New Market Technology Inc.

Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

16/10/08

NMKT daily

0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.08

Phone: 972-386-3372 Fax: 214-853-5929 www.newmarkettechnology.com ir@newmarkettechnology.com MARKET DATA

Symbol NMKT Exchanges OTC Current Price $0.07 Price Target $0.54 Rating Speculative Buy Outstanding Shares 212.2 Million Market Cap. $27.1 Million Average 50-day Volume 927,188

0.07 0.06 volume

© BigCharts.com

4 3 2 1

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New Market Technology Inc. 14860 Montfort Drive, Ste 210 Dallas, TX 75254 United States

0

Aug

Sep

Oct

Company Introduction NewMarket Technology Inc. (NMKT) is a full-service software development, systems integration and maintenance provider that also evaluates and incubates new technologies. NMKT has product reseller and integrator partnerships with many prominent software vendors, including Microsoft, Hyperion, SAP, Oracle, Cisco, Sun Microsystems, iPass and Lockheed Martin Overseas Corp. These relationships form the base of NMKT’s business and faciliate its international expansion. In addition, NMKT, searches for innovative new technolgies that can be developed into high-margin sales opportunities.

Source: Yahoo Finance, Analyst Estimates

The well-known products of its partners enable NMKT to establish customer relationships that would otherwise be difficult to achieve with lesser-known products and services. NMKT’s ultimate goal is offering its existing customers new products and services based on emerging technologies that would be difficult to market without an existing relationship.

The Company went public in 2002 by reorganizing into an existing Voice over Internet Protocol (VoIP) company. Because of its heritage, NMKT is often mistaken for a simple telecommunications company. However, since 2002, the Company has built product and service offerings that not only include VoIP, but also incorporate healthcare practice management software, municipal wireless solutions, offshore outsourcing, multimedia, network security and more. NMKT’s customers include large and small corporations, service providers, universities and government agencies in North America, South America and Asia.

The Company has been ranked by Deloitte as one of the fastestNew Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

growing technology-based businesses in North America for the past four years. In 2006, NMKT ranked No. 1 in Texas, No.3 in the United States, and No. 5 in North America on Deloitte’s Technology Fast 500, a ranking of the 500 fastest-growing technology, media, telecommunications and life sciences companies in North America. The Company grew from less than $1 million in revenues in 2002 to more than $50 million in profitable revenues in 2005. NMKT continued its rapid growth, reporting $77.6 million in revenues and net income of $5.8 million in 2006, and $93.1 million in revenues and net income of $7.3 million in 2007.

NMKT is headquartered in Dallas, Texas, and has offices in Venezuela, Brazil, Chile, Singapore and China.

Investment Highlights Stellar revenue growth The Company has reported robust revenue growth since its reorganization in 2002. In six years, NMKT has grown from less than $1 million in revenue to $93.1 million in 2007 - nearly more than 9,000% revenue growth.

The growth is the result of a combination of geographical and market expansion though acquisitions and strong organic growth in NMKT’s core markets. During the first quarter of 2008, NMKT’s revenue increased 15% yearover-year to $20.9 million. Growth continued at a more modest pace in the second quarter with revenues rising 4% year-over-year. The growth was primarily due to increased sales in the Company’s Latin American and Chinese systems integration subsidiaries. In the third and fourth quarters of 2008, we expect sales to drive growth in the Company’s North American assets to levels similar to its overseas assets.

Future growth plans call for expansion into the financial acquisition services market, expansion into other developing world markets including Eastern Europe and Africa, and the continued acquisition of complementary businesses. Based on the Company’s growth initiatives and management’s outlook, we expect NMKT to report revenue in the range of $120 million in 2008 and $160 million in 2009.

Improving operating margins despite gross margin contraction Competition within its core lines of business, as well as the continuing trend toward outsourcing in North America, has caused the Company’s gross margins to contract. The systems integration and software development industries have both experienced margin erosion over the past several years, and this trend will likely continue to pose a challenge for NMKT and others. However, the Company also has overseas assets that can be leveraged to combat gross margin declines in its North American business and NMKT is developing its own outsourcing opportunities. In addition, the Company’s development of emerging technology assets could yield much higher margins. We also believe that NMKT’s continued sales growth will enable the firm to realize benefits from economies of scale. For example, second quarter 2008 operating margins rose to 5.4% from 4.0% in the same period last year. In the first quarter of 2008, NMKT’s operating margin increased to 6.3% from 2.9% one year earlier. We think this margin improvement trend is likely to continue for the remainder of 2008 and into 2009.

Solid product offerings in partnership with leading IT companies As mentioned earlier, NMKT has established reseller agreements and partnerships with some of the world’s leading IT companies. These products open the door to new customer relationships and allow NewMarket to establish a presence in new geographical regions, many of which are outside the United States.

