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November 9, 2004 Stock Pick: NewMarket Technology, Inc. (NMKT)

Stock Price: $0.53 added

We expect NewMarket Technology to report earnings on or before this Friday, November 12th. Remember that the company reported $7.6 million in revenues for Q204 up from $562,000 for Q203, a 1,250% increase. Since then the company has raised annual revenue guidance 20% to $24 million in expected revenue this year. We see them reporting at least $7.6 million for Q3, but they could surprise once again and report over $10 million in revenues and/or return to profitability.

NewMarket Technology, Inc. is in the business of continuously launching emerging communication technologies in the telecommunications, homeland security, and healthcare industries. They create economies of scale across these various industries through their robust service, support, and integration organization known as NewMarket Strategic Sourcing.

This company is now becoming a powerhouse in the new market, new technology space. With this comes an expectation of substantial profitable growth and strong financial community support. With substantial profitable growth and influx of investment for new technologies and markets comes an out of this world opportunity for shareholders.

NewMarket plans to spin-out Xiptel, their VoIP subsidiary. Xiptel has already signed $2 million in contracts, and is expected to generate $30 million in 2005. Xiptel will be combined with Telefyne, Inc. to acheive its revenue goal. NewMarket shareholders will receive shares in Xiptel by the end of the year. NMKT shareholders will continue to benefit from NewMarket retaining the services and support contract with Xiptel. NMKT plans to replicate this spin-out model with its NewMarket China and Latin American operations by the end of Q1 2005.

NewMarket will report over 1000% revenue growth for 2004 over 2003. They have just begun to roll out their services, and plan to aggressively roll out the same services in China through a company they plan to acquire known as Gaozhi Communications. Through this company and their other operations in China, they will generate over $10 million alone in China for 2005. Overall, through all their operations, the company expects to generate $75 million in revenues for 2005 and maintain profitability.

The big picture here is that NMKT is extremely undervalued. NMKT's market cap is around $35 million while they will report over $24 million in sales with profitability for 2004. We doubt there is many other company's out there this undervalued looking forward.

NewMarket has met or exceeded expectations virtually every time they have set a goal.

So, here are the projections made in our last stock pick:

• $50 million profitable revenue run rate by year end 2004

At last report the company is at a $40 million revenue run rate. Annualized profitability could come as early as Q3 earnings on Friday.

• $20 million in booked revenue for 2004.

Guidance was increased to over $24 million in booked revenue for 2004 in a recent interview with the CEO.

• Profitability for full year 2004.

Profitability for full year 2004 could come as early as Q3 earnings on Friday. However, profitability for full year 2004 will more likely come in Q4.

• Xiptel IPO by end of the year.

On track. Company recently announced it will combine Xiptel with a $15 million in annualized revenue company creating $30 million in expected sales for 2005.

• NewMarket China listed on US exchange by year end.

The company has now changed this in their powerpoint to Q105.

• New Market Latin America listed on US exchange by year end.

The company has now changed this in their powerpoint to Q105.

• $100 million in profitable annualized revenue by summer 2005.

With the rate NewMarket is continuing to grow, expect this to happen.

• 500% revenue growth between Q1 and Q4, 2005.

This was in their powerpoint also, they would have to generate $15.6 million in revenues for Q4. This is attainable at their rapid growth pace..

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