UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K





(Mark
One)





[
X]          ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE


SECURITIES
EXCHANGEACT OF
1934





For
the fiscal year ended December 31, 2008





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 Registrant as Specified in Its Charter)






NEVADA
              
              65-0729900(State
      or other Jurisdiction of
              
              (I.R.S.
      EmployerIncorporation
      or Organization)
              
              Identification
      No.)










14860
      Montfort Drive, Suite 210Dallas,
      Texas 75254(Address
      of Principal Executive Offices)(972)
      386-3372(Issuer's
      Telephone Number, Including Area Code)





Securities
registered under Section 12(b) of the Exchange Act:








Title
      of each class:
              
              Name
      of exchange on which registered:Common
      Stock, Par Value $0.001
              
              Over-the-Counter







Securities
registered under Section 12(g) of the Exchange Act:


None





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes o     No þ





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes o     No þ





Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, during the preceding 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 þ     No o










Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this
Form 10-K.       Yes o     No þ





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.   See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):





Large
      Accelerated Filer [   ]
              
              Accelerated
      Filer [   ]Non-Accelerated
      Filer  [ü]
              
              Smaller
      Reporting Company [ 
 ]





Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).  Yes o     No þ





Aggregate
market value of the voting and non-voting common equity held by non-affiliates
of the Registrant based on the closing price of the Registrant’s common stock on
June 30, 2008:    $19,404,277





DOCUMENTS
INCORPORATED BY REFERENCE:





None










NewMarket
Technology, Inc.





ANNUAL
REPORT ON FORM 10-K





FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2008




PART
      I
                  
                  3Item 1.
                  Description of Business
                  3Item 1A.
                  Risk Factors
                  10Item 1B.
                  Unresolved Staff Comments
                  14Item 2.
                  Description of Properties
                  14Item 3.
                  Legal Proceedings
                  14Item 4.
                  Submission of Matters to a Vote of Security
      Holders
                  14PART II
                  
                  15Item 5.
                  Market for Common Equity and Related Stockholder
      Matters
                  15Item 6.
                  Selected Financial Data
                  15Item 7.
                  Management’s
      Discussion and Analysis of Financial ConditionAnd
      Results of Operations
                  16Item 7A.
                  Quantitative and Qualitative Disclosures about Market
      Risk
                  19Item 8.
                  Financial Statements and Supplementary
    Data
                  19Item 9.
                  Changes
      in and Disagreements with Accountants onAccounting
      and Financial Disclosure
                  19Item 9A.
                  Controls and Procedures
                  19Item 9B.
                  Other Information
                  20PART
      III
                  
                  20Item 10.
                  Directors and Executive Officers of the
      Registrant
                  20Item 11.
                  Executive Compensation
                  21Item 12.
                  Security Ownership of Certain Beneficial Owners and
      Management
                  22Item 13.
                  Certain Relationships and Related
      Transactions
                  23Item 14.
                  Principal Accountant Fees and Services
                  23PART IV
                  
                  24Item 15.
                  Exhibits and Financial Statement
    Schedules
                  24Signatures
                  
                  28Index to Financial Statements
                  F-1







PART I





Item 1. Description of Business





History
of the Business





The
Company was originally incorporated as Nova Enterprises, Inc. in the State of
Nevada on February 19, 1997, to develop and produce a unique proprietary
software solution for use in Internet Telephony (hereafter referred to as "IP
Telephony").  In March 1998, we entered into a reorganization
agreement, pursuant to which our predecessor exchanged 9,000,000 shares of its
common stock for all of the outstanding common shares of a private operating
company known as IPVoice Communications, Inc. ("IPVCDE"), a transaction commonly
referred to as a "reverse acquisition." In general terms, a reverse acquisition
is a transaction in which the inactive public entity acquires an operating
company and then changes its name as the surviving parent corporation to the
name of the subsidiary and allows the subsidiary to appoint management in the
surviving public entity. Thereafter, the subsidiary may formally merge with the
parent or may continue to operate as a separate operating subsidiary. In this
case, the subsidiary transferred all of its assets to the parent. The
reorganization agreement was accounted for as a reorganization of
IPVCDE.





In May
1999, the corporate name was changed to IPVoice.com, Inc. In January 2001, in
connection with the acquisition of 100% of the issued and outstanding shares of
the common stock of IPVoice Communications, Inc., a Delaware corporation, the
name was changed to IPVoice Communications, Inc. As a result of that
acquisition, the prior Delaware corporation ceased to exist, and the Nevada
corporation became known as IPVoice Communications, Inc. The prior officers and
directors resigned and were replaced by the officers and directors of the
Delaware incorporated IPVoice Communications, Inc. This transaction was
accounted for as a reorganization of IPVoice Communications, Inc.





3




Until
August 1999, we conducted business from our headquarters in Denver, Colorado at
which time the headquarters was relocated to Phoenix, Arizona. In June 2002, our
headquarters relocated again to its current location in Dallas,
Texas.





To better
reflect our renewed business plan and the product line expansion beyond voice
communications, we changed our name from IPVoice Communications Inc. to
NewMarket Technology Inc. in June 2004. Our common stock is currently traded on
the Pink Sheets Electronic Quotation Service under the symbol
"NMKT."





In June
2002, we acquired all of the assets of VergeTech Inc. (“VTI”) in exchange for a
$3,000,000 promissory note convertible into 50% of the issued and outstanding
shares of the Company as of the date of issuance. VTI was a privately held
communications industry technology services firm founded in 1997 and
headquartered in Dallas, Texas.





Consistent
with the VTI asset acquisition agreement, our Board of Directors and the
management team resigned and VTI management assumed the vacated management
positions. Philip Verges, the founder of VTI, became our Chief Executive Officer
and Chairman of the Board.





As part of
our new business strategy, two acquisitions were completed in 2003. We acquired
all of the issued and outstanding stock of Infotel Technology PTE Ltd.
("Infotel") based in Singapore as part of a strategy to establish a foothold
operation in Asia. Infotel is a communications systems integrator engaged in the
business of reselling and integrating specialty communication devices to various
government agencies and commercial customers. We also acquired a majority of the
issued and outstanding stock of IP Global Voice, Inc. ("IP Global Voice") of San
Francisco, California.  IP Global Voice is a full feature voice-over
IP (“voIP”) service provider that began providing service to small and
medium-sized businesses in December, 2003.





We entered
the healthcare industry in 2004 by acquiring a majority interest in Medical
Office Software Inc, (“MOS”) ,a twenty year old Florida-based technology company
providing practice management and claims processing IP software and maintenance
to three thousand ongoing physician clients.  In October 2006, we sold
our majority interest in MOS  pursuant to a stock purchase
agreement  with VirtualHealth Technologies, Inc. (“VirtualHealth”).
Under the terms of the Agreement, we received 1.4 million shares of
VirtualHealth common stock and a $900,000 convertible note in exchange for
our  majority  interest  in MOS.





We further
added to our healthcare strategy in 2004 with an equity investment in Sensitron,
Inc., a California-based wireless health records maintenance
provider.  In March 2006, we, agreed to convert our previous equity
investment in Sensitron into a promissory note with an interest rate of 6% per
annum. Additionally, we received 20,000 warrants to purchase the common stock of
Sensitron.





We also
expanded into the security industry in 2004 with our acquisition of a majority
interest in Digital Computer Integration Corporation ("DCI"). DCI, based in
Plano, Texas, provided custom integrated technology solutions to military and
civil government agencies that include a number of proprietary IP communication
homeland security technologies.  In February 2005, we entered into an
agreement with Defense Technology Systems, Inc. (“DFTS”), a security products
company, under which DFTS acquired our majority interest in DCI in exchange for
two classes of DFTS preferred stock which represents a majority voting interest
in DFTS.  The voting control of the preferred stock was subjugated to
a proxy committee which was controlled by the executive officers of
DFTS.





In 2004 we
also acquired one-hundred percent of Netsco Inc., a software firm with a
proprietary RFID technology already trialed for military application and
marketed in partnership with Sun Microsystems, Inc.





We
continued to expand our telecommunications industry strategy in 2004 with an
equity investment in RedMoon Broadband Inc. ("RedMoon") RedMoon specializes in
the engineering and management of municipal wireless broadband
networks.  In 2004 we also acquired one-hundred percent of RKM
Suministros, Ltd. (“RKM”), a Venezuela-based computer systems integration
company.





In January
of 2005, we partnered with Gaozhi Science and Technology, Inc. of Shanghai,
China and established NewMarket China, Inc. ("NewMarket China"), a wholly-owned
subsidiary of NewMarket Technology.   In the third quarter of
2005, NewMarket China formed a Chinese wholly-owned foreign entity, Clipper
Technology, Inc. (“CLPTEC”).  CLPTEC is engaged in the development,
implementation, integration and maintenance of technology software and
supporting peripherals for computing, communications, and data
exchanges.  In October 2005, CLPTEC executed an agreement with the
Huali Group, based in Ningbo, China, under which CLPTEC received a a 51%
ownership interest in Clipper-Huali, Ltd. (“Clipper-Huali”) a newly-formed
Chinese corporation. Clipper-Huali engages in the business of application
software development, sale of proprietary software, value added reselling of
leading business application software and the sale of system and network
software.





In 2005,
NewMarket expanded an existing partnership with TekVoice Communications, Inc.
(“TekVoice”) to an equity investment in TekVoice. TekVoice expanded the
NewMarket telecommunications strategy into the Hispanic and Latin American
markets with plans to establish an independent public listing on a United States
securities exchange. TekVoice is a Hispanic and Latin America voIP service
provider.   In December 2007, TekVoice was acquired by AlterNet
Systems, Inc. (“AlterNet”) through a reverse acquisition.





In May
2005, we executed a stock purchase agreement to acquire fifty-one percent
interest in Vera Technology Inc (“Vera”). In a simultaneous agreement, Vera
acquired one hundred percent of Classified Information Inc. (“CI”). We exchanged
$1.3 million in preferred stock for the issuance of Vera preferred stock of
equal value that includes fifty-one percent voting rights. CI provides a
proprietary and patented, secure data exchange solution that enables simple and
complete interoperability across all network configurations, on all computer
systems, and with essentially every associated software package. The proprietary
solution allows companies to communicate securely via the Internet through
adaptive and secure transfer protocols supporting all leading standards of EDI,
XML, and flat file transfers.  In August 2006, we executed an
agreement with Vera under which we sold our majority interest in Vera to the
existing management of Vera in consideration for $5,000 in cash and a $1.3
million unsecured promissory note. The note matures in twenty years; however the
principal repayment may be accelerated provided that Vera meets certain
financial milestones.





4




In June
2005, IP Global Voice acquired substantially all of the assets of Corsa Networks
Technologies, Inc.  (“Corsa”). Corsa is an IP systems integration firm
specializing in the construction of secure data and communication
networks.  These assets are operated in conjunction with the
operations of IP Global Voice.





