-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LjXSKRZd4oTk+nCVNMdj4PA8uU4abYOtEhwjM6UvnQHGcm+gGt2ZhnXISXOD2SnT TZiT1COyD1FfLSFY9esU/Q== 0001164150-04-000183.txt : 20041115 0001164150-04-000183.hdr.sgml : 20041115 20041115172706 ACCESSION NUMBER: 0001164150-04-000183 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041115 DATE AS OF CHANGE: 20041115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NewMarket Technology Inc CENTRAL INDEX KEY: 0001092083 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 650729900 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-27917 FILM NUMBER: 041147029 BUSINESS ADDRESS: STREET 1: 14860 MONTFORT DRIVE STREET 2: SUITE 210 CITY: DALLAS STATE: TX ZIP: 75254 BUSINESS PHONE: 9723863372 MAIL ADDRESS: STREET 1: 14860 MONTFORT DRIVE STREET 2: SUITE 210 CITY: DALLAS STATE: TX ZIP: 75254 FORMER COMPANY: FORMER CONFORMED NAME: IPVOICE COMMUNICATIONS INC DATE OF NAME CHANGE: 20010212 FORMER COMPANY: FORMER CONFORMED NAME: IP VOICE COM INC DATE OF NAME CHANGE: 19990729 10QSB 1 nmti-10qsb_09302004.txt United States SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-QSB (Mark-One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2004. OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission file number: 000-27917 NewMarket Technology, INC. ---------------------------------------- (Exact name of Small Business Issuer as Specified in Its Charter) NEVADA 65-0729900 - --------------------------- ------------------------ (State or other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 14860 Montfort Drive, Suite 210 Dallas, Texas 75254 ---------------------------------------------------------- (Address of Principal Executive Offices) (972) 386-3372 ---------------------------------------------------------- (Issuer's Telephone Number, Including Area Code) IPVoice Communications Inc. ---------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [_] No [_] (APPLICABLE ONLY TO CORPORATE REGISTRANTS) State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. As of November 11, 2004, we had 73,445,397 shares of our common stock outstanding. INDEX NEWMARKET TECHNOLOGY, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Item 2. Management's Discussion and Analysis or Plan of Operation. Item 3. Controls and Procedures. PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities and Small Business Issuer Purchases of Equity Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information. Item 6. Exhibits and Reports on Form 8-K. SIGNATURES CERTIFICATIONS PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) INDEX TO FINANCIAL STATEMENTS Consolidated Balance Sheet..................................................F-2 Consolidated Statements of Operations.......................................F-3 Consolidated Statements of Stockholders Equity..............................F-4 Consolidated Statements of Cash Flows.......................................F-5 Notes to Consolidated Financial Statements..................................F-6
NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Consolidated Balance Sheet ASSETS September 30, 2004 December 31, 2003 ------------------ ------------------ (unaudited) CURRENT ASSETS Cash, (includes restricted cash of $401,654 and $0) $ 2,395,741 $ 1,632,083 Accounts receivable, net of allowance of $41,911 and $26,535 3,419,716 257,437 Inventory 611,474 0 Prepaid expenses, deposits and other current assets 149,300 32,394 ------------------ ------------------ Total current assets 6,576,231 1,921,914 ------------------ ------------------ PROPERTY AND EQUIPMENT Computer and office equipment 1,581,021 35,388 Less: Accumulated depreciation (1,338,089) (32,023) ------------------ ------------------ Total property and equipment 242,932 3,365 ------------------ ------------------ OTHER ASSETS Notes receivable 1,550,631 759,000 Investment in unconsolidated subsidiary 0 4,000,000 Goodwill 9,817,600 2,755,757 Software code 5,100,653 0 Intangible property 65,600 65,440 ------------------ ------------------ Total other assets 16,534,484 7,580,197 ------------------ ------------------ Total Assets $ 23,353,647 $ 9,505,476 ================== ================== LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY) CURRENT LIABILITIES Accounts payable Trade $ 1,593,582 $ 56,177 Related parties 379,139 0 Accrued expenses Trade 1,062,820 122,183 Salary and taxes 231,052 36,228 Income tax payable 312,887 0 Deferred revenue 57,477 0 Current portion of long term debt 320,610 0 Short-term line of credit 135,844 447,823 ------------------ ------------------ Total current liabilities 4,093,411 662,411 ------------------ ------------------ LONG-TERM LIABILITIES Deferred income tax liability 34,376 0 Notes payable 5,116,368 3,800,000 ------------------ ------------------ Total long-term liabilities 5,150,744 3,800,000 ------------------ ------------------ Total Liabilities 9,244,155 4,462,411 ------------------ ------------------ Minority interest in consolidated subsidiaries 373,252 100,693 ------------------ ------------------ STOCKHOLDERS EQUITY Senior convertible preferred stock, $0.001 par value, authorized 10,000,000 shares; Series A, 100: Series B, 0 and 503: Series C 3,300; Series D 550; Series E 2,000 and Series F 3,000 and 0 issued and outstanding shares 9 4 Common stock, $0.001 par value, authorized 100,000,000 shares; 69,445,397 and 50,934,786 issued and outstanding shares 69,445 50,935 Deferred compensation (356,119) 0 Additional paid-in capital 24,817,816 15,202,578 Accumulated comprehensive income (loss) (249,450) 0 Accumulated deficit (10,545,461) (10,311,145) ------------------ ------------------ Total stockholders equity 13,736,240 4,942,372 ------------------ ------------------ Total Liabilities and Stockholders Equity $ 23,353,647 $ 9,505,476 ================== ==================
The accompanying notes are an integral part of the financial statements F-2
NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Consolidated Statements of Operations (Unaudited) Nine Months Ended September 30, Three Months Ended Nine Months Ended September 30, September 30, ---------------------------- ---------------------------- 2004 2003 2004 2003 --------------- ------------ -------------- ------------- REVENUES Net sales $ 7,877,721 $ 669,550 $ 18,152,988 $ 1,723,557 Less: Cost of sales 4,153,300 491,139 10,972,491 1,252,287 --------------- ------------ -------------- ------------- Gross Margin 3,724,421 178,411 7,180,497 471,270 OPERATING EXPENSES: Compensation Employees 1,591,760 50,975 2,872,447 152,850 Consulting 45,500 0 93,949 0 Consulting - related party 146,375 0 264,430 0 General and administrative expenses 1,218,391 87,346 3,504,778 246,901 Selling and marketing 262,470 0 775,666 0 Depreciation and amortization 49,630 0 133,428 9,074 --------------- ------------ -------------- ------------- Total expenses 3,314,126 138,321 7,644,698 408,825 --------------- ------------ -------------- ------------- Income (Loss) from operations 410,295 40,090 (464,201) 62,445 --------------- ------------ -------------- ------------- OTHER INCOME (EXPENSE): Interest income 2,617 135 6,530 271 Interest expense (32,990) 0 (101,573) (40) Foreign currency transaction gain (loss) 14,198 0 11,522 0 Bad debt expense 0 0 0 0 Other income 5,189 4,500 14,169 13,500 --------------- ------------ -------------- ------------- Total other income (expense) (10,986) 4,635 (69,352) 13,731 --------------- ------------ -------------- ------------- Net income (loss) before income tax (credit) and minority interest 399,309 44,725 (533,553) 76,176 Foreign income tax (credit) 3,598 0 74,016 0 Minority interest in consolidated subsidiary income (loss) 117,362 0 373,252 0 --------------- ------------ -------------- ------------- Net income (loss) 513,073 44,725 (234,317) 76,176 Other comprehensive income (loss) Foreign currency translation gain (loss) (365,742) 0 (249,450) 0 --------------- ------------ -------------- ------------- Comprehensive income (loss) $ 147,331 $ 44,725 $ (483,767) $ 76,176 =============== ============ ============== ============= Income (loss) per weighted average common share $ 0.01 $ 0.01 $ ( 0.01)$ 0.01 =============== ============ ============== ============= Number of weighted average common shares outstanding 20,011,212 13,614,552 =============== ============ ============== =============
The accompanying notes are an integral part of the financial statements F-3
NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Consolidated Statements of Stockholders Equity Par Value of Number of Shares Stock Additional ------------------- -------------- Paid-In Pfd Common Pfd Common Capital ------ ------------ ---- --------- ------------ BEGINNING BALANCE, December 31, 2001 2,518 29,214,470 $3 $29,214 $7,299,646 Series B preferred stock dividend 0 0 0 0 0 1st qtr. - issuance of shares for interest 0 171,840 0 172 8,423 1st qtr. - services ($0.04/sh.) 0 10,500,000 0 10,500 409,500 2nd qtr. - services ($0.04/sh. & $0.05/sh. 0 2,500,000 0 2,500 102,500 3rd qtr, - services ($0.05/sh.) 0 5,000,000 0 5,000 245,000 3rd qtr. - conversion of Series B pref. stock (48) 5,303,824 0 5,304 (5,304) 4th qtr. - conversion of Series B. pref. stock (3) 1,774,375 0 1,774 (1,774) 4th qtr. - conversion of debt 0 60,000,000 0 60,000 1,740,000 4th qtr. - 1 for 30 reverse split 0 (110,648,874) 0 (110,649) 110,649 4th qtr. - conversion of Series B. pref. stock (26) 588,546 (1) 589 (588) 4th qtr. - services ($0.09/sh.) 0 200,000 0 200 17,800 Bene. conv. feature discount amortization 0 0 0 0 0 Net loss 0 0 0 0 0 ------ ------------ ---- --------- ------------ BALANCE, December 31, 2002 2,441 4,604,181 2 4,604 9,925,852 Issuance of common stock for services 0 111,667 0 112 12,171 Series B preferred stock dividend 0 0 0 0 723,585 Conversion of Series B pref. stock (1,738) 23,885,332 (1) 23,885 (23,883) Conversion of Series A pref. stock (100) 710,218 0 710 (710) Beneficial conver feature discount amort 0 0 0 0 0 Conversion of debt to common stock 0 21,623,388 0 21,624 1,265,566 Issuance of Series C pref. stock 3,300 0 3 0 3,299,997 Net income (loss) 0 0 0 0 0 ------ ------------ ---- --------- ------------ BALANCE, December 31, 2003 3,903 50,934,786 4 50,935 15,202,578 Conversion of Series B pref. stock (503) 1,075,257 (1) 1,075 (1,074) Conversion of debt to common stock 0 13,035,354 0 13,035 2,559,818 Issuance of common stock for services 0 2,400,000 0 2,400 714,500 Issuance of common stock for acquisition 0 2,000,000 0 2,000 977,000 Issuance of Series D pref. stock 550 0 1 0 364,999 Issuance of Series E pref. stock 2,000 0 2 0 1,999,998 Issuance of Series F pref. stock 3,000 0 3 0 2,999,997 Amortization of deferred compensation 0 0 0 0 0 Other comprehensive income (loss) 0 0 0 0 0 Net income (loss) 0 0 0 0 0 ------ ------------ ---- --------- ------------ ENDING BALANCE, September 30, 2004 (unaudited) 8,950 69,445,397 $9 $69,445 $24,817,816 ====== ============ ==== ========= ============
