SOURCE: NewMarket Technology, Inc.

May 16, 2007 08:39 ET

NewMarket Technology, Inc. Releases Overview of Strategic Five-Year Plan for Continued Growth From $77 Million in Profitable Revenue to $500 Million in Highly Profitable Revenue

Company Discusses Strategic Five-Year Plan in Letter to Shareholders

DALLAS, TX -- (MARKET WIRE) -- May 16, 2007 -- NewMarket Technology, Inc. (OTCBB: NMKT) CEO Philip Verges released a letter to shareholders today discussing an overview of the new five-year strategic plan. The letter is included in its entirety below.

Dear Fellow Shareholders:

NewMarket is approaching its five year anniversary since reinventing itself as a technology incubator -- introducing new technologies to new markets. We have much to celebrate and at the same time, we have much to review and improve. Over the last five years, we have adapted and improvised upon the strategic plan constructed to launch the Company's reinvention as a technology incubator. It is time to renew the strategic five year plan. The purpose of this letter is to begin a narrative providing shareholders with insight into the Company's plans to sustain growth and improve shareholder return over the next five years.

The core aspect of NewMarket's incubator business model is a corporate structure strategy that organizes incubating technologies into individual subsidiary companies. The purpose of housing incubating technologies into individual subsidiaries is to facilitate a future public listing of the individual subsidiaries. The individual listings are intended to enable shareholders to directly benefit from NewMarket investments in each incubated technology. The plan is to distribute stock in the independently listed subsidiaries to NewMarket shareholders in dividend distributions.

NewMarket has enjoyed rapid revenue growth with respectable profit for five years since reinventing itself as a technology incubator. Growing from about $1 million in revenue, to $77 million in revenue, with over $4 million in net income is a milestone worth celebrating. On the other hand, NewMarket has yet to issue one of its highly touted dividend distributions. This delay is cause for review and improvement.

Review and Improvement of the Dividend Strategy

In order for a dividend distribution to occur, NewMarket must first independently list a subsidiary operation. We have executed agreements to independently list three subsidiary operations in the last six months. In all three we are in various stages of reorganization. We are changing corporate names and ticker symbols; adjusting fiscal reporting years; reorganizing operations from one subsidiary to another and executing upon a host of additional activities both anticipated and unanticipated.

In hindsight, we did a poor job of anticipating the workload these activities created. You might say we bit off more than we could chew. All three of our first publicly listed subsidiary initiatives are proceeding forward, just at a pace burdened by an unanticipated workload. However, there is no deviation from the plan to issue dividends. Dividend distributions remain central to NewMarket's technology incubation business model.

The recent delays in reporting annual financial results and the associated financial statement amendments are part of the overall unanticipated workload. While we are working to recover from the annual reporting delays, we are running up against the current reporting requirements. We have resolved the inadvertent reporting discrepancy in our first independently listed subsidiary. We amended a previous subsidiary financial statement to resolve the inadvertent reporting discrepancy and yesterday filed the subsidiary's 2006 annual report that had been delayed pending the discrepancy's resolution. The amended subsidiary's annual report impacts the NewMarket Technology's parent annual report. Accordingly, an amended annual report will be filed for NewMarket Technology, Inc.

The increased workload to resolve the previous reporting discrepancy has impacted our capacity to meet current reporting requirements for the first quarter of 2007. Today we will file quarterly reporting extensions for both NewMarket Technology, Inc. and NewMarket China, Inc. We will file the NewMarket Technology, Inc. amended annual report, the NewMarket Technology, Inc. quarterly report and the NewMarket China, Inc. quarterly report within the extension period.

The previous reporting discrepancy and the impact to current reporting has been our priority within the overall unanticipated workload. Nevertheless, the overall workload includes a list of tasks required to complete the renaming, reorganization and revised reporting of the two additional publicly listed subsidiaries that make up NewMarket's first three publicly listed initiatives.

In addition to the three initial publicly listed subsidiary initiatives, the public listing of NewMarket's Voice over Internet Protocol (VoIP) subsidiary, Xiptel, is also underway. So is the acquisition of a portfolio of early stage technology supporting NewMarket's planned launch of a publicly listed intellectual property development subsidiary.

The above mentioned projects to establish publicly listed NewMarket subsidiaries account for five planned dividend distributions. On the horizon is also the independent listing of NewMarket's South East Asia subsidiary making a total of six planned dividend distributions. We have not lost our resolve to independently list subsidiary operations. We still believe the independent listing of subsidiary operations is the key to a perpetual technology incubator. We remain enthusiastic about working diligently to achieve the first dividend distribution. We even remain optimistic about a relatively timely first dividend distribution. Through it all though, we have learned it is harder than it looks.