In
February 2006, we entered into a purchase agreement with the founders
of  UniOne Consulting Ltda., a Brazilian limited liability company,
(“UniOne”), to acquire the founders’ 100% interest in UniOne.  The
purchase price paid by the Company was $6,460,320.  The purchase price
is payable in tranches through the end of 2010.  UniOne is a systems
integrator, developer and business practice implementation company, providing
support for the integration and maintenance of enterprise software applications.
UniOne is located in Sao Paulo, Brazil, and had a regional office in Santiago de
Chile, Chile until the end of 2008.





In
August   2006,   NewMarket China executed an
Agreement  and  Plan  of   Reorganization   (the   “Agreement”)  with  Intercell
International Corporation  ("Intercell").  The Agreement
provided for all of the issued and  outstanding  stock of
NewMarket  China,  Inc., one thousand  (1,000)
shares  held by NewMarket, to be  exchanged  for
two  million  (2,000,000)  restricted common
shares of Intercell.  As a result of the Agreement, NewMarket China
became a wholly-owned subsidiary of Intercell.  Simultaneously,
NewMarket purchased 250,000 shares of newly designated Series A Preferred Stock
from Intercell for an aggregate purchase price of $250,000.  The
shares of Series A Preferred Stock may be converted  into that number
of authorized but unissued  common shares of
Intercell,  which shall be equal to 60%  ownership of the
Company  after  giving  effect  to  such  issuance  on  and
as of  the  date  of conversion.  In
January 2007, Intercell’s name was changed to NewMarket China to reflect the new
operations of the business.  In June 2008, NewMarket China’s name was
changed to China Crescent Enterprises, Inc. (“China Crescent”).





In
February 2007, we executed a share exchange agreement with Paragon Financial
Corporation, (“Paragon”), a Delaware corporation,   under which
we sold our ownership interest in UniOne in exchange for the issuance to us of a
supermajority voting preferred stock.  These preferred shares will be
deemed at all times to be equivalent to ninety-five percent (95%) of the
outstanding common shares of Paragon for voting purposes on all
matters.  Paragon’s name was subsequently changed to NewMarket Latin
America, Inc.





We have
never been the subject of a bankruptcy, receivership or similar
proceeding.





2007
Financing:





On
November 30, 2007, we and certain of our subsidiaries including, IP Global Voice
and China Crescent, entered into a Security Agreement (the “Security Agreement”)
with LV Administrative Services, Inc. (the “Agent”) as administrative and
collateral agent for Valens U.S. SPV I, LLC (“Valens US”) and Valens Offshore
SPV II, LLC (“Valens Offshore,” and together with the Agent and Valens US, the
“Creditor Parties”). Pursuant to the terms of the Security Agreement, we issued
a secured convertible term note to Valens US and Valens Offshore in the
principal amounts of $1,800,000 and $2,200,000 respectively (collectively, the
“Notes”). In addition, we issued a Revolving Note to Valens US, pursuant to
which Valens has committed to advance up to $3,000,000 us (the “Revolving
Note”).





The Notes
and the Revolving Note bear interest at a rate equal to the “prime rate”
published in The Wall Street Journal plus two percent (2%), per annum (the
“Contract Rate”), provided however that the Contract Rate shall not at any time
be less than nine percent (9%) per annum.  The unpaid principal and
accrued interest under the Notes and the Revolving Note are due and payable on
November 30, 2010 (the "Maturity Date"). The interest on the Notes and the
Revolving Note is payable monthly, in arrears, commencing on December 1,
2007.





The Notes
require amortizing payments of the principal amount of $133,333 together with
any accrued and unpaid amounts (the “Monthly Amount”) which are owed to the
Creditor Parties, commencing on June 1, 2008 and on the first business day of
each succeeding month thereafter through the maturity date. The Creditor Parties
may convert a portion of the Monthly Amount into shares of the Company’s common
stock provided: (A) the average closing price of the Company’s common stock
exceeds 115% of the Fixed Conversion Price of $.20; (B) the amount of such
conversion does not exceed 25% of the average dollar trading volume of our
common stock for the 22 trading date immediately preceding the due date of the
Monthly Payment. If the criteria set forth above in (A) is met but the criteria
set forth in (B) is not met as to the entire Monthly Amount, the Creditor
Parties shall convert only such part of the Monthly Amount that meets the
criteria set forth in (B). Any portion of the Monthly Amount that has not been
converted into shares shall be payable at the rate of 100% of the Monthly Amount
in cash.





Pursuant
to the Security Agreement, an event of default shall be deemed
to  include: our failure to pay any amount due under the Notes and the
Revolving Note where such failure continues for a period of 3 days after such
payment is due; the failure of the Company and its subsidiaries to pay any taxes
when due; any person or group, other than a lender under the Security Agreement,
becomes the beneficial owner of 35% or more of our voting equity interests or if
our Board of Directors ceases to consist of a majority of our Board of Directors
on the date of the Security Agreement or we or any of our subsidiaries mergers
or consolidates with or sells all or substantially all of its assets; the
indictment of the Company or any of our subsidiaries or any of our officers
under any criminal statute or commencement of criminal or civil proceedings
against any company; and our failure to deliver common stock as required by the
warrants and the Notes and such failure is not cured within 2 business
days.





5




We granted
a security interest to Valens in each of our real or personal, tangible or
intangible, property and assets. We also pledged the stock of certain of our
subsidiaries and other equity interests owned by us.





We also
issued five year warrants to purchase 3,825,840 shares of our common stock to
Valens Offshore and warrants to purchase 8,347,287 shares of common stock to
Valens US which are exercisable at a price of $0.22 per share.





We also
entered into certain additional agreements in connection with the Security
Agreement, including:




1.
            Stock
      Pledge Agreement;2.
            Intellectual
      Property Security Agreement; and





3.
            Collateral
      Assignment of Notes.





In October
2008, at our request, the Revolving Note was cancelled.





Current
Corporate Strategy:





We are in
the business of developing market entry technology products and services into
early and mainstream technology products and services. To this end, we have
introduced a unique business model which we believe overcomes the profit margin
pressure facing the technology service sector resulting from the globalization
of the technology labor force.





In
general, the component functions of our business model are to:





1) find
and acquire timely early stage technology companies;


2)
incrementally invest to market refine the acquired technology
offering;


3)
concentrate initial sales efforts on focused pilot opportunities;


4) expand
pilot opportunities to a level that prove market viability;


5) spin
the technology company out into a next stage, stand alone company to support
expanded capital formation;


6)
maintain the support service economy of scale by retaining support service
contract functions at NewMarket Technology; and


7) build
service and sales capacity in developing economies oversees to take advantage of
reduced labor expense and to sell into fast growing economic regions with less
brand name competition than in North America.





Technology
sector businesses face two substantial market wide systemic issues. The first is
the growing global technical labor force is creating significant profit margin
pressure as technology companies continue to ratchet down expenses and sell at
prices below their competition by employing the ever growing technology labor
force from developing economic countries around the world. The global technology
labor force is growing and technology companies will continue to chase each
other's downward spiraling labor expense in turn continuing to squeeze
technology company profit margins for the foreseeable future. Secondly, since
the collapse of the dotcom investment market, the technology sector has not been
able to re-establish consistent investment community interest in technology
innovation. Profit margin pressure deters investment community interest at the
same time making internal research and development investment an unlikely
alternative. Technology innovation is critical to the technology sector. Updated
technology products with enhanced features and performance that replace last
generation products are a significant and critical portion of the overall
technology market.





We believe
NewMarket improves technology product and service profit margins by combining
traditional product and service revenues with income monetized from the overall
business value of a technology offering. The equity value is usually a factor of
the future earnings potential of a new technology. Earnings potential is
generally derived by projecting the currently realized revenue and earnings of a
product or service offering, within its market entry customer scope, across the
entire market of potential customers that are likely future candidates for the
new product or service offering. We contain each technology product and service
offering within a subsidiary company. As the product and service offering
matures, we plan to monetize the overall value of the technology offering
through an incremental liquidation of stock in the subsidiary company housing
the now mature product or service offering. The revenue and profits of the now
mature product or service offering combined with the income from the incremental
sale of stock in the associated subsidiary will provide us with a profit margin
advantage.





Our
corporate structure that enables the incremental sale of subsidiary stock in
order to boost product and service revenues and profits is also the aspect of
our business model that attracts investment in technology product and service
innovation. In addition to selling stock in subsidiary companies to combine
equity income with traditional product and service revenue and profits, the
subsidiary structure provides an attractive long term and incremental return on
investment opportunity for both institutional and retail common shareholders.
When a subsidiary company is positioned for incremental liquidation through an
independent public listing or the sale of subsidiary stock to a third-party
company, we will issue subsidiary stock to common shareholders through a
dividend declaration. By issuing stock in subsidiary companies to our common
shareholders, we believe it will enhance long-term return opportunity for our
common shareholders by adding dividend returns to NewMarket stock appreciation,
if any. The ability of our common shareholders to liquidate subsidiary stock
issued in a NewMarket dividend creates incremental return opportunities that can
be immediately realized without liquidating our stock.





We believe
our business opportunity is perpetuated by the ongoing demand for technology
innovation. New technologies likewise require ongoing investment. However, since
the 2001 collapse of the high tech IPO market, new technologies have struggled
to find investment and investors have not found an attractive start-up
investment model.





6




We have
set out to replace the high tech IPO market with the micro-cap public market.
The technology start-ups are appropriately much smaller organizations with more
reasonable start-up goals. The required capital investments are correspondingly
smaller.





In order
to create a meaningful organization through smaller investments, the counter
strategy to smaller investments is more investments. We  are
concentrating on Internet Protocol (IP) Communication Technologies. We currently
has three market sector concentrations, each leveraging a core expertise in IP
technology and telecommunications, wireless broadband and systems
integration.





Our
Principal Products/Services:





We provide
full service software and systems development, integration and maintenance and
maintain product reseller and integrator partnerships with Microsoft, Hyperion,
SAP, Oracle, Cisco, and Sun Microsystems  among other software and
systems vendors. We maintain our own line of emerging proprietary technologies
that compliment and enhance the functions and features of our corporate brand
name partners. Our in house proprietary offerings include:





·
            Voice
      over IP (VoIP) services


·
            Broadband
      Wireless Services


·
            Voice
      Mail and Messaging Services;


·
            Prepaid
      Long-Distance Calling Card
Services;


·
            Corporate
      Long-Distance, Fax and Data Networking
Services;


·
            E-commerce
      Communications Services for businesses selling products and services over
      the Internet;


·
            Electronic
      Data Interchange (EDI) Software.





We also
offer lower cost, high quality software development outsourcing to our clients
through our resources in China and Latin America.