The accompanying notes are an integral part of the financial statements NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Consolidated Statements of Stockholders Equity (Continued) Accum Total Comp Stockholders Deferred Income Accumulated Equity Comp (Loss) Deficit (Deficiency) ---------- ----------- -------------- ------------ $ 0 $ 0 $ (8,655,388) $ (1,326,525) 0 0 (173,932) (173,932) 0 0 0 8,595 0 0 0 420,000 0 0 0 105,000 0 0 0 250,000 0 0 0 0 0 0 0 0 0 0 0 1,800,000 0 0 0 0 0 0 0 0 0 0 0 18,000 0 0 0 0 0 0 (1,416,382) (1,416,382) ---------- ----------- -------------- ------------ 0 0 (10,245,702) (315,244) 0 0 0 12,283 0 0 (260,897) 462,688 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1,287,190 0 0 0 3,300,000 0 0 195,454 195,454 ---------- ----------- -------------- ------------ 0 0 (10,311,145) 4,942,372 0 0 0 0 0 0 0 2,572,853 (714,500) 0 0 2,400 0 0 0 979,000 0 0 0 365,000 0 0 0 2,000,000 0 0 0 3,000,000 358,381 0 0 358,381 0 (249,450) 0 (249,450) 0 0 (234,316) (234,316) ---------- ----------- -------------- ------------ $(356,119) $ (249,450) $ (10,545,461) $ 13,736,240 ========== =========== ============== ============ F-4
NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Consolidated Statements of Cash Flows Nine Months Ended September 30, (Unaudited) 2004 2003 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (234,317)$ 76,176 Adjustments to reconcile net loss to net cash used by operating activities: Amortization of stock issued for services/deposits - related party 264,430 0 Amortization of stock issued for services - other 93,949 0 Depreciation 133,428 9,074 Minority interest in consolidated subsidiary income loss (373,252) 0 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (760,075) (237,735) (Increase) decrease in inventory 15,205 0 (Increase) decrease in prepaid expenses and deposits 40,289 0 Increase (decrease) in accounts payable - trade 184,395 104,744 Increase (decrease) in accounts payable - related parties (101,921) 0 Increase (decrease) in accrued expenses 205,732 0 Increase (decrease) in accrued salary and taxes 190,252 (30,170) Increase (decrease) in deferred revenue 10,478 0 Increase (decrease) in income taxes payable 74,016 0 Increase (decrease) in accrued dividends payable 0 0 ------------- ------------- Net cash used by operating activities (257,391) (77,911) ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Notes receivable advances to third parties (791,631) 0 Purchase of property and equipment (40,787) (488) ------------- ------------- Net cash used by investing activities (832,418) (488) ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on notes payable (286,287) 0 Advances on notes payable 1,304,613 269,750 Cash purchased in acquisitions 795,512 0 ------------- ------------- Net cash provided by financing activities 1,813,838 269,750 ------------- ------------- Effect of exchange rates on cash 39,629 0 ------------- ------------- Net increase (decrease) in cash and equivalents 763,658 191,351 ------------- ------------- CASH, beginning of period 1,632,083 46,642 CASH, end of period $ 2,395,741 $ 237,993 ============= ============= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid in cash $ 68,593 $ 7 ============= ============= Non-Cash Financing Activities: Common stock issued to settle debt $ 2,572,853 $ 0 ============= ============= Common stock issued for acquisition of consolidated subsidiary $ 979,000 $ 0 ============= ============= Preferred stock issued for acquisition of consolidated subsidiaries $ 5,365,000 $ 0 ============= ============= Promissory note issued for acquisition of consolidated subsidiary $ 4,900,000 $ 0 ============= =============
The accompanying notes are an integral part of the financial statements F-5 NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Notes to Consolidated Financial Statements (Information with regard to the nine months ended September 30, 2004 and 2003 is unaudited) (1) Summary of Significant Accounting Principles The Company NewMarket Technology, Inc, (f/k/a IPVoice Communications, Inc.), (the ompany , is a Nevada corporation which conducts business from its headquarters in Dallas, Texas. The Company was incorporated on February 19, 1997 as Nova Enterprises, Inc., changed its name to IPVoice Communications, Inc. in March of 1998, then to IPVoice.com, Inc. in May of 1999, back to IPVoice Communications, Inc. in January of 2001 and to NewMarket Technology, Inc., in July 2004. The Company is involved in the information technology industry., principally voice over internet, systems integration, homeland defense and medical office information technology. The following summarize the more significant accounting and reporting policies and practices of the Company: a) Use of estimates The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and revenues and expenses for the year then ended. Actual results may differ significantly from those estimates. b) Significant acquisitions In March 1998, IPVoice Communications, Inc., a Nevada corporation, acquired 100% of the issued and outstanding shares of the common stock of IPVoice Communications, Inc., a Delaware corporation, in a reverse merger, which was accounted for as a reorganization of the Delaware company. In June 2002, the Company acquired the net assets of Vergetech, Inc., a Texas corporation, in exchange for a $3,000,000 promissory note maturing in January 2004. This acquisition has been accounted for as a purchase. In June 2003, the Company entered into a term sheet agreement to acquire 51% of the common stock of IP Global Voice, Inc., (IPGV), a Delaware corporation headquartered in San Francisco, California. At the time of the agreement IPGV was a newly formed corporation. This term sheet required the Company to loan IPGV $100,000 on a Senior Secured Convertible Promissory Note, carrying an interest rate of 10% and maturing on March 30, 2004. Closing of the acquisition would occur when the Company loaned IPGV an additional $400,000 with the same terms as the initial $100,000. The Company completed the initial $100,000 on the date of signing the term sheet, a second $100,000 in August 2003, and the remaining $300,000 in F-6 NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Notes to Consolidated Financial Statements (1) Summary of Significant Accounting Principles (Continued) b) Significant acquisitions, continued, September 2003, at which time the acquisition was considered closed. At closing the Company committed to invest $4,500,000 in IPGV in exchange for 6,000,000 shares of IPGV common stock; a warrant to purchase an additional 1,000,000 shares of IPGV common stock at a price of $1 per share and 2,250,000 shares of IPGV common stock in exchange for 2,250,000 shares of Series C Preferred Stock of the Company. In March 2004, the Company issued 2,000,000 shares of common stock, valued at $979,000, to acquire an additional 38% of IPGV. In July 2003, the Company agreed to a term sheet agreement to acquire 100% of InfoTel Technologies, Pte, Limited, a Singapore company, from the debt holders of Appiant Technologies, Inc. This acquisition was based on a $4,000,000 purchase price. The Appiant Debenture holders received 3,000 shares of Series C Convertible Preferred Stock of the Company valued at $3,000,000 and a promissory note for $1,000,000. Subsequently this was modified to $3,300,000 of preferred stock, (3,300 shares), and a $700,000 promissory note. There is a one year look-back holding that the Company common stock underlying the conversion of the preferred stock must have a value of $3,000,000, (now $3,300,000), or the Company is required to either pay the holders the difference between $3,000,000 and the market price in cash, or sell Infotel and apply the proceeds to pay the difference. The preferred stock is convertible, after one year and 100% after two years, at the lesser of the 20 day trailing average price per share of the common stock or $1 per share. In January 2004, the Company entered into a term sheet agreement to acquire 51% of the common stock of Digital Computer Integration Corp., (DCI), a Plano, Texas based corporation. Under the terms of the agreement, the Company is required to loan DCI $100,000 spread over the following month, on a convertible note, bearing interest at 8% and convertible into common stock at the closing of the acquisition. Further, the Company is required to loan $250,000 at the acquisition closing under another convertible note bearing 8% rate of interest with no stated maturity and provide a line of purchase order financing to DCI in the amount of $1,000,000. The acquisition is based on a factor of one times signed 2004 revenue at the closing date, or an expected amount of approximately $5,000,000. This price carries a one year look back which can adjust the purchase price upward or downward based on actual recorded revenue for the year ended December 31, 2004, but in no event greater than a 30% adjustment. F-7 NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Notes to Consolidated Financial Statements (1) Summary of Significant Accounting Principles (Continued) b) Significant acquisitions, continued In January 2004, the Company entered into a term sheet agreement to acquire 100% of the common stock of RKM Suministros, C.A., (RKMV), and RKM USA Corp., Inc., (RKMM). RKMV is a Venezuela corporation and is headquartered in Caracas. RKMM is a Miami based US corporation. The purchase price of RKMV is $2,000,000, to be paid in the form of shares of Series C Convertible Preferred Stock of the Company. The sales price is based on one times gross revenue. The sellers cannot convert for the first six months. At the end of six months the seller can convert up to $600,000 worth of the preferred shares and an additional $400,000 after nine months and the balance after the first anniversary. The sellers are restricted from any conversions that would represent a greater than 4.9% stake in the then issued and outstanding common stock of the Company. This agreement carries a one year look back with an adjustment in the sales price of a maximum of 30% upward, (maximum price of $2,600,000), and 20% downward, ($1,600,000 minimum price). This look back is based on the one year revenues of RKMV and RKMM for the immediately preceding 12 months. Revenue variations resulting in exchange rate fluctuations between the US dollar and Venezuelan Bolivare are specifically excluded for these purposes. In addition, there is a second look back provision, which allows for the reversal of some to all of the transaction if the Company common stock does not have a minimum of $20,000,000 in trading volume over the immediately preceding 12 months. If, during the first 12 months after closing, the Company experiences a change of control, the sellers conversion rights are immediately accelerated to 100%. If prior to the conversion of the Prefered stock, the Company is sold or otherwise no longer a publicly traded entity, the sellers may opt to