The Company is working to develop its own proprietary emerging technologies that it hopes to sell to its estabNew Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

lished customer base. NMKT’s plan is to develop newer technologies that will compliment its existing products and services and drive higher-margin sales. This emphasis on cross-selling new technologies gives the Company an advantage over many traditional systems integration companies.

Business model capitalizing on IP communication technologies NMKT has developed an innovative business model that focuses on searching for, acquiring, developing and spinning off emerging technology companies to generate equity income for its shareholders. Equity income would be in addition to traditional product and service revenues and profits. By developing independently-listed subsidiaries, the Company has the opportunity to use shares of its subsidiaries for a variety of purposes. NMKT has become a conglomerate of micro-cap public companies and should benefit from economies of scale and greater bargaining power.

Aggressive acquisition campaign Since 2002, the Company has built a solid portfolio of technology companies. Its goal is to deploy technology solutions over a larger number of industries and to better serve the global marketplace, particularly the America’s and Asian marketplaces. In June 2008, NMKT announced a definitive and binding agreement with FIC of Taiwan to acquire a 75% interest in Everex of Fremont, California, a respected brand name in personal computing and a market leader in producing innovative products. Everex has sold millions of PCs and peripheral components worldwide, and reported 2007 sales of $60 million.

This transaction can be a transformational event for NMKT. First of all, Everex is being acquired to serve as the cornerstone of the Company’s mobility technology solutions initiative. Mobility solutions promise to be a quantum development in the world of technology and personal computing. Secondly, the transaction is likely to substantially increase NMKT’s North American sales to levels comparable to the Company’s Asian and South American sales. A more balanced blend of domestic and overseas sales will likely make future financing transactions easier for NewMarket, since many fund-raising efforts in North America can be limited by a predominance of overseas assets.

Managed services strategy enhances revenue potential NMKT launched a new strategy earlier in 2008 to transition the Company’s revenue to long-term managed services contracts and customer relationships. The objective of the managed services strategy is to improve the Company’s value by extending the average length of customer relationships and contracts while improving the efficiency of regional operations through the consolidation of back office functions.

By extending the length of contracts, customer acquisition costs are reduced and forecasts become more accurate. NMKT’s sales base should become more stable, allowing the Company to focus a greater portion of its efforts on long-term growth New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

rather than the renewal of shorter term contracts. Since launching the managed services strategy, NMKT has won longer-term contracts with some of its established customers. Most notable are WBA Telecommunications, with a $10.5 million three-year contact, and a $4 million, three-year contract with Movistar, a division of Telefonica.

CEO leadership NMKT’s CEO Philip Verges should be given much of the credit for the Company’s results. Mr. Verges joined the Company (in fact, re-invented the Company) in 2002, bringing entrepreneurial experience, development strategy, technology products and system integration relationships that allowed NMKT, in a short period of time, to become one of the industry’s most dynamic players. Mr. Verges’ experience with start-ups and developmentstage businesses includes opening a new division for Electronic Data Systems, establishing operations in a new geographic region for another systems integration company, and launching his own business, VergeTech International, which grew from $0.3 million in revenues in 1997 to $11 million in 2001, finally merging it into what is now NewMarket Technology.

Market opportunity A favorable industry outlook supports NMKT’s business model. The Company is building a business at the convergence of the telecom and IT industries. Both industries are poised for strong growth over the long-term, which will provide emerging companies with numerous opportunities. According to the Telecommunications Industry Association (TIA), global telecom spending is likely to exceed $2.9 trillion in 2006 and will grow 10% annually over the next several years to $4.2 trillion in 2010. At the same time, IDC forecasts worldwide IT spending will grow 6% annually from $1.2 trillion in 2006 to $1.5 trillion in 2010.

Most of the growth is expected to come from NMKT’s target regions and industries, particularly, Asia-Pacific, Latin America and Eastern Europe, as well as the banking, health care, communications and media industries.

Business Model NMKT is developing market entry technology products and services, while maintaining a core systems integration base of business. NMKT does business in several market segments, with a focus on Telecommunications, Healthcare and Security. The Company also plans to develop technologies for the financial acquisition services segment.

Technology sector businesses face two substantial industry-wide challenges. The first is the growing global technical labor force, which puts significant pressure on profit margins as technology companies continue to ratchet down expenses and sell products at prices below competitors by employing a technology labor force from developing countries. Secondly, since the collapse of the dotcom investment market, the technology sector has been unable to re-establish consistent investment community interest in technology innovation. Profit margin pressures deter investment community interest and make internal research and development investment less attractive.

The Company’s business strategy focuses on the following: 1) Maintain a core systems integration base of business; 2) Additionally, Find and acquire timely early-stage technology companies; New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

2) Incrementally invest to refine acquired technologies; 3) Concentrate initial sales efforts on focused pilot opportunities; 4) Expand pilot opportunities as warranted to a level that proves market viability; 5) Spin the technology company off as a next stage, stand-alone public company to support expanded capital formation; 6) Realize support services economies of scale by retaining support service contract functions at NMKT; and 7) Build service and sales capacity in developing economies overseas to take advantage of lowe labor costs and sell into fast-growing economic regions with less brand name competition than in North America.