Revenue/Products
Breakdown:





To date,
our revenues have come primarily in the following product areas:





·
            software
      licensing


·
            telephony
      services, both domestic and
international


·
            technical
      consulting


·
            systems
      integration products and services





Our
Customers:





We have
three major types of customers: large and small national and international
corporations, such as Siemens, Petrobras, Sabre, Anglo American, Petroleos de
Venezuela (PDVSA), Avon, Bayer, ExxonMobil, and Visa International; service
providers (domestic and foreign), including Internet Service Providers (ISPs),
Application Service Providers (ASPs), Local Exchange Carriers (LECs) and
Competitive Local Exchange Carriers (CLECs); and governments (domestic and
foreign) and governmental agencies.





Our
Billing Practices:





For
integration and licensing services, we bill our customers on a biweekly or
monthly basis. On most communication services such as local and long distance
provided through our service provider, we provide services on a prepaid basis.
We also offer real-time billing. Real-time billing allows the customer to secure
reports on the volume of calls, locations called, exact amount owed and other
features. We also offer major customers weekly and monthly billing, if they post
letters of credit.





Geographic
Markets:





Our target
markets are located domestically in all 50 states and internationally in
developing economies, including Asia and Latin America.





Competitive
Business Conditions:





The
Internet-based communications software products industry is highly competitive
and varied. Many of our existing and potential competitors have financial,
personnel, marketing, customer bases and other financial resources significantly
greater than ours. Among our various competitors are many of our potential
customers such as Bell South, Qwest, Cisco Systems and Lucent Technologies.
These competitors have the flexibility to introduce new service and pricing
options that may be more attractive to our existing and potential customers. As
a result, these competitors have greater growth and profit potential than we do.
We will attempt to overcome the competitive advantages of our competitors by
pursuing our new strategy of acquiring businesses that are complementary to our
own and which provide us with brand name recognition.





7




Major
Suppliers:





Our
principal suppliers are provided below:





·
            Microsoft


·
            SAP


·
            Hyperion
      Solutions


·
            iPass


·
            Broadsoft


·
            Cisco
      Systems


·
            Sun
      Microsystems


·
            SSA
      Global


·
            Oracle


·
            Juniper
      Networks


·
            Hewlett-Packard


·
            Dell
      Computers





Although
there can be no assurances, management believes that we have good relations with
each of our principal suppliers.





Patents,
Trademarks and Licenses:





We have
one provisional patent for our RFID shipping management product. Otherwise we do
not hold, and have not applied for, any patents. We have previously filed for
service mark protection with the U.S. Patent and Trademark Office for the
following marks but, we do not immediately intend to vigorously follow up on
those filings.





·
            IPVoice


·
            MultiCom


·
            AuditRite


·
            TrueConnect


·
            TruePartner


·
            4Com


·
            ICB
      Connect


·
            IP
      Jack-in-the-Box (stylized mark)


·
            COMMUNICATIONS
      OUT OF THE BOX


·
            IPVoice.net


·
            IPVoice.com


·
            FLAT5


·
            FLAT25


·
            4X4





The
applications were filed between August 1998 and early 2001. To date, the
following marks have been accepted for registration: MultiCom, TrueConnect,
4Com, IP Jack-in-the-Box, and FLAT25. Various office actions have been issued
and responses filed. There can be no guarantees as to when, if ever,
registration will be granted on any or all of our applications.





Regulatory
Matters:





Federal





We have no
current domestic license with the Federal Communications Commission ("FCC"). We
use the Internet for transmission of long- distance telephone calls. Presently,
the FCC does not regulate companies that provide IP Telephony services as common
carriers or telecommunications service providers. Notwithstanding the current
state of the rules, the FCC's potential jurisdiction over the Internet is broad
because the Internet relies on wire and radio communications facilities and
services over which these regulatory authorities have long-standing
authority.





We have
previously requested our Competitive Local Exchange Carrier (CLEC) and Inter
eXchange Carrier (IXC) status in the U.S., but do not presently intend to
vigorously continue pursuing the CLEC and IXC status. A CLEC designation permits
the resale of local telecommunications services and an IXC designation allows
for the resale of long-distance telecommunications services. We also have
received a 214 international license from the FCC for international
long-distance service.





State





Our
business strategy historically subjected us to varying levels of regulation in
the states in which we anticipated providing intrastate telecommunications
services. The vast majority of the states required us to apply for certification
to provide intrastate telecommunications services, or at least to register or to
be found exempt from regulation before commencing intrastate service. The
majority of states also require us to file and maintain detailed tariffs listing
our rates for intrastate service. Although we had previously started the process
of filing in each state, we do not intend to pursue this process vigorously at
this time.





8




Many
states also impose various reporting requirements or require prior approval for
transfers of control of certified carriers, corporate reorganizations,
acquisitions of telecommunications operations, assignments of carrier assets,
including subscriber bases, carrier stock offerings and incurrence by carriers
of significant debt obligations. Certificates of authority can generally be
conditioned, modified, canceled, terminated or revoked by state regulatory
authorities for failure to comply with state law and the rules, regulations and
policies of the state regulatory authorities. Fines and other penalties,
including the return of all monies received for intrastate traffic from
residents of a state, may be imposed for such violations. In certain states,
prior regulatory approval may be required for acquisitions of telecommunications
operations.





We
currently are not subject to any state regulation with respect to our
Internet-related services. However, there can be no assurances that we will not
be subject to such regulations in the future. Additionally, we are not aware of
any pending legislation or regulations that would have a material adverse effect
on our operations. As we expand our efforts we must remain attentive to relevant
federal and state regulations. FCC rules prohibit switching a customer from one
long-distance carrier to another without the customer's consent and specify how
that consent must be obtained. Many states have consumer protection laws that
further define the framework within which our marketing activities must be
conducted. We intend to comply fully with all laws and regulations; however, the
constraints of federal and state restrictions could impact the success of direct
marketing efforts and otherwise increase our costs of doing
business.





Future
Regulation:





Due to the
increasing popularity and use of the Internet, it is possible that additional
laws and regulations may be adopted with respect to the Internet, covering
issues such as:





·
            content


·
            privacy


·
            access
      to adult content by minors


·
            pricing


·
            bulk
      e-mail


·
            encryption
      standards


·
            consumer
      protection


·
            electronic
      commerce


·
            taxation


·
            copyright
      infringement


·
            other
      intellectual property issues





We cannot
predict the impact, if any, that future regulatory changes or developments may
have on our business, financial condition or results of operation. Changes in
the regulatory environment relating to the Internet access industry, including
regulatory changes that directly or indirectly affect telecommunication costs or
increase the likelihood or scope of competition from regional telephone
companies or others, could increase our operating costs, limit our ability to
offer services and reduce the demand for our services.





If, as the
law in this area develops, we become liable for information carried on, stored
on or disseminated through our gateways, it may be necessary for us to take
steps to reduce our exposure to this type of liability through alterations in
our equipment, expanded insurance coverage or other methods. This may require us
to spend significant amounts of money for new equipment or premiums and may also
require us to discontinue offering certain products or services.





In a
report to the United States Congress, the FCC stated its intention to consider
regulating voice and fax telephony services provided over the Internet as
"telecommunications" even though Internet access itself would not be regulated.
The FCC is also considering whether such Internet- based telephone service
should be subject to universal service support obligations or pay carrier access
charges on the same basis as traditional telecommunications
companies.





Local
telephone companies assess access charges to long-distance companies for the use
of the local telephone network to originate and terminate long-distance calls,
generally on a per-minute basis. Access charges have been a matter of continuing
dispute, with long-distance companies complaining that the rates are
substantially in excess of cost, but local telephone companies argue that access
rates are justified to subsidize lower local rates for end users and other
purposes. Local and long-distance companies both contend that Internet-based
telephony should be subject to these charges. Since we plan to continue to
install our gateways and to offer IP Telephony, we could be directly affected by
these developments. We cannot predict whether these debates will cause the FCC
to reconsider its current policy of not regulating Internet service
providers.





A
governmental body could impose sales and other taxes on the provision of our
services, which could increase the costs of doing business. A number of state
and local government officials have asserted the right or indicated a
willingness to impose taxes on Internet-related services and commerce, including
sales, use and access taxes. No such laws have become effective to date. We
cannot accurately predict whether the imposition of any such taxes would
materially increase our costs of doing business or limit the services that we
provide. It may be possible to pass on some of these costs to the consumer and
continue to remain competitive.





9




As our
services are available over the Internet in multiple states and foreign
countries, these jurisdictions may claim that we are required to qualify to do
business as a foreign corporation in each such state and foreign country. New
legislation or the application of laws and regulations from jurisdictions in
this area could have a detrimental effect upon our business.





Environmental





Our
business is not subject to any material costs or other effects as a result of
compliance with federal, state or local environmental laws.





Research
and Development:





The
Company spent $0 on research and development during the years ended December 31,
2008 and 2007, respectively.





Employees:





We
currently have over 600 employees. We currently have two officers and five board
members. Philip Verges is the Chief Executive Officer and
Chairman.  Philip J. Rauch serves as our Chief Financial Officer. The
current Board of Directors consists of Philip Verges, Philip J. Rauch, James
Mandel, Bruce Noller, and Hugh G. Robinson. None of the current employees is
represented by a labor union for purposes of collective bargaining. We consider
our relations with our existing employees to be good.





Available
Information:





Our
website address is www.NewMarketTechnology.com, We make available free of charge
through our Internet site our annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, and Forms 3, 4 and 5 filed on behalf of
directors and executive officers, and any amendments to these reports, filed or
furnished pursuant to the Securities Exchange Act of 1934 as soon as reasonably
practicable after they are electronically filed with or furnished to the
Securities and Exchange Commission.





Item 1A. Risk Factors





Risks
Related to Our Company





While we
have been cumulatively profitable for the year over the last three years,
profits have been small and we have incurred monthly and quarterly operating
losses from time to time in the last five years.





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.





It will be
difficult to predict our future results. You should consider the uncertainties
that we may encounter as a company in a new and rapidly evolving market. These
uncertainties include:





·
            market
      acceptance of our products or
services;


·
            consumer
      demand for, and acceptance of, our products, services and follow-on
      products;


·
            our
      ability to create user-friendly applications;
  and


·
            our
      unproven and evolving business
model.





We will
need to achieve greater revenues to maintain profitability. 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 may 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.





10




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 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 and information technology industries are 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:





·
            to
      develop or license new products, services and technology that address the
      varied needs of our customers and prospective
  customers


·
            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 continue to 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
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 Bell South, Cisco Systems,
Nortel Networks and Qwest, 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.