reverse the acquisition. The purchase price of RKMM is $1. The Company is obligated to lend RKM $40,000 within 10 days, $30,000 within 60 days and $30,000 within 90 days after the closing. The Company is also obligated to lend RKM $1,000,000 in additional funds in conjunction with contracted projects which have a minimum 25% pre-tax profit margin. This acquisition was closed in April 2004. In February 2004, the Company entered into a purchase agreement to acquire 51% of the common stock of Medical Office Software, Inc., (MOS), a Florida corporation headquartered in Ft. Lauderdale, Florida. The purchase price is $1,000,000, payable by conversion of a $150,000 note that a major stockholder of MOS owes to VTI, a related party of the Company, $300,000 in cash and $550,000 , (550 shares), in shares of Convertible Preferred Stock of the Company. In February 2004, the Company entered into a term sheet agreement to acquire 51% of the common stock of Wireless Frontier Internet, Inc. The Company is obligated to provide $100,000 on April 1, 2004, on a convertible note carrying an 8% rate of interest. The purchase price is $15,000,000, payable as $13,800,000 in shares of Convertible Preferred Stock of the F-8 NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Notes to Consolidated Financial Statements (1) Summary of Significant Accounting Principles (Continued) b) Significant acquisitions, continued Company and $1,100,000 in cash, with $300,000 due at the closing; $300,000 each at 90 days and 180 days subsequent to closing and the final $200,000 at 270 days subsequent to closing. The Convertible Preferred Stock of the Company will bear a stated dividend rate of 4% and is restricted from conversion into common stock for two years from issuance. In August 2004, the Company acquired 51% of Logicorp, a Canadian company. The Company will pay $1,100,000 in cash and issue a 24 month $1,000,000 promissory note to complete this acquisition. c) Principles of consolidation The consolidated financial statements include the accounts of NewMarket Technology, Inc. and its wholly owned and majority owned subsidiaries. All inter-company balances and transactions have been eliminated. d) Net income (loss) per share Basic net income(loss) per weighted average common share is computed by dividing the net income(loss) by the weighted average number of common shares outstanding during the period. e) Stock compensation for services rendered The Company issues shares of common stock in exchange for services rendered. The costs of the services are valued according to accounting principles generally accepted in the United States and are been charged to operations as earned. f) Property and equipment All property and equipment is recorded at cost and depreciated over their estimated useful lives, using the straight-line method, generally three, five or seven years. Upon sale or retirement, the costs and related accumulated depreciation are eliminated from their respective accounts, and the resulting gain or loss is included in the results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred. g) Intangibles In the second quarter of 2000, the Company engaged a law firm for the preparation and filing of the required applications for rates and tariffs with the state regulatory authorities in 48 continental United States, Hawaii, the District of Columbia and the U.S. FCC at a total cost of $260,000, in accordance with APB 17. The Company intends to amortize this cost over a twelve-month period beginning with the initiation of operations, as these rates and tariffs are renewed on an annual basis. In the fourth quarter of 2002, in conjunction with the redirection of the Company business, this asset has been written off. In June 2002, goodwill in the amount of $2,756,327 was recorded in conjunction with the net asset acquisition from Vergetech. Goodwill amounting to $7,061,273 was recorded in conjunction with the acquisitions in 2003 and 2004. The Company will evaluate this asset periodically to determine any impairment of the asset. F-9 NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Notes to Consolidated Financial Statements (1) Summary of Significant Accounting Principles (Continued) h) Revenue recognition The Company provides consulting and computer programming services, principally to the telecom industry. Revenue is recognized as services are provided and billed to the customers. i) Interim financial information The financial statements for the nine months ended September 30, 2004 and 2003 are unaudited and include all adjustments which in the opinion of management are necessary for fair presentation, and such adjustments are of a normal and recurring nature. The results for the nine months are not indicative of a full year results. (2) Stockholders Equity The Company has authorized 300,000,00 shares of $0.001 par value common stock, and 10,000,000 shares of $0.001 par value preferred stock. Rights and privileges of the preferred stock are to be determined by the Board of Directors prior to issuance. The Company had 69,445,397 shares of common stock issued and outstanding at September 30, 2004. The Company had 100shares of Series A preferred stock issued and outstanding at September 30, 2004. The Company had 0 shares of Series B preferred stock issued and outstanding at September 30, 2004. The Company had 3,300 shares of Series C preferred stock issued and outstanding at September 30, 2004. The Company had 550 shares of Series D preferred stock issued and outstanding at September 30, 2004. The Company had 2,000 shares of Series E preferred stock issued and outstanding at September 30, 2004. The Company had 3,000 shares of Series F preferred stock issued and outstanding at September 30, 2004. In the first half of 2002, the Company filed a Form S-8 to register 12,500,000 shares of common stock at a price of $0.04 per share, which were subsequently issued to certain officers, directors, related parties and others. In April 2002, the Company filed a Form S-8 to register 500,000 shares of common stock at a price of $0.05 per share, which were issued to the Company law firm. In April 2002, the Company issued 171,840 restricted common shares as payment of $8,592 in accrued interest to the remaining Series A unit holders. In the third quarter 2002, the Company issued 5,000,000 common shares in exchange for services valued at $250,000, or $0.05 per share, pursuant to an S-8 registration statement. In the third and fourth qarters 2002, 51 shares of the Series B preferred stock were converted to 7,078,199 common shares. In October 2002, 60,000,000 common shares were issued to convert $1,800,000 of the promissory note issued to acquire the net assets of Vergetech. In October 2002, the Company completed a 1 for 30 reverse split of its common stock, resulting in 110,648,874 shares being retired. Subsequent to the reverse split, 26 shares of the Series B preferred stock were converted into 588,546 shares of common stock, and 200,000 shares of common stock were issued in exchange for services valued at $18,000, or $0.09 per share. F-10 NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Notes to Consolidated Financial Statements (2) Stockholders Equity (Continued) In 2003 The Company issued 111,667 shares of restricted common stock in exchange for services valued at $12,283. In 2003, the holders of the Series B preferred stock converted the remaining balance of 2,2483 shares into 23,885,332 shares of common stock. In 2003 the holders of $1,387,191 of convertible debt, including interest, exchanged the debt and interest for 22,333,606 shares of common stock. In October 2003, the Company issued 3,300 shares of Series C Preferred Stock to close the acquisition of Infotel. In the first quarter of 2004, the Company issued 1,075,257 shares of common stock for the conversion of the final remaining 503 shares of Preferred Series B outstanding. The Company issued 1,685,354 shares of common stock for the conversion of $287,527 of convertible debt, at $0.17 per share. The Company issued 1,300,000 shares of restricted common stock pursuant to consulting contracts with four individuals. These shares were valued at $313,000, or $0.24 per share. All of these contracts are prospective for a period of one year, therefore the Company is amortizing the expense over the life of the contracts. The Company issued 2,000,000 shares of restricted common stock to acquire an additional 38% of IP Global Voice. These shares were valued at $979,000, or $0.4895 per share. The Company issued 550 shares of restricted preferred stock, Series D, to acquire 51% of the common stock of Medical Office Software, Inc. These shares were valued at $365,000. In the second quarter of 2004 the Company issued 600,000 shares of restricted common stock pursuant to consulting contracts with two individuals. These shares were valued at $253,000, or $0.42 per share. Both of these contracts are prospective for a period of six months and one year, therefore the Company is amortizing the expense over the life of the contracts. The Company issued 2,000 shares of restricted preferred stock, Series E, to acquire 100% of the common stock of RKM Suministros, S.A. These shares were valued at $2,000,000. The Company issued 3,000 shares of restricted preferred stock, Series F, to acquire 100% of the common stock of Netsco, Inc. These shares were valued at $3,000,000. (3) Income Taxes Deferred income taxes (benefits) are provide for certain income and expenses which are recognized in different periods for tax and financial reporting purposes. The Company had net operating loss carry-forwards for income tax purposes of approximately $10,545,500 which expire beginning December 31, 2117. There may be certain limitations on the Company ability to utilize the loss carry-forwards in the event of a change of control, should that occur. The amount recorded as a deferred tax asset, cumulative as of September 30, 2004, is $4,218,000, which represents the amount of tax benefits of the loss carry-forwards. The Company has established a valuation allowance for this deferred tax asset of $4,218,000, as the Company has no history of profitable operations. The significant components of the net deferred tax asset as of September 30, 2004 are: Net operating losses $4,218,000 --------------------- Valuation allowance (4,218,000) --------------------- Net deferred tax asset $0 ===================== F-11 NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Notes to Consolidated Financial Statements (4) Commitment and Contingencies a) Leases The Company entered into a sale-leaseback agreement with Creative Capital Leasing Group ( essor in February 2001. The Lessor purchased certain equipment from the Company at a price of $300,000; the book value of the assets was in excess of $300,000. The Company was required to make monthly payments commencing February 1, 2001 in the amount of $11,288 for 66 months. The former President of the