To this end, NMKT has introduced a unique business model, which we believe addresses issues such as the globalization of the techology work force which are causing profit margin pressures. NMKT holds each technology product and service offering within a subsidiary company. As the product and service offering matures, the Company plans to monetize the value of the technology through an incremental liquidation of stock in the subsidiary.

Moreover, by spinning off its maturing subsidiaries, NMKT will generate equity income for its shareholders in addition to traditional product and service revenues and profits.

Technology Portfolio NewMarket has built a solid portfolio of technology companies. Its businesses are diverse in their geographical reach, products and service. Many of these companies were acquired, but some have been grown internally through start-up efforts, most notably NMKT’s Chinese subsidiary. Readers should note that this subsidiary, formerly known as NewMarket China, recently changed its name to China Crescent Enterprises (ticker symbol: CCSE).

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

NewMarket Portfolio of Companies Company Name

Country Focus

Subsidiary >51% owned

Affiliate <51% owned

Business Focus

China Crescent Enterprises Inc. (OTCBB: CCSE)

Peoples Republic of China

Yes

N/A

Hardware VAR Offshore Outsourcing Multimedia

NewMarket Latin America Inc. (OTC: NLAI)

Brazil, Chile, Venezuela

Yes

N/A

Software Development Systems Integration

NewMarket Broadband

TX, U.S.

Yes

N/A

Wi-Fi & Wi-MAX

NewMarket Intellectual Property

TX, U.S.

Yes

N/A

Patented Emerging Technology

Infotel Technologies Ltd.

Singapore

Yes

N/A

RKM Suministros S.A.

Venezuela

Yes

N/A

UniOne Consulting

Brazil, Chile

Yes

N/A

IP Global Voice

CA, U.S.

Yes

N/A

Software Development Systems Integration Software Development Systems Integration Software Development Systems Integration VoIP Commercial Solutions

TekVoice Communications Inc.

FL, U.S.

N/A

Yes

VoIP Commercial Solutions

RedMoon Broadband Inc.

TX, U.S.

N/A

Yes

Wi-Fi & Wi-MAX

Source: Company’s presentation

To date, NMKT’s revenues have been derived from the following product areas: • Software licensing; • Long-distance telephone services; • Technical independent consulting; and • Security.

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

NewMarket sales model

North America

Traditional Technologies

From companies such as:

• • • •

Microsoft Oracle SAP Infor

New Technologies

South America

Sytems Integrations China

For example:

• • • •

VoIP Wireless RFID Security

SE Asia Source: Company’s presentation

Systems integration NMKT provides full service systems integration, customization and implementation for a variety of software and hardware products in North America, Asia and Latin America. The Company re-sells, installs, customizes and supports products from Microsoft, SAP, BAAN, Hyperion, SSA Global, etc. In addition, NMKT offers comprehensive consulting to identify and implement system solutions or to execute a specific project focused on areas such as forecasting or security enhancement, to name a few.

NewMarket Systems integration subsidiaries:

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

Telecommunications NMKT provides Voice-over-IP and traditional phone lines to both business and residential customers, including the latest complementary voice system services. In addition, the Company offers broadband access to business and residential customers, as well as Wireless Mesh systems for municipalities and corporate campuses.

NMKT’s hardware partners include Cisco, Polycom, 3COM, Linksys and Edgewater.

NewMarket Telecommunications subsidiaries and affiliates:

Security NMKT offers data integration and customization, as well as security solutions to protect customer’s information and communications. NMKT’s subsidiaries can design, develop, manufacture, install and market specialty products, equipment and systems for the safety and security needs of all sectors of the domestic and international marketplace. When commercial off-the-shelf products do not fulfill critical customer requirements, NMKT can design specialized hardware and software solutions.

NewMarket Security subsidiaries:

Healthcare NMKT has entered the emerging healthcare technology products and services market with products and services that address this market’s demands for increased productivity and security. The Company offers its healthcare clients the latest solutions in practice management, prescription tracking and monitoring.

NewMarket Healthcare partners:

Virtual Health Technologies

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

In addition, NMKT continues to search for, evaluate and acquire emerging technologies that may provide distinctive advantages to customer’s business and enhance the Company’s existing solutions portfolio. NMKT also plans to develop products and services for the financial acquisition services sector.

Everex acquisition During June 2008, NMKT announced an agreement with FIC of Taiwan to acquire a 75% interest in Everex of Fremont, California. The Company announced the end of September as the target date for completing this transaction. While we expect the transaction to be complete during this calendar year, we are not surprised that the transaction has not closed by the September target date due to the magnitude of the transaction. NMKT also noted that the structure of the acquisition does not entail the issue of any NMKT common stock or a security which would subsequently result in the later issue of NMKT common stock.