Our future
plans call for acquiring companies that augment and complement current products
and customers. Such plans involve various risks to future business operations
and financial condition. If we fail to perform adequate due diligence, we may
acquire a company or technology that:





·
            is
      not complementary to the business


·
            is
      difficult to assimilate into the
business


·
            subjects
      the Company to possible liability for technology or product
      defects


·
            involves
      substantial additional costs exceeding estimated
  costs





In
addition, we also face the following risks in connection with
acquisitions:




11




·
            we
      may spend significant funds conducting negotiations and due diligence
      regarding a potential acquisition that may not result in a successfully
      completed transaction


·
            we
      may be unable to negotiate acceptable terms of an
    acquisition


·
            if
      financing is required to complete the acquisition, we may be unable to
      obtain such financing on reasonable terms, if at
  all


·
            negotiating
      and completing an acquisition, as well as integrating the acquisition into
      our operations, will divert management time and resources away from our
      current operations and increase our
costs





Risks
Related to Our Industry





Deterioration
of the IP communications and IT services industries 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 communications and information technology products. Reduced capital spending
budgets by our customers caused by an ongoing industry downturn have led to
continued soft demand for our products and services, which has resulted in, and
may continue to 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 Doing Business in China and Other Foreign Countries




Changes in
Chinese laws and regulations, or their interpretation, or the imposition of
confiscatory taxation, restrictions on currency conversion, imports and sources
of supply, devaluations of currency or the nationalization or other
expropriation of private enterprises could have a material adverse effect on our
business, results of operations and financial condition. Under our current
leadership, the Chinese government has been pursuing economic reform policies
that encourage private economic activity and greater economic decentralization.
There is no assurance, however, that the Chinese government will continue to
pursue these policies, or that it will not significantly alter these policies
from time to time without notice.




Substantially
all of the sales of China Crescent are generated from China. We anticipate that
sales of our products in China will continue to represent a substantial majority
of China Crescent’s total sales in the near future. Any significant decline in
the condition of the Chinese economy could adversely affect demand for our
products, among other things, which in turn would have a material adverse effect
on our business and financial condition.





The
Chinese government has enacted some laws and regulations dealing with matters
such as corporate organization and governance, foreign investment, commerce,
taxation and trade. However, their experience in implementing, interpreting and
enforcing these laws and regulations is limited, and our ability to enforce
commercial claims or to resolve commercial disputes is unpredictable. If our new
business ventures are unsuccessful, or other adverse circumstances arise from
these transactions, we face the risk that the parties to these ventures may seek
ways to terminate the transactions, or, may hinder or prevent us from accessing
important information regarding the financial and business operations of these
acquired companies. The resolution of these matters may be subject to the
exercise of considerable discretion by agencies of the Chinese government, and
forces unrelated to the legal merits of a particular matter or dispute may
influence their determination. Any rights we may have to specific performance,
or to seek an injunction under Chinese law, in either of these cases, are
severely limited, and without a means of recourse by virtue of the Chinese legal
system, we may be unable to prevent these situations from occurring. The
occurrence of any such events could have a material adverse effect on our
business, financial condition and results of operations.





Substantially
all of our revenues in China are generated from China Crescent’s subsidiary,
CLPTEC.  However, Chinese regulations restrict the ability of CLPTEC
to make dividends and other payments to its parent company.  Chinese
legal restrictions permit payments of dividends by CLPTEC only out of its
accumulated after-tax profits, if any, determined in accordance with Chinese
accounting standards and regulations.   Any limitations on the ability
of CLPTEC to transfer funds to China Crescent could materially and adversely
limit our ability to grow, make investments or acquisitions that could be
beneficial to our business, pay dividends and otherwise fund and conduct our
business.





China only
recently has permitted provincial and local economic autonomy and private
economic activities, and, as a result, we are dependent on our relationship with
the local government in the province in which we operate our business. Chinese
government has exercised and continues to exercise substantial control over
virtually every sector of the Chinese economy through regulation and state
ownership. Our ability to operate in China may be harmed by changes in its laws
and regulations, including those relating to taxation, environmental
regulations, land use rights, property and other matters. We believe that our
operations in China are in material compliance with all applicable legal and
regulatory requirements. However, the central or local governments of these
jurisdictions may impose new, stricter regulations or interpretations of
existing regulations that would require additional expenditures and efforts on
our part to ensure our compliance with such regulations or interpretations.
Accordingly, government actions in the future, including any decision not to
continue to support recent economic reforms and to return to a more centrally
planned economy or regional or local variations in the implementation of
economic policies, could have a significant effect on economic conditions in
China or particular regions thereof, and could require us to divest ourselves of
any interest we then hold in Chinese properties.





12




China
historically has been deficient in Western style management and financial
reporting concepts and practices, as well as in modern banking, computer and
other control systems. We may have difficulty in hiring and retaining a
sufficient number of qualified employees to work in China. As a result of these
factors, we may experience difficulty in establishing management, legal and
financial controls, collecting financial data and preparing financial
statements, books of account and corporate records and instituting business
practices that meet Western standards. We may have difficulty establishing
adequate management, legal and financial controls in China.





Substantially
all of the sales of Unione are generated from Brazil. We anticipate that sales
of our products and services in Brazil will continue to represent a substantial
majority of Unione’s total sales in the near future. Any significant decline in
the condition of the Brazilian economy could adversely affect demand for our
products and services, among other things, which in turn would have a material
adverse effect on our business and financial condition.





We are
required to comply with the United States Foreign Corrupt Practices Act, which
prohibits U.S. companies from engaging in bribery or other prohibited payments
to foreign officials for the purpose of obtaining or retaining business. Foreign
companies, including some of our competitors, are not subject to these
prohibitions. Corruption, extortion, bribery, pay-offs, theft and other
fraudulent practices occur from time-to-time in China, Brazil and
Venezuela.  If our competitors engage in these practices, they may
receive preferential treatment from personnel of some companies, giving our
competitors an advantage in securing business or from government officials who
might give them priority in obtaining new licenses, which would put us at a
disadvantage. Although we inform our personnel that such practices are illegal,
we cannot assure you that our employees or other agents will not engage in such
conduct for which we might be held responsible. If our employees or other agents
are found to have engaged in such practices, we could suffer severe
penalties.





Risks
Related to Currency Exchange Between Foreign Currencies and United States
Dollars





Our
reporting currency is the U.S. dollar and our operations in foreign countries
use their local currency as their functional currencies. A substantial
percentage of our revenue and expenses are in foreign currencies.  We
are subject to the effects of exchange rate fluctuations with respect to any of
these currencies. For example, the value of the Chinese RMB depends to a large
extent on Chinese government policies and China’s domestic and international
economic and political developments, as well as supply and demand in the local
market.   Fluctuation in exchange rates between foreign
currencies and the U.S. dollar may result in significant appreciation or
depreciation of those currencies against the U.S. dollar.





Risks
Related to Our Capital Stock





The public
market for our common stock may be limited.





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.





The U.S.
Securities and Exchange Commission (the ‘SEC”) has adopted regulations which
generally define “penny stock” to be an equity security that has a market price
of less than $5.00 per share, subject to specific exemptions. The market price
of our common stock is less than $5.00 per share and therefore is a “penny
stock.” Brokers and dealers effecting transactions in “penny stock” must
disclose certain information concerning the transaction, obtain a written
agreement from the purchaser and determine that the purchaser is reasonably
suitable to purchase the securities. These rules may restrict the ability of
brokers or dealers to sell our common stock and may affect your ability to sell
shares.





We may be
the subject of securities class action litigation due to future stock price
volatility.





Shareholder
interest in our company may be substantially diluted as a result of the sale of
additional securities to fund our plan of operation.





Our
preferred stock has certain preferences over our common stock with regard to
liquidation, dividends and election of directors.





13




Our issued
and outstanding Preferred Stock holds a preference in liquidation over our
common stock. All of our 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.





Item 1B. Unresolved Staff Comments





Not
applicable.





Item 2. Description of Properties





As of
December 31, 2008, our headquarters operated out of approximately 3,400
square feet of leased facilities located at 14860 Montfort Drive, Suite 210,
Dallas, Texas 75254. Our telephone number is (972) 386-3372. Our lease expires
on December 31, 2009. Our monthly rental payments are $3,100. We have a number
of additional leases for office space associated with our subsidiary operating
companies.





We do not
own any property or intend to have any property in the foreseeable future. We do
not intend to renovate, improve or develop properties. We are not subject to any
competitive conditions for property and currently have no property to insure. We
have no policy with respect to investments in real estate or interests in real
estate and no policy with respect to investments in real estate mortgages.
Further, we have no policy with respect to investments in securities of or
interests in persons primarily engaged in real estate activities.





Item 3. 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.




Davis vs.
NewMarket Technology, Inc. is an action brought by the Chapter 7 bankruptcy
trustee of Barbara Will, an ex-president of the Company, alleging breach of an
employment agreement. The action was brought in Phoenix, Arizona and seeks
$1,195,850 plus interest. The Company has filed a motion to stay the proceedings
or dismiss pursuant to an arbitration clause and for lack of personal
jurisdiction. The trustee (Davis) abandoned the suit on June 15, 2006, then
NewMarket filed a motion to dismiss which was objected by Barbara Will. Since
then NewMarket received on October 19, 2006, a Notice of Intent to Arbitrate by
Barbara Will to enforce her employment agreement of approximately $1.5 million.
We are in the process of negotiating a settlement agreement on this
matter.






In October
2006, a demand for arbitration was filed styled Broadsoft v. Xiptel. Broadsoft
has brought a contract/collections action against Xiptel claiming Xiptel owes a
total of $587,300 in principal obligations and interest. NewMarket Technology,
Inc. is a guarantor of Xiptel's contract with Broadsoft. Xiptel and NewMarket
Technology, Inc. have viable defenses and counterclaims against Broadsoft and
the companies will vigorously defend their case. Actual exposure, while
potentially somewhat greater than the full amount currently claimed (including
attorneys fees and further interest), is believed by management to be far less
than the claimed amount. The Company believes the claim is without merit and
intends to vigorously defend the action.




In June
2007, Michael McKim filed a lawsuit against NewMarket Technology, Inc. in the
United States District Court for the Western District of Kentucky at Louisville
seeking a declaration of rights regarding a purported settlement agreement of an
earlier lawsuit filed by McKim against IPVoice Communications, Inc.  McKim
claims that he is owed 400,000 shares of free-trading NewMarket stock, and
further seeks damages regarding the dimunition in value of the stock (McKim
estimates the dimunition in value to be between $126,000 and $177,000) that he
alleges should have been awarded to him sometime between November 2004 and
January 2005.  McKim also seeks to recover his attorney fees, and has
claimed punitive damages totaling $250,000.  In March 2008, the Company was
successful in filing a motion for summary judgment on all claims in this
action.





We have
incurred expenses related to the settlement of lawsuits of $286,581 and $248,433
for the years ended December 31, 2008 and 2007, respectively.