Company had pledged personal assets as collateral. The Company paid approximately $28,400 in rentals during 2002. (See note 8) b) Lawsuits In December 1999, SatLink filed a lawsuit alleging breach of contract as a result of the rescission of the acquisition in October 1999, as discussed in Note 5 above. In December 1999, the former CFO of the Company filed a lawsuit alleging breach of contract as a result of the rescission of the employment agreement in October 1999.The Company believes this suit has no merit and intends to vigorously defend it. On April 25, 2000, Michael McKim filed a lawsuit against the Company alleging breach of employment contract and fraud. The Company formerly employed Mr. McKim as Vice President of Research and Development. In addition, for a period of time, he was a member of the Company Board of directors. As a part of his compensation, Mr. McKim was to receive 300,000 shares of common stock, followed by an additional 750,000 shares of common stock over a three-year period, subject to various limitations. In his complaint, Mr. McKim alleges that the Company failed to issue the 300,000 shares to him, thereby breaching the employment agreement. In addition, he alleges that, in failing to provide the shares to him, the Company committed fraud. The Company filed its answer on June 19, 2000 denying the allegations of the complaint. The Company also filed a counterclaim against Mr. McKim alleging that, during the course of his employment, Mr. McKim engaged in intentional misrepresentation, breach of fiduciary duty and intentional interference with business relationships. This lawsuit was settled in 2003. The Company issued 11,667 shares of restricted common stock to Mr. McKim to settle this lawsuit. (5) Change of Control On June 19, 2002, the Company entered into an Asset Purchase Agreement to purchase substantially all of the assets of Vergetech, Inc. of Dallas in exchange for a promissory note in the amount of $3,000,000. At that time, the existing officers and directors resigned after appointing a new director and officer. F-12 NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) Notes to Consolidated Financial Statements (6) Asset abandonment Subsequent to the change of control, new management attempted to take control and possession of the Company assets. Prior management informed new management that the assets had been relocated to Lancaster, Pennsylvania, under the control of Jeremy Feakins, a stockholder of the Company. Mr. Feakins has refused to disclose the physical location of the assets. Management is evaluating the options and remedies available to it. As a result, management elected to write-off these assets. Creative Capital, (note 5), elected to foreclose on the assets pledged by the previous President. Therefore, the Company elected to write down the balance of this lease to zero. (7) Long term debt In 2003, the Company retired $1,387,191 of convertible debt and accrued interest. This debt was retired by issuing 22,333,606 shares of common stock. In November and December 2003, the Company borrowed $1,800,000 in four traunches from two parties, both of whom have been holders of the Company preferred and common stock. The terms of all four traunches are the same; payment of principal two years from the date of issuance; 8% interest rate, payable quarterly in cash or common stock of the Company and a 12% discount from the face amount of the note. The combination of the amortization of the discount and stated interest rate equals a 14% rate of interest annually. The debt is convertible in whole or in part into share of the Company common stock at the debt holders option. The conversion price is the trailing ten day average closing price of the common stock . In December 2003, the Company issued a $700,000 promissory note to the debt holders of Appiant Technology, Inc. as a portion of the purchase price of Infotel Technologies, Pte, Limited. The terms of this note are: $100,000 payable in February and March 2004, $50,000 each month thereafter. This note carries no stated interest rate. (9) Short term debt In November 2003, the Company borrowed $400,000 with 90 day terms. This note carried a 2% discount from the face amount, equaling an 24% annual rate of interest. F-13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS Overview This analysis should be read in conjunction with the consolidated financial statements, the notes thereto, included in this Form 10-QSB and the financial statements and notes thereto included in NewMarket Technology, Inc.'s December31, 2003 Annual Report on Form 10-KSB. The Annual Report includes a more detailed overview of the Company Business Plan. The overview herein is abbreviated as a review to preamble the subsequent management discussion and analysis relevant to this Form 10-SB. The NewMarket Technology, Inc. business model and market concentration is founded on the belief that emerging communication technology will be the single greatest influence on business and government efficiency improvements over the next 10 years. Management contends that communication technology will out pace all other business innovation in contribution to economic efficiency, continuous product differentiation, and an improved world wide standard of living. Management is committed to building NewMarket into a globally recognized leader in the continuous introduction of emerging communication Technologies. NewMarket has implemented a long-term plan to continuously find and acquire early stage technology companies; incrementally invest to market refine acquired technology offerings; concentrate initial sales efforts on focused pilot opportunities; expand pilots to a level that proves market viability; spin technology companies out into a next stage expanded capital opportunity while retaining at NewMarket the support service contract functions such as customer service support, systems installation and integration, maintenance and version update supplemental programming. To build a first rate competitive support service capacity, NewMarket is developing support resources in specific oversees economies that offer a reduced labor expense and an opportunity to sell into fast growing economic regions with less brand name competition than in North America. Until we achieve a sustained level of profitability, we must be considered a start-up entity. Until that time, we may periodically depend on financing resources for cash flows to meet certain operating expenses and no assurance of our financial success or economic survival can be given during this period. We have only recently begun to experience revenue from the sale of NewMarket products and services. We believe our strategy, introduced in June of 2002, to package our own IP Telephony products and services with recognized brand names and to pursue sales in the high demand Telecommunications, Healthcare and Homeland Security Markets will be successful. 18 We expect to realize $24,000,000 in overall sales in fiscal year 2004. Management anticipates that while in an aggressive growth phase, those forecasted sales will produce only a small profit. In addition to the products and services we currently offer in the Telecommunications market, we plan to further expand the current product line into the Healthcare and Homeland Security markets in fiscal 2004. Our plans call for accelerating market entry into the Healthcare and Homeland Security industries through strategic mergers and acquisitions. In the first quarter of 2004, NewMarket has already acquired Medical Office Software Inc. ("MOS"), and Digital Computer Integration Inc. ("DCI") as part of that strategy. MOS is an eighteen-year-old corporation providing medical industry software solutions to more than 3000 Physicians primarily in the South Florida Region. The flagship administrator product of MOS is a Medical Practice Management Software Package that includes billing, accounting and electronic claims filing. DCI is a fourteen-year-old corporation located in Plano, Texas that specializes in the development of non-standard products for use in the United States and Allied military applications, as well as homeland security and public safety applications. Custom solutions have included mission critical command and control computers, emergency vehicle mobile computing solutions and WIFI systems. In the second quarter of 2004, NewMarket acquired one hundred percent of the stock of NETSCO Inc. NETSCO Inc. is an eight-year-old corporation headquartered in Research Triangle Park of North Carolina. The company is a software product and services company that specializes in mission critical distributed computing solutions for large-scale enterprise applications. NETSCO has particular expertise in Java(TM), J2EE(TM) XML, UNIX and LINUX. The NETSCO Framework is a proprietary technology that provides a set of services commonly required for distributed enterprise systems, such as Workflow, Dynamic Configuration, Persistence and Global User Management. Different versions of the NETSCO Framework (NFW) were utilized by both global commercial and military organizations. Examples of NETSCO software integrated solutions include multi-channel (i.e. rich-client, web-client, and wireless), specialized Customer Relationship Management (CRM), Supply-Chain Management, Logistics, Fulfillment, Enterprise Resource Planning (ERP), and Command Control Communication (CCC) infrastructure. Utilizing its proven software technology products and large-scale systems integration experiences, NETSCO now offers turnkey RFID solutions. We expect to seek additional strategic merger and acquisition candidates to further expand our product and service offerings in the Telecommunication, Healthcare and Homeland Security Markets in fiscal 2004 and beyond. 