1) In reaction to the global economy 2) In relation to the trading dynamics of the OTC markets 3) Due to the number of issued and outstanding shares of common stockNewMarket is not alone in realizing record low share prices. Many publicly traded companies on both large and small cap exchanges, all over the world, have recently hit 52 week low share prices. OTC traded companies are trading, on average, at share prices less than half of what they were last year. Nevertheless, even in the face of a dismal economy, the NewMarket share price might be performing better if we had fewer shares issued and outstanding. NewMarket made a number of acquisitions with convertible securities beginning in 2003 and continuing through 2005. In other words, we purchased new operations on terms involving a deferred payment in stock. We anticipated that the deferred stock payment would result in the issue of less common stock. We expected the Company's common stock share price to increase in reaction to the improved balance sheet and operational performance that resulted from the acquisitions. The deferred stock payment plan was anticipated to pay the sellers after the common stock share price had increased, and, in turn, to result in less stock being issued than had stock been issued at the time of acquisition. In practice, the common stock share price decreased regardless of the Company's improved operational performance, and we ended up issuing more common stock in conjunction with the acquisitions than anticipated. Why did the share price go down between the time of purchase and the issue of common stock for the purchase? I believe the share price went down as a result of third party short selling in anticipation of the eventual common stock that would be issued in conjunction with the convertible securities issued to make acquisitions between 2003 and 2005. If there was any doubt as to the ability of third parties to sell down the price of a company like NewMarket, all one needs to do is examine the recent price action of our nation's major financial companies. If it can be done to a company with billions in market capitalization, it can certainly be done to one with millions in market capitalization. In my opinion, the regulations surrounding the practice of short selling are inadequate and even if improved, must be enforced. I am on record advocating action against undisclosed short selling and any short selling that does not require a hard borrow prior to the execution of the short sale. I attended the 26th Annual SEC Government-Business Forum on Small Business Capital Formation in November and publicly advocated my opinion that short selling disclosure would be more beneficial to genuine retail investors than the financial reporting disclosures required by Sarbanes Oxley. While issuers like NewMarket have substantial transparency requirements, the world of short sellers remains almost completely opaque. I will continue to advocate regulatory improvements for small issuers in the future. However, I believe the regulatory weaknesses that have empowered predatory investment strategies will not be resolved by those regulatory agencies anytime soon. So, alternatively, NewMarket has implemented it own strategies to work around predatory investment strategies. We have also taken pains to provide shareholders with education and the information we have learned and with what we believe to be the practical realities of investing in small and early stage publicly traded companies. Some of you may have attended one of our "Milestone Investment Strategy" presentations. NewMarket has a sound business operation and is producing respectable financial results. The current market value has completely decoupled from the Company's fundamental financial performance. In addition to our current strategies to align the share price with the company's fundamental financials, the Company's long term strategy to align share price and fundamental financial performance is centered on moving the Company to a listed exchange. The OTC and the OTCBB are quotation systems only. Why Aren't Officers and Directors Buying Stock? In my opinion, announcements from OTC listed companies regarding management stock purchases are usually nothing short of publicity stunts. In general, I don't believe management stock purchases on the open market are a meaningful demonstration of management confidence for most OTC listed companies. In many cases, I believe the announcements are intended to inspire market confidence and correspondingly create buying that drives an increased share price. With few exceptions, most OTC listed companies have entered the public arena to raise cash for operational growth or acquisition. If the management and directors had the necessary cash to invest in the operations or to make acquisitions, they would not be likely to publicly list their companies. Management's ownership in small and early stage companies is usually purchased more with sweat equity than cash. NewMarket founders and management have made many investments in NewMarket over the years in addition to their sweat equity investments. Remember, NewMarket was founded out of the trunk of my Pontiac Grand Prix some eleven years ago. We struggled through the Dot com collapse and entered the public markets through a reverse merger in 2002. After taking little or no pay in 2002 and 2003, we admittedly enjoyed some compensation improvements beginning in 2004 and own stock as well. We have never, however, liquidated any stock. Alternatively, the founders collectively pulled together additional cash and invested that cash back into NewMarket. Among other investments by founders and management, you may recall a $4 million loan to the Company that was subsequently forgiven 12 months ago. Management and the founders have multiple investments in the Company, from direct cash investments to personal guarantees. Management and founders intend to invest further into NewMarket. We have already publicly discussed a potential management buyback. With that said, we do not believe purchasing stock in the open market would be a meaningful demonstration of our confidence in the Company nor do we believe it is the best use of our collective financial resources. We are instead looking to muster our collective resources to make a substantial investment that would have direct benefit to the Company's operations. As I mentioned previously, I believe the ultimate resolution to realizing an improved market valuation will be based on reconnecting the stock share price to the Company's fundamental financial performance. I likewise believe the best demonstration of management's commitment and confidence would be through an investment in improved operational performance. Why Doesn't The Company Buy Back Stock? The explanation here is consistent with the explanation above. Most OTC listed companies are public for the purpose of capital formation. I consider the majority of OTC company stock purchase announcements to be publicity stunts. A few shareholders have noted that NewMarket has relatively healthy cash reserves and suggested that cash be used to purchase stock. In response to this suggestion, I again point out that the Company's ultimate market valuation improvement will be based on operational performance. Accordingly, I maintain that the