We were incorporated as Suncross Exploration Corporation in Nevada on November 16, 2004. On June 17, 2008, Suncross Exploration Corporation ("Suncross") entered into an Agreement and Plan of Reorganization dated as of June 17, 2008 relating to the acquisition ("Acquisition") of Team Nation Holding Corporation ("Team"). With the acquisition of Team, Suncross became a company specializing in title insurance and escrow services through our affiliate title agency(ies), and the provision of management, production services, HR administration, IT support, and accounting administration for title insurance companies and related real estate ventures. Under the terms of the acquisition, Suncross issued 25,000,000 shares ("Suncross Shares") of its restricted common stock to the four (4) shareholders of Team in exchange for 100% of the issued and outstanding shares of Team. 22,000,000 shares were subsequently transferred to CalCounties Title Nation Company, a California corporation owned by Dennis R. Duffy-one third; Daniel J. Duffy-one third; and Janis Okerlund-one-third.
Historically, we also participated in the management of distressed asset funds specializing in the acquisition of distressed RMBS, CMBS, CMO, CDO and REO assets. Having found that market to be too volatile, we have refocused our attention to the title insurance services which are the core of our business.
Title Insurance Services: Our services are offered to residential and commercial customers, independent and affiliated title agencies, and related companies in the real estate and mortgage lending industries throughout the United States, predominantly in the State of California. We currently manage the operation of Frist Southwestern Title Company of California ("FSWT") and provide vendor services to CalCounties Title Nation ("CCTN") which collectively operate 2 branch offices and employ approximately 110 individuals located in California. Thorough our affiliates we are also licensed to issue title insurance policies in Orange and Los Angeles counties, California, and are applying to expand licensing to encompass all of California and 30 to 40 states nationally. Through expansion of existing operations, we have achieved substantial growth during the last year and intend to use strategic licensing and acquisition strategies to grow exponentially in the coming year.
Our strategy to turn away from the risk inherent distressed asset market to focus on our core title services business has enabled us to:
• expand our geographic footprint to offer real estate services on a nationwide basis through our vast referral network;
• diversify our customer base by targeting national real estate lenders and mortgage brokers, in addition to our traditional focus on real estate agents and regional lenders in the Southwestern United States;
• serve as the exclusive provider of settlement and information services in closing a real estate transaction; and
• increase our revenue opportunities for each transaction without significantly increasing our fixed costs.
Operating Strategy
We attribute our success to an operating strategy which emphasizes the following factors:
Commitment to Service.
• We believe that title insurance policies and escrow functions are generally standardized, and that the level of service provided is therefore the key differentiating factor among title industry competitors. We are committed to providing an unparalleled quality of service to our customers, and we emphasize the importance of that culture of service to all of our employees. Our advanced technology platform facilitates our prompt and efficient delivery of title and escrow services. Through our commitment to service, we strive to build lasting and personal relationships with our real estate industry clients.
Customer and Market Focus.
• Our services and marketing for our traditional title insurance and escrow segment are directed primarily to real estate agents and lenders in the residential resale and refinance sectors of the market, which we believe are less prone to cyclical industry downturns associated with changing interest rates than the commercial real estate and new home sectors.
• In the residential resale market, we focus on establishing relationships with real estate agents, who typically direct the selection of escrow and title insurance services by their clients. Although title insurance premiums are typically paid by the buyer or seller of residential property, depending on local custom, the real estate agent responsible for the closing generally selects the title agent because of his or her greater familiarity with service levels. All parties to the home closing are concerned with personal time schedules and the costs associated with settlement delays. We provide title search and escrow services in connection with the resale transaction, and we arrange for the issuance of owner and lender title insurance policies at closing either directly as agent for other national title insurers or indirectly through our referral network via our national coordinators.
• In the residential refinance market, we actively promote relationships with community banks and other lenders who refinance existing mortgage loans. Although the borrower pays our fees, we view these lenders as our customers because they typically direct the selection of escrow and title insurance by their borrowers. Our services in a refinance transaction also include title search and escrow services in connection with the refinancing of the existing mortgage loan, and the issuance of a lender title insurance policy in favor of the new lender.
