China Crescent Enterprises, Inc. (OTCBB: CCTR) has released a
letter to shareholders discussing what is referred to within the
letter as the 'OTCBB Factor' to consider when investing in OTCBB
quoted companies, including China Crescent Enterprises. The letter
goes on to review China Crescent's operational successes and
corresponding return on investment potential in light of the 'OTCBB
Factor.' The letter also highlights potential operational successes
anticipated in the coming year that could trigger future return on
investment opportunities. China Crescent's current price per share
(PPS) is less than a penny ($0.01). The letter makes special
mention of both the opportunities to achieve dramatic returns on
sub-penny investments and the careful considerations that should be
addressed when making a sub-penny investment.
The letter from Philip Verges, China Crescent Founder and Board
Member, is included in its entirety below.
Dear Fellow Shareholders,
China Crescent is a young Company with big plans. The prospect
of long-term success looks promising in light of the Company's 2010
performance. China Crescent posted a profit through the first three
quarters on over $50 million in revenue. The Company had only
realized $30 million in revenue through the third quarter last
year. In fact, the revenue for all of 2009 was only $45
million.
PPS Performance and ROI Past, Present and
Future
In spite of the Company's tremendous fundamental financial
performance, the price per share (PPS) is not steadily increasing.
Some investors that purchased stock in anticipation of China
Crescent achieving forecasted objectives are disappointed by the
PPS performance. At the same time, other investors have managed
satisfactory returns making China Crescent one of the most actively
traded stocks quoted on the Over-The-Counter-Bulletin-Board
(OTCBB).
I want all investors to realize satisfactory returns. So, the
purpose of this letter today is to submit investment strategies I
think are best suited for achieving optimal results from
investments in OTCBB listed companies and to provide some
highlights of how those strategies might be implemented with China
Crescent.
The 'OTCBB Factor' To Consider Into
Investments
The OTCBB is comprised of several different types of companies.
Some companies list on the OTCBB to bypass the more expensive
process of directly listing on a national exchange such as NASDAQ
or the NYSE Euronext. This type of company then works to achieve a
'graduation' listing onto a national exchange. Other companies are
delisted from national exchanges to the OTCBB after failing to
maintain PPS performance standards. China Crescent does not fit
into either of these categories.
China Crescent is an early stage, entrepreneurially managed
company that listed on the OTCBB to gain access to the investment
market that is available to publicly listed companies. China
Crescent's business plans have required and continue to require
investment.
Statistically, only about fifty percent of early stage,
entrepreneurially managed companies, public or private, continue to
operate beyond three to five years. That statistic alone makes
these companies a high risk investment. A publicly listed early
stage company can be less risky than a similar private investment
because an investment in publicly traded stock can be liquidated at
any time. The typical private investment only has the potential to
realize a return if the target company happens to be one of the
fifty percent that succeeds long-term. The public market investor
has the opportunity of opting out of a long-term investment and
otherwise taking a return on investment at anytime the PPS is
higher than when it was purchase.
Take ROI When The Company Achieves A Milestone
Success -- Again and Again
The type of investor attracted to OTCBB investments is
frequently looking for a higher rate of return over a shorter
period of time than what might otherwise be expected from an
investment in a national exchange listed company. To those
interested in OTCBB investments, I regularly suggest concentrating
on the early stage, entrepreneurial category of OTCBB listings.
While only about half of them will succeed long-term, many of them
will have milestone successes along the way. These milestone
successes can inspire corresponding increases in share price that
create an opportunity for achieving a high rate of return over a
short period of time.
Why doesn't the share price keep going up after a milestone
success? Well for one, you are not the only investor taking
advantage of the share price increase. The volume of selling stock
in order to realize a return on investment from a
milestone-inspired increase can overcome the demand to purchase
stock and contribute to holding back a further increase. Sometimes
the milestone-inspired selling can even contribute to reversing the
increase. Milestone-inspired share price increases are most often
only temporary. Another contributor to the frequent halt in a
milestone success driven share price increase is an increase in
issued and outstanding.
Remember, early stage entrepreneurial companies listed on the
OTCBB in the first place to get access to investment and receiving
that investment results in the company issuing new stock. The
average share price on the OTCBB is about $0.04. If an OTCBB
company raises $1 million with stock at an average share price of
$0.04, then at least 25 million new shares are likely to be
issued.
China Crescent's PPS has been volatile. The overall share price
trend has been down over the last year, but the periodic increases
have created return on investment opportunities many times. The
return opportunities stretch periods of time that can last days,
but sometimes only minutes. The OTCBB is an investment environment
that requires constant attention.
I periodically conduct Webcast presentations on the 'Milestone
Investing Strategy'. I plan to conduct the next presentation on
Tuesday, December 21st.
China Crescent Potential Milestone
Opportunities
The sales growth China Crescent has demonstrated through the
first three quarters of 2010 has established some momentum.
Management anticipates similar growth for the foreseeable future.
