Weida Communications, Inc. (WDAC)
Interview with:
Mitchell Sepaniak, President and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
satellite operations in China providing ground-based equipment and related services to support government and corporate applications, including broadband Internet access, remote meter monitoring, and mission-critical data backup systems.

 

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Weida Communications is using their unique blend of U.S. management, technology, knowledge and experience combined with China’s knowledge and experience to take advantage a massive opportunity in China

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Technology
Communications Equipment
(WDAC-OTC: BB)

Weida Communications, Inc.

515 E. Las Olas Blvd., Suite 1350
Ft. Lauderdale, FL 33301
Phone: 877-527-7750


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Mitchell Sepaniak
President and CEO

Interview conducted by:
Lynn Fosse
Senior Editor

CEOCFOinterviews.com
September 2004

BIO:

Mitchell Sepaniak, Chief Executive Officer, President and Chairman of the Board

Mitchell Sepaniak has over 20 years of experience leading business and marketing efforts in global markets for enterprise networking, e-commerce and healthcare companies.  Prior to joining Weida Communications, Inc. he served as the senior vice president of marketing for Healtheon / WebMD (HLTH) and senior executive vice president of marketing and business development for MedEAmerica Corporation.

Previously, while senior vice president of sales and marketing at Automated Data Processing (ADP), Mr. Sepaniak was responsible for marketing and sales activities with partner banks.  He launched ADP’s small business e-commerce product, which enables small businesses to perform cash management functions through the Internet and closed traditional networks.

Mr. Sepaniak also held senior marketing and business development positions at National Data Corporation and Bausch & Lomb.  He is a graduate of the University of Denver with a business degree.

Company Profile:

Weida Communications, Inc. is a U.S.-managed company participating in the fast-growing China telecommunications market through its majority profit-sharing interest in and control of one of only two companies in China holding licenses for bi-directional VSAT (Very Small Aperture Terminal) satellite communications services.  This is an attractive telecommunications solution in China with its exploding demand for telecommunications, dense urban areas and extensive mountainous terrain. Weida's satellite operations provide ground-based equipment and related services to support government and corporate applications, including broadband Internet access, remote meter monitoring and mission-critical data backup systems.

CEOCFOinterviews: Mr. Sepaniak, will you tell us about your background with Weida and how it has changed under your leadership?

Mr. Sepaniak: “A little over four years ago, I was in China on a speaking engagement with the People’s Bank of China. We were discussing how international currency was going to evolve. I met a gentleman named Dr. Pong, who at the time was in the process of leaving China Telecom Corporation Ltd. (NYSE: CHA), which was the first Chinese telecommunications company. He acquired a license to manage VSAT (Very Small Aperture Terminal), the bi-directional capability covering all of China. We started to talk about developing a business line together; he asked for assistance and I helped him. Over the course of the next two years, we helped him build some investments and get some working capital. More importantly, I helped him define his business plan and focus on strategic development and honing down relationships with the government. We entered an agreement to acquire his group and continue to finance his strategy. We recently took it public and reverse merged as a NASDAQ company to expand our presence in the financial community.”

CEOCFOinterviews: What is the plan today?

Mr. Sepaniak: “The plan today isn’t too much different than it was over two years ago. The plan is to take advantage of the license that we have to facilitate bi-directional VSAT communications, which is the only privately held satellite communications in China; the rest of what is held are joint ventures with the government and there are about thirty of them out there. Most of them are very specific; such as the television and radio type of environment. We signed an agreement and strategic accord with China Telecom to be its primary partner in disaster recovery and redundancy system as well as supplying Internet capabilities, that they in-turn will give to their major accounts. The first phase of this will target financial institutions, such as the People’s Bank of China and Construction Bank of China (now China Construction Bank). Right now, they are mandated by the government to develop a disaster recovery program and we are currently the only program that has been approved. We are very excited about that opportunity. We are in the process of facilitating the sub-docs associated with each company through China Telecom. We have gone through an alpha and a beta and we are in production now. Additionally, we are doing some recovery from the petroleum industry. Our big spots will be with financial institutions, the stock exchanges and branching out into other corporate programs for private investor recovery, back-end services, and Internet capabilities.”

CEOCFOinterviews: Is there equipment that you need to put in-place in China?

Mr. Sepaniak: “We have already built three major networks on the mainland, which requires significant investment from a capital perspective for equipment. We are also selling equipment to enable corporations and banks to hook up the satellite systems. Our revenue model is two-fold. It is a classic model of razor and razor blades and the razor blades has become our service. The equipment put in, network and satellite link and we charge them a toll or a fee, what we call a click and that is a recurring revenue model. We don’t take a large margin on equipment; we kind of give it away. But, the margins are healthy on the service side.”

