syconet, that they had too many peripheral issues to
contend with, and you withdrew your involvement to pursue other opportunities for
CMI Holdings. Can you comment on that?
I went to SYCO with the best intentions to help them fix their internal
problems and develop a strong relationship with CMIH. What I discovered was that
several of the key players all had different goals and objectives and that much of my
job was negotiating between them all. After several agreements fell through and
people wouldn’t meet in the middle, I realized I was spending too much of my time with
too little results. So I felt it was best if I concentrated on CMIH.
What is the status of your relationship with Syconet? Were you able to
accomplish the goals you set for the company prior to your departure?
At this point, I’m simply in touch with some of the principles of the
company, and maintaining contact. We still have product we are selling with them. I'm
waiting before I expand that. Several of the operational objectives I was able to fulfill.
That ended up being the easiest part.
What is the financial status of Syconet and how does it affect CMI Holdings
Group?
I am unable to comment on the SYCD financials, however there isn’t a
financial relationship between the two other than vendor/vendee.
Have you succeeded in developing new clients regarding product fulfillment in
your alliance with Scyonet?
We have several new clients for product fulfillment that we are not able
to announce at this time. Those new clients are unrelated to SYCD.
Does CMI Holdings have any current business relationship with the Rare
Medium Group? If not are there any plans to work with this group?
I am unable to comment on any business development with them.
When can we expect to see a CMI website that better reflects the company's
direction? Thanks. Jim Pyc, Shareholder, Denver, CO
Soon. It's a project that has been developing in importance, but just
hasn't hit the top of the list. But we've been working out the parameters of what we
want.
Just a couple more questions then we will ask the room if they have any
questions to pose...
Could you provide insight into the progress of Big Apple Consulting's
"Nationwide Public Relations Campaign." Is CMI reaping benefit from Big Apple's
work yet? Can you discuss any upcoming plans the Big Apple may have to spread the
word about CMI other than distributing press releases?
Big Apple does more than distribute our press releases. They've arranged
for several conferences and have been networking with their broker network. They
helped arrange for me to be here.
Which we are very appreciative of.
I consider that a benefit.
Hopefully you do too.
Yes indeed.
Is Comics and Comix a part of CMI holdings or is that company separate from a
legal and financial perspective? Thanks. Jim Pyc, Shareholder Denver, CO
Comics and Comix is totally separate on a structural basis. However the
two companies work together by sharing expenses. We also have full access to their
inventory on a cost basis. We share payroll costs and general office expense as well.
Our last question... Rumors are flying that you have a deal in the works with a
well known video outlet. Can you elaborate on that?
I am unable to comment on rumors. I can say that we are actively
expanding our sales and fulfillment base with a variety of different types of businesses,
both online and off-line.
We will take questions now from the room....
how many office locations do you have?
We've got one office and warehouse in Sacramento.
Hi Ross, Do you know how many market makers cover CMIH?
MM - I think we're at 10. Some of them show up, play around and then
disappear.
kindred - CMIH now has 13 Market makers based on Level 2 as of close today.
How many employees?
Employees - There are about 50 total between all the companies together.
Mr. Rojek, do you plan to spin off any divisions to raise venture capital to
grow/expand newer divisions or for capital to acquire other properties?
We have a couple of plans for spin-offs. One of the reasons for becoming
a holding company.
what are total annual revenues for CMIH ?
cmih_ceo> 1999 - $774,000 (unaudited), 2000 we haven't completed yet (EOM).
can you elaborate more on your plans for holding company?
Part of the holding company is to take stakes in other companies public
or private, and share the overhead or sales channels that allows us to increase our
asset base.
Which divisions are being considered and will current CMIH shareholders
become owners in the newly spun off company?
Well, the current shareholders will either benefit from the increased asset
base or we will pay out a dividend of the stock we receive from any public spin-offs.
What is your educational background?
I started as a Business Major then went to Poli Sci/History. Now I'm back
to business.
And that's where you should be. Appreciate your candor and best of luck.
What plans do you have for the $2 million in financing you received?
We have several opportunites that will require some cash investment.
What was the reason for the 50 to 1 split?
Split - we needed to change our capital structure, but I also didn't want to
dilute my shareholders. So the split was the best way for us to do that.
Sorry, I missed your response. Is CMIH currently filing documents /w
the SEC that appear in FreeEdgar?? t/u
No. When we took over the pink sheet shell, it wasn't a reporting
company. We've been preparing to become a reporting company.
Not many pink sheet companies have funding, sound business plans and a
revenue stream.
Do you have a date in mind for becoming fully reporting?
We're trying to have it in place by the end of June. Either a 10SB ready
to submit or a shell/merger 8K ready to go.
Mr. Rojek, you stated earlier on that the 8k or 10sb should be filed by the
end of Q2 (June) based on current accounting and information you have. Do you
expect a smooth transition to fully reporting status? TIA
I'd like to think so. Our attorney is trying to make sure the question and
answer is as simple as possible.
Great and thanks. The SEC comment period can be a load of fun. Glad to
hear you feel confident regarding filing. Thanks again.
Not a problem, behoof.
Anything else, folks?
It seems from my research that blank check companies are probably the
cheapest and friendliest way to become listed on the OTCBB, since there is no prior
baggage(mess) such as bankruptcy or reputation to carry forward, since a blank check
shell has never conducted any business. Has Lebrecht Group looked into this?
zeze - We've been looking at several.
Thanks Ross, appreciate you coming by... lets do it again soon.
Mr. Rojek, all I can say is that it has been an absolute pleasure talking with you.
Just want to say thank you to for the time given by Mr. Rojek.
Thank you.
I, for one, want to thank you for your appearance and candor... it is greatly
appreciated and has been very informative.
Ok, thanks for taking the time out of your day for us.
Take care, Ross
Be and stay well, Ross
TJ - everyone else, Thanks a lot.
Your very welcome, keep in touch.
And thank you for such a candid interview.
I try.
You did well.
Bye everyone.
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