19 In a two-fold strategy to expand sales into developing economic regions and at the same time tap into the offshore technical labor market, we will pursue acquisitions of systems integration firms in developing economies. In 2003, as previously mentioned, we acquired Infotel. In the first quarter of this year we acquired RKM IT Solutions in Caracas, Venezuela. RKM is a sixteen year old systems integration and IT outsourcing services firm recognized in Venezuela and throughout northern South America as a leading provider of voice, data and video network solutions, as well as systems and help desk support. Clients include DuPont, Bayer, Sony, BASF, ConocoPhillips, Colgate-Palmolive and ChevronTexaco. RKM is also a regionally certified partner for Cisco Systems, Sun Microsystems, Computer Associates, IBM and Microsoft. RKM has won the 2003 Microsoft Infrastructure Solution of the Year in Venezuela and has been recognized as a Gold Partner. The company is expanding its system integration and IT outsourcing services in the Caribbean, Colombia, Ecuador, Peru and Mexico. In addition to the systems integration firms acquired in Latin America and Asia, later in 2004 we plan to seek systems integration acquisition candidates in Eastern Europe. As part of NewMarket's overall plan to build sales and delivery capacity through the acquisition of systems integration and IT outsourcing firms, NewMarket acquired fifty-one percent (51%) stock ownership in Logicorp Data Systems Ltd. of Canada in August 2004. This is a significant acquisition that expands NewMarket's capacity, geographic reach and revenue and customer base. Logicorp's annualized revenue is approximately nineteen million U.S. dollars per year ($19 million). The revenue benefit of this acquisition will not be fully recognized in NewMarket's financial reports until 2005 due to a two quarter difference in the fiscal year ends between Logicorp and NewMarket. While we have and continue to aggressively grow through mergers and acquisitions, management plans for our long-term growth to be achieved through organic sales growth. The current financial forecasting only includes the consolidated forecasts of the acquired companies. In the second quarter of fiscal 2004 management will complete organic sales plans that will include additional sales being forecasted into fiscal 2004. Results of Operations Net Sales. Quarter Ended September 30, 2004 Compared to the Quarter Ended September 30, 2003. Net sales increased over one thousand one hundred and seventy-seven percent (1177 %) from $669,550 for the quarter ended September 30, 2003 to $7,877,721 for the quarter ended September 30, 2004. The substantial sales growth is due to both the acquisition of existing businesses operations as well as the organic sales growth from the acquired operations. Over $3,000,000 in sales this quarter result from organic growth from acquired business operations. 20 Cost of Sales. Cost of sales increased eight hundred and forty-six percent (846%) from $491,139 for the quarter ended September 30, 2003 to $4,153,300 for the quarter ended September 30, 2004. This increase was due to the acquisitions made over the last year and the related organic growth. Our cost of sales, as a percentage of sales has gone down. The cost of sales for the quarter ended September 30, 2003 was approximately 73.4% and 52.7% for the quarter ended September 30, 2004. Management plans to continue to pursue strategies to reduce the overall cost of sales as a percentage of sales as the company grows. Management will leverage the increased purchasing volume to improve purchasing contracts and reduce overall cost of sales. Management will also implement resource utilization strategies that can demonstrate notable savings when applied over higher volumes of production. Compensation Expense. Compensation expense increased three thousand four hundred and ninety-nine percent (3499%) from $50,975 for the quarter ended September 30, 2003 to $1,783,635 for the quarter ended September 30, 2004. The overall increase is due in large part to the substantial increase in the number of employees from approximately 35 employees as of September 30, 2003 to approximately 300 employees as of September 30, 2004. Management is working to keep Compensation in reasonable proportion to the overall Company sales and expenses. Management has significantly decreased its stock-based compensation to outside consultants, officers and related party consultants and plans to continue to limit such compensation. No performance incentive Compensation program has yet been in place since the implementation of the new business model in June 2002, but management plans to construct and implement such a plan in 2004 intended to support the aforementioned objective of keeping overall Compensation in proportion to Company sales and expenses. General and Administrative Expense. General and administrative expenses for the quarter ended September 30, 2003 were $87,346 compared to $1,218,391 for the quarter ended September 30, 2004. The general and administrative expenses for the quarter ended September 30, 2004, are dramatically higher than for the quarter ended September 30, 2003 as a direct result of both the general and administrative expenses of the acquisitions made over the last year, as well as the one time expenses associated with completing such acquisitions. Management plans to reduce the general and administrative expenses as a portion of overall sales and total expenses in 2004 through the consolidation of redundant processes in resources inherited in the recent acquisitions. Depreciation and amortization Expense. Depreciation and amortization expense increased substantially from a negligible expense for the quarter ended September 30, 2003 to $49,630 for the quarter ended September 30, 2004. This increase is a direct result of the acquisitions made over the last year. Depreciation on fixed assets is calculated on the straight-line method over the estimated useful lives of the assets. 21 Liquidity and Capital Resources At September 30, 2003, the Company had cash of $237,993 and a working capital deficit of ($1,630,520) as compared to cash of $2,395,741 and working capital surplus of $2,482,820 at September 30, 2004. This improved working capital situation was due primarily to the implementation of the previously herein described new business model implemented in June 2002, which includes as part of the plan the acquisitions made over the last year. In addition we have been successful attracting investment capital to carry out this business model. Since inception, the Company has financed operations primarily through equity security sales and convertible debt. The nature of the growth strategy of the Company will require further funding to be acquired either through equity or debt.. Accordingly, if revenues are insufficient to meet needs, we will attempt to secure additional financing through traditional bank financing or a debt or equity offering; however, because the rapid growth and nature of the acquisitions of the Company and the potential of a future poor financial condition, we may be unsuccessful in obtaining such financing or the amount of the financing may be minimal and therefore inadequate to implement our continuing plan of operations. There can be no assurance that we will be able to obtain financing on satisfactory terms or at all, or raise funds through a debt or equity offering. In addition, if we only have nominal funds by which to conduct our operations, it will negatively impact our potential revenues. Factors That May Affect Future Results: You should carefully consider the risks and uncertainties described below and other information in this report. These are not the only risks and uncertainties that we face. Additional risks and uncertainties that we do not currently know about or that we currently believe are immaterial may also harm our business operations. If any of these risks or uncertainties occurs, it could have a material adverse effect on our business. Risks Related to Our Company We have incurred operating losses in two of the last three years. Although in fiscal year 2003, we experienced a net profit of $195,454, during fiscal years 2002 and 2001, we experienced net losses of $1,416,382, and $2,689,747, respectively. We cannot be certain that we can sustain or increase profitability on a quarterly or annual basis in the future. If we are unable to remain profitable, our liquidity could be materially harmed. We cannot predict our future results because our business has a limited operating history, particularly in its current form. 22 Given our limited operating history, it will be difficult to predict our future results. You should consider the uncertainties that we may encounter as an early stage company in a new and rapidly evolving market. These uncertainties include: o market acceptance of our products or services; o consumer demand for, and acceptance of, our products, services and follow-on products; o our ability to create user-friendly applications; and o our unproven and evolving business model. We have not until recently generated significant revenues and we incurred losses in fiscal years 2001 and 2002. We have a limited operating history with our recently acquired subsidiaries and we have incurred losses for 2001 and 2002. There can be no assurance that we will be successful in increasing revenues, or generating acceptable margins, or, if we do, that operation of our business will be a profitable business enterprise. We will likely have to seek additional outside sources of capital for our business. There can be no assurance that we will be able to obtain such capital on favorable terms and conditions or at all. If this occurs the market price of our common stock could suffer. Our quarterly and annual sales and financial results have varied significantly in the past, and we expect to experience fluctuations in the future, which means that period-to-period comparisons are not necessarily meaningful or indicative of future performance. Our sales and operating results have varied, and may continue to vary, significantly from year to year and from quarter to quarter as a result of a variety of factors, including the introduction of new products by competitors, pricing pressures, the timing of the completion or the cancellation of projects, the evolving and unpredictable nature of the markets in which our products and services are sold and economic conditions generally or in certain geographic areas in which our customers do business. Furthermore, we may be unable to control spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, we cannot assure you that sales and net income, if any, in any particular quarter will not be lower than sales and net income, if any, in a preceding or comparable quarter or quarters. In addition, sales and net income, if any, in any particular quarter are not likely to be indicative of the results of operations for any other quarter or for the full year. The trading prices of our securities may fluctuate significantly in response to variations in our quarterly or annual results of operations. We may not be able to sustain or accelerate growth, or sustain or accelerate recurring revenue from our business. There can be no assurance that demand for our services and products will increase or be sustained, or that our current or future products will have market acceptance in that product category. Our acquisition costs per customer 23 are high due to the significant costs associated with sales, research and development and marketing. To the extent we do not achieve growth and this cost per customer is not reduced, it will be difficult for us to generate meaningful revenue at acceptable margins or achieve profitability. To the extent that our business model is not successful, because market acceptance does not develop as expected, or other competing technologies evolve in connection with the changing market or for any other reason, we might have future unexpected declines in revenue. Rapid technological change could render our products and services