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NewMarket Technology Inc. Releases Letter to Shareholders on 2005 Plans for $75 Million in Revenue, $10 Million in Dividends and Future Acquisitions
Monday February 14, 11:22 am ET
CEO Details Organic Growth and Impending Defense Technology Systems Transaction; Second Shareholder Letter Tomorrow on More 2005 Plans
DALLAS--(BUSINESS WIRE)--Feb. 14, 2005-- NewMarket Technology Inc. (OTCBB:NMKT - News) today released a letter to shareholders providing detail on the Company's unique business model and plans to grow from $25 million in revenue in 2004 to $75 million in revenue in 2005. The letter also includes detail on the Company's plans to declare an estimated $10 million in dividends in 2005. The CEO explains how the Company's business model and dividend plan stand to establish NewMarket as a recognized leader in the emerging technology market. The letter is included in its entirety in this release.
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Dear Fellow Shareholders:
We are midway through the first quarter of fiscal 2005. The Company is approaching the first of several significant events scheduled this year that we believe will establish NewMarket as a recognized leader in the emerging technology market. The Company is building a new category of emerging technology business and this letter to shareholders is intended as part of our overall plan to keep shareholders abreast of our efforts to construct a new and as of yet uncategorized business model.
The term "recognized leader" should not be considered lightly. With a market capitalization value of $50 million, NewMarket plans this year to issue an estimated $10 million worth of dividends to shareholders representing 20 percent of the Company's total market capitalization. It is unlikely that any other company currently listed on the Over the Counter Bulletin Board Exchange (OTCBB) will issue any dividends that equal a similar percentage of the issuing company's market capitalization or for that matter, such dividend examples will be far and few between on any exchange. It is NewMarket's unique dividend strategy that management believes will establish the Company as a recognized leader in the emerging technology market.
Again, the first significant event enabling the first of three or more dividends to be issued this year will take place later this week. Defense Technology Systems Inc. (OTCBB:DFTS - News) will meet with NewMarket this week in Dallas to finalize the previously announced transaction between the two companies (more detail included below) This event will be a major benchmark in the history of NewMarket resulting from a plan initiated over three years ago and executed upon vigorously throughout the last three years.
NewMarket has forecasted dramatic revenue growth to $75 million in 2005 from $25 million in 2004. In addition, we are forecasting $10 million in dividends. NewMarket will continue to acquire new companies as it has over the past two years. The Company will also continue to strengthen its foundation through expanding cash reserves and graduating to a more regulated exchange where more institutional investors will discover NewMarket. This letter is to communicate in detail, as it applies to our uncategorized business model, on our organic sales efforts, expected dividends and ongoing acquisition plans. In a second Shareholder Letter to be released tomorrow, Tuesday February 15th, we will address the additional company initiatives that will build our foundation, such as our recent American Stock Exchange (Amex) application.
Business Model
The NewMarket business model is really a simple concept, though much work has gone into establishing the basic core of the business model and bringing the company to the pending dividend benchmark event. NewMarket is a publicly listed Company for two reasons: capital formation and shareholder liquidity. NewMarket acquires entrepreneurial emerging technology companies and makes modest investments in the acquired companies by gaining access to capital through NewMarket's publicly listed security. NewMarket then spins the now more mature emerging technology company into a separate publicly listed micro cap company and distributes equity in the new stand alone company to all of the shareholders of NewMarket by issuing a shareholder dividend.
Over the last two years, NewMarket has acquired equity interests, most as a majority interest, in eight entrepreneurial emerging technology companies. The combination of NewMarket's Homeland Security emerging technology subsidiary with DFTS will be the first spin-off and dividend where shareholders have the opportunity to receive equity in a standalone, independent publicly listed company. NewMarket will continue to acquire, assist in building and then spin-off emerging technology companies.