We are not
aware of any contemplated legal proceeding by a governmental authority in which
we may be involved.





Item 4. Submission of Matters to a Vote of Security
Holders





14




We did not
submit any matter to a vote of security holders during 2008.











PART II





Item 5. Market for Common Equity and Related Stockholder
Matters





Our common
stock had been quoted since July 1998 on the Over-the-Counter Bulletin Board
("OTCBB") under the symbol "NMKT". From October 6, 2008, our common stock became
ineligible for further quotation on the OTCBB and our shares have since been
quoted on the Pink Sheets Electronic Quotation Service (“Pink
Sheets”).  The high and low bid information for each quarter for the
two most recent fiscal years is presented below. The quotations are interdealer
prices without adjustment for retail markups, markdowns or commissions and do
not necessarily represent actual transactions. These prices may not necessarily
be indicative of any reliable market value. On December 31, 2008, the last
reported sale price of the common stock on the Pink Sheets was $0.037 per
share.








Quarter
                    
                    High
                    
                    
                    Low2007First
      Quarter
                    
                    $
                    0.44
                    
                    
                    $
                    0.28Second
      Quarter
                    
                    $
                    0.45
                    
                    
                    $
                    0.29Third
      Quarter
                    
                    $
                    0.35
                    
                    
                    $
                    0.22Fourth
      Quarter
                    
                    $
                    0.29
                    
                    
                    $
                    0.182008First
      Quarter
                    
                    $
                    0.22
                    
                    
                    $
                    0.12Second
      Quarter
                    
                    $
                    0.19
                    
                    
                    $
                    0.085Third
      Quarter
                    
                    $
                    0.147
                    
                    
                    $
                    0.081Fourth
      Quarter
                    
                    $
                    0.09
                    
                    
                    $
                    0.029






Holders:





As of
December 31, 2008, we had 239,968,620 shares of our common stock outstanding
held of record by approximately 172 shareholders of record. We currently have
only one class of common stock outstanding.   Based upon
information provided to us by persons holding securities for the benefit of
others, it is estimated that we have in excess of 14,000 beneficial owners of
our common stock as of that date.





Dividends:





We have
not declared any cash dividends on our common stock since our inception and do
not anticipate paying such dividends in the foreseeable future. We plan to
retain any future earnings for use in our business operations. Any decisions as
to future payment of cash dividends will depend on our earnings and financial
position and such other factors as the Board of Directors deems relevant. We are
also subject to certain restrictions related to the declaration of dividends on
our common stock by the terms of our outstanding preferred stock.








Item 6.  Selected Financial Data





The
following selected financial data is derived from our consolidated financial
statements.. The data should be read in conjunction with the consolidated
financial statements, related notes, and other financial information included
herein.  The information presented below is in thousands, except per
share amounts.





Year
      ended December 31,2008
                    
                    
                    2007
                    
                    
                    2006
                    
                    
                    2005
                    
                    
                    2004SELECTED
      STATEMENT OF OPERATIONS DATANet
      sales
                    
                    $
                    95,105
                    
                    
                    
                    93,108
                    
                    
                    
                    77,636
                    
                    
                    
                    50,138
                    
                    
                    
                    24,977Net
      income (loss)
                    
                    $
                    (30,340
                    )
                    
                    
                    7,349
                    
                    
                    
                    5,887
                    
                    
                    
                    2,909
                    
                    
                    
                    243Net
      income (loss) per weighted avg. common share-basic
                    
                    $
                    (
      0.14
                    )
                    
                    
                    0.04
                    
                    
                    
                    0.04
                    
                    
                    
                    0.03
                    
                    
                    
                    0.01SELECTED
      BALANCE SHEET DATAWorking
      capital
                    
                    $
                    12,182
                    
                    
                    
                    19,198
                    
                    
                    
                    10,018
                    
                    
                    
                    6,142
                    
                    
                    
                    2,199Total
      assets
                    
                    $
                    51,455
                    
                    
                    
                    75,080
                    
                    
                    
                    64,576
                    
                    
                    
                    51,512
                    
                    
                    
                    25,149Long
      term liabilities
                    
                    $
                    1,209
                    
                    
                    
                    2,109
                    
                    
                    
                    9,916
                    
                    
                    
                    4,244
                    
                    
                    
                    2,947Stockholders'
      equity
                    
                    $
                    31,131
                    
                    
                    
                    58,292
                    
                    
                    
                    45,168
                    
                    
                    
                    32,766
                    
                    
                    
                    17,143




15





Item 7. Management’s Discussion and Analysis of Financial Condition
And Results of Operations





Forward-Looking
Statements:





Some
statements contained in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” constitute “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include the words “may,” “estimate,” “intend,”
“continue,” “believe,” “expect,” or “anticipate” and other similar words. These
forward-looking statements generally relate to plans and objectives for future
operations and are based upon management’s reasonable estimates of future
results or trends. Although we believe that the plans and objectives reflected
in or suggested by such forward-looking statements are reasonable, such plans or
objectives may not be achieved. Actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
risks and uncertainties, including: (a) lack of demand for our products and
services; (b) competitive products and pricing; (c) limited amount of resources
devoted to advertising; (d) lack of demand for our products and services being
purchased via the Internet; and (e) other factors that may negatively affect our
operating results. Statements made herein are as of the date of the filing of
this Form 10-K with the Securities and Exchange Commission and should not be
relied upon as of any subsequent date. We expressly disclaim any obligation to
update any information or forward-looking statements contained in this Form
10-K, except as may otherwise be required by applicable law.





Overview





We believe
our strategy, introduced in June of 2002, to package proprietary technology
products and services with recognized brand names and to pursue sales in the
high demand IP communications, wireless broadband and systems integration
markets will be successful.   In 2005, we initiated an expansion
of our business model through the launch of sister operations in Latin America
and Asia. In the future we may expand into other regions.





Revenue in
fiscal year 2008 was $95,104,801 which resulted in net loss of
$30,340,220.  The comprehensive net loss for 2008 was $29,399,707,
which represents an adjustment to compensate for the risk associated with
foreign profits and the potential conversion of foreign currency, unrealized
gains or losses in available-for-sale securities, and changes to the derivative
liability associated with outstanding warrants.





While we
have and continue to grow sales through mergers and acquisitions, management
plans for our long-term growth to be achieved through a combination of
acquisitions and organic sales growth.





We expect
that additional capital will be required to support our growth
plan.  However, no specific capital plan exists.  Current
consideration entails raising capital directly to our operating subsidiaries and
reducing or eliminating the use of our common stock for future capital
plans.





Results
of Operations -Year Ended December 31, 2008 Compared to the Year Ended December
31, 2007





Net sales
increased 2% from $93,108,116 for the year ended December 31, 2007 to
$95,104,801 for the year ended December 31, 2008. This increase was due
primarily to a small increase in sales in our operating subsidiary in
China.





Cost of
sales increased 11% from $67,322,978 for the year ended December 31, 2007 to
$74,784,778 for the year ended December 31, 2008. This increase was primarily
due to an increase in product costs in the fourth quarter of the year. Our cost
of sales, as a percentage of sales was approximately 79% and 72% for the years
ended December 31, 2008 and 2007, respectively. Our 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.





General
and administrative expenses for the year ended December 31, 2008 were
$18,958,850 compared to $19,836,138 for the year ended December 31, 2007, a
decrease of 4%  The decrease in general and administrative expenses
was primarily due to a reduction in headcount in our operating
subsidiaries.  We plan to reduce the general and administrative
expenses as a percentage of overall sales through the consolidation of redundant
processes in resources inherited in the recent acquisitions.





Other
expenses for the year ended December 31, 2008 was $29,568,545 compared to other
income of $2,879,970 for the year ended December 31, 2007, a decrease of
$32,448,515. This decrease is primarily attributable to an increase in interest
expense of $516,231, a goodwill impairment expense of $7,240,220, an impairment
of other assets related to software of $2,852,608, a bad debt expense of
$6,339,105 and a write-down of notes receivable and investments of
$12,284,638.  We periodically review the assets of the Company in
accordance with generally-accepted accounting principles which may require us to
adjust the carrying value of assets on our books.





16




Depreciation
and amortization expense decreased 41% from $775,698 for the year ended December
31, 2007 to $458,802 for the year ended December 31, 2008. The decrease is due
primarily to the sale and disposal of fixed assets in the Company’s Chinese
operating subsidiary. Depreciation on fixed assets is calculated on the
straight-line method over the estimated useful lives of the assets which are
typically between three and seven years.





The
company recorded a net loss of $30,340,220 for the year ended December 31, 2008
compared to net income of $7,348,829 for the year ended December 31, 2007. The
loss was primarily attributable to the aforementioned impairment and write-downs
of various assets.  The comprehensive net income (loss), which is
adjusted to compensate for the risk associated with foreign profits and the
potential conversion of foreign currency, as well as the change in value of
available-for-sale securities held by us and the change in the derivative
liability attributable to outstanding warrants decreased from comprehensive
income of $7,885,223 for the year ended December 31, 2007 to a comprehensive
loss of $29,399,707 for the year ended December 31, 2008.





Results
of Operations -Year Ended December 31, 2007 Compared to the Year Ended December
31, 2006





Net sales
increased 20% from $77,635,622 for the year ended December 31, 2006 to
$93,108,116 for the year ended December 31, 2007. This increase was due
primarily to an increase in organic sales in the Company’s operating
subsidiaries, particularly in China and Latin America.





Cost of
sales increased 21% from $55,752,439 for the year ended December 31, 2006 to
$67,322,978 for the year ended December 31, 2007. This increase was primarily
due to the corresponding increase in overall sales. Our cost of sales, as a
percentage of sales was approximately 72% for the years ended December 31, 2007
and 2006. 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.





General
and administrative expenses for the year ended December 31, 2006 were
$16,635,341compared
to $19,836,138 for the year ended December 31, 2007, an increase of
19%.  The increase in general and administrative expenses was
primarily due to the overall increase in sales and operational expenses. We plan
to reduce the general and administrative expenses as a percentage of overall
sales through the consolidation of redundant processes in resources inherited in
the recent acquisitions.





Other
income (expenses) for the year ended December 31, 2007 was $2,879,970 compared
to $1,781,720 for the year ended December 31, 2006, an increase of
62%.  This increase is primarily attributable to the gain on
forgiveness of debt of approximately $4.3 million by VTI, offset by a goodwill
impairment charge of approximately $1.5 million.





Depreciation
and amortization expense decreased from $786,173 for the year ended December 31,
2006 to $775,698 for the year ended December 31, 2007. The decrease is due
primarily to the sale of certain fixed assets in the Company’s NewMarket China
subsidiary. Depreciation on fixed assets is calculated on the straight-line
method over the estimated useful lives of the assets which are typically between
three and seven years.