obsolete. The IP Telephony industry is characterized by rapid technological innovation, sudden changes in user and customer requirements and preferences, frequent new product and service introductions and the emergence of new industry standards and practices. Each of these characteristics could render our services, products, intellectual property and systems obsolete. The rapid evolution of our market requires that we improve continually the performance, features and reliability of our products and services, particularly in response to competitive offerings. Our success also will depend, in part, on our ability: o to develop or license new products, services an technology that address the varied needs of our customers and prospective customers, and o to respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis. If we are unable, for technical, financial, legal or other reasons, to adapt in a timely manner to changing market conditions or user preferences, we could lose customers, which would cause a decrease in our revenue. We may be unable to obtain additional capital if needed to grow our business, which would adversely impact our business. If we raise additional financing, you may suffer significant dilution. Although we expect that our current cash and cash from operations will be sufficient to satisfy our working capital and ordinary course capital expenditure needs over the next 12 months, if our revenues do not grow to cover our expenses, we will need to seek additional third-party investment in order to provide additional working capital and, in any event, additional capital will be required to finance our growth plans. We cannot be certain that financing from third parties will be available on acceptable terms to us or at all. Our future capital requirements will depend upon several factors, including the rate of market acceptance of our products and services, our ability to expand our customer base and our level of expenditures for sales and marketing. If our capital requirements vary materially from those currently planned, we may 24 require additional financing sooner than anticipated. If we cannot raise funds on acceptable terms, we may not be able to develop our products and services, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, any of which could have a material adverse effect on our ability to grow our business. Further, if we issue equity securities, you will experience dilution of your ownership percentage, and the new equity securities may have rights, preferences or privileges senior to those of our common stock. Many of our competitors have significantly greater resources than we do and may be able to respond more quickly to new or emerging technologies and changes in customer requirements. Companies that represent competition in our markets include WorldCom, Cisco Systems, Nortel Networks and MCI, among others. Certain of our competitors have significantly greater financial, technical, marketing and other resources than we do and may be able to respond more quickly to new or emerging technologies and changes in customer requirements. Additional competition could result in price reductions, reduced margins and loss of market. We cannot guarantee that we will be able to compete successfully against future competitors or that future competitive pressures will not materially and adversely affect our business, financial condition and results of operations. If we lose the services of our key personnel, we may be unable to replace them, and our business could be negatively affected. Our success depends in large part on the continued service of our management and other key personnel and our ability to continue to attract, motivate and retain highly qualified employees. In particular, the service of Philip Verges, our Chairman and Chief Executive Officer is integral to the execution of our business strategy. If one or more of our key employees leaves NewMarket, we will have to find a replacement with the combination of skills and attributes necessary to execute our strategy. Because competition from other technology companies for skilled employees is intense, and the process of finding qualified individuals can be lengthy and expensive, we believe that the loss of services of key personnel could negatively affect our business, financial condition and results of operations. Risks Related to Our Industry Deterioration of the IP Telephony industry could lead to further reductions in capital spending budgets by our customers, which could further adversely affect our revenues, gross margins and income. Our revenues and gross margins will depend significantly on the overall demand for IP Telephony products. Reduced capital spending budgets by our customers caused by the ongoing industry downturn have led to continued soft demand for our products and services, which has resulted in, and may continue to 25 result in, decreased revenues, earnings levels or growth rates. The global economy in general, and the technology market in particular, has weakened and market conditions continue to be challenging. As a result, individuals and companies are delaying or reducing expenditures. We have observed effects of the global economic downturn in many areas of our business. In addition, the technology industry has experienced significant consolidation, and this trend is expected to continue. It is possible that we and one or more of our competitors each supply products to the companies that have merged or will merge. This consolidation could result in further delays in purchasing decisions by merged companies or in us playing a decreased role in the supply of products to the merged companies. Further delays or reductions in spending could have a material adverse effect on demand for our products and services and, consequently, our results of operations, prospects and stock price. Risks Related to Our Capital Stock The public market for our common stock may be volatile. The market price of our common stock has been and is likely to continue to be volatile and significantly affected by various factors, including: * general market conditions and market conditions affecting technology stocks in particular; * actual or anticipated fluctuations in our quarterly or annual operating results; * announcements relating to contracts, investments, acquisitions, divestitures; * discontinued operations, layoffs or corporate actions; * industry conditions or trends; and * limited public float, market making activity and research coverage. The stock markets, especially the over-the-counter markets, have experienced significant price and volume fluctuations that have affected the market prices of many technology companies' stocks. These fluctuations have often been unrelated or disproportionate to operating performance. These broad market or technology sector fluctuations may adversely affect the market price of our common stock. General economic, political and market conditions such as recessions and interest rate fluctuations may also have an adverse effect on the market price of our common stock. In addition, the market price of our common stock has also been and is likely to continue to be affected by expectations of analysts and investors. Our preferred stock has certain preferences over our common stock with regard to liquidation, dividends and election of directors. Our issued and outstanding Senior Convertible Preferred Stock, Series B Preferred Stock and Series C Preferred Stock each hold a preference in liquidation over our common stock. In addition, our Series C Preferred Stock accrues dividends at an annual rate equal to $.060 per share. All of our 26 outstanding Preferred Stock is subject to conversion into common stock upon the occurrence of certain enumerated events and contain provisions that may limit our ability to raise additional capital if needed. In addition, any such conversion will dilute our existing common stockholders. Our ability to issue additional preferred stock or other convertible securities may adversely affect the rights of our common stockholders and may make takeovers more difficult, possibly preventing you from obtaining optimal share price. Our Articles of Incorporation authorize the issuance of shares of "blank check" preferred stock, which would have the designations, rights and preferences as may be determined from time to time by the board of directors. Accordingly, the board of directors is empowered, without shareholder approval (but subject to applicable government regulatory restrictions), to issue additional preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of the common stock. In the event of an issuance, the preferred stock could be used, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. We have also historically used securities that are convertible into common stock as a currency to finance acquisitions and may continue to do so in the future. SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS We have made forward-looking statements in this Form 10-Q under "Management's Discussion and Analysis or Plan of Operations" and in the "Notes to Consolidated Financial Statements." In addition, our representatives or management may make other written or oral statements that constitute forward-looking statements. Forward-looking statements are based on management's beliefs and assumptions and on information currently available to them. These statements often contain words like believe, expect, anticipate, intend, contemplate, seek, plan, estimate or similar expressions. We make these statements under the protection afforded them by Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve risks, uncertainties and assumptions, including those discussed in this report. We operate in a continually changing business environment, and new risk factors emerge from time to time. We cannot predict those risk factors, nor can we assess the impact, if any, of those risk factors on our business or the extent to which any factors may cause actual results to differ materially from those projected in any forward-looking statements. Forward-looking statements do not guarantee future performance, and you should not put undue reliance on them. 27 Forward-looking statements can generally be identified by the use of forward-looking terminology, such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or the negative of these terms or other comparable terminology, or by discussions of strategy, plans or intentions. Statements contained in this report that are not historical facts are forward-looking statements. Without limiting the generality of the preceding statement, all statements in this report concerning or relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are necessarily estimates reflecting our best judgment based upon current information and involve a number of risks and uncertainties. Other factors may affect the accuracy of these forward-looking statements, and our actual results may differ materially from the results anticipated in these forward-looking statements. While it is impossible to identify all relevant factors, factors that could cause actual results to differ materially from those estimated by us include, but are not limited to, those factors or conditions described in "Management Discussion and Analysis or Plan of Operation" as well as changes in the regulation of the IP telephony industry at either or both of the federal and state levels, competitive pressures in the IP telephony industry and our response to these factors, and general conditions in the economy and capital markets. For a more complete discussion of these and other risks, uncertainties and assumptions that may affect us, see the company's annual report on Form 10- KSB for the fiscal year ended December 31, 2003. ITEM 3. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures: As of September 30, 2004, the company's management, including its Chief Executive Officer and Principal Financial Officer, have reviewed and evaluated the effectiveness of the company's disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934. Based on that review and evaluation, the Chief Executive Officer and Principal Financial Officer have concluded that the company's disclosure controls and procedures are adequate and effective and that no changes are required at this time. Changes in Internal Controls: In connection with the evaluation by management, including its Chief Executive Officer and Principal Financial Officer, of the company's internal control over reporting, pursuant to Exchange Act Rule 13a-15(d), no changes during the quarter ended September 30, 2004 were identified that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting. 28 PART II--OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are presently engaged in various legal actions as indicated below. We cannot determine at this time to what extent liability or damages, if any, will be imposed against us as a result of these matters. We do not currently maintain insurance coverage that would be applicable to any damages that may be awarded against us as a result of these matters. Should any significant damage awards be rendered against us, the payment of such damages may have a material adverse effect on our operations and financial condition. On December 17, 1999, Satlink 3000, doing business as Independent Network Services ("INS"), filed a complaint against the Company in the Superior Court of the State of Arizona, County of Maricopa, No. CV 99-22560, alleging breach of contract, and other causes of action and seeking actual and punitive damages as a result of the rescission of our merger with INS. In July, 2003 we reached a mutually agreeable settlement of this matter with Satlink 3000. On December 22, 1999, Peter Stazzone, who became the Company's Secretary and Treasurer in connection with the failed merger of Satlink 3000, filed a complaint against the Company in the Superior Court of the State of Arizona, County of Maricopa, Case No. CV 99-22828, alleging various causes of action against us, including breach of an employment contract with us, breach of fiduciary duty, tortious interference and intentional and negligent misrepresentation, all in connection with our rescission of the Satlink 3000 merger. The Company considers the claim with out merit. We are currently in settlement negotiations with Mr. Stazzone while also vigorously defending the claim in ongoing court proceedings. On or about September 2, 2003, Fisher-Anderson, L.C. filed a complaint for breach of contract and conversion against us in the Superior Court of the State of Arizona, County of Maricopa, Case No. CV 2003-018065 seeking damages and other relief in connection with one or more leases of certain furniture and equipment provided by Fischer Anderson to the Company. We believe that we do not possess the furniture or equipment at issue. In the same lawsuit, we, along with other defendants, are defending claims in the nature of contract and breach of fiduciary duty brought by Mr. James Howson, our former Chairman and Chief Executive Officer and a former stockholder that had personally guaranteed the lease obligations of the Company. This complaint has been settled to the mutual satisfaction of all parties. We are not aware of any contemplated legal proceeding by a governmental authority in which we may be involved. ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES In the first quarter 2000, an existing shareholder exercised warrants for 386,000 shares of common stock for $386,000 cash. In the first quarter 2000, an existing Rule 506 investor exercised his warrants for 75,000 shares of common stock by tendering $74,063 cash. In the first quarter 2000, we issued 300,000 shares of common stock for services/deposits, valued at the current market rate of $876,778, to two entities, one related party ($730,778) and the other unrelated ($146,000). 29 In the second quarter 2000, we made a tender offer to the senior convertible (Series A) preferred stockholders who were given the option of: (1) converting all of the units into 17,83 shares of common stock, (2) converting a portion of the units t shares of common stock and amend the notes or (3) retain the units and not to agree to the offer. As a result of the tender offer, we issued 543,876 shares of common stock in exchange for the cancellation of 950 shares of Series A preferred stock and $759,450 of debt. During the second quarter of 2000, we received $2,084,371, net of expenses of $425,629, from the issuance of 2,500 shares of convertible Series B preferred stock with a 7.5% dividend rate. At the election of the shareholders, the Series B preferred stock may be converted into shares of common stock by dividing the purchase price by the conversion price. The conversion price equals the lesser of: (1) 110% of the lowest closing bid price for the common stock for the five trading day prior to the date of issuance or (2) 75% of the average of the three lowest closing bid price for the common stock for the thirty consecutive trading days preceding the conversion date. We hav recorded a beneficial conversion feature discount on the issuance of convertible Series B preferred stock in the amount of $833,333. Based on the Series B preferred stockholders' agreement, we are recording the Series B preferred stock dividend over 180 days from May 22, 2000. Also, on the conversion date, the Series B preferred stockholders have an option to acquire up to $2,500,000 of common stock at the conversion price. Furthermore, in accordance with the Series B preferred stockholders' agreement, we issued 350,000 warrants to purchase common stock at an exercise price of $2.136 per share. In July 2000, we, along with International Investment Partners Ltd. (IIP), agreed to terminate the consulting agreement, effective May 31, 2000, under terms which excused IIP from providing any further services and discontinued our obligation to make the monthly payments for such services. In addition, IIP agreed to exchange both outstanding warrants for 700,000 shares of common stock. In October 2000, we entered into an agreement with Marie Peregrim to provide sales and marketing management consulting services throughout Europe, excluding the United Kingdom, in exchange for 300,000 shares of common stock valued at $273,000. On February 14, 2001, our SB-2 was declared effectiv by the Securities and Exchange Commission ("SEC"). This SB-2 was filed primarily to register shares of common stock underlying the 2,500 shares of convertible Series B preferred stock and related dividends and warrants associated with the issuance On February 20, 2001, the Company's Board of Director adopted the 2001 Stock Award Plan ("Plan") under which 2,256,000 shares of common stock were reserved. The Plan was effective upon adoption. All of the shares under the Plan were granted that we no longer consider the plan active. Under the Plan, shares of common stock may be awarded to employees and consultants for services rendered. For purposes of the Plan, the shares of common stock were valued at $0.38 per share. A registration on Form S-8 was filed with the SEC on February 20, 2001 so that the shares of common stock, when awarded, would be freely marketable by the individual recipients. 30 On April 26, 2001, the Company's Board of Directors adopted the 2001 Stock Award Plan II ("Plan II") to reserve an additional 3,004,418 shares of common stock. Plan II was effective upon adoption. For purposes of Plan II, these shares of common stock were valued at an average price of $0.13 per share In consideration for their service, two of our former officers Mr. Howson and Ms. Will each were awarded 1,000,000 shares of common stock under this Plan II. The remaining shares were issued to our employees as part of severance arrangements or fo accepting certain wage concessions. In the first half of 2002, the Company filed a Form S to register 12,500,000 shares of common stock at a price of $0.04 per share, which were subsequently issued to certain officers, directors, related parties and others. In April 2002, the Company filed a Form S-8 to register 500,000 shares of common stock at price of $0.05 per share, which were issued to the Company's law firm. In April 2002, the Company issued 171,840 restricted common shares as payment of $8,592 in accrued interest to the remaining Series A unit holders. In the third quarter 2002, the Company issued 5,000,000 common shares in exchange for services valued at $250,000, or $0.05 per share, pursuant to an S-8 registration statement. In the third and fourth qarters 2002, 5 shares of the Series B preferred stock were converted to 7,078,199 common shares. In October 2002, 60,000,000 common shares were issued to convert $1,800,000 of the promissory note issued to acquire the net assets of Vergetech. In October 2002, the Company completed a 1 for 30 reverse split of its common stock, resulting in 110,648,874 shares being retired. Subsequent to th reverse split, 26 shares of the Series B preferred stock were converted into 588,546 shares of common stock, and 200,000 shares of common stock were issued in exchange for services valued at $18,000, or $0.09 per share. In March of 2003 in a private placement exempt from registration, we issued 111,667 shares of common stock in satisfaction of consulting services contracts with third parties. On October 14, 2003, we issued 2,500 shares of Series C Preferred Stock in connection with our acquisition of Infotel. On November 24, 2003, we issued a $408,000 promissory note to VTI, an affiliate, for a short-term loan of a like amount. At various times between September 2003 and December 2003, we issued six convertible notes having two year maturities to two institutional investors in face amounts aggregating approximately $1.8 million. At various times throughout 2003, holders of the Series B Convertible Preferred Stock submitted conversion notices and we issued 23,885,332 shares of common stock in satisfaction of such conversion notices. At various times throughout 2003, holders of convertible notes issued by us in 2000 and 2001 submitted conversion notices to us and we issued 22,333,606 shares of common stock in satisfaction of such conversion notices. All of these issuances were exempt from registration as private placements of securities. 