In our renewed five year strategic plan we have recognized the gravity of the workload requirement to execute upon our independent listing and dividend distribution strategy. In turn, shareholders will see an expansion of our organization to accommodate the realities of the required workload and an improved forecasting of the efforts required to list subsidiaries and issue subsidiary stock in dividend distributions.

$500 Million Revenue Planning Goal

Reviewing past performance in conjunction with previous goals is the beginning of a renewed planning process. Setting future goals comes next.

As we have stated before, NewMarket is aggressively pursuing a profitable revenue goal of $500 million in 2010. We believe the goal is achievable. Realizing about 600% growth in three years is admittedly a formidable task. Even in light of our recent experience in biting off more than we can chew, we still believe the $500 million revenue goal in 2010 is achievable. It will require both organic growth and expansion through acquisition. Where our acquisitions in the past have resulted in a substantial increase in the NewMarket issued and outstanding, our future acquisition plans include a strategy to avoid such increases.

The plan we are discussing in this letter is a strategic five year plan. We have advertised that the revenue goal of this five year plan is $500 million. Even $500 million in five years is an aggressive plan, but five years is also further away than the previously stated $500 million in revenue in 2010. While we are building a five year plan to achieve $500 million in profitable revenue, we are not backing away from our goal to achieve $500 million in profitable revenue earlier than five years.

Planning and forecasting growth is a difficult exercise. It is a particularly difficult exercise for a company with multiple product lines in multiple markets. Our approach has been to forecast a range of growth and correspondingly update our growth objectives within that range based on interim progress. Over the last two years we have frequently updated our annual forecast based on quarterly results. Our five year goal is to minimally grow to $500 million in revenue. We are shooting to realize $500 million in revenue in 2010, in which case we would revise our five year revenue goal upward.

IP Yet To Be Developed and Reaching Beyond Information Technology

The NewMarket Technology incubator business model was launched five years ago on a foundation of information technology consulting and systems integration operations. The operations acquired by NewMarket to initiate the incubator business model had experience on the software side of VoIP technologies and had development and maintenance experience with software solutions from Cisco, Microsoft and Sun Microsystems.

As NewMarket looked for early technology solutions to acquire and build into its incubator business model, the Company concentrated on opportunities that were compatible with the VoIP and name brand software experience. Given that NewMarket's early investment resources were very limited, the Company also concentrated on early technologies that were not that early. In other words, NewMarket looked for early technologies that qualified as an early technology, but were not so early that immediate sales of the early technology would be impossible.

Since NewMarket has concentrated on technology acquisitions with immediate sales opportunities, the initial acquired technology portfolio did not include first to market opportunities. We did not have the first VoIP solution nor were we the only provider of on-line healthcare claims processing. Accordingly, NewMarket did not have the opportunity to enjoy a first to market return on investment on any of its initial technology acquisitions.

NewMarket's primary opportunity to generate a return on investment to shareholders resides in optimizing the strategy to publicly list subsidiary operations and issue stock in the subsidiary operations to NewMarket shareholders in dividend distributions. That return on investment opportunity can be optimized by improving the potential value of the emerging technologies that go into the subsidiary operations. The potential value of the emerging technologies can be improved by acquiring earlier stage technologies that can deliver first to market return on investment opportunities.

Going forward, NewMarket is working to initiate projects with earlier stage technologies to include intellectual property (IP) yet to be developed. NewMarket has announced an initiative, still in the planning stages, to launch a subsidiary operation concentrating on the acquisition and development of IP. Recently, I have joined the Board of Directors of Enable Intellectual Property Commercialization Corporation in conjunction with an additional initiative to access earlier stage technology investment opportunities for NewMarket.

In addition to working on earlier stage technologies, NewMarket is also exploring early stage technology opportunities outside of its traditional software centric experience. NewMarket's Chinese subsidiary has launched a product development and sourcing service to develop and manufacture innovative products for the Western market. We are engaged in early negotiations with a clean coal technology for deployment in China. We are also engaged in negotiations with a medical device company with existing sales in Europe and a pending FDA approval in the United States.

Over the next three weeks we will release additional information within a series of letters to shareholders that provides more detail on both the NewMarket expansion efforts outside of its traditional software centric focus and the initiatives to engage earlier stage technologies.

New Emerging Markets

The globalization of a free market economy is creating regional, high growth markets fueled by early stage companies that can realize rapid growth funded by modest investments. The majority of NewMarket's growth has come from emerging market acquisitions and investments. NewMarket is currently in China, South America and South East Asia.