Net income
increased twenty-five percent (25%) from $5,887,493 for the year ended December
31, 2006 to $7,348,832 for the year ended December 31, 2007. 2007 net income
represented 7.9% of net sales compared to  2006 net income which
represented 7.6% of net sales. The comprehensive net income, which is adjusted
to compensate for the risk associated with foreign profits and the potential
conversion of foreign currency, as well as the change in value of marketable
securities held by the Company, increased nineteen percent (19%) from $6,615,601
for the year ended December 31, 2006 to $7,885,223 for the year ended December
31, 2007. Comprehensive net income represented 8.5% of net for the years ended
December 31, 2007 and 2006. The increase in profit and increase in the
percentage of net sales were due primarily to an increase in income from
operations as well as a gain on forgiveness of debt.





Liquidity
and Capital Resources





Cash
Flow Activities





Our cash
balance decreased $241,376, from $5,202,244 as of December 31, 2007, to
$4,960,868 as of December 31, 2008.  The decrease was the result of
cash provided by operating activities of $7,769,073 offset by cash used in
financing activities of $2,400,862, cash used in investing activities of
$3,943,201 and the effect of exchange rates on cash of
$1,666,386.  Operating activities for the year ended December 31, 2008
exclusive of changes in operating assets and liabilities provided $1,278,176, as
well as a decrease in accounts receivable, inventory and prepaid expenses of
$3,188,996, and an increase in deposits and accounts payable of $4,251,531,
offset by an increase in interest receivable of $500,000 and a decrease in
accrued expenses and other payables of $449,630.





Liquidity





As of
December 31, 2008, we own 1.4 million shares of common stock of
VirtualHealth.  We have classified these shares as available for sale
securities in which unrealized gains (losses) are recorded to shareholders’
equity.  At December 31, 2008, all 1.4 million shares of VirtualHealth
common stock are tradable, and based upon the closing price of $0.21 per share,
the market value of the VirtualHealth common shares at December 31, 2008 was
$294,000.





17




Since
inception, we have financed operations primarily through equity security sales.
We may need to raise cash through additional equity sales at some point in the
future in order to sustain operations. 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
nature of our business plan and potential future market or economic conditions,
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.





Critical
Accounting Policies and Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires our management to make
assumptions, estimates and judgments that affect the amounts reported in the
financial statements, including the notes thereto, and related disclosures of
commitments and contingencies, if any. We consider our critical accounting
policies to be those that require the more significant judgments and estimates
in the preparation of financial statements, including the
following:





Principles
of Consolidation





The
consolidated financial statements include the accounts of the Company and our
wholly-owned  and majority-owned subsidiaries. All material
intercompany accounts, transactions and profits have been eliminated in
consolidation.





Use
of Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.   Actual results could differ from those
estimates.





Property
and Equipment





Property
and equipment are recorded at cost, less accumulated
depreciation.  Depreciation is provided for using straight-line
methods over the estimated useful lives of the respective assets, usually three
to seven years.





Stock-Based
Compensation




In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment”, which
addresses the accounting for share-based payment transactions.  SFAS
No. 123(R) eliminates the ability to account for share-based compensation
transactions using APB 25, and generally requires instead that such transactions
be accounted and recognized in the statement of operations based on their fair
value.  SFAS No. 123(R) will be effective for the Company beginning
with the first fiscal quarter of the fiscal year ended June 30,
2007.    Depending upon the number of and terms of options
that may be granted in future periods, the implementation of this standard could
have a significant impact on our financial position and results of operations in
future periods.





Valuation
of Long-Lived Assets





In
accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", we periodically evaluate long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying value of
an asset may not be recoverable.  If the estimated future cash flows
(undiscounted and without interest charges) from the use of an asset were less
than the carrying value, a write-down would be recorded to reduce the related
asset to its estimated fair value.  For the year ended December 31,
2008, we recorded impairment charges of $2,585,608 related to the impairment of
certain software assets held by our Singapore-based subsidiary.





Goodwill





We
evaluate for potential impairment, the amount of goodwill recorded, by means of
a cash flow analysis in accordance with SFAS 142, “Goodwill and Other Intangible
Assets”.  For the years ended December 31, 2008 and 1007, we recorded
impairment charges of $7,240,220 and $1,457,690, respectively.





Statement
of Cash Flows





In
accordance with SFAS No. 95, "Statement of Cash Flows", cash flows from our
operations are based upon the local currencies. As a result, amounts related to
assets and liabilities reported on the statement of cash flows will not
necessarily agree with changes in the corresponding balances on the balance
sheet.





18




Translation
Adjustment




We conduct
a substantial amount of business outside the United States where the primary
currency of the economic environment in which our operations are conducted is
the local currency.  We use the United States dollar ("U.S. dollars")
for financial reporting purposes.





In
accordance with SFAS No. 52, “Foreign Currency Translation,” our results of
operations and cash flows are translated at the average exchange rates during
the period, assets and liabilities are translated at the exchange rates as of
the balance sheet dates, and equity is translated at the historical exchange
rates. As a result, amounts related to assets and liabilities reported on the
consolidated statements of cash flows will not necessarily agree with changes in
the corresponding balances on the consolidated balance sheets.





Comprehensive
Income





Comprehensive
income includes accumulated foreign currency translation gains and losses, any
unrealized accumulated gains or losses attributable to available-for-sale
securities, and changes in the derivative liability associated with outstanding
warrants.  We have reported the components of comprehensive income on
our statements of stockholders’ equity.





Effects
of Inflation





Inflation
and changing prices have not had a material effect on our business and we do not
expect that inflation or changing prices will materially affect our business in
the foreseeable future.  However, our management will closely monitor
the price change and continually maintain effective cost control in
operations





Off-Balance
Sheet Arrangements





We do not
have any off-balance sheet arrangements as defined in Regulation S-K Item
303(a)(4).





Recent
Accounting Pronouncements





(See
“Recently Issued Accounting Pronouncements” in Note 2 of Notes to the
Consolidated Financial Statements.)








Item 7A. Quantitative and Qualitative Disclosures about Market
Risk





While our
reporting currency is the U.S. dollar, the majority of our consolidated revenues
and consolidated costs and expenses are denominated in foreign currencies. A
portion of our assets are denominated in foreign currency. As a result, we are
exposed to foreign exchange risk as our revenues and results of operations may
be affected by fluctuations in the exchange rate between U.S. dollars and
foreign currencies. If a foreign currency depreciates against the U.S. dollar,
the value of a portion of our revenues, earnings and assets as expressed in our
U.S. dollar financial statements will decline. We have not entered into any
hedging transactions in an effort to reduce our exposure to foreign exchange
risk.





Item 8. Financial Statements and Supplementary Data





The
information required by this item appears beginning on page F-1 of this
report.





Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure





None.





Item 9A. Controls and Procedures





Disclosure
Controls and Procedures




We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the reports that we file or submit under
the Exchange Act is recorded, processed, summarized, and reported within the
time periods specified in the SEC’s rules and forms, and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.




We carried
out an evaluation, under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) as of the end of our most recent fiscal year. Based upon this
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were effective as of
December 31, 2008.




Management’s
Annual Report on Internal Control Over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) under the
Securities Exchange Act, as amended.  Our management assessed the
effectiveness of our internal control over financial reporting as of December
31, 2008. In making this assessment, our management used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)
in Internal Control-Integrated Framework.  A material weakness is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of the company's annual or interim financial statements will not be
prevented or detected on a timely basis.  We have identified the
following material weaknesses:




19




1.
            As
      of December 31, 2008, we did not maintain effective controls over the
      control environment.  Specifically we have not developed and
      effectively communicated to our employees our accounting policies and
      procedures.  This has resulted in inconsistent
      practices.  Further, the Board of Directors does not currently
      have a majority of independent members.  Since these entity
      level programs have a pervasive effect across the organization, management
      has determined that these circumstances constitute a material
      weakness.  To remedy this weakness, we are developing an
      accounting policy manual and have begun looking for an additional
      independent director.





2.
            As
      of December 31, 2008, we did not maintain effective controls over
      financial statement disclosure. Specifically, controls were not designed
      and in place to ensure that all disclosures required were originally
      addressed in our financial statements in a timely manner.  
      Accordingly, management has determined that this control deficiency
      constitutes a material weakness. To remedy this weakness, we have
      implemented changes to our financial statement review
    process.





Because of
these material weaknesses, management has concluded that the Company did not
maintain effective internal control over financial reporting as of December 31,
2008, based on the criteria established in "Internal Control-Integrated
Framework" issued by the COSO.





This
Annual Report on Form 10-K does not include an attestation report of our
independent registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by our
independent registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit us to provide
only management’s report in this Annual Report on Form 10-K.





Changes
in Internal Control Over Financial Reporting




No change
in our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred
during the fourth quarter of 2008 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.





Item 9B. Other Information





None.





PART III





Item 10. Directors and Officers of the Registrant





The
following table sets forth information with respect to the sole executive
officer and directors of NewMarket Technology, Inc. as of May 15,
2009.










Name
                
                Age
                
                PositionPhilip
      M. Verges
                
                43
                
                Chairman,
      Chief Executive Officer, DirectorPhilip
      J. Rauch
                
                48
                
                Chief
      Financial Officer, DirectorJames
      Mandel
                
                55
                
                DirectorBruce
      Noller
                
                52
                
                DirectorHugh
      G. Robinson
                
                76
                
                Director







PHILIP
VERGES, Chief Executive Officer and Chairman of NewMarket Technology, Inc.,
previously managed VTI since its inception. Mr. Verges is an experienced
executive manager, with a track record in both telecommunications and high
technology. Mr. Verges is a 1988 graduate of the United States Military Academy.
His studies at West Point centered on national security. Accelerated for early
promotion, Mr. Verges served with distinction as a U.S. Army Captain in a wide
variety of important engagements to include research and development of
counterterrorism communication technologies and practices.  Mr.
Verges' early career after the Army includes time in the Computer Sciences
Research and Development Department of General Motors as well as experience
teaching systems engineering methodology and programming to Electronic Data
Systems ("EDS") employees from 1991 to 1995. Mr. Verges' first business start-up
experience was at EDS in a new division concentrating on call center technology
in financial institutions. Later in 1995, he added to his start-up experience at
a $30 million technology services business with the responsibility to open a new
geographic region with a Greenfield operation. Mr. Verges founded VTI in
1997.





20




PHILIP J.
RAUCH, Chief Financial Officer, has been an officer and Director of NewMarket
since March, 2006.  Mr. Rauch holds a Bachelor of Science in Economics
degree with honors from the University of Pennsylvania Wharton School of
Business, with a concentration in finance and accounting.  From
February 2004 through February 2006, Mr. Rauch had been the Chief Operating and
Financial Officer of Defense Technology Systems, Inc.  Beginning in
1997, Mr. Rauch served in a senior capacity at AboveNet, Inc. (formerly
Metromedia Fiber Network, Inc.) as Vice President, Business Operations, and
later as Controller.  He is currently a member of the American
Management Association.