The acquisition brings significant WiMax Internet expertise to NMKT and has the added benefit of establishing an ongoing relationship with FIC of Taiwan, one of the largest companies in Asia. This acquisition will give NMKT a jump-start in its mobility technology initiatives with WiMax enabled product and services. Everex recently introduced CloudBook, an ultra-mobile, low-cost and lightweight portable computer. A Wi-Max enabled version of the CloudBook is scheduled for release in the first half of 2009. The next generation of WiMax Internet access and mobile computing devices is poised to radically alter the way the world works and plays. The Everex product line and the Company’s mobility strategy position NMKT at the forefront of this trend and significantly enhance many of the Company’s existing emerging market and emerging technology initiatives.

Through this transaction, NMKT will also be able to substantially increase North American sales since Everex already has established revenues in the United States, reporting annual sales of $60 million in 2007. Since expanding into emerging markets worldwide, NMKT’s sales outside of the United States have grown faster than its domestic sales. In addition, NMKT will benefit from improved cash flow and increased overall financial maturity. Also notable is the impact the transaction will have on the Company’s Asian operations, particularly China. Everex is a respected name in computer hardware, which is currently a vital part of China’s infrastructure improvements.

As NMKT moves toward higher-margin service offerings, a partnership with an Asian company outside of China will enhance the Company’s strategy, as selling Chinese hardware products in China typically produces only modest profit margins. In turn, NMKT can assist Everex in entering additional markets such as Latin America where NMKT already has established operations.

Industry Outlook Telecommunication and IT industries According to the Telecommunications Industry Association (TIA), global telecom spending is likely to exceed $2.9 trillion in 2006 and will grow 10% annually to $4.2 trillion in 2010. IDC estimated that worldwide end-users spent $1.2 trillion on information technology in 2006 and will increase IT spending 6% annually to $1.5 trillion in 2010.

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

Global telecom spending, $ trillion 4.8

4.2

3.6

Global IT spending, $ trillion 1.6 1.2

2.9

2.4

0.8

1.2

0.4

0.0

2006

2010

0.0

1.5 2.9

2006

2010

Sources: http://www.tiaonline.org/media/2004_TIA_Industry_Outlook.pdf, http://www.tiaonline.org/business/media/press_releases/2006/PR06-14.cfm. http://www.idc.com/getdoc.jsp?containerId=202600

According to IDC, the major share of the growth will come from emerging economies, particularly Asia-Pacific, Latin America and Eastern Europe. Growth in the manufacturing and banking sectors, as well as the health care, communications and media industries, will outpace overall industry growth.

VoIP market The VoIP market has grown dramatically since the early days of calls made from personal computers. VoIP is an alternative communications technology that can circumvent traditional landlines by translating voice into data packets, transmitting the packets over Internet networks, and reconverting them into voice at the destination. Unlike traditional landline networks, VoIP doesnâ&#x20AC;&#x2122;t use dedicated circuits for each telephone call. Instead, multiple users can share the same VoIP network simultaneously. These systems are more efficient since the data network is not restricted by the one-call, one-line limitations of traditional telephone networks. This improved network efficiency creates cost savings that can be passed along to consumers as lower phone rates.

At the end of 2004, only 1.8 million VoIP lines were in service across Europe, equivalent to slightly more than 1.0% of households. By mid-year 2007, approximately 22 million European households had VoIP telephone service. The number of U.S. VoIP subscribers has risen from 6.5 million in mid-2006 to 11.8 million in mid-2007 equivalent to 10% of all U.S. households. According to eMarketer predictions, the number of U.S. VoIP users will climb to 32.6 million in 2010, equal to nearly 40% of all broadband households1.

1. www.researchandmarkets.com/reports/c35746

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

Worldwide VoIP subscribers (in millions) 180 152.6

160 140

115.4

120 100

87.3

80 60 40

50

66.1

37.8

20 0 2006

2007

2008

2009

2010

2011

Source: web20.telecomtv.com/docs/e9e52ba6-695b-4578-b169-6b4472f71297/The%20Race%20for%20Revenue.pdf

Worldwide VoIP service revenues jumped 66% in 2006 to $15.8 billion after more than doubling in 2005, and are expected to triple by 2010, according to Infonetics Research2. About 71% of worldwide VoIP service revenues came from residential/SOHO customers and 29% from business customers in 2006. By 2011, In-Stat predicts the worldwide consumer VoIP market will reach $44 billion.

Across Europe, revenues from VoIP services are growing at a comparable pace. Annual revenues from consumer VoIP services approximated €583 million3 in 2005 and €1.5 billion in 2006. VoIP revenues were estimated to exceed €2.8 billion in 2007. Western European VoIP service providers are expected to generate revenues exceeding €5.4 billion by 2011.

SoftBank is the world’s largest VoIP service provider with an 18% market share, followed by NTT, Vonage, France Télécom and Time Warner Cable.