best use of the Company's cash is in support of the Company's operation. The current global economic recession is significant and has the potential to be one of the deepest and longest on record. With that in mind, it does not make sense to be using cash reserves for stock buy backs. The Company is holding its cash in reserve for unforeseen market surprises, and the potential opportunity of acquiring new subsidiaries at discounted valuations. This isn't just my opinion. As an example, it has been widely reported that our nation's financial industry is using the cash it has received from the U.S. Government to shore up its cash reserves and to acquire its competition. In light of the current economic uncertainties and current credit crisis, I further believe that any cash created by operations should be maintained in support of operations. Why Should Shareholders Buy More Stock And Why Should New Investors Buy Stock? [I have to be careful about addressing such a question. I can't recommend anyone to purchase or sell stock for numerous reasons. At the same time, I don't want to create unnecessary suspicion that I might be pointing to regulatory restrictions as a smoke screen to addressing genuine concerns. I will discuss the pros and cons one might consider as a shareholder or a new investor in the consideration of purchasing stock, but you should not consider anything in this letter as a recommendation to buy or sell in any way. All scenarios discussed below that contemplate the purchase or sale of stock are examples intended to illustrate one point or another. Again, this discussion is NOT advice to buy or sell stock.] I believe most shareholders own stock purchased at an average share price of approximately $0.30. Even if NewMarket's share price were $0.30 today, I would still consider the market value low. My objective is to realize an even higher market value through a re-alignment with the historical fundamental financial performance, improved fundamental financial performance and further growth. The question for shareholders and interested investors is one of "confidence" in the future. Do you have confidence in the economy to recover? Do you have confidence in the management team to mitigate the impact of predatory trading issues associated with the OTC markets? Do you have confidence in management to exit the OTC quotation systems to a recognized exchange listing? Do you have confidence in management to affect an alignment of historical fundamental financial performance and market value? Do you have confidence in management to continue to improve fundamental financial performance and grow the Company? Your level of confidence on a scale of zero to ten in the above questions is probably neither a ten nor a zero. If it is a ten, then your best course of action would likely be to buy stock and cost average down your $0.30 pps in order to improve your return potential when NewMarket's market valuation improves. If your confidence is a zero, you should probably sell your stock and use the losses to reduce your taxes. If your confidence is anywhere in between, you might exercise a variety of strategies. If you are more than a zero, but less than a five, you might sell some of your position and take the tax loss. If you are in the middle of the road on your confidence level, you might choose to just wait and see what happens next. If you are tentatively positive -- above a five on the zero to ten scale -- you might purchase some stock to average down, and if the share price increases a substantial percentage, take back your average down investment. For example, if the price is $0.035 and you purchase $100 worth of stock (about 2,860 shares) and the share price goes to $0.07 you could sell $100 worth of stock (about 1,480 shares) and still have the benefit of cost averaging down. Project and Subsidiary Updates We have also received shareholder questions on some of our ongoing initiatives. In today's letter, I have focused on shareholder questions about the low share price and how NewMarket might be considered an investment opportunity for a range of different investors. I will publish another letter later providing updates on our Chinese and Latin American subsidiaries, our previously announced LOI to acquire Everex, our OTC listing status and the management buyback initiative. Making History -- Living Through a Global Financial Crisis We are living in a historic time. Future generations will study the 2008 financial industry crisis, just as we studied or lived through the World Wars, the Great Depression and the Civil Rights Movement. Just as all those past historic events changed the United States and the world, and I like to believe for the better, I also believe the current financial industry crisis is going to change the United States and the world for the better. The advent and growth of the Internet has directly and indirectly lowered the traditional barriers to business entry and made the global market accessible to small businesses everywhere. Small businesses account for more employment and more gross domestic product (GDP) than ever before. Small businesses have collectively captured market share previously held by big businesses. However, the world's financial markets are only now waking up to the fact that the global economy has been overtaken by the small business sector. In time, the financial industry will adjust to accommodate the new landscape of the global economy, dominated by an increased volume of business organizations of smaller average size. I like to believe that all of us are playing at least a small and positive part in the history-making that is currently underway and that we will contribute to an improved United States and improved world. I believe NewMarket has great potential as an emerging market technology services company, but I also believe we have been and continue to be a trailblazer in the small issuer public markets. I have great hope for the small issuer public markets to facilitate economic growth that contributes to lifting the United States out of recession. My hope is based on the confidence in the small issuer public markets to consistently create investment returns for retail investors. Thank you for your time and consideration and even more so for your ongoing support of NewMarket -- even if that support might be coming reluctantly on the lower end of the zero to ten scale. You have my ongoing gratitude and commitment. Best Regards,
Philip M. Verges Founder and CEO NewMarket Technology, Inc.Corporate E-mail Updates To be added to NewMarket Technology's e-mail database to receive company updates or to obtain more information on the Company, please send an e-mail to ir@newmarkettechnology.com or call 214-722-3065. 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 systems integration and maintenance services to support the prevailing industry standard solutions from companies such as Microsoft, Oracle, Infor, 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. The company has continued its rapid growth, reporting $77.6 million in revenue with a net income of $5.8 million in 2006 and most recently $93.1 million in revenue with a net income of $7.3 million in 2007. "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 ir@newmarkettechnology.com 214-722-3065 http://www.newmarkettechnology.com