DALLAS, Texas, 22 February 2005. NewMarket Technology Inc. and Defense Technology Systems today announced a definitive agreement to combine the two companies' homeland security operations.
In the agreement, Defense Technology Systems has acquired a majority interest in NewMarket's Homeland Security subsidiary in exchange for $6 million in Defense Technology preferred stock.
Defense Technology's 2005 revenue forecast is $12 million for the combined operations. NewMarket's Homeland Security subsidiary has a 2005 revenue forecast of $8 million. The $8 million forecast is based on trailing the 12-month revenue of over $4 million with an additional $2 million in scheduled projects pending completion of related prerequisite projects.
The NewMarket Homeland Security subsidiary operates under the business name DCI-Netsco (www.dci-netsco.com). DCI-Netsco is the combined operations of two NewMarket subsidiaries, DCI and Netsco. While the assets of each subsidiary reside in two separate companies, DCI management is responsible for the day-to-day operations of Netsco and is the exclusive reseller of Netsco products. Defense Technology and NewMarket plan on a future sale of Netsco equity to Defense Technology.
DCI is a leading edge technology company with over 15 years of experience in engineering specialized hardware and software where commercial-off-the-shelf (COTS) products fall short of the critical needs of enterprise, military or government organizations. The company's experience with military and government solutions has led the company toward becoming a respected Homeland Security Solution Provider with a host of innovative proprietary technologies.
Netsco, a Sun Microsystems Partner, is a software product and services company that specializes in mission-critical distributed computing solutions for large-scale enterprise applications. Netsco has developed a number of proprietary Radio Frequency Identification (RFID) systems and is currently engaged in a number of RFID pilot projects around the world. Netsco recently announced receiving a provisional patent on its Value Asset and Shipment Tracking System (VAST), a wireless monitoring, tracking, evaluating and response system where any product and any system can be monitored and tracked globally using multiple wireless technologies. The VAST has multiple industrial and military applications.
NewMarket will receive two classes of preferred stock totaling $6 million in value. One class of preferred will be convertible into 10 million shares of Defense Technology common stock as of July 1st 2005. NewMarket has plans to declare a dividend and distribute the 10 million Defense Technology shares to NewMarket shareholders. The second class of preferred stock will have Defense Technology majority voting rights. The majority voting rights will be assigned to a three person proxy that includes Philip Verges, the CEO of NewMarket, Dan McPhee, the CEO of Defense Technology and Phil Rauch, the CFO of Defense Technology. Philip Verges will also join the Defense Technology Board of Directors. On the NewMarket balance sheet, $5 million of DCI common stock will be exchanged for $6 million of Defense Technology preferred stock. With the Defense Technology voting majority being assigned to a third party proxy, the Defense Technology and NewMarket financials will not be consolidated and NewMarket will not assume any of the Defense Technology liabilities. NewMarket will maintain a substantial revenue stream associated with DCI from an operational outsourcing contract already in place between DCI and NewMarket's Strategic Sourcing division (www.newmarketsourcing.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 spin-off with the acquisition by Defense Technology Systems 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.
Defense Technology Systems, Inc. is an international provider of data and security solutions with two operating divisions.
The company's Defense Systems division was created in response to growing international security concerns. DWS offers a broad portfolio of security-related products, including ballistic glass and associated security systems, and the only Security Portal certified for Ballistics and Forced Entry by the U.S. Department of State. The highly skilled DWS Defense Systems team, working in collaboration with its partners, will 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.
The company's data division is a multi-regional manufacturer of electronic cable assemblies used in providing connectivity solutions for customers operating a wide range of data systems to include linking or connecting standard or proprietary electronic devices and peripheral components from different vendors to provide solutions for various customer equipment configurations and requirements. The data division adds value by providing connectivity solutions, which may also include distributed sales of passive components such as electronic connectors, electronic wire and cable, cabinets and racks and patch panels, and active components including hubs, bridges, routers, gateways and modems.
For more information on Defense Technology Systems, Inc. visit: www.dwsdefense.com and www.dataworlddirect.com.
