| NewMarket China, Inc. (OTCBB: CCSE) China Cresent Enterprises, Inc. provides technology and telecommunication services in China and software development and maintenance services to US customers. Headquartered in Shanghai, NewMarket China bridges the gap between Western and Eastern business cultures. CCSE can help companies realize the advantages of the high quality, low cost development available in China, and overcome the challenge of taking a business global. NewMarket Technology, Inc. (NMKT.OB), China Cresent Enterprises, Inc. parent company, is a multinational broad based technology firm that has been capitalizing on introducing existing and emerging technologies into both the U.S. and fast growing emerging markets. China Cresent Enterprises, Inc.was established as a private subsidiary of NewMarket Technology in January of 2005 for the intended purpose of entering the Chinese market. It was a brand new company at that time and has rapidly established itself in China by localizing the NewMarket business plan for the Chinese market. NewMarket Technology has the expressed goal of propagating its business plan into different regions of the globe and into a variety of technology market spaces. NewMarket China represents the parent company’s first and best developed extension of its business plan. In 2006 NewMarket Technology acquired a shell company by the name of Intercell, Inc. for the purpose of bringing NewMarket China public on its own. China Cresent Enterprises, Inc. was reorganized into Intercell Inc. in October of 2006, and the newly combined public entity was subsequently renamed NewMarket China, Inc. The existing Intercell management exited the company and NewMarket China’s management assumed control of the firm. This series of events represented the first time NewMarket Technology had developed and subsequently taken one of its subsidiaries public on its own. It has since conducted a similar transaction for its Latin American interests taking NewMarket Latin America (NLAI.PK) public in March of 2007. Using the North American business plan as a template, and mixing it with the rapid growth environment in China could prove to be an extraordinary growth story. The company has already grown from zero to nearly $40 million in annualized sales in only three years. Its current revenue streams were established prior to having access to its own public equity. The firm generated this revenue by establishing two subsidiaries that are registered Chinese companies selling into the domestic Chinese market. New access to its own public equity should allow the firm to accelerate its growth through merger and acquisition, in a similar fashion to its parent. Considering that NewMarket China already represents the largest portion of its parent company’s consolidated revenue, it should be interesting to see if NewMarket China can outpace its own parent’s outstanding growth record. While CCSE is a fully reporting OTCBB U.S. corporation, their operations are based primarily in mainland China with the majority or their historical revenue derived from domestic Chinese sales. Their home office is in Dallas, TX, but the bulk of their business is managed out of their Shanghai Office. The company was established in 2005 and generated sales of over $22 million in their first year of operations. NewMarket understands the differences in business processes, communications, and cultures between the Untied States and China, providing customers with a successful environment for global relationships and transactions CCSE is first focusing on establishing sales and growing the top line. By getting their foot in the door with a broad base of customers, including numerous private Chinese companies, as well as Chinese government and military agencies, the NMCH team expects to deepen its relationship with customers and begin selling higher margin products, as well as expanding sales to the United States, and eventually Latin America where their sister subsidiary resides. Currently, their product offering consists largely of western name brand hardware and the accompanying system integration services. This is historically a low margin business, but it is serving its purpose, which is to establish sales and customers. CCSE is 60% owned by NewMarket Technology, Inc. (NMKT.OB), and has a similar business plan in a similar market space, but they have one distinct difference. Their operations are concentrated in one of the highest growth regions of the world, namely China. NMKT has shown stellar growth in its own operational history, refined the business plan, and laid the groundwork for CCSE to grow its own position in the marketplace. Going forward, CCSE will continue to grow operations in China. Currently, they are expanding in the second tier cities surrounding the Shanghai area, where the corporate competition is not as intense, and the costs are not as high, as in China’s first tier cities like Shanghai and Beijing. They have also established their first pilot sales in the offshore outsourcing arena to U.S. based customers. This is their first step in establishing higher margin sales and leveraging the impressive start they have made. China Cresent Enterprises, is essentially a copy of its parent company that has been modified for the differences in business climate and culture found in China. While China Cresent Enterprises, a majority owned subsidiary of NewMarket Technology, Inc., the company has developed some subsidiaries of its own. The primary difference is that as of the date of this report, NewMarket China’s subsidiaries have been organically grown. The company as of yet has not acquired any subsidiary or affiliate positions in any companies. The firm has stated plans to expand its growth through acquisition at some point in the future. These potential acquisition targets are not limited to Chinese firms, but will likely be firms based in a variety of locations but are focused on the Chinese market. The lack of acquisition to date is due primarily to the differences in Chinese business law and culture. The firm has been careful not to rush in expecting the M&A process to be the same as in the United States. The Chinese legal system has unique limitations that may not be a factor in the U.S., and similarities in the process are not necessarily the same. Also, transparency in the financial reporting of private Chinese companies can be more challenging to confirm than in the U.S. In China today, the vast majority of firms eligible for acquisition are private, and therefore the firm is taking a modified approach in its consideration of M&A candidates. In addition, the company has used the past year to settle into its new public status and complete the process of combining operations before attempting to use its equity to raise capital or to acquire assets. Based upon the company’s stated goals, it can be assumed that the company will begin to increase growth through acquisition in the near future. As China Cresent Enterprises was established and launched operations in mainland China, the firm sought to quickly establish a customer base and a stream of revenue. Since China is still an economy that has a developing capital market, and a gradually changing attitude towards intellectual property, the country predominantly places value on hard tangible assets. Recognizing this reality, NewMarket China has departed