The Company also has a number of pilot projects that could result
in larger subsequent contracts. The largest of those has been
discussed publicly by the Company. China Crescent has engaged a
$1.6 million pilot project contract in conjunction with a $160
million letter of intent contingent upon a successful pilot.
Ongoing sales success and the periodic large contracts are
potential milestone-inspired share price increase triggers.
On January 6th, China Crescent will conduct a Webcast to present
the Company's business plan for 2011. The presentation will include
an overview of the Company's plan to achieve a NYSE Euronext
listing in conjunction with a broader NewMarket Greenfield
Partnership Program strategy. China Crescent also plans to spin off
one of its operations into an independently traded company in a
transaction that would result in a distribution of stock in the new
public company to China Crescent shareholders. Any of these events
could trigger a milestone-inspired PPS increase.
A Special Note on Sub-Penny PPS
China Crescent is one of a growing number of OTCBB companies
with a share price below a penny. I will discuss the sub-penny
phenomenon in the Milestone Webcast next week, on the 21st, as well
as address the challenges faced by some investors when their
brokerage firm makes it difficult to trade sub-penny stock. With a
share price below a penny, investors should carefully consider the
size of their overall investment. Much more stock has to trade in
order to liquidate a position in the event a milestone-inspired PPS
increase opportunity arises.
On the other hand, the potential benefit of a sub-penny share
price is the increased possibility to realize dramatic returns. In
terms of dollars and cents, a PPS does not have to increase much to
create a dramatic ROI opportunity. For instance, stock purchased at
a PPS of one tenth of one cent ($0.001) can potentially deliver a
100% ROI on a PPS increase of one tenth of one cent ($0.001) to two
tenths of one cent ($0.002). When investing in penny and sub-penny
stocks, it might be good to keep in mind the mantra "small
investments over short periods of time." A $1,000 investment at a
PPS of $0.001 purchases 1 million shares. It might also be good to
make sure the trading volume of the company you are investing in
can support your potential liquidation requirements.
The Small Equity Initiative
In the last year, I have founded an organization named the Small
Equity Initiative to provide entrepreneurs with education on how
best to secure investment, to provide investors with education on
how best to achieve returns on small business investments and to
advocate for much needed small business investment market
improvements worldwide. The Small Equity Initiative has had a
number of milestone successes of its own over the past year.
The Small Equity Initiative has been recognized by the United
Nations. I now sit on an Advisory Board to the United Nations
International Strategy for Disaster Reduction (UNISDR). The UNISDR
has recognized the economic power and importance of the small
business sector and is working to engage small businesses in
entrepreneurial endeavors that can mitigate the risk of losses in
the event of a natural disaster. The Small Equity Initiative also
participated in the Annual Forum for Small Business Capital
Formation held at the Securities and Exchange Commission and
contributed to a number of requested small business investment
regulatory changes. Just a few short weeks ago, the Small Equity
Initiative participated in the Economist Magazine's World In 2011
Forum that included President Clinton and the Clinton Foundation
among other notable participants.
I expect 2011 to be an even bigger year for the Small Equity
Initiative. Please visit the Small Equity Initiative website to
learn more (www.smallequity.com) and sign up to receive Small
Equity updates by emailing info@smallequity.com.
Best Regards and Happy Holidays,
Philip
Philip Verges Founder and Board Member China Crescent
Enterprises, Inc.
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About The Small Equity Initiative
(www.smallequity.com) Small Equity Initiative (SEI) is an organization
dedicated to education, advocacy and activism to improve the
capital markets for both small business entrepreneurs and
investors. SEI is based in the U.S. but serves the global small
business community.
About China Crescent Enterprises, Inc.
(www.chinacrescent.com) China Crescent is a systems integration service
provider that markets technology outsourcing services in China
including the sale and service of brand name technologies such as
Microsoft, Cisco, IBM, HP and Dell. Following a strategic
acquisition last year, the Company expanded its business line to
include original design manufacturing (ODM). China Crescent
reported $45 million in profitable revenue in 2009 after reporting
over $40 million in revenue for both 2007 and 2008 and has set a
goal of reaching $100 million in revenue in 2010. Headquartered in
Dallas with operations in Shanghai, Shenzhen, Dalian and Beijing,
China Crescent bridges the gap between global business cultures to
assist clients worldwide realize the advantages of the high
quality, low cost technology products and services available from
China. China Crescent also assists clients in localizing products
and services to realize the tremendous growth potential available
by expanding into the Chinese Market.
"SAFE HARBOR STATEMENT" UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 This press release contains forward-looking
statements that involve risks and uncertainties. The statements in
this release are forward-looking statements that are made pursuant
to safe harbor provision of the Private Securities Litigation
Reform Act of 1995. Actual results, events and performance could
vary materially from those contemplated by these forward-looking
statements. These statements involve known and unknown risks and
uncertainties, which may cause China Crescent's actual results in
future periods to differ materially from results expressed or
implied by forward-looking statements. These risks and
uncertainties include, among other things, product demand and
market competition. You should independently investigate and fully
understand all risks before making investment decisions.
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Contact: China Crescent Enterprises, Inc. Email Contact
214-722-3060
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