DALLAS, TX--(Marketwire - November 13, 2007) - NewMarket Technology, Inc. (
OTCBB:
NMKT) today
announced CEO Philip M. Verges has released a letter to shareholders to
review year-to-date financial performance in addition to providing
shareholders with an update on the Company's continued emerging market
success and evolving market strategy in developing economies. The letter
includes an early outlook of 2008 plans.
The letter has been released in conjunction with the published third
quarter financial report for the independently listed NewMarket China, Inc.
(
OTCBB:
NMCH) subsidiary. The subsidiary report has been filed in advance
of NewMarket's comprehensive third quarter financial report to be published
subsequently. The letter to shareholders is included in its entirety below.
NewMarket Technology recently announced a webcast scheduled for Monday,
November 19 at 4:30 PM EST to review the Company's third quarter financial
performance. The webcast review will be conducted by CEO Philip M. Verges
and CFO Philip J. Rauch and will include third quarter performance for
NewMarket's independently listed subsidiary NewMarket China and a review of
NewMarket's subsidiary operations in Latin America. NewMarket's Latin
American subsidiary operations are being consolidated into NewMarket Latin
America, Inc. (
PINKSHEETS:
NLAI). Log on details for the webcast are
available on
www.newmarkettechnology.com on the home page under "Current
Events" or can be accessed at
http://biz.yahoo.com/cc/3/87613.html.
Dear Fellow Shareholders:
NewMarket continues to report dramatic award winning revenue growth with
$77.6 million in 2006 and driving toward a $100 million revenue goal in
2007. The Company has been recognized in the Deloitte Technology Fast 500
for four consecutive years. NewMarket ranked as the fifth fastest growing
company in North America in 2006 and 21st fastest growing company in 2007.
NewMarket received honorable mention for placing highly in the rankings for
two consecutive years in Deloitte's recent release on the 2007 results.
I believe NewMarket's pending third quarter financial performance results
will be received by shareholders as a continued demonstration of aggressive
revenue growth. I also believe that the third quarter results will
demonstrate the Company's advancing maturity through net income performance
and a stabilizing capital structure.
As previously communicated to shareholders, with award winning growth has
come some growing pains. While management expects overall financial
performance results in 2007 to demonstrate continued rapid growth, we had
set our sights even higher. In addition to delaying projects that could
have contributed more revenue in 2007, management also delayed planned
dividends and the independent listing of more subsidiary operations. While
revenue producing projects, dividend and independent listing events have
been delayed, we have every intention of fully executing on all of these
initiatives as we overcome the previously mentioned growing pains.
The purpose of this letter is to provide shareholders with a review of the
year to date financial performance and how that performance fits into the
Company's advancing maturity. Furthermore, this letter will also provide
an update on NewMarket's exciting progress in the emerging markets arena
and our evolving strategy to capitalize on this fast growth market segment.
Finally, this letter will conclude with an early outlook of goals and
prospects for 2008.
Corporate Maturity
NewMarket has grown over the last five years from a $1 million in annual
sales "startup" into a nearly $100 million in annual revenue small to
medium sized enterprise. I would characterize the company as still being
in transition from its beginnings as a key-man managed startup into a
professionally managed enterprise driving toward future recognition as a
household brand name synonymous with "technology innovation."
We have added a number of senior managers and still have more positions to
fill. The addition of Philip J. Rauch as our CFO last year has been
instrumental in our transition into a professionally managed company. Mr.
Rauch has been refining the organization's ongoing aggressive revenue
growth objectives, including specific gross margin and net income
discipline. In conjunction with Mr. Rauch coming on board last year,
NewMarket posted its best ever net income in 2006. This year, NewMarket
has continued to demonstrate a bottom line discipline, and I believe
shareholders will find the third quarter financial results to be a further
validation of our progress.
Significantly, Mr. Rauch has also improved NewMarket's long-term capital
structure discipline. NewMarket acquired a number of assets prior to 2006
in transactions that ultimately resulted in a steep issued and outstanding
increase on a quarterly basis after 2006. The Company shifted its
acquisition strategy in order to stabilize the capital structure. I believe
shareholders will consider the third quarter financial results a dramatic
demonstration of the shift in acquisition strategy.
Emerging Market Success and Evolving Strategy
NewMarket's emerging market efforts in South America and China have been
the greatest contributors to the Company's revenue growth. As the Company
continues to execute on its business plan, management anticipates the net
income contribution from emerging market operations in South America and
China to begin keeping pace with the ongoing emerging market contribution
to revenue.