Another important market for VoIP services involves international calls. VoIP offers an affordable alternative to the high prices charged by Public Switched Telephone Network (PSTN) companies. Based on TeleGeography’s estimates, international VoIP traffic exceeded 50 billion minutes and represented 17% of the global market in 2006, compared with 31 billion minutes and 13.7% of the market in 2004. VoIP minutes will continue to drive traffic away from traditional PSTNs and into IP core backbones, requiring service providers to handle multiple types of traffic as VoIP services and applications continue to proliferate.

2. www.voipmonitor.net/2007/08/09/VoIP+Service+Revenue+Hits+158B+In+2006.aspx 3. www.telegeography.com/products/euro_voip/samples/Executive_Summary.pdf

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

Worldwide traffic, billions of minutes 30%

350 VoIP Minutes TDM Minutes Total Minutes Growth

25%

250

20%

200 150

10%

100 5%

50

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

0% 1986

0

TDM and VoIP Traffic Growth

15%

1985

TDM and VoIP Traffic (billions od minutes)

300

Source: http://www.telegeography.com/wordpress/?m=200712

Internet usage Continued growth in the number of Internet users is expanding the customer base for IP-based services. The number of Internet users already exceeds 1.0 billion worldwide. As of September 30, 2007, there were 1.2 billion Internet users, according to Internet World Stats.

Internet Usage

Europe North America Worldâ&#x20AC;&#x2122;s total

Population, Mn (2007 Est.)

% Pop. of World

809.9 334.5 6,574.6

12.3 % 5.1 % 100.0 %

Internet Users, Penetration Latest Data, (% Population) Mn 337.9 232.6 1,244.4

% Usage of World

User Growth ( 20002007 )

27.2 % 19.8 % 100.0 %

221.5 % 115.2 % 244.7

41.7 % 69.5 % 18.9 %

Source: www.internetworldstats.com/stats.htm

The number of Internet users worldwide is expected to reach 2.0 billion by 2011.

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

Broadband usage Internet telephony is essentially a broadband phenomenon. Increasing broadband penetration rates facilitate the rapid deployment of voice, video and data IP services. Broadband is often called high-speed Internet because of its high data transmission rates. The number of broadband connections worldwide is rising steadily as more users tap high-speed technologies for peer-to-peer (P2P) file sharing systems, music and games downloading, videoon-demand and conference calls.

At the end of the first quarter of 2007, there were an estimated 300 million broadband subscribers worldwide.

Last year, the number of broadband subscribers in the OECD countries increased 24% to 221 million4 (June 2007).

For every 100 OECD residents, 18.8 had broadband subscriptions, up from 15.1 two years ago. The strongest per capita subscriber growth rates were in Ireland, Germany, Sweden, Australia, Norway, Denmark and Luxembourg.

Each of these countries added more than five subscribers per 100 residents in 2007.

The Telecommunications Industry Association (TIA) estimates the total U.S. broadband subscriber base will reach 57 million in 2008, up from 32.5 million in 2004. According to TIA, the United States had fewer than 5 million broadband subscribers in 2001. The number of U.S. subscribers grew 35.4% in 2004 to 32.5 million. The breakdown by broadband technology was as follows: cable modem (17.0 million), DSL (12.6 million), fixed wireless (2.2 million), fiber-to-the-home (0.2 million), satellite (0.4 million), mobile wireless (3G) (0.1 million) and broadband-overpower line (less than 50,000).

Financial Analysis Revenues The Company is generating revenues by offering technology products and services in the telecommunication, healthcare and security markets. To date, the Company’s revenues have come primarily in the following product areas: hardware sales, software licensing; systems integration; technical independent consulting; and security.

The strong revenue growth reported since NMKT’s inception reflects a combination of geographical and market expansion though strategic mergers and acquisitions. During the first quarter of 2008, NMKT’s revenue increased 15% year-over-year to $20.9 million. Growth continued at a more modest pace in the second quarter of 2008, with revenues improving 4% year-over-year to $22.8 million. This gain was primarily due to increased sales in the Company’s Latin American and Chinese systems integration subsidiaries.

Future revenue growth will come from introducing new products in the financial acquisition services segment, expansion into other emerging markets like Africa, the Middle East and Eastern Europe and the acquisition of complementary businesses. Over the long-term, the Company plans to lay the groundwork for sustainable growth by capitalizing on the IT and telecommunication industries’ strong fundamentals and leveraging acquisitions and organic growth

4. http://cordis.europa.eu/search/index.cfm?fuseaction=news.simpledocument&N_RCN=28639

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

Revenues, $ Mn

Source: SEC Filings

Segments NMKT has three reporting segments: • Services and computer programming services; • Contracts, particularly training contracts and technical support contracts; and • Product sales, which consist of the sale and installation of hardware and software.

The Services segment provides 89% of total revenues.

