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DALLAS
Gaozhi's $3 Million in Annual Revenue Step Towards Achieving $10 Million Forecast in China and $75 Million Company Wide
NewMarket Technology Inc. (OTCBB:NMKT) and Defense Technology Systems (OTCBB:DFTS) and Gaozhi Communications of Shanghai, China announced that the two companies will close on the previously announced acquisition of Gaozhi by NewMarket during the second Investor Trade Mission to China which departs on January 17, 2005. Gaozhi Communications is currently operated by Gaozhi Science and Technology Development Ltd. NewMarket will acquire a majority interest in Gaozhi Communications for cash and Gaozhi Science and Technology will remain as the second largest shareholder.
Gaozhi Communications has annual revenue of $3 million with significant business relationships in China that will contribute towards meeting NewMarket's China 2005 revenue forecast of $10 million. The acquisition of Gaozhi Communications represents the first acquisition in China and is an integral step in NewMarket's initiatives to becoming a part of the rapid economic growth in China through a merger and acquisitions strategy. China reported that its economy grew 9.3% in 2003.
A NewMarket China PowerPoint Presentation is available to interested investors by contacting LCGroup@mindspring.com
About NewMarket Technology, Inc. (www.newmarkettechnology.com)
In 2002, NewMarket launched a business plan to continuously introduce emerging communication technologies to market. The plan included a financing model for early technologies and an approach to creating economies of scale through a specialized service and support organization intended specifically for the emerging technology industry. The Company posted six consecutive profitable quarters through 2003 and established an annualized $15 million in revenue. In 2004, the Company diversified its communications technology offering into the healthcare and homeland security industries with the respective acquisitions of Medical Office Software Inc. and Digital Computer Integration Corp (DCI). The Company has expanded sales into Asia, Latin America and Canada through the acquisitions of Infotel Technologies in Singapore, RKM IT Solutions of Caracas, Venezuela, and Logicorp respectively. The company recently announced its first spinoff with the acquisition by Defense Technology Systems (OTCBB:DFTS) of NewMarket's Homeland Security subsidiary, DCI, for stock. NewMarket shareholders will receive a property dividend in the form of DFTS stock at a later date.
This press release contains statements (such as projections regarding future performance) that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to those detailed from time to time in the Company's filings with the Securities and Exchange Commission.
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UBS Capital Markets, Formerly Schwab Capital Markets, Largest Market Maker by Share Volume in NewMarket Technology Inc.
NewMarket Technology Inc. (OTCBB:NMKT) released a letter today to shareholders addressing the new SEC Regulation SHO. The letter is included in this press release.
Dear Fellow Shareholders,
The first month under Regulation SHO has just closed. This correspondence is in response to the numerous inquiries recently from shareholders regarding Regulation SHO as it might apply to NewMarket. Management is encouraged by the potential of Regulation SHO to limit trading volatility from irregular, excessive and improperly documented short sales and we have taken extra measures to contribute to the intent of Regulation SHO. Supervision of the new compliance requirements under Regulation SHO is a large undertaking for an already burdened SEC. We anticipate the market wide impact on irregular and excessive short sales to take a considerable amount of time. Accordingly, NewMarket has undertaken a pro-active effort to communicate with market participants active in the trading of NewMarket shares in regard to trading activity that could indicate potential violations of the new Regulation SHO.
Short selling itself is not illegal. However, the regulations associated with short selling are very specific. A short sale is the sale of a borrowed security. The new Regulation SHO clearly requires that the existence of the borrowed stock be documented prior to the execution of a short sale. Regulation SHO states, "The locate must be made and documented prior to effecting a short sale, regardless of whether the seller's short position may be closed out by purchasing securities in the same day."
Market makers are exempt from the uniform "locate" requirement in order to support a fluid trading environment. The broker dealer executing the order bears the "locate" responsibility. Market makers that are also broker dealers will be required to comply with the "locate" requirement as it applies to their broker dealer activity. Market makers are only exempt as it applies to bona-fide market making. If a market maker posts continually at or near the best offer, but does not also post at or near the best bid, the market maker loses the "locate" exemption.
In the interests of shareholders, NewMarket has initiated an effort to monitor daily trading. When a market maker's posted sales appear disproportionate with their posted purchases, we now initiate a written communication to the market maker to bring their attention to the potential of a "locate" violation. This is not a communication to direct or insinuate wrongdoing. On the contrary, our intention is to cooperate with market makers in an effort manage an efficient market in compliance with Regulation SHO. We recognize the fast-paced environment of the trading activity and we further recognize how in such an environment a market maker might be an unknowing conduit for short sales out of compliance with the new "locate" regulation.
In the last month we have sent correspondences to numerous market makers in regard to potential "locate" violations. We have sent several correspondences to the top four most active market makers by share volume. All market makers contacted, with the exception of UBS Capital Markets (SCHB), formerly know as Schwab Capital Markets, have responded. UBS Capital Markets was the largest market maker by volume in January at 32% of the 15 million shares traded. UBS Capital Markets has been the largest market maker in NewMarket stock by volume for the last three months. We recognize that UBS is one of the most active market makers in micro-cap trading and NewMarket is just one of many issues it trades, but we will continue in our communications to facilitate our genuine and sincere efforts to cooperate with the intent of Regulation SHO.
We will continue in our efforts to proactively support an efficient market and we will likewise continue to communicate with shareholders in our ongoing efforts.
Best Regards
Philip Verges
CEO and Chairman
Change of Auditor to Meet Sarbanes Oxley Regulatory Requirements Prompts Filing Delay
NewMarket Technology Inc. (OTCBB:NMKT) announced today the filing of an Annual Report Extension. Although the SEC Form 10KSB is due today, NewMarket will file an SEC Form 12b-25 to extend the filing period. The SEC Form 12b-25 includes an estimate of the Company's expected revenue and profit for 2004. NewMarket anticipates filing its Annual Report next week. The delay was necessary to accommodate a previously announced change of auditor. The change of auditor was necessary to meet Sarbanes Oxley rules requiring an audit partner change every five years. The auditor transition has been amicable and without conflict.
"We did not anticipate filing an extension of our annual report," said Philip Verges, CEO of NewMarket Technology Inc. "The Sarbanes Oxley rules are not yet routine and the requirement to change auditors was not forecasted. With the five acquisitions and two affiliate investments closed on during 2004, our new auditors have informed us that a few more days would be required before filing. Nevertheless, we do expect to have the annual report filed next week. We also expect the annual revenue and annual profit in the audited financials to be consistent with our previously announced forecasts as the extension filing includes the 2004 estimated revenue and profit."
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