BRUCE
NOLLER, Director, has been the President of Managed Services for NewMarket since
2008. Mr. Noller brings to the Board over 25 years of financial, operational and
marketing experience. Mr. Noller was formerly the President of Noller and
Associates, Inc., a financial and business consulting
firm.  Previously, he served as Vice President for Integrated Control
Systems, a worldwide management consulting firm. During that time, Mr. Noller
proposed and oversaw engagements with a
variety  of  industries   including   healthcare,
distribution,    manufacturing,   retail,   banking,   insurance,   mining   and
telecommunications.  Mr. Noller has international management
consulting experience in Singapore,  Malaysia,  China,
Canada, Latin America and Europe.





JAMES
MANDEL, Director, has been the Chief Executive Officer and a Director
of  Multiband Corporation since October 1, 1998. From
October 1991 to October 1996, he was Vice President of Systems for
Grand Casinos, Inc., where his duties included managing the design, development,
installation and on-going maintenance for the 2,000 room, $507 million
Stratosphere Hotel, Casino and Tower in Las Vegas. Mr. Mandel also managed
the systems development of Grand Casino Mille Lacs, in Onamia, Minnesota, Grand
Casino Hinckley in Hinckley, Minnesota and six other casinos nationwide. He also
serves as Chairman of the Board of CorVu Corporation and is a trustee of the
Boys and Girls Club of Minneapolis.




HUGH G.
ROBINSON, Director, is the former Chairman and Board Member of the Federal
Reserve Bank of Dallas and served as an officer in the United States Army
retiring with the rank of Major General. Mr. Robinson is currently a member of
the Board of Directors of CarMax, Inc., Aleris International, Inc.and a member
of the Advisory Board of TXU Corp. Mr. Robinson is a graduate of the U.S.
Military Academy at West Point, New York and earned a Master's Degree in Civil
Engineering at Massachusetts Institute of Technology (MIT). He received an
honorary Doctor of Laws degree from Williams College and attended the Harvard
Management Program for Executives. Mr. Robinson’s military career included a
number of prestigious posts that included aide de camp to President Lyndon B.
Johnson.  After retiring from the military, Robinson joined The
Southland Corporation as vice president and president of Cityplace Development
Corporation, a subsidiary of Southland. From 1989 through 2002, Mr. Robinson
served as Chairman and Chief Executive Officer of The Tetra Group, Inc., a
Dallas construction management company with divisions in Minority Business
Development and affordable housing. Mr. Robinson serves on the Board of
Directors of the North Texas Public Broadcasting Co., Inc., the LBJ Foundation,
Inc., and the Better Business Bureau.  He is a member of the Dallas
Citizens Council, the National Society of Professional Engineers, the Greater
Dallas Chamber and the Dallas Black Chamber.





Section
16(a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Securities Exchange Act of 1934 requires that our executive
officers, directors and 10% stockholders file reports of securities ownership
and changes in ownership with the Securities and Exchange Commission. Officers,
directors and 10% owners also are required to furnish us with copies of all
Section 16(a) forms they file.





Based
solely on our review of the copies of the Section 16(a) forms received by
us, or written representations from certain reporting persons, we believe that,
during the last fiscal year, all Section 16(a) filing requirements
applicable our officers, directors and greater than 10%, beneficial owners were
complied with.





Audit
Committee and Charter




We have an
audit committee and audit committee charter. Our audit committee is comprised of
two directors. A copy of our audit committee charter is filed as an exhibit to
this Form 10-K. Our audit committee is responsible for: (1) selection and
oversight of our independent accountant; (2) establishing procedures for the
receipt, retention and treatment of complaints regarding accounting, internal
controls and auditing matters; (3) establishing procedures for the confidential,
anonymous submission by our employees of concerns regarding accounting and
auditing matters; (4) engaging outside advisors; and, (5) funding for the
outside auditory and any outside advisors engagement by the audit
committee.




Code
of Ethics





We have
adopted a corporate code of ethics that applies to our chief executive officer
and our chief financial officer. A copy of the code of ethics is filed as an
exhibit to this Form 10-K. We believe our code of ethics is reasonably designed
to deter wrongdoing and promote honest and ethical conduct; provide full, fair,
accurate, timely and understandable disclosure in public reports; comply with
applicable laws; ensure prompt internal reporting of code violations; and
provide accountability for adherence to the code.





Item 11. Executive Compensation





This table
summarizes the before-tax compensation for the Chief Executive Officer and Chief
Financial Officer who were our only executive officers during fiscal
2008.





21




Summary
Compensation Table:








Long-Term
                      
                      
                      All
      OtherCompensation
                      
                      
                      CompensationAnnualCompensation
                      
                      
                      AwardsSecuritiesName and
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      UnderlyingPrincipal
      Position
                      
                      Year
                      
                      Salary
                      
                      
                      Bonus
                      
                      
                      OptionsPhilip
      M. Verges
                      
                      2008
                      
                      $
                      250,000
                      
                      
                      
                      --
                      
                      
                      
                      --
                      
                      
                      
                      --Chairman,
      Chief Executive Officer,
                      
                      2007
                      
                      
                      225,000
                      
                      
                      
                      --
                      
                      
                      
                      --
                      
                      
                      
                      --Director
                      
                      2006
                      
                      
                      200,000
                      
                      
                      
                      --
                      
                      
                      
                      --
                      
                      
                      
                      --(since
      June 2002)Philip
      J. Rauch (1)
                      
                      2008
                      
                      $
                      200,000
                      
                      
                      
                      --
                      
                      
                      
                      --
                      
                      
                      
                      --Chief
      Financial Officer, Director
                      
                      2007
                      
                      
                      200,000
                      
                      
                      
                      --
                      
                      
                      
                      --
                      
                      
                      
                      --(since
      March 2006)
                      
                      2006
                      
                      
                      188,000
                      
                      
                      
                      --
                      
                      
                      
                      --
                      
                      
                      
                      --






The
foregoing compensation table does not include certain fringe benefits made
available on a nondiscriminatory basis to all our employees such as group health
insurance, dental insurance, long-term disability insurance, vacation and sick
leave.  In addition, we make available certain non-monetary benefits
to our executive officers with a view to acquiring and retaining qualified
personnel and facilitating job performance.  We consider such benefits
to be ordinary and incidental business costs and expenses.  The
aggregate value of such benefits in the case of each executive officer listed in
the above table, which cannot be precisely ascertained but which is less than
10% of the cash compensation paid to each such executive officer, is not
included in such table.





Option
Grants in 2008





We
maintain no stock option plan or long-term incentive plans at this
time.





Option
Exercises in 2008 and 2008 Year-End Option Values





We
maintain no stock option plan at this time. As such, none of the executive
officers listed in the Summary Compensation Table exercised stock options or
held unexercised stock options during 2008.





Employment
Agreements





We do not
have any employment agreements in place with our officers at this
time.





Director
Compensation





Directors
who are also our employees receive no additional remuneration for their services
as directors. Beginning March 2006, non-employee directors receive a quarterly
retainer of $3,000 and are reimbursed for necessary travel expenses incurred in
connection with board meetings. In 2005, we formed an audit committee consisting
of independent members, using the definition of independence set forth by the
National Association of Securities Dealers' listing standards





This table
summarizes the before-tax compensation for the non-employee Board of Directors
during fiscal 2008:





Name
                Fees Earned or Paid in Cash
    ($)
                Stock Awards ($)
                Option Awards ($)
                All Other Compensation
  ($)Hugh
      G. Robinson
                12,000
                --
                --
                --James
      Mandel
                12,000
                --
                --
                --







Item 12. Security Ownership of Certain Beneficial Owners and
Management





22




The
following table sets forth as of December 31, 2008, certain information
regarding beneficial ownership of the Common Stock held by each person known by
us to own beneficially more than 5% of the Common Stock, each of our directors,
each of the executive officers named in the Summary Compensation Table, and all
of our executive officers and directors as a group.





Beneficial
ownership is a technical term broadly defined by the SEC to mean more than
ownership in the usual sense. In general, beneficial ownership includes any
shares a director, executive officer or other 5% holder can vote or transfer,
shares subject to stock options and warrants that are exercisable currently or
become exercisable within 60 days and shares subject to convertible securities
that are convertible currently or within 60 days. These shares are considered to
be outstanding for the purpose of calculating the percentage of ownership of the
stockholder holding these options, warrants or convertible securities, but are
not considered to be outstanding for the purpose of calculating the percentage
ownership of any other person. Percentage ownership is based on 239,968,620
shares of common stock and the cumulative shares of convertible preferred stock
(each share of preferred stock is, at the holder's option, convertible into
shares of common stock, subject to certain anti-dilution protection) outstanding
as of December 31, 2008 and resulting in a fully diluted 300,000,000 shares of
common stock at December 31, 2008. Except as otherwise noted, the stockholders
named in this table have sole voting and dispositive power for all shares shown
as beneficially owned by them.








Shares
      of Common
                                      
                                      
                                      
                                      
                                      
                                      Shares
      ofStock
                                      
                                      
                                      
                                      
                                      
                                      Convertible
                                      
                                      
                                      PercentageBeneficially
                                      
                                      
                                      Percentage
                                      
                                      
                                      Preferred
      Stock
                                      
                                      
                                      of
      ConvertibleOwned
                                      
                                      
                                      of
      Common Stock
                                      
                                      
                                      Beneficially
      Owned
                                      
                                      
                                      Preferred
      StockNamed
      Executive Officers and DirectorsPhilip
      M. Verges (1) (5)
                                      
                                      
                                      23,000,000
                                      
                                      
                                      
                                      7.7
                                      %
                                      
                                      
                                      --
                                      
                                      
                                      
                                      --Philip
      J. Rauch (2)
                                      
                                      
                                      1,000,000
                                      
                                      
                                      
                                      0.0
                                      %
                                      
                                      
                                      --
                                      
                                      
                                      
                                      --Bruce
      Noller (3)
                                      
                                      
                                      500,000
                                      
                                      
                                      
                                      0.0
                                      %
                                      
                                      
                                      --
                                      
                                      
                                      
                                      --All
      current Officers and Directors
                                      
                                      
                                      24,500,000
                                      
                                      
                                      
                                      7.7
                                      %
                                      
                                      
                                      --
                                      
                                      
                                      
                                      --VergeTech,
      Inc. (4)
      (5)
                                      
                                      
                                      23,000,000
                                      
                                      
                                      
                                      7.7
                                      %
                                      
                                      
                                      --
                                      
                                      
                                      
                                      --




(1) Mr.
Verges's address is c/o NewMarket Technology, Inc., 14860 Montfort Drive, Suite
210, Dallas, Texas 75254.