somewhat from its parent company's history on focusing primarily on systems integration services related to software. The vast majority of NewMarket China’s domestic Chinese sales results from selling and integrating hardware and the networking of those tangible assets. A smaller portion of their sales do come from software, but the marketplace simply has a stronger demand for hardware at this time. In the past year the company has also been working to move on to higher margin service related sales. Specifically the firm is developing an offshore software outsourcing capability using Chinese engineering resources. Again, in an effort to adapt to the Chinese marketplace, NewMarket China has departed slightly from its parent company’s approach. China Cresent Enterprises has traditionally focused on business applications. After examining the Chinese capabilities to develop software, the firm determined that the Chinese marketplace had an advanced capability to develop multimedia and gaming applications. Rather than limit itself to business software, the firm determined that a greater level of success might be had bringing multimedia outsourcing services to the United States in conjunction with business software services. The company has capitalized on that strategy by establishing pilot projects in the multimedia space. The company is also exploring possible extensions of its business into environmentally friendly products and services. The Chinese manufacturing capability has lead them to both solar and high efficiency lighting products, but at this time they have not established any sales. Leadership John T. Verges, CEO Mr. Verges, Chief Executive Officer and President of the Company, brings over 17 years of public and private sector experience to NewMarket China. Mr. Verges holds a Bachelor of Science in Management Information Systems from the University of Texas at Dallas where he graduated Summa Cum Laude. In addition, he later earned a Masters of Business Administration in Finance from the University of Texas at Dallas, graduating with high honors. Mr. Verges served on active duty in the United States Navy for five years as a Naval Officer and Aviator. After completing his active duty commitment, Mr. Verges remained on reserve status for ten additional years. His private sector service has included work in the semiconductor industry with Texas Instruments, and consulting work in a wide variety of sectors including telecommunications, manufacturing, hotel and restaurant, airline, and finance. In the past ten years, Mr. Verges has been a founder in New-Market Technology and has been instrumental in its growth and the growth of its subsidiary and affiliate companies. Philip J. Rauch, Chief Financial Officer Mr. Rauch brings substantial financial and corporate development talent and experience to NewMarket China. Prior to his appointment at NewMarket, Mr. Rauch held the positions of chief operating officer and chief financial officer for Defense Technology Systems, Inc., a U.S.-based company that designs, manufactures and installs safety and security equipment for domestic and international business communities. Mr. Rauch holds a Bachelor of Science in Economics with honors from the University of Pennsylvania Wharton School of Business, with a concentration in finance and accounting. Mr. Rauch has further earned a certificate in Construction Management from the Institute of Design and Construction in New York. He is currentlya member of the American Management Association and the Construction Financial Management Association. Philip M. Verges, Director Mr. Verges, Director of NewMarket China, Inc., is also the Chief Executive Officer and Chairman of NewMarket Technology, Inc. Mr. Verges is a 1988 graduate of the United States Military Academy. His studies at West Point centered on national security. Mr. Verges served with distinction as a U.S. Army Captain in a wide variety of important engagements to include research and development of counterterrorism communication technologies and practices. Mr. Verges' early career after the Army includes time in the Computer Sciences Research and Development Department of General Motors as well as experience teaching systems engineering methodology and programming to Electronic Data Systems ("EDS") employees from 1991 to 1995. Mr. Verges' first business start-up experience was at EDS in a new division concentrating on call center technology in financial institutions. Later in 1995, he added to his start-up experience at a $30 million technology services business with the responsibility to open a new geographic region with a Greenfield operation. Mr. Verges founded NewMarket Technology in 1997. Mr.Philip Verges is the brother of Mr. John Verges, the Chief Executive Officer of the Company. Bruce A. Noller, Director Mr. Noller, Director of NewMarket China, Inc., brings over 25 years of Financial, Operational and Marketing experience to NewMarket China and NewMarket Technology. Prior to joining NewMarket, Mr. Noller served as President of Noller and Associates Inc. a Dallas-based Accounting and Tax firm. Prior to founding his own firm in 1994, he served as Vice President for Integrated Control Systems, a worldwide management consulting firm. During that time, Mr. Noller pro-posed and oversaw engagements with a variety of industries including healthcare, distribution, manufacturing, retail, banking, insurance, mining and telecommunications. Mr. Noller has international management consulting experience in Singapore, Malaysia, China, Canada, Latin America and Europe. Mr. Noller holds an MBA from the University of North Texas. Dr. James Jiang, President of Chinese Operations Dr. Jiang has over 18 years of information technology, wireless and senior management experience, including CEO level positions. His management resume includes posts with various multinational firms including British Telecom Laboratory, GaozhiSoft, Singapore Technologies and Telular Corp. Dr. Jiang has extensive knowledge of GSM/GPRS systems and architecture, 3G wireless communications and Internet technologies. In 1996, he developed and launched AirTrak, China's first e-commerce service to deliver commerce information from the Internet via a wireless network, and was chief architect of a dynamic web content cache engine and mobile application platform. He holds two patents in Viterbi Decoding and Dynamic Contents Extraction, and is a World Bank Scholar. Dr. Larry Wu , Vice President of Business Development Dr. Wu joined NewMarket Technology two and a half years ago after serving in the Chinese State Council Research Office as a Senior Advisor to the Premier, Mr. Wen Jiabao. Prior to his position at the State Council Research Office, Dr. Wu worked in Washington D.C. at the Chinese Embassy as a Secretary for Science and Technology. In this position, he led Chinese efforts to promote technology and telecommunications trade and investment, as well as research and development collaborations between Chinese and American companies. Dr. Wu is a published author in his field with three books and numerous articles, which include U.S. publications in Business Week and Red Herring. Most recently, Dr. Wu was named one of “50 Business Opinion Leaders” in June 2006 “Talents” Magazine. Dr. Wu holds a PhD in Public Policy on Science and Technology from Renmin University of China. |
$0.18 (08/07/08)