Revenues by segment

Revenues Services revenue Contract revenues Product revenues Gross Margin Services COS Contract COS Product COS

2005

2006

2007

2007 vs. 2006

50.1 39.1 3.1 7.9

77.6 67.8 3.8 5.9

93.1 83.3 3.3 6.5

19.9% 22.7% -14.1% 9.8%

37.0% 39.0% 45.9% 23.7%

28.2% 28.9% 29.9% 19.3%

27.7% 28.9% 15.4% 18.4%

-0.5% 0.0% -14.5% -1.0%

Source: SEC Filings

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

NMKT’s overseas operations are located in Brazil and Chile (UniOne), Venezuela (RKM), China (China Crescent Enterprises) and Singapore (Infotel), and together account for 71.5% of total revenues. The breakdown of revenues by operation is as follows: UniOne, 21%; RKM, 4%; China Crescent Enterprises, 43%; and Infotel, 3.5%.

Income statement As mentioned earlier in this report, competition within NMKT’s core lines of business, as well as the continuing outsourcing trend in North America, has put pressure on the Company’s gross margins. NMKT’s core capabilities are in industries that have experienced margin contraction over the past several years. However, the Company also has overseas assets that can be leveraged to combat margin compression in North America. NMKT may also develop its own outsourcing capabilities. In addition, the Company’s development of emerging technology assets could yield much higher margins. We also assume that with continued growth, NMKT will realize greater benefits from economies of scale.

Operating results

Revenue, $ Mn Cost of goods sold, % revenue Other operating expenses, % of revenue Operating margin Net margin* Diluted EPS, $

% Chg

Q2 2007

Q2 2008

% Chg

93.1 72.3% 22.1%

20% 0.5% -0.3%

21.9 76.2% 19.8%

22.8 75.0% 19.6%

4% -1.2% -0.2%

5.7% 8.5%

5.6% 8.5%

-0.2% 0.0%

4.0% 2.6%

5.4% 6.6%

1.4% 2.6%

0.03

0.03

0%

0.00

0.00

2006

2007

77.6 71.8% 22.4%

* Net income includes foreign currency translation gains. Source: SEC Filings

Liquidity Since its inception, NMKT has financed operations primarily through equity security sales. NMKT has recently begun to report higher operating cash flows, allowing the Company to scale back its use of external financing. In addition, NMKT has retired some of its interest-bearing debt, thus improving its capital structure, and recently announced the retirement of a $3 million credit facility

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

Balance sheet items, $ Mn 31-Mar-08

31-Jun-08

Cash and equivalents Net Working Capital

4.7 21.6

4.4 22.5

Debt Equity

6.8 76.2

6.2 67.2

Source: SEC Filings.

Valuation Revenue forecast In a recent press release, NMKT management suggested that NMKT could report higher-than-anticipated revenue growth in 2008, and revenues exceeding $120 million this year, based on organic growth; the company anticipates revenues potentially exceeding $150 million if acquisitions are included. NMKT has a good track record for customer retention and has been building upon its existing customer base year after year. As of July 31, 2008, the Company had already signed sales contracts with new customers expected to bring in approximately $25 million in new revenues by year-end. These new contracts were not included when NMKT management originally shared 2008 revenue goals. The Companyâ&#x20AC;&#x2122;s historically strong annual growth combined with these new contracts will likely enable NMKT to record the best financial performance in its history this year.

Given the favorable industry outlook, recent Company initiatives and NMKTâ&#x20AC;&#x2122;s strong integrator and reseller partnerships, we expect the Company to record strong growth over the next five years. We think the Company is on track to exceed $120 million in revenues in 2008 and surpass the $160 million milestone in 2009.

A strong portfolio of technology companies, an innovative business model, the rapid rollout of China and Latin America operations, as well as the pending Everex acquisition, are all factors that support an optimistic growth outlook.

Revenue forecast, $ Million

Source: SEC Filings, Analyst estimates

New Market Technology Inc. (OTC: NMKT)

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Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

Despite the fact that NMKTâ&#x20AC;&#x2122;s gross margins are under pressure, we expect the Company to gain efficiencies through economies of scale as sales rise and improve product and service margins with its growing portfolio of emerging technologies. These factors should fuel improvements in operating margins and allow the Company to accelerate growth in net income and free cash flow.

EPS forecast, $

Source: SEC Filings, Analyst estimates

Peer Comparison A number of publicly traded companies have product and service offerings comparable to NMKT and are facing similar challenges. However, NMKT is traded at a significant discount to peer group Price/Earnings and Price/ Sales multiples.

Company Name 11-Aug-08

Comparative analysis Ticker symbol

Price per Mrkt. Cap. P/E Share, $ $ Mn 2008 2009

2008

P/S

2009

Electronic Data Systems Affiliated Computer Services Acxiom Perot Systems Computer Sciences iGATE Corp.

