DALLAS, TX--(Marketwire - February 26, 2008) - NewMarket Technology, Inc. (
OTCBB:
NMKT) today
released a letter from CEO Philip M. Verges. The letter is the second in a
series of letters to be released over the next few weeks to provide
detailed updates on the Company's plans for acquisitions after a two year
hiatus, to continue with the independent listing of subsidiaries, to issue
dividends and to move to a national exchange.
This second letter provides an overview of the Company's previous and
current acquisition strategy. The letter outlines the content of future
letters in this series that will provide more detail on specific
initiatives underlying the Company's overall acquisition strategy.
The letter is included in its entirety below:
Dear Stakeholders and All Who Have Interest in the Small Business Market:
In addition to our core systems integration business, NewMarket is in the
business of continuously introducing new technologies to new markets. In
other words, NewMarket is always looking for garage and kitchen table
technology entrepreneurs to bring into the NewMarket family of companies.
Within the NewMarket family of companies, we work to provide technology
entrepreneurs the infrastructure to commercialize their technology
innovations.
Vulture Capital and Hiring IBM
In our search, we find the world has no shortage of entrepreneurial
technology inventors. It is our contention that entrepreneurial technology
inventors are hampered primarily by inconsistent access to early stage
investment and a technology market gravitational pull toward established
brand name incumbents. Perhaps you have heard one or two of the
characterizations depicting the investment and marketing challenges facing
technology entrepreneurs. For instance, the reference to venture capital
as "vulture capital" or the old saying attributed to Management Information
System (MIS) Managers and Chief Information Officers (CIO) that, "no one
gets fired for hiring IBM."
A New Business Model to Empower the Technology Entrepreneur
NewMarket has founded a business model to overcome the "vulture capital"
investment issues facing technology entrepreneurs and circumvent the "no
one gets fired for hiring IBM" resistance of MIS Managers and CIOs. We are
learning from our experience in the execution of this business model and in
turn continuing to improve the model.
NewMarket Mergers and Acquisitions
This letter is part of a series of letters, started last week, intended to
share with all NewMarket Stakeholders, and all who have interest in the
small business market, what we have learned along the way in pursuit of the
NewMarket vision to establish a recognized, respectable and repeatable
early stage technology investment scenario. This particular letter focuses
on mergers and acquisitions. It will address the Company's current merger
and acquisition strategy, evolved from experience and updated to reflect
the Company's growth and maturity. The intention of this letter is to
update stakeholders on the Company's latest plans in addition to sharing
lessons learned with other publicly listed small companies.
Innovative Technologies and Systems Integrators
NewMarket has two main categories of companies it looks to acquire. One
category encompasses new, innovative technologies. The second category we
define in general as systems integration companies. "New innovative
technologies" is a very broad category. We streamline our efforts in this
category by limiting our focus to a handful of industries at any one time.
We plan to expand the number of industries we work in as the Company grows.
"Systems integration companies" is also a broad category. IBM and EDS can
be considered systems integrators. Each resells hardware and software
products manufactured by other brand name technology companies such as
Hewlett-Packard and Microsoft. NewMarket similarly resells many of the
same brand name technology products. Similar to our innovative technology
category, we have streamlined our systems integration category with a
specific set of focused criteria.
Why Systems Integration
One purpose of building systems integration companies into the NewMarket
business model is to specifically address the "no one gets fired for hiring
IBM" issue. Without a recognized brand name, garage and kitchen table
entrepreneurs, among other challenges, have difficulties getting potential
clients to consider their innovations, let alone purchase them. NewMarket
has implemented a practical solution to this problem by simply choosing to
participate in the brand name technology arena as a systems integrator,
reselling the products of recognized technology industry incumbents, such
as Microsoft, Oracle and Cisco Systems. NewMarket sells its innovative
technologies into its own systems integration channels established around
technology industry incumbent brand names.
Historical Systems Integration Acquisition Criteria
NewMarket has enjoyed accelerated market penetration for both brand name
and innovative technologies within the world's emerging economic regions.