CEOCFOinterviews: What advantages are there in being the only private satellite company in China?

Mr. Sepaniak: “We respond quicker to consumer requirements and needs. We don’t have to go through many of the bureaucratic elements some of our counterparts experience. The other thing is that we focus on capital more efficiently. Thirdly, it is a combination of U.S. management and focus as well as technological knowledge. That is combined with very strong relationships in China and their ability to aid in maneuvering through the country’s bureaucratic elements.”

CEOCFOinterviews: What should people know about this opportunity?

Mr. Sepaniak: “People sit there and say that China is so big, but the reality is that there are so many people that are so poor and therefore not part of the market. You whittle that down and get more focused and you are then looking at only 180 million individuals. We have all read about the enormous amount of growth in corporations internationally and all major players are active in China. We focus on that opportunity. If you put that on a scale and look at how big the United States is on a business-to-business productive and compared us to an FDC (First Data Corporation ‘NYSE: FDC’) or Equifax (NYSE: EFX), very business-to-business type of plays and network plays, there are significant opportunities. We are focusing on a business-to-business opportunity, with players in China being major multinational financial institutions and government agencies. It will continue to grow and will be less affected by the Chinese middle class as the telecom side is pretty much absorbed.  To convert the lower class side is going to be very difficult. We are the only ones that focus on the business-to-business opportunity. I would like to be the only one in a nice little niche that not many people are focusing on right now. We are hoping it will be difficult when other people try to get in.”

CEOCFOinterviews: Please tell us about the financial situation of Weida today.

Mr. Sepaniak: “We have capital of about $25 million and we are still raising additional funds to help us with our capital needs. We’ve done this all through the private sector. We are a start-up with just under a half-a-million dollars in revenue this year to date, but with the signing of the China Telecom Strategic Alliance program, announced through a press release in August, we see a very rapid and healthy growth for our revenue this year. Every dollar we bring in goes to our network.  However, by the end of 2005, we should be in a nice healthy 8% for the bottom line and 15% on the EBIDA line and we should be around anywhere from thirty to forty million dollars in revenue. We are excited about what we have in front of us. The only risk we have is the desire to control our growth and stay focused so that we don’t have any hiccups.”

CEOCFOinterviews: You filed for a NASDAQ national market listing; what is going on with that?

Mr. Sepaniak: “We filed and fit the criteria. We are different from some of the negative players that have been out there with reverse merges. We have been audited five times by Deloitte and six times this June. We anticipate getting a positive comment from them to move to the big board probably around the first week of October.”

CEOCFOinterviews: In closing, why should potential investors be interested and what should they say that they might not realize when they first look at Weida?

Mr. Sepaniak: “I think that we are unique. We offer a different blend than what is out there.  We have U.S. management, U.S. technology united with China’s knowledge and experience, which makes a unique blend to take advantage of. We are very focused strategically; we know our strengths and our weaknesses and we are staying within our core competency. We are not trying to get overwhelmed with over zealous opportunities that people talk about at great length but only serve to de-focus you. Our biggest differentiator is that we are a niche.   No one else has focused on this opportunity – we are the first ones in this category. It is a category, which has been greatly affected by the Chinese government and certain mandates of financial institutions, the Hazardous Recovery programs in-place. Right now, to the best of my knowledge, we are the only ones participating with a capability that’s already been approved by China Telecom, because it’s a strategic alliance with them to take over their major accounts. We are in a unique position. I think that an investor will see only strong and positive growth as well as a positive opportunity. The risks are like anything else.”

CEOCFOinterviews: What are the risks?

Mr. Sepaniak: “Well the government can come and shut you down, but the government can shut anybody down just like the government in the United States decentralized the communications in the United States and caused all the baby Bells to break up. The likelihood of that happening is not high because there is not that level of lack of competition. The Chinese government isn’t specifically in our state. We continue to meet and exceed their requirements. I see nothing that would upset this negatively. I have more chance of winning the lottery than having something happen to us. We have the greatest opportunity, almost exclusive, with a strong company and are very well positioned financially and with a great product. We are perfectly positioned for extraordinary growth.”

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“Our biggest differentiator is that we are a niche because we are the first ones in this category and no one else is paying attention.   It is a category, which has been greatly affected by the Chinese government and certain mandates of financial institutions, the Hazardous Recovery programs in-place. Right now, to the best of my knowledge, we are the only ones participating in that with a proven capability and approval by China Telecom.  It’s a strategic alliance with them to take over their major accounts. We are in a unique position.” - Mitchell Sepaniak

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