Peer median

EDS ACS ACXM PER CSC IGTE

24.85 50.37 14.19 17.46 45.84 10.67

12,560 4,870 1,100 2,090 6,930 575

17.50 12.95 20.57 17.64 10.66 18.72 17.57

14.79 11.58 17.10 15.45 9.73 15.93 15.12

0.55 0.73 0.81 0.74 0.39 2.54 0.74

0.54 0.69 0.77 0.69 0.38 2.21 0.69

NewMarket Technology

NMKT

0.13

27

3.03

2.18

0.22

0.16

Source: Yahoo Finance

New Market Technology Inc. (OTC: NMKT)

17

Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

We think some discount relative to the peer group is warranted since NMKT has a limited operating history, focuses on emerging and arguably unstable markets in Asia and Latin America, and may use equity for acquisitions, resulting in dilution for its existing shareholders. We value these shares at a 9.3 times forward Price/Earnings multiple, which is less than the peer group’s 15.1 times forward Price/Earnings multiple.

We derive a $0.54 target price for NMKT shares by multiplying a 9.3 times forward Price/Earnings multiple by our $0.059 2009 EPS estimate. We are initiating coverage of NewMarket Technology with a Speculative Buy rating and a $0.54 price target.

Investment Risks Development-stage business Despite substantial progress over the last six years, NMKT remains in the development stage, with limited profitability and resources for acquisitions. Consequently, there are uncertainties related to the Company’s ability to increase revenues through acquisitions and improve profitability.

Ability to manage and integrate acquisitions NMKT has grown through acquisitions, and the Company indicates acquisitions remain an essential component of its business strategy. Significant expenses are often associated with acquisition-related due diligence, and negotiations with acquisition targets. Considerable effort is required to raise financing for acquisitions and much management time is consumed integrating, developing and spinning off acquired companies as viable and selfsufficient businesses. There is no assurance that NMKT will be successful in completing targeted acquisitions or enhancing shareholder value through acquisitions.

Financing could result in share dilution or increase financial risks The Company anticipates current cash reserves will be sufficient to satisfy its operating needs over the next 12 months. However, NMKT will likely require additional financing in the future to further develop its products and services portfolio, capitalize on acquisition opportunities and respond to competitive challenges. Issuing stock to raise funds dilutes the interests of existing shareholders while debt instruments increase financial risk.

Competition from existing players and solutions Both the IT and telecom industries are highly competitive and subject to rapid change. A number of companies have products and services similar to NMKT, and some of these competitors have greater customer bases, brand recognition and financial resources.

In addition, rapidly evolving technologies and innovation will require NMKT to make significant ongoing investments in research and development.

Margin erosion Price competition and the migration of operating facilities to developing countries have compressed industry profit margins. Declines in NMKT’s gross margins offset some of the operating margin gains the Company has realized from new technologies and economy of scale benefits. Going forward, we expect NMKT’s revenue growth to create operating leverage that will enable the Company to improve operating and net margins.

New Market Technology Inc. (OTC: NMKT)

18

Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

Management Philip M. Verges Founder, Chief Executive Officer and Chairman

Philip Verges has built the Company from a technology start-up in 1997, to a global business focused on emerging technologies and developing economies. In his first foray into the role of entrepreneur, Mr. Verges founded VergeTech (VTI) in 1997, a firm that specialized in providing leading edge technology services.

After merging his company with IPVoice Communications in 2002, Mr. Verges devised and implemented the company’s new business strategy of developing market-entry technology products and services into early and mainstream technology products and services through established system integrator relationships. This led to the formation of NewMarket Technology.

Since that time, Mr. Verges has been instrumental in NMKT’s successful acquisitions of technology-based businesses in North America, Asia and Latin America, and in the formation of two publicly-traded subsidiary companies, China Crescent Enterprises Inc. and NewMarket Latin America. A graduate of the U.S. Military Academy at West Point, Mr. Verges’ early career included time in the Computer Sciences Research and Development Department of General Motors as an employee of Electronic Data Systems (EDS). His initial business start-up experience was at EDS with a new division focused on call center technology for financial institutions. Later, Mr. Verges added to his start-up experience by opening a new geographic region for a $30 million technology services business. Mr. Verges has been recognized by Ernst and Young as an Entrepreneur of the Year Finalist and as a Tech Titan Corporate CEO finalist, sponsored by Deloitte and Touche.

Philip J. Rauch Chief Financial Officer & Director

Philip J. Rauch joined NewMarket as CFO in 2006. Prior to that, Mr. Rauch served as COO and CFO for Defense Technology Systems Inc. Previous positions held by Mr. Rauch include vice president of business operations and controller at AboveNet Inc., vice president and CFO of Columbus Construction, and vice president and CFO of Garofalo Electric Co. Mr. Rauch holds a Bachelor of Science degree in economics with honors from the University of Pennsylvania Wharton School of Business, with a concentration in finance and accounting.