Accordingly, one of NewMarket's acquisition criterion has been "location,"
with a concentration in emerging economic regions. The Company has
acquired and established systems integration operations in South East Asia,
China, and South America in addition to North America. Candidly, another
notable systems integrator acquisition criterion has been to look for
distress situations. Distress does not necessarily mean a company that is
struggling financially. NewMarket has acquired systems integration
companies in situations where shareholders are in litigation with each
other or experiencing financial distress with other assets and are in need
of liquidity from a performing asset. The purpose of NewMarket's distress
criteria has been to acquire assets as affordably as possible.
Updated Systems Integration Acquisition Criteria
NewMarket has not acquired a company in two years. The Company's last
acquisition was UniOne in Brazil, during the first quarter of 2006. Over
the last two years NewMarket has concentrated on solidifying systems
integration market channels and building innovative technology sales into
those channels. By solidifying existing channels and building innovative
sales, the Company has demonstrated about twenty percent (20%) organic
sales growth through 2007. During the acquisition hiatus, the Company also
expanded its legal, accounting and executive management capabilities to
prepare for a reinitiated merger and acquisition campaign. NewMarket is
now about six months into building an acquisition pipeline. The Company is
working to expand systems integration operations in South East Asia and
North America through merger and acquisition. There are no systems
integration acquisitions under consideration at this time in South America
or China. Future letters in this series will address specific acquisitions
under development. NewMarket Technology is not currently contemplating any
stock acquisitions.
NewMarket China, Inc. and NewMarket Latin America, Inc.
NewMarket has two independently listed regional subsidiaries. One in
China, NewMarket China, Inc. (
OTCBB:
NMCH) and one in South America,
NewMarket Latin America, Inc. (
PINKSHEETS:
NLAI). The consolidation of
NewMarket's South American operations into NewMarket Latin America is still
underway. Future letters in this series will be dedicated to each of these
independently listed regional subsidiaries. Both NewMarket China and
NewMarket Latin America are today predominately systems integration
operations. The immediate primary focus of each will be to expand
innovative technology sales organically and through mergers and
acquisitions. Each regional subsidiary has its own pipeline of innovative
technology acquisition opportunities under development. Additionally, each
company has also undertaken organic sales initiatives within their
respective regions to market innovative technologies, currently within
NewMarket's overall portfolio. For instance, announcements have been made
recently regarding the sale of broadband wireless solutions in South
America.
Communication, Security and Healthcare Innovations
Over the last five years NewMarket's innovative technology efforts have
been concentrated on three industry sectors -- communications, security and
healthcare. With the Company's founding roots in Voice over Internet
Protocol (VoIP), most of the Company's innovative technology advances have
been in the communications industry sector. In fact, after initial
acquisitions in the security and healthcare sectors, NewMarket subsequently
repositioned and reorganized its security and healthcare assets to better
concentrate on its communication industry strengths. Today, with the
Company's improved resources, NewMarket has begun to reenergize its
healthcare and security industry sector concentrations. More information
on specific progress in each sector will be forthcoming in future letters
within this series.
Mobility Computing Solutions and NewMarket's Improving Business Model
NewMarket has recently made a number of announcements regarding its
Mobility Computing Solutions initiative. Last week, NewMarket announced a
letter of intent to acquire Worldwide Strategies, Inc. (
OTCBB:
WWSG). In
addition to expanding NewMarket's innovative technologies portfolio, the
Mobility Computing Solutions initiative will demonstrate NewMarket's
maturing business model. NewMarket has recognized the benefits of the
micro-cap public market in accessing early stage financing for innovative
technologies. We have also identified the need to build incumbent brand
name technology channels to complement new, innovative technology
opportunities. Ultimately, the long-term sustainability of NewMarket's
business model to continuously introduce new technologies to market is
founded on the shareholder dividend potential of each new technology.
After many lessons learned, NewMarket has the opportunity to integrate
those lessons into the Mobility Computing Solutions initiative right from
the start. I look forward to sharing with you in more detail the business
model updates instituted in the Mobility Computing Solutions initiative and
the acquisition of Worldwide Strategies, Inc.