• Our lender services are provided and marketed to national lenders and mortgage brokers. Unlike our traditional title and escrow services, these services are typically offered on a national scale from centralized processing centers. We believe this approach allows us to focus on providing high quality service while managing our costs.
Operating Flexibility.
• The cyclical nature of the title insurance industry requires us to consistently manage operating expense levels in response to market fluctuations. Our executives and key managers have extensive experience in controlling expenses to reflect cyclical industry movements. We control our most significant cost item, personnel expenses, through use of temporary personnel and overtime personnel as needed, reduction in staffing levels when appropriate, and commission and incentive elements of our compensation structure that vary significantly with changes in our revenue levels. Because the existing cycle has been a downward one in the industry, we have been able to grow counter-cyclically to attract key personnel and opportunities from companies that are downsizing significantly due to market constriction and over burdensome overhead.
• We also seek to maintain financial and other operating flexibility by controlling other significant expense items, including contracts for data services for title and property information, which are structured based on usage; supply costs, which are variable based on business volume; and provisions for title and escrow losses, which correlate generally to revenue levels. We also manage our fixed costs such as rent by entering into relatively short term leases, typically three to five years.
Experienced Management Team.
• We focus on attracting and retaining the highest quality management and operational personnel available. Our executives and other key managers have an average of over 20 years experience in the title insurance industry, and directly participated in the successful development and operation of several large regional title agency networks, major title insurance underwriters and providers of various real estate settlement services. In addition, our entrepreneurial culture, growth record, incentive compensation structure and dedication to customer service help us to continually attract top producers with established client relationships.
• Our operational management is centralized, with our key managers given primary responsibility for operations in their respective areas of service. Regular meetings of key managers allows for an exchange if ideas, feedback, suggestions and overall transparency in the management team so that management decisions made in one service area are sympathetic to the needs of the company at large.
Growth Strategies
Our primary long-term objectives are to become a national provider of title insurance and integrated real estate services and to maximize our profits throughout different real estate cycles. Counter-cyclical growth is a primary goal while the economy continues to struggle, creating opportunities to implement our strategies effectively. To accomplish our objectives, we are pursuing various growth strategies that include both acquisitions and organic growth, all of which are designed to broaden our market position and maximize profitability. Specifically, these strategies include:
Increasing Share of Existing Markets.
• Our title and escrow operations are concentrated in Southern California which provides a particularly strong platform for future growth because Southern California traditionally ranks high in relation to other states in the rate of new job creation and population growth. We operate branch offices in two of the largest and most active real estate markets in the nation: greater Los Angeles and Orange County, California.
• We intend to expand operations in existing and target markets by continually attracting top producers and establishing lean marketing branch offices in those markets, while retaining centralized processing. Unlike competitors who expand physical operations, including title production, customer service and property information services into each location, we believe that adding revenue without corresponding increases in fixed operational costs should significantly improve our operating margins in those markets.
Expanding Geographically.
• From our base in the southland, we intend to expand licensing to cover all of California and add licensing throughout the nation to enable our entry into desirable markets. Traditional expansion strategies include replicating operations in every market but our strategy relies heavily on centralization of core services from production and customer service to IT administration and accounting support. By using our management services business model we can focus on marketing and revenue strategies in the new marketplace while continuing to increase efficiency by centralizing repetitive services. We will entertain regional offices or strategic acquisitions in target markets as well to augment our growth strategy and ensure we grow with focus and minimal operating expense. we do not currently serve to build a national presence with branch operations in states with either high growth or in which major population centers exist.
Management and Production Services: Team currently holds contracts to manage all operations of two emerging title companies operating in Southern California. Team provides management, title plant and production services, customer service, sales and marketing support, HR administration, IT administration and accounting services to both companies in exchange for fees and a percentage of net profits of the operations. Under the management of Team both companies have grown significantly, increasing their gross revenue tenfold and collapsing expenses through shared resources to significantly impact the bottom line.