31 In the first quarter of 2004, the Company issued 1,075,257 shares of common stock for the conversion of the final remaining 503 shares of Preferred Series B outstanding. The Company issued 1,685,354 shares of common stock for the conversion of $287,527 of convertible debt, at $0.17 per share. The Company issued 1,300,000 shares of restricted common stock pursuant to consulting contracts with four individuals. These shares were valued at $313,000, or $0.24 per share. All of these contracts are prospective for a period of one year, therefore the Company is amortizing the expense over the life of the contracts. The Company issued 2,000,000 shares of restricted common stock to acquire an additional 38% of IP Global Voice. These shares were valued at $979,000, or $0.4895 per share. The Company issued 550 shares of restricted preferred stock, Series D, to acquire 51% of the common stock of Medical Office Software, Inc. These shares were valued at $365,000. The Company issued 2,000 shares of restricted preferred stock, Series E, to acquire 100% of the common stock of RKM. These shares were valued at $2,000,000. The Company issued 3000 of restricted preferred stock, Series F, to acquire 100% of the common stock of Netsco. These shares were valued at $3,000,000. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable ITEM 5. OTHER INFORMATION Not Applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The exhibits required to be filed herewith by Item 601 of Regulation S-B, as described in the following index of exhibits, are incorporated herein by reference, as follows: Exhibit No. Description - ---------- ------------------------------------- 2.1 Purchase Agreement dated October 14, 2003 by and among NewMarket Technology, Inc. and Intercoastal Financial Services Corporation. (Filed as Exhibit 20.1 to the Company's Current Report on Form 8-K filed October 15, 2003 and incorporated herein by reference.) 2.2 Stock Purchase Agreement dated August 26, 2003 by and between NewMarket Technology, Inc. and IP Global Voice, Inc. (Filed as Exhibit 21.0 to the Company's Current Report on Form 8-K filed September 2, 2003 and incorporated herein by reference.) 32 3.1 Articles of Incorporation of Nova Enterprises, Inc. (Filed as Exhibit 3.(i).1 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 3.2 Certificate of Amendment of Articles of Incorporation changing name to NewMarket Technology, Inc. (Filed as Exhibit 3.(i).2 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 3.3 Certificate of Amendment of Articles of Incorporation changing name to IPVC.com, Inc. (Filed as Exhibit 3.(i).3 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 3.4 Certificate of Amendment of Articles of Incorporation changing name to IPVoice.com, Inc. (Filed as Exhibit 3.(i).4 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 3.5 Certificate of Amendment of Correction completing the description of the Senior Convertible Preferred Shares listed in the Certificate of Amendment of Articles of Incorporation filed on April 19, 1999. (Filed as Exhibit 3.(i).5 to the Company's Quarterly Report of Form 10-QSB filed May 15, 2000 and incorporated herein by reference.) 3.6 Certificate of Amendment of the Articles of Incorporation designating the preferences, limitations and relative rights of Series B Preferred Stock. (Filed as Exhibit 3.(i).6 to the Company's Quarterly Report of Form 10-QSB filed May 15, 2000 and incorporated herein by reference.) 3.7 Certificate of Amendment of Articles of Incorporation changing name to IPVoice Communications, Inc. (Filed as Exhibit 3.(i).7 to the Company's Amendment No. 2 to Form SB-2 filed February 12, 2001 and incorporated herein by reference.) 3.8 Certificate of Amendment of the Articles of Incorporation designating the preferences, limitations and relative rights of Series C Preferred Stock. (Filed as Exhibit 3.(i).8 to the Company's Amendment No. 2 to Form SB-2 filed February 12, 2001 and incorporated herein by reference.) 3.9 Certificate of Amendment to the Articles of Incorporation increasing the authorized common stock to 100,000,000 shares. (Filed as Exhibit 3.(i).9 to the Company's Annual Report on Form 10-KSB filed May 15, 2000 and incorporated herein by reference.) 3.10 Bylaws of Nova Enterprises, Inc. (Filed as Exhibit 3.(ii).1 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 33 4.1 Form of Private Placement Offering Memorandum dated February 27, 1997 offering 1,600,000 common shares at $0.01 per share. (Filed as Exhibit 4.1 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 4.2 Form of Private Placement Offering Memorandum dated April 20, 1998 offering 992,500 common shares at $1.00 per share. (Filed as Exhibit 4.2 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 4.3 Form of Private Placement Offering Memorandum dated September 15, 1998 offering 100,000 common shares at $0.50 per share. (Filed as Exhibit 4.3 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 4.4 Form of Private Placement Offering Memorandum dated December 1, 1998 offering 1,000,000 common shares at $0.15 per share. (Filed as Exhibit 4.4 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 4.5 Form of Private Placement Offering Memorandum dated February 1, 1999 offering 1,250,000 common shares at $0.40 per share. (Filed as Exhibit 4.5 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 4.6 Form of Private Placement Offering Memorandum dated February 1, 1999 offering 104 Units at $25,000.00 per unit. (Filed as Exhibit 4.6 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 4.7 Form of Promissory Note for Private Placement Offering of 104 Units at $25,000 per unit. (Filed as Exhibit 4.7 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 34 4.8 Form of Warrant for Private Placement Offering of 104 Units at $25,000 per unit. (Filed as Exhibit 4.8 to the Company's Form 10-SB filed November 3, 1999 and incorporated herein by reference.) 10.1 Secured Convertible Promissory Note dated August 26, 2003 from IP Global Voice, Inc. (Filed as Exhibit 20.0 to the Company's Current Report on Form 8-K filed September 2, 2003 and incorporated herein by reference.) 31.1 * Certification of Chief Executive Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 * Certification of Principal Financial Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 * Certification of the Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. - -------------------- * Filed herewih. (b) Reports on Form 8-K During the first and second quarter of 2004 and prior to August 9, 2004, we had four Current Reports on Form 8-K as follows: Current Report on Form 8-K filed February 10, 2004, which included disclosure under Item 2 relating to the acquisition by the Company of 51% of Medical Office Software, Inc. Current Report on Form 8-K filed March 11, 2004, which included disclosure under Item 2 relating to the acquisition by the Company of 51% of Digital Computer Integration Corp. Current Report on Form 8-K filed April 30, 2004, which included disclosure under Item 5 relating to a letter to shareholders that communicated the extension of the reporting deadline for the 2003 Annual Report on Form 10KSB pending the closing of the previously announced RKM IT Solutions acquisition and a review of the report by outside counsel. Current Report on Form 8-K filed April 5, 2004, which included disclosure under Item 2 relating to the acquisition by the Company of 100% of the issued and outstanding stock of RKM IT Solutions in Caracas, Venezuela. 35 Current Report on Form 8-K filed June 2, 2004, which included disclosure under Item 2 and 7 relating to the audit of the previously acquired Infotel Technologies Ltd (pte) of Singaproe. Current Report on Form 8-K filed June 2, 2004, which included disclosure under Item 2 and 7 relating to the audit of the previously acquired RKM IT Solutions in Caracas, Venezuela. Current Report on Form 8-K filed June 11, 2004, which included disclosure under Item 2 relating to the acquisition by the Company of 100% of Netsco Inc. Current Report on Form 8-K filed August 9, 2004, which included disclosure under Item 2, 5 and 7 relating to the acquisition by the Company of 100% of Logicorp Inc. and to the name change from IPVoice Communications Inc. to NewMarket Technology Inc. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NewMarket Technology, Inc. ------------------------------- (Registrant) Date: November 15, 2004 By:/s/ PHILIP M. VERGES - ------------------------------- Philip M. Verges Chairman and Chief Executive Officer, Primary Financial Officer 36 EX-31 2 nmti-10qsb_ex31ceo.txt EXHIBIT 31.1 Rule 13a-14(a) Certification of Chief Executive Officer I, Philip M. Verges, certify that: 1. I have reviewed this report on Form 10-QSB of NEWMARKET TECHNOLOGY, INC.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 15, 2004 /s/ Philip M. Verges ----------------- --------------------- Philip M. Verges President and Chief Executive Officer EX-31 3 nmti-10qsb_ex31cfo.txt EXHIBIT 31.2 Rule 13a-14(a) Certification of Principal Financial Officer I, Philip M. Verges, certify that: 1. I have reviewed this report on Form 10-QSB of NEWMARKET TECHNOLOGY, INC.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 15, 2004 /s/ Philip M. Verges ----------------------------------------- Philip M. Verges Principal Financial Officer EX-32 4 nmti-10qsb_ex32.txt EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. ss. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The following statement is being furnished to the Securities and Exchange Commission solely for purposes of Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), which carries with it certain criminal penalties in the event of a knowing or willful misrepresentation. Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549 Re: NewMarket Technology, Inc. Ladies and Gentlemen: In accordance with the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 (18 USC 1350), each of the undersigned hereby certifies that: (i) this Current Report on Form 10-QSB fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (ii) the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of NewMarket Technology, Inc. Dated as of this 15th day of November 2004. /s/ Philip M. Verges ----------------------------------------- Philip M. Verges Chairman, Chief Executive Officer and Principal Financial Officer A signed original of this written statement required by section 906 has been provided to NewMarket Technology, Inc. and will be retained by NewMarket Technology, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----