With 50% of the world's population residing in Brazil, Russia, India and
China, the "BRIC" acronym has become a common emerging market reference
found in many Western Fortune 2000 business plans. However, the BRIC
economies largely consist of small business operations. The shortage of
business partner prospects with the operational magnitude to forge viable
joint ventures with Fortune 2000 companies impedes the ability of Fortune
2000 operations to make a nimble entry into the leading global emerging
markets -- not to mention the second and third tier emerging markets. On
the other hand, NewMarket, as a small business itself, has been able to
successfully forge small business partnerships in Brazil and China in
addition to second and third tier developing economic regions and now has
tenured management teams on the ground in the targeted emerging markets.
In addition to the issue of viable emerging market partnership potential is
the issue of available investment support. The traditional investment
banking community is less than eager to engage capital in emerging markets
with the political and economic risk of most emerging markets -- especially
the second and third tier emerging markets or "frontier" markets. However,
NewMarket has found the micro-cap public markets an ideal platform for
emerging market investment. The micro-cap public markets certainly have
their own issues and risk and are experiencing their own maturation
experience. But the liquidity of the micro-cap public markets and the
smaller average size of the typical micro-cap investment has made for a
favorable emerging market investment environment.
NewMarket is working to improve upon its current emerging market success by
leveraging the public micro-cap investment environment and engaging small
businesses to form small business partnerships with two specific
initiatives. One, we are targeting state owned infrastructure oriented
business operations with which to create joint ventures that can be
independently listed on public micro-cap exchanges. I just returned from a
conference of Telecom Operators for Small States (TOSS). This was a
meeting of senior management from telecom companies providing services to
countries with a population of less than two million residents, where the
telecom companies are owned by the governments of small nations. Malta and
the Isle of Man, for example, were in attendance. These telecom operators
are facing similar issues resulting from the global telecommunications
regulatory environment generating new laws and treaties at an accelerating
rate and in general, intended for large telecom operators. The operators
are struggling to react and diversify their services into content rich
services that include features such as music downloads and wireless
broadband internet access. NewMarket, in many instances is a larger
organization or of commensurate size compared to many of these telecom
operators in terms of annual revenue and balance sheet strength. As a
result of our participation in this conference, we have a number of next
stage business development opportunities to forge joint venture operations
with TOSS members which could result in independent publicly listed
companies delivering new telecom services to the resident populations of
the TOSS member nations.
The second emerging market initiative we have launched is forging joint
venture operations between early stage emerging market operations and
Western Fortune 2000 companies. For example, we are in the early stages of
developing an online travel services company in Sub-Saharan Africa. We are
working to establish an equity partnership with a United States Fortune
2000 online travel services company. We are looking for the right
U.S.-based online travel services company to provide intellectual property
and management expertise, both of which will be protected by U.S. law as
the joint venture company is headquartered in the U.S. and governed by U.S.
law. We intend to mitigate the emerging market investment risk for the
U.S. Fortune 2000 partner by independently listing the African joint
venture operation on a U.S. micro-cap public exchange and raising the
necessary early stage capital for the joint venture with the equity of the
independently listed African joint venture. Additionally, the U.S. Fortune
2000 partner has the opportunity to participate in a social outreach
initiative with minimized financial risk. The joint venture will generate
jobs in the developing economic regions, where jobs are needed. If the
joint venture succeeds, the Fortune 2000 operation will not only have
participated in a social outreach initiative, but also opened a new high
growth potential market.
The state-owned infrastructure company joint venture and Western Fortune
2000 joint venture initiatives are still early stage and financial results
from these initiatives will take time. As an illustration, using our
current operations as an example, our first meeting in China was in 2002
and we did not generate revenue from China until 2005. With 2007 annual
sales approaching $40 million in China, we believe the 2002 initiative has
proved worthwhile. We are equally optimistic, if not more so, of the
potential that can be realized from our current state owned infrastructure
and Western Fortune 2000 initiatives.
2008 Early Outlook
NewMarket Technology is an early stage technology company with a mission to
continuously introduce new technologies to new markets. The two key
strategies we follow in the execution of our mission are; 1) to launch our
early stage technologies from one of our platform service companies
providing current brand name technology solutions from the incumbent
industry giants like Cisco Systems, Microsoft, Sun Microsystems and Oracle,
and 2) to concentrate our early stage technology product offerings in the
world's emerging markets where the global economy is growing the fastest
and technology "leap frog" opportunities exist.
To date, NewMarket has made substantial strides since launching the
execution of this mission in June of 2002. The Company has established a
significant emerging market presence in two of the world's leading emerging
markets -- Brazil and China. In Brazil, NewMarket's local operation is
recognized as a leading provider of Oracle solutions and in the Northern
regions of the South American continent, NewMarket's local operations are a
recognized leading provider of Microsoft solutions. In China, NewMarket's
operations are recognized in the greater Shanghai business region as a
leading provider and integrator of some of the world's leading computer and
networking equipment from brand name companies headquartered in Western
countries.