Team currently manages and provides vendor services to First Southwestern Title Company of California ("FSWT"), an underwritten title agent licensed by the Department of Insurance of California and doing business in 11 California counties. First Southwestern produces title evidence and issues policies of Transunion Title Insurance Company through is underwriting agreement, arrange for FSWT by Team. In 2008 and into 2009, Team has strategically reduced the expenses of FSWT's operations and streamlined its marketing efforts to keep the financially troubled company out of bankruptcy. FSWT is now poised for alliance with an operating partner to grow the brand and increase revenues significantly in 2009. There are currently bidders seeking to acquire FSWT and Team expects to announce and alliance or sale within the upcoming 180 days.
Team also currently provides vendors services to CalCounties Title Nation Company ("CCTN"). During 2008, Team actively managed the entire operations of CCTN, growing its revenues from $3,266,878 in 2007 to $6,478874 in 2008, a growth of 98%. Relinquishing it role as manager in January of 2009, Team secured a five year vendor services agreement to continue providing core services including production, IT, HR, Accounting and consulting for CCTN, which is on track to exceed $14,000,000 in gross revenue for 2009.
Escrow Operations: Team wholly owns Escrow Nation, a California corporation licensed to transact escrow business by the California Department of Corporations. Escrow Nation is currently inactive, but available as a tool as the market presents revenue opportunities. Escrow Nation can add value to the overall performance of Team by capturing escrow revenue for services to its affiliate entities and to its investors. As the family of companies owned and managed by Team grows, Escrow Nation will grow in concert and will allow Team to capture additional revenue from its core operations.
Mortgage Operations: Mortgage Nation, Inc. is wholly owned by Team and is licensed to provide mortgage broker services to its affiliates, employees and investors. Mortgage Nation is currently inactive, but available as a tool as the mortgage industry recovers and presents revenue opportunities.
Acquisition strategy: Team is committed to finding, analyzing and acquiring failing real estate companies, particularly title agencies, title insurance companies licensed both in California and throughout the United States, escrow, and mortgage companies to acquire their revenue streams and inventories and to adjust their infrastructure to mitigate expenses. Already poised to support growing operations, we can pick up the business at hand without needing to increase staff or duplicate costly services. Team has identified several such opportunities and currently has exclusive rights to purchase an agency in Southern California. Team is also in negotiations to acquire a title insurance underwriter and a potential join venture with two companies situated outside of California.
Competition
The title insurance and real estate settlement services business is highly competitive. We believe that quality and timeliness of service are the key competitive factors in the industry because parties to a real estate transaction are usually concerned with time schedules and costs associated with delays in the closing of transactions. Other competitive factors in the title and escrow business include pricing and the financial strength of the title insurance underwriter.
Companies with significant market share in the local and regional markets in which we compete include First American, Fidelity National Title, Chicago Title and Ticor Title. The number and size of competing companies varies in different geographic markets and has significantly diminished in the last 18 months due to market contraction. In those markets where we operate and intend to operate, we will face competition from other independent agencies although several competitor agencies have discontinued service, sold to other underwriters or gone out of business since the end of 2006. Major national insurance underwriters, many of which have financial and other resources significantly greater than ours are the largest competitor but, we believe that we can effectively compete against these larger competitors in the markets that we serve. We believe that our level of service and our nimble operating structure are the principal differentiating factors which have enabled us to compete effectively with our competitors, even in the challenging industry market conditions we face.
The principal competitors for our vendor services are title companies such as First American and Fidelity National Title, both of which primarily outsource their title production and customer service functions to overseas operations. We believe our commitment to customer service and consistent performance are more valuable to our vendor services clients and the ability to centralize locally has enabled us to significantly reduce expenses for our clients and managed companies and will continue to do so without the need to send our production services overseas.
Employees
As of April 30, 2009, we had a total of 31 direct employees. Our managed companies had a total of 77 employees at April 30, 2008. We believe our relations with our employees are excellent.
