DALLAS, TX--(Marketwire - June 9, 2010) - NewMarket Technology, Inc. (
Dear Shareholder,
The annual and first quarter audited financial reports for NewMarket have been released. The Company's revenue and net income performance is positive. In fact, the revenue is at record levels and the net income compared to the same period last year reflects a healthy operational fortitude to withstand the impact of periodic economic turbulence such as that experienced over the last year amidst the global financial crisis. So some are wondering why then the current share price has not reacted with a price increase.
The purpose of this letter is to discuss the recent share price in light of the Company's recent financial performance results and reported business developments and within the overall over-the-counter market environment. The share price is down at the moment compared to the share price prior to the recent financial reports, but this does not necessarily mean that it will not go up again. Indeed, the share price performance of over-the-counter listed companies (both OTCBB and Pinksheets OTC) is frequently volatile with substantial increases and decreases in share price that can represent double and triple digit percentage changes. Such dramatic changes can result in substantial gains or losses. Understanding the over-the-counter markets better in addition to learning more about a particular company can help to improve the opportunity to enjoy more gains than losses.
Earlier this year, I launched a not-for-profit organization dedicated to providing investors and entrepreneurs with better accesses to education on the small business capital formation market, particularly when it comes to the over-the-counter market. In addition to the information I will cover in this letter today, you might find additional useful information on the Small Equity Initiative website www.smallequity.com.
One of the over-the-counter themes I regularly discuss is the disconnect between the fundamental financial performance and share price of over-the-counter listed companies. Most over-the-counter listed companies are early stage business operations -- many without sustainable cash flow. In fact, the primary reason many of these companies have listed publicly on the over-the-counter market is to get access to the investment market that is available to over-the-counter listed companies. If share price and fundamental financial performance were aligned many of these companies still would not have access to investment capital in spite of their public listing. Microsoft started as an over-the-counter company and the potential that another 'Microsoft' might emerge from the over-the-counter market continues to attract investors looking for a Microsoft-like return on investment.
Microsoft-like opportunities are few and far between, but the over-the-counter market does regularly deliver exceptional return on investment opportunities. The problem is that many investors purchasing over-the-counter stocks seem to be looking to penny purchases for dollar returns, instead of realizing the more likely and more regular over-the-counter opportunity to benefit from a $0.005 price per share increase on a $0.02 stock. We are working diligently at NewMarket and within our family of companies to include our Greenfield Partners to help investors learn to consistently benefit from the more likely periodic 25% return on investment opportunities (and many times even better than 25%) that are possible through investing in over-the-counter listed companies. Current NewMarket and NewMarket Greenfield Partners include China Crescent Enterprises, Inc. (
While it is possible to regularly enjoy return on investment opportunities of 25% or better from periodic share price increases, it is also possible to benefit from periodic share price decreases. Some over-the-counter participants profit by selling short, or selling stock in anticipation of a share price decrease with the intention of purchasing stock at a lower future share price and filling the earlier sale order at a higher price. The continuous competition between those looking to profit from share price increases and those looking to profit from share price decreases contributes to a share price's volatility and substantial increases and decreases for which the over-the-counter market is often known. Some aggressive profiteers, to include both those looking to benefit from share price decreases as well as share price increases, will post anonymously and often misleadingly on stock message boards in an attempt to influence both the stock purchase and the stock sale decisions of others.
Recently, NewMarket has received questions related to the topic of dilution, some stemming from posts on message boards. We often address questions we receive via our periodic Webcasts and shareholder letters, so let me address this topic now. The tone of some of the questions and posts has alluded to an accusation of nefarious management intent to profit at the cost of shareholders by issuing more common stock. It is my belief that such message board posts are related to the efforts of individuals looking to profit from a decreased share price, in other words, selling the stock short.
NewMarket has issued common stock. There is nothing nefarious about the increase. For example, one reason for the increase in common stock results from NewMarket raising several million dollars about two years ago. The details of the investment are publicly disclosed. The subsequent events regarding the investment are also publicly disclosed. The conversion of the investment debt into stock is publicly disclosed.