James Mandel Director

James Mandel has been the CEO and a director of Multiband Corp. since October 1998. From October 1991 to October 1996, Mandel served as vice president of systems for Grand Casinos Inc., where his duties included managing the design, development, installation and on-going maintenance for the 2,000 room, $507 million Stratosphere Hotel, Casino and Tower in Las Vegas. Mr. Mandel also managed the systems development of Grand Casino Mille Lacs in Onamia, Minnesota, the Grand Casino Hinckley in Hinckley, Minnesota, and six other casinos nationwide. He also serves as chairman of the board of CorVu Corp. and is a trustee of the Boys and Girls Club of Minneapolis.

Bruce Noller President of Managed Services & Director

Bruce Noller brings more than 25 years of financial, operational and marketing experience to NMKT. Mr. Noller was formerly the president of Noller and Associates Inc. Before he founded his own firm in 1994, he served as vice president for Integrated Control Systems, a worldwide management consulting firm.

During that time, Mr. Noller proposed and oversaw engagements within a variety of industries including healthcare, distribution, manufacturing, retail, banking, insurance, mining and telecommunications. Mr. Noller has international management consulting experience in Singapore, Malaysia, China, Canada, Latin America and Europe. Mr. Noller holds an MBA from the University of North Texas.

New Market Technology Inc. (OTC: NMKT)

19

Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

Hugh G. Robinson Director

Hugh G. Robinson is the former chairman and a board member of the Federal Reserve Bank of Dallas, previously serving as an officer in the United States Army, retiring with the rank of Major General. Mr. Robinson is currently a member of the board of directors of CarMax Inc., Aleris International Inc., and a member of the advisory board of TXU Corp. Mr. Robinson is a graduate of the U.S. Military Academy at West Point, and earned a masterâ&#x20AC;&#x2122;s degree in civil engineering at the Massachusetts Institute of Technology (MIT). He received an honorary Doctorate of Law from Williams College and attended the Harvard Management Program for Executives. Mr. Robinsonâ&#x20AC;&#x2122;s military career included a number of prestigious posts such as serving as aide de camp to President Lyndon B. Johnson. After retiring from the military, Mr. Robinson joined The Southland Corp. as vice president and president of Cityplace Development Corp., a subsidiary of Southland. From 1989 through 2002, Mr. Robinson served as chairman and CEO of The Tetra Group Inc., a Dallas construction management company with divisions in minority business development and affordable housing. Mr. Robinson serves on the board of directors of the North Texas Public Broadcasting Co. Inc., the LBJ Foundation Inc. and the Better Business Bureau. He is a member of the Dallas Citizens Council, the National Society of Professional Engineers, the Greater Dallas Chamber and the Dallas Black Chamber.

New Market Technology Inc. (OTC: NMKT)

20

Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

Appendix: Income statement projections, $

2006

2007

2008E

2009E

REVENUES Services revenue Contract revenue Product revenue Total revenue

67,847,261 3,847,945 5,940,416 77,635,622

83,280,821 3,305,066 6,522,229 93,108,116

112,429,108 4,296,586 8,478,898 125,204,592

150,655,005 5,413,698 10,852,989 166,921,692

COST OF SALES Services COS Contract COS Product COS Total cost of sales

48,262,075 2,698,207 4,792,157 55,752,439

59,203,151 2,795,461 5,324,366 67,322,978

83,297,127 3,720,031 7,006,465 94,023,623

112,070,115 4,703,480 9,000,834 125,774,429

Gross Margin

21,883,183

25,785,138

31,180,969

41,147,263

OPERATING EXPENSES: General and administrative expenses Depreciation and amortization Total expenses

16,635,341 786,173 17,421,514

19,836,138 775,698 20,611,836

21,456,973 775,698 22,232,671

27,938,566 775,698 28,714,264

4,461,669

5,173,302

8,948,298

12,432,999 623,593 (608,928) (4,474) 0 0 0 0 0 10,191

Income (Loss) from operations OTHER INCOME (EXPENSE): Interest income Interest expense Foreign currency transaction gain (loss) Bad debt expense recovery Inflation effects Lawsuit settlement Gain on debt forgiveness Other income/(expense) Total other income (expense)

1,023,967 (503,714) 13,298

623,593 (608,928) (4,474)

(318,539) (92,124) 0 1,658,832 1,781,720

0 (248,433) 4,293,000 (1,174,788) 2,879,970

623,593 (608,928) (4,474) 0 0 0 0 0 10,191

Net income (loss)

5,887,493

7,348,832

8,958,489

12,443,190

0.04

0.04

0.04

0.06

0.03

0.03

0.04

0.06

Income (loss) per weighted average common share - basic Income (loss) per weighted average common share - fully diluted

New Market Technology Inc. (OTC: NMKT)

21

Analyst: Victor Sula, Ph.D. Initial Report October 17th, 2008

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We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www. finra.org.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or securities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr. Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D. degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level III candidate in the CFA program.

New Market Technology Inc. (OTC: NMKT)

22