Organic Growth Forecast
NewMarket succeeds in establishing initial emerging technology sales by introducing emerging technologies through previously established and trusted vendor relationships. In addition, to investing in and grooming promising emerging technology companies, NewMarket maintains a traditional technology services business which provides the company with recurring revenue. NewMarket is a certified partner with Microsoft (Nasdaq:MSFT - News), Cisco Systems (Nasdaq:CSCO - News), and Sun Microsystems (Nasdaq:SUNW - News). With these credentials, NewMarket is expanding its traditional technology service sales to correspondingly expand its ability to introduce more emerging technology products to market.
While the traditional technology service business is becoming more competitive everyday, resulting in increasing pressure on profits, NewMarket's business model actually enables increased profits. By combining the traditional technology service business with the emerging technology value-added, not only are the higher profits from the emerging technology products blended in for improved net profits, an entirely new income line is added to the overall business -- equity income through equity dividend spin-offs.
With each spin-off, NewMarket will declare a shareholder dividend and issue equity in the new publicly listed company to shareholders. Likewise, the Company itself will have the ability to monetize the equity in the spin-offs that is retained on the balance sheet and add equity income to the traditional technology service sales and emerging technology product sales. When practical, NewMarket plans to retain a 51% or greater ownership in the spin-offs in order to be able to consolidate the financials of the new company into NewMarket's financial results.
In 2003 and 2004, NewMarket established a traditional technology service customer base through merger and acquisition. NewMarket will continue to geographically expand its customer base through merger and acquisition, but the vast majority of revenue growth will come from the organic expansion of the acquired customer base and exploiting the cross-selling opportunities identified going forward. NewMarket expects the revenue growth from the $25 million in 2004 to $75 million in 2005 to come largely from an increase in traditional technology service sales as well as an increase in emerging technology product sales.
Equity Dividends to Shareholders in 2005
The first anticipated dividend resulting from the culmination of NewMarket's business model introduced three years ago will come from the previously announced transaction to combine NewMarket's Homeland Security subsidiary with DFTS. NewMarket and DFTS meet this week in Dallas to finalize the transaction which will include the distribution of an estimated 10 million DFTS shares to NewMarket shareholders.
NewMarket is currently in negotiations that will result in similar dividends to NewMarket shareholders both later this year and into 2006. A second spin-off and dividend announcement can be anticipated before the end of the First Quarter 2005. The Company anticipates issuing up to three equity dividends in 2005 totaling an estimated $10 million in dividend value.
Ongoing Acquisitions
Today, NewMarket is concentrating on emerging technologies in three primary industry segments -- Telecommunications, Healthcare and Homeland Security. NewMarket will continue to pursue acquisitions in all three of these segments for the foreseeable future. NewMarket has also recently announced expanding into the Financial Services segment. Shareholders can anticipate a first acquisition in the Financial Services arena prior to the end of the Second Quarter 2005. Furthermore, NewMarket will continue to geographically expand its traditional technology service business through ongoing acquisitions. Shareholders can look for an announcement of an acquisition in South Latin America by the end of First Quarter or early Second Quarter.
NewMarket will continue to form capital through its public security for investment in new acquisitions. As the Company has expanded dramatically over the last year, the quality of capital available to the Company has likewise improved. Shareholders can anticipate a strategic investment announcement within the next few weeks intended to drive the acquisition campaign outlined above. The Company is embarking on developing capital formation directly into NewMarket's portfolio of emerging technology companies. Once NewMarket establishes a spin-off and equity dividend track record, we anticipate improved opportunities to access investment directly into portfolio emerging technology companies intended for eventual spin-off. Such ability to form capital with multiple securities is expected to dramatically accelerate NewMarket's ability to increase revenue growth and dividend issuance.
Management at NewMarket is excited by the planned course of events in 2005 and in particular, the pending DFTS transaction. We believe the closing of the DFTS transaction will gain notable recognition in the emerging technology industry and establish NewMarket as the company to watch as one of the most promising prospects for revitalizing the emerging technology marketplace. With one to two more similar spin-offs and equity dividend transactions, we believe that NewMarket be well on its way to achieving
Gruß
leo