Remember, the primary reason early stage companies list publicly on the over-the-counter market is to gain access to investment for their business plan. Public stock is a currency for such investment. Accordingly, most over-the-counter listed companies are likely to issue more common stock. The average share price of the 100 most actively traded OTCBB companies is approximately $0.02 and the average share price of the 100 most actively traded OTC Pinksheets companies is less than $0.01. Raising a million dollars will result in a lot of stock being issued. The top 100 most actively traded stocks on both the OTC and OTCBB markets have an average issued and outstanding of over 1 billion shares. They are the most actively traded stocks most likely because active OTC and OTCBB investors probably look to these stocks to find the regular increases and decreases in share price they need to enjoy a return on investment.
NewMarket does not participate in message boards and instead continues to keep its communications within the guidelines of public disclosure for investors, to include filing our periodic financial reports and other informational reports with the Securities and Exchange Commission and issuing frequent communications in the form of press, Webcasts and shareholder letters such as this one. Message boards are anonymous and therefore unreliable and unverifiable information, so investors should take the various message board posts making accusations of nefarious management intent regarding the increases in issued and outstanding with a grain of salt. Also, as much as I enjoy those posts praising the brilliance of management (and founders like me), you should take those posts with a grain of salt as well. Somebody probably has an agenda to get others to make a stock sale or a purchase that would in turn make the poster's investment strategy more profitable, be that strategy to see the share price increase or to see it decrease to support a short sale. Investors should evaluate any investment opportunity for themselves using public information from sources such as the Securities and Exchange Commission, the companies themselves and other investment sources such as their broker or industry analysts. Stock message boards are not a good source of due diligence for stock purchase or sale decisions. Posters are in most cases anonymous and a message board itself takes little, if any, responsibility for the legitimacy of the posts.
I do not believe the issued and outstanding of over-the-counter listed companies has much impact on the ability of an over-the-counter listed company to deliver the regular share price increases and decreases that enable the consistent return on investment opportunities I have discussed here. I regularly refer to the over-the-counter return on investment opportunities as "milestone" driven. Rather than a share price being connected to or driven by fundamental financial performance, I believe share prices of over-the-counter listed companies reflect "milestone" events, such as the signing of a new contract or the filing of a patent or the addition of a notable board member. In other words, events that reflect a "milestone" in a Company's journey toward success. Statistically, most early stage companies will not find long-term success at the end of the journey, but the "milestones" along the way can produce regular return on investment opportunities, for example on the order of 25% as discussed earlier in this letter, during the journey if the early stage company is over-the-counter listed.
NewMarket is a company that has achieved fundamental financial success that might ultimately put it in that category of early stage companies that achieve long-term success at the end of their journey. In the meantime, the purchase of NewMarket's over-the-counter listed stock has the potential of delivering "milestone" returns. While the share price is down now compared to the share price prior to the recent financial reports, I believe the NewMarket share price has the potential to go up based on upcoming possible milestones. To learn more about the long-term return on investment opportunity, look for past news and Webcasts on NewMarket's systems integration business plan with Worldwide Strategies, Inc.
Next week, I plan to conduct another Small Equity Initiative Webcast on milestone investing, stock message boards, issued and outstanding increases and capital formation for over-the-counter listed companies. A link to the Webcast will be posted on www.smallequity.com upon release and emailed to the Small Equity email database. To receive updates from the Small Equity Initiative, please sign up at www.smallequity.com.
Thank you,
Philip Verges
Chairman & Founder
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About NewMarket Technology, Inc. (http://www.newmarkettechnology.com/)
NewMarket provides systems integration, technology infrastructure services and emerging technology worldwide. NewMarket has a focus on providing technology and support services to rapidly growing economies where technology purchasing is on the rise. In addition to its base of operations in North America, NewMarket has operations today in the growing economies of China, Southeast Asia, Brazil and Northern Latin America. Last year the Company reported over $40 million in revenue from Asia and over $20 million in revenue from Latin America. Overall, NewMarket reported over $95 million in revenue for 2008 and reported over $98 million in profitable revenue for 2009.
Across the globe, NewMarket is a Microsoft and Oracle partner, distributes various computer hardware and peripherals from brand partners such as Dell, HP, IBM, Cisco, Sony, Epson, Canon and Sanyo and is also an authorized reseller of operating systems and various software from companies such as Red Hat, Sybase, IBM, BEA, Veritas and others. Additionally, the Company works with emerging technologies such as mobile computing, various security and wireless broadband technologies. NewMarket's rapid growth since 2002 placed the Company on the Deloitte Technology Fast 500 for 5 consecutive years. NewMarket was recognized as the third fastest growing technology company in the United States in 2006 and the number one fastest growing technology company in North Texas for two years in a row.
"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