NewMarket has enjoyed some market recognition for its success in launching emerging market operations and is likewise enjoying some unsolicited opportunity both within the emerging markets where we are currently operating as well as opportunities in additional emerging markets. For example, NewMarket is currently bidding on a project in Kazakhstan, and I recently had the opportunity to meet with the Finance Minister of Kenya and speak about NewMarket's technology incubation business model at a Kenyan Business Development Conference held in Washington D.C. Furthermore, NewMarket has long had its sites set on Eastern Europe and has managed a handful of projects to date in Eastern Europe.

Two of NewMarket's first three publicly listed initiatives are emerging market subsidiaries. The emerging market subsidiaries have grown faster than most of our emerging technology subsidiaries into operations that can produce earlier shareholder returns through dividend distributions. We anticipate that emerging technology investments in emerging markets will similarly produce emerging technology returns that, on average, exceed the United States emerging technology returns.

Again, over the next three weeks we will release additional information within a series of letters to shareholders that provides more detail on our various emerging market initiatives.

Micro Capital Market Foundation

The global market place is growing by leaps and bounds. The news media is rich with business stories from all over the world. More and more people in the United States are conversant in the names of foreign currencies and foreign stock exchanges. Ironically, as the various regional economies around the world evolve and merge into a larger overall global economy, the average size of the businesses that make up that global economy are getting smaller.

In the United States, about fifty percent of the GDP comes from small business as does about fifty percent of employment. An even greater percentage of new jobs every year comes from small business. Globally, most foreign GDP comes from small business. In China, the fastest growing notable economy in the world, the vast majority of businesses qualify as small business by United States Small Business Administration standards.

With all the small business growth in the global economy, an improved small business investment environment is likely to follow. The Over the Counter Bulletin Board (OTCBB), the premier exchange for small and early stage business in the United States, is a very young exchange. In April, it celebrated its tenth anniversary. The OTCBB was only approved for operation by the SEC in April of 1997. The New York Stock Exchange on the other hand is more than 200 years old. The micro capital market is in its infancy and NewMarket is one of the early adopters.

We have been very vocal regarding what we believe to be fundamentally different stock trading and valuation dynamics. In our discourse, we by no means excuse micro cap share price performance on the grounds of alleged stock manipulation. The micro cap public market is rich with allegations of stock abuses and corresponding finger pointing.

We are alternatively trying to share what we have learned in our five years of experience -- experience that stretches half the life of the OTCBB. We are trying to share our experience for the benefit of other small businesses, as well as for the benefit of small business investors. We believe a better small business investment environment is also better for NewMarket.

We will continue in our efforts to present and write about our experience in the micro cap markets. This will include not only our experience on the OTCBB, but what we learn as we begin to explore foreign micro cap listing opportunities. We plan to specifically improve NewMarket's overall capital structure by continuing to prepare and eventually move NewMarket, the parent company, to an upgraded exchange.

The series of shareholder letters over the next three weeks will include additional details regarding our ongoing experience on the OTCBB exchange and how it impacts our strategic five year plan.

The Coming Three Weeks and Follow Up Letters

I have written numerous shareholder letters over the last five years in an effort to bridge the communication gap between required filings and ordinary press releases. As a small company we don't have access to the communication resources of larger companies. Management is not getting interviewed on CNN. We don't have the budgets to attend nationally recognized conferences. We don't have the public relations department to win coverage in print. NewMarket's alternative has been the shareholder letter. I have given you good news and bad news in these letters. I try to start each letter I write to shareholders with the greeting "Fellow Shareholders." I do so to emphasize the opportunity we share. The good news I get to express in these letters is good news for me too. The bad news is bad news for me too.

This correspondence and the following correspondences are intended to communicate that we are learning and integrating what we learn. We are learning from our mistakes and our successes. The Company continues to improve and we look forward to even more dramatic growth over the next five years than what we have achieved in the first five.

Best Regards,
Philip Verges
CEO and Chairman
NewMarket Technology, Inc.
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About NewMarket Technology, Inc. (

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 to include Microsoft, Cisco Systems, SAP, Siebel and Sun Microsystems. Concurrently, NewMarket continuously seeks to acquire undiscovered emerging technology assets to incorporate into an overall product portfolio carefully packaged to complement the prevailing industry standard solutions. NewMarket delivers its portfolio of products and services through its global network of Solution Integration subsidiaries in North America, Latin America, China and Singapore. NewMarket maximizes shareholder return on investment by independent listing of consolidated regional and emerging technology subsidiaries in order to issue subsidiary stock in shareholder dividends. NewMarket ranked Number Five 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.


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.

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