While management prepared in late 2006 to transition NewMarket from a key
man, small business into a professionally managed small to medium sized
enterprise, we nevertheless encountered unanticipated growth challenges as
the company continued to achieve rapid growth. The unanticipated
challenges necessitated a reallocation of corporate resources to
concentrate on corporate infrastructure initiatives rather than on
corporate rapid growth initiatives. The result was a delay in the
additional independent public listing of subsidiary operations and a
corresponding delay in the planned distribution of dividends of stock in
those subsidiaries to NewMarket shareholders. Additionally, the company
also postponed a small number of organic growth initiatives that would have
substantially increased overall 2007 sales. With the reallocation of
corporate resources to corporate infrastructure initiatives, NewMarket will
begin 2008 better prepared to support ongoing aggressive growth, including
the independent public listing of subsidiary operations and the
corresponding distribution of shareholder dividends. NewMarket has not
altered its growth strategy, but is now better prepared to sustain
continued growth.
Shareholders are assured that NewMarket will definitely list additional
subsidiary operations in 2008 and issue shareholder dividends. The
declaration of a dividend date of record before the end of 2007 is not out
of the question. However, we are not currently prepared at this time to
definitely commit to a date of record for a dividend.
After traditionally holding our annual Town Hall meetings in December every
year, we have moved the meeting to January. We have scheduled the January
date to be able to meaningfully present NewMarket's 2008 outlook with 2008
initiatives underway rather than conduct a December meeting with 2008
initiatives presented as no more than bullets on a PowerPoint presentation.
Town Hall and Emerging Market Seminar
In addition to the Company's annual Town Hall meeting, scheduled for
Thursday, January 17, 2008 at 3:30 pm CST in Dallas, Texas, at the Fairmont
Hotel, NewMarket will host a seminar focusing on emerging technologies and
emerging and frontier economies. The seminar, which is scheduled for
Friday, January 18, 2008 will be an opportunity for shareholders and
interested investors to learn more about the use of emerging technologies
and the opportunity for rapid growth within rapidly growing economies
worldwide. Anticipated participants include business,non-profit, and
government leaders with expertise in emerging markets, such as Brazil,
China and Africa.
Those interested in attending the NewMarket Town Hall or Emerging Markets
Seminar should contact Whitney Marks at
wmarks@newmarkettechnology.com or
214-722-3052 to RSVP and obtain more information.
Here at NewMarket, we are excited about the Company's outlook in 2008. We
look forward to picking up the continued independent public listing of
subsidiary operations and issuing our first shareholder dividends. We also
look forward to expanding operations and sales. This year has been a
foundation building year and 2008 will see the benefits of that foundation
building. We sincerely appreciate shareholders' patience as we grow and
build shareholder value.
Best Regards,
Philip Verges
CEO & Chairman
NewMarket Technology, Inc.
To be added to NewMarket's corporate e-mail list for shareholders and
interested investors, please send an e-mail to
ir@newmarkettechnology.com.
About NewMarket Technology, Inc. (
www.newmarkettechnology.com)
NewMarket helps clients maintain the delicate balance between maintaining
legacy systems and gaining a competitive edge from the latest technology
innovations. NewMarket provides certified integration and maintenance
services to support the prevailing industry standard solutions such as
Microsoft, Oracle, SAP, Siebel and Sun Microsystems. Concurrently,
NewMarket continuously seeks to acquire emerging technology assets to
incorporate into an overall product portfolio carefully packaged to
complement the prevailing industry standard solutions. Some emerging
technology solutions NewMarket provides include VoIP, Broadband Wireless
and Security.
NewMarket delivers its portfolio of products and services through its
network of Solution Integration subsidiaries in North America and the
leading emerging markets around the world to include, Latin America, China
and Singapore.
NewMarket ranked Number One in Texas, Number Three in the United States and
Number Five in North America on Deloitte's 2006 Technology Fast 500, a
ranking of the 500 fastest growing technology, media, telecommunications
and life sciences companies in North America. Rankings are based on
percentage revenue growth over five years, from 2001-2005. The Company grew
from less than $1 million in revenue in 2001 to over $50 million in
profitable revenue in 2005. In 2006, the company continued its rapid
growth, reporting $77.6 million in revenue with a net income of $5.8
million.
"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 NewMarket'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.
Contact Information: Contact:
NewMarket Technology, Inc.
Investor Relations
214-722-3065
ir@newmarkettechnology.com
www.newmarkettechnology.com