20% Organic Growth and Over $100 Million in Revenue in Acquisition Pipeline
NewMarket has forecasted twenty percent organic growth in 2008 over 2007,
with continued net income improvements as the Company's operations mature.
We do not plan to include any potential benefit from possible mergers and
acquisitions in the forecast until the acquisition is completed. After an
acquisition is completed, only then will the forecast be updated.
NewMarket is aggressively, but systematically pursuing acquisitions. We
have over $100 million in potential revenue in the current acquisition
pipeline. Management is optimistic about NewMarket's acquisition
prospects, but the realization of any additional revenue or other benefit
from acquisition must be considered speculative at this time.
Developing Company Communications - "Catch 22"
I want to further comment on communications about company developments in
general, beyond the catchall "speculative" comment above. Even as
NewMarket reaches $100 million in annualized sales, we are still a
developing company. We are a high growth company with aggressive plans.
Communications with shareholders can be a "Catch 22" situation. I believe
it is important for any developing company to communicate its vision to
shareholders and its plans and efforts to pursue that vision. The
challenge faced by all developing companies is that those plans and efforts
are undoubtedly going to change in reaction to unexpected encounters in
pursuit of their vision. In fact, it is my belief that the best developing
companies change in reaction to what they encounter, and those that stick
to the plan end up out of business. However, it can be difficult for a
stakeholder, not involved within the day to day management, to understand
changes as a reaction to an unexpected encounter in pursuit of a vision and
to otherwise interpret such changes as something less than genuine. We
will do our best at NewMarket to err on the side of over communication in
order to keep stakeholders up to date on latest lessons learned and
possible changes that might result from those lessons. Our vision is over
ten years old now and remains unchanged.
Thank You,
Philip M. Verges
CEO, NewMarket Technology, Inc.
Corporate Email Updates
To be added to NewMarket Technology's e-mail database to receive company
updates, please send an e-mail to
ir@newmarkettechnology.com.
About Worldwide Strategies, Inc. (
www.wideinc.com)
Worldwide Strategies is a development stage business that has built a
proprietary affinity marketing process and system to provide clients with
call center software platforms or outsourced client services to include
multi-lingual capabilities. The Company's development to date has resulted
in less than $1 million in liabilities. The affinity market business has
signed several substantial contracts, but has not yet established
substantial revenue. The Company has approximately 20 million shares
outstanding on a fully diluted basis. The NewMarket transaction is
intended to support a strategic business relationship and has been designed
to have added no additional common stock to the issued and outstanding.
The acquisition will be transacted with preferred stock including majority
voting rights.
About NewMarket China, Inc. (
www.newmarketchina.com)
NewMarket China, Inc. is a technology leader in the rapidly developing
Chinese market specializing today in software engineering, high quality
software development and digital multimedia outsourcing services delivered
to customers globally. At the same time, the firm is a systems integrator
and value added reseller of major global hardware brands in the Chinese
domestic market.
Headquartered in Dallas with operations in Shanghai and Beijing, NewMarket
China bridges the gap between Western and Eastern business cultures to
assist western clients in realizing the advantages of the high quality, low
cost technology products and services available from China. NewMarket
China also assists Western clients in localizing products and services to
realize the tremendous growth potential available by expanding into the
Chinese Market.
About NewMarket Latin America, Inc. (
www.newmarketlatinamerica.com)
NewMarket Latin America is a consolidated subsidiary of NewMarket
Technology providing world class systems integration services through
relationships with Hyperion, Oracle, SAP, SSA Global, Microsoft and many
more. NewMarket Latin America has major customers in various sectors such
as Oil and Gas, Consumer Products, Financial Services, and Pharmaceuticals
Industries.
NewMarket Latin America deliver solutions to regional customers in addition
to specializing in helping US clients expand their businesses and
operations into one of the fastest growing economic regions in the world.
NewMarket Latin America has offices and operations throughout Latin
America.
NewMarket Latin America also identifies emerging technologies developed
within the region and brings those latest technologies to market worldwide.
These innovations help clients grow their businesses and gain a new
competitive advantage.
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, Cisco Systems, 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.
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