(2) Mr.
Rauch’s address is c/o NewMarket Technology, Inc., 14860 Montfort Drive, Suite
210, Dallas, Texas 75254.


(3) Mr.
Noller’s address is c/o NewMarket Technology, Inc., 14860 Montfort Drive, Suite
210, Dallas, Texas 75254.


(4)
VergeTech, Inc.'s address is 14860 Montfort Drive, Suite 210, Dallas, Texas
75254.


(5) Mr.
Verges as the sole director and officer and a substantial stockholder of
VergeTech is deemed be the beneficial owner of VergeTech’s shares





Item 13. Certain Relationships and Related
Transactions





None





Item 14. Principal Accountant Fees and Services





Summarized
below is the aggregate amount of various professional fees billed by our
principal accountants, Pollard-Kelley Auditing Services Inc. (“PKASI”) in 2008
and 2007:








2008
                      
                      
                      2007Audit
      fees
                      
                      $
                      104,000
                      
                      
                      $
                      98,000Tax
      fees
                      
                      
                      0
                      
                      
                      
                      0Total:
                      
                      $
                      104,000
                      
                      
                      $
                      98,000





Audit
Fees: Consists of fees billed for professional services rendered for the audits
of our consolidated financial statements, reviews of interim consolidated
financial statements included in the quarterly reports, services performed in
connection with filings with the Securities & Exchange Commission
letters and other  services that are normally  provided by
PKASI in connection with statutory and
regulatory  filings.





23




Tax Fees:
Consists of fees billed for professional services for tax compliance, tax advice
and tax planning.  These services include assistance regarding
federal, state and local tax compliance and consultation in connection with
various transactions and acquisitions.





The
engagement of the auditors was approved by the Audit Committee of the Board of
Directors prior to the start of the audit for the fiscal year ended December 31,
2008.








PART IV








Item 15. Exhibits and Financial Statement Schedules





(a)
Financial Statements





The
following financial statements of the Company and the related report of
Independent Registered Public Accounting Firm thereon are set forth immediately
following the Index of Financial Statements which appears on page F-1 of this
report:




Independent
Registered Public Accounting Firm Report





Consolidated
Balance Sheets as of December 31, 2008 and 2007




Consolidated
Statements of Operations for the years ended December 31, 2008, 2007 and
2006




Consolidated
Statements of Stockholders' Equity for the years ended December 31, 2008, 2007
and 2006




Consolidated
Statements of Cash Flows for the years ended December 31, 2008, 2007 and
2006




Notes to
Consolidated Financial Statements





(b)
Financial Statement Schedules





All
schedules are omitted as the required information is inapplicable or the
information is presented in the consolidated financial statements or related
notes.





(c)
Exhibits





EXHIBIT


NO.       DESCRIPTION
OF EXHIBIT


------    ---------------------------------------


2.1       Purchase  Agreement  dated  October  14,  2003  by
and  among  IPVoice


Communications,  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
IPVoice


Communications,
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.)





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


IPVoice  Communications,   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.)





24




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.)





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.)





25




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.)





4.9       Certificate  of  Designation,   Preferences  and  Rights  of  Class  C


Cumulative  Convertible  Preferred
Stock (Filed as Exhibit 10.2 to the


Company's  Form
8-K  filed  March 3, 2005
and  incorporated  herein by


reference.)





4.10      Certificate  of  Designation,   Preferences  and  Rights  of  Class  D


Cumulative  Preferred  Stock
(Filed as Exhibit  10.3 to the  Company's


Form
8-K filed March 3, 2005 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.





10.2      DCI
Acquisition Agreement (Filed as Exhibit 10.1 to the Company's Form


8-K
filed March 3, 2005 and incorporated herein by reference.)





10.3      8%  Promissory  Note
by and
between  NewMarket  Technology,  Inc.,  as


Borrower,
and Glenwood Partners, L.P. dated as of March 9, 2005 (Filed


as
Exhibit  10.3 to the  Company's  Form 8-K
filed  March 15, 2005 and


incorporated
herein by reference.)




10.4
                Quota
      Purchase and Sale Agreement between NewMarket Technology, Inc., Flavio Da
      Silva,  Marcio Pissardo,  Celso Isberner, Alexanre
      Couto and Mind Information Services Ltda. (Filed as
      Exhibit  10.1 to the  Company's  Form 8-K
      filed  March 8, 2006 and incorporated
      herein by reference.)
 
 10.5
                Agreement
      and Plan of Reorganization by and between NewMarket Technology, Inc.,
      NewMarket China, Inc. and Intercell International Corp. (Filed as
      Exhibit  10.1 to the  Company's  Form 8-K
      filed  August 11, 2006 and incorporated herein by
      reference.)
 
 10.6
                Stock
      Purchase  Agreement by and between Medical Office Software,
      Inc., NewMarket Technology,  Inc. and VirtualHealth Technology,
      Inc. (Filed as Exhibit  10.1 to
      the  Company's  Form 8-K filed  October 12,
      2006 and incorporated herein by
reference.)
 
 10.7
              Security
      Agreement made as of November 30, 2007 by and among the Lenders from time
      to time party thereto, LV Administrative Services, Inc., as administrative
      and collateral agent, NewMarket Technology, Inc., IP Global Voice, Inc.
      NewMarket China, Inc., Netsco Inc. Newmarket Intellectual Property, Inc.
      and New Market Broadband, Inc. (Filed as Exhibit  10.1 to
      the  Company's  Form 8-K filed  December 6,
      2007 and incorporated herein by reference.)10.8
              Secured
      Revolving Note dated November 30, 2007 issued by NewMarket Technology,
      Inc. and the other companies thereto to Valens U.S. SPV I, LLC, as holder
      in the principal amount of $3,000,000. (Filed as Exhibit  10.2
      to the  Company's  Form 8-K filed  December
      6, 2007 and incorporated herein by reference.)10.9
              Secured
      Convertible Term Note dated November 30, 2007 issued by NewMarket
      Technology, Inc. and the other companies thereto to Valens U.S. SPV I,
      LLC, as holder in the principal amount of $1,800,000. (Filed as
      Exhibit  10.3 to the  Company's  Form 8-K
      filed  December 6, 2007 and incorporated herein by
      reference.)10.10
              Secured
      Convertible Term Note dated November 30, 2007 issued by NewMarket
      Technology, Inc. and the other companies thereto to Valens Offshore SPV
      II, Corp, as holder in the principal amount of $2,200,000. (Filed as
      Exhibit  10.4 to the  Company's  Form 8-K
      filed  December 6, 2007 and incorporated herein by
      reference.)10.11
              Common
      Stock Purchase Warrant dated November 30, 2007 issued by NewMarket
      Technology, Inc.  to Valens U.S. SPV I, LLC for 8,347,287 shares
      of common stock. (Filed as Exhibit  10.5 to
      the  Company's  Form 8-K filed  December 6,
      2007 and incorporated herein by reference.)10.12
              Common
      Stock Purchase Warrant dated November 30, 2007 issued by NewMarket
      Technology, Inc.  to Valens Offshore SPV II, Corp for 3,825,840
      shares of common stock. (Filed as Exhibit  10.6 to
      the  Company's  Form 8-K filed  December 6,
      2007 and incorporated herein by reference.)






26


10.13
              Registration
      Rights Agreement dated November 30, 2007 by and between NewMarket
      Technology, Inc.  and Valens U.S. SPV I, LLC. (Filed as
      Exhibit  10.7 to the  Company's  Form 8-K
      filed  December 6, 2007 and incorporated herein by
      reference.)10.14
              Registration
      Rights Agreement dated November 30, 2007 by and between NewMarket
      Technology, Inc.  and Valens U Offshore SPV II, Corp. (Filed as
      Exhibit  10.8 to the  Company's  Form 8-K
      filed  December 6, 2007 and incorporated herein by
      reference.)10.15
              Stock
      Pledge Agreement dated November 30, 2007 by and among LV Administrative
      Services, Inc. as administrative and collateral agent for the Creditor
      Parties, as defined therein, and NewMarket Technology, Inc. (Filed as
      Exhibit  10.9 to the  Company's  Form 8-K
      filed  December 6, 2007 and incorporated herein by
      reference.)10.16
              Intellectual
      Property Security Agreement dated November 30, 2007 by NewMarket
      Technology, Inc., IP Global Voice, Inc. NewMarket China, Inc., Netsco Inc.
      Newmarket Intellectual Property, Inc. and New Market Broadband, Inc. in
      favor of LV Administrative Services, Inc. as administrative and collateral
      agent for the Lenders, as defined in the Security Agreement. (Filed as
      Exhibit  10.10 to the  Company's  Form 8-K
      filed  December 6, 2007 and incorporated herein by
      reference.)




14.1      NewMarket
Technology, Inc. Code of Ethics (Filed as Exhibit  14.1 to
the


Company's  Form
10-KSB filed  March 31, 2006 and incorporated herein by


reference.)





14.2      NewMarket
Technology, Inc. Audit Committee Charter (Filed as Exhibit  14.1 to
the


Company's  Form
10-KSB filed  March 31, 2006 and incorporated herein by


reference.)





31.1
*    Certification  of Chief Executive Officer
Pursuant to


Rule
13a-14 and Rule 15d-14(a), promulgated under the Securities and


Exchange
Act of 1934 as amended.





31.2
*    Certification  of Chief Financial Officer
Pursuant to


Rule
13a-14 and Rule 15d-14(a), promulgated under the Securities and


Exchange
Act of 1934 as amended.








32.1
*    Certification  of Chief Executive Officer
Pursuant to 18


USC
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-


Oxley
Act of 2002.





32.2
*    Certification  of Chief Financial Officer
Pursuant to 18


USC
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-


Oxley
Act of 2002.





* Filed
Herewith





27








Signatures





In
accordance with Section 13 or Section 15(d) 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:   June
17, 2009








By:
/s/ Philip M. Verges


----------------------------------------------------


Philip
M. Verges


Chief
Executive Officer and


Chairman
of the Board of Directors








Date:   June
17, 2009








By:
/s/ Philip J. Rauch


----------------------------------------------------


Philip
J. Rauch


Chief
Financial Officer




28




In
accordance with the Exchange Act this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.








/s/ Philip
M. Verges


---------------------               Chief
Executive Officer and     June 17, 2009


Philip
M.
Verges               Chairman
of the Board






/s/ Philip
J. Rauch


---------------------               Chief
Financial Officer and     June 17, 2009


Philip
J.
Rauch                 Director





/s/ James
Mandel


---------------------                 Director                       June
17, 2009


James
Mandel





/s/ Bruce
Noller


---------------------                 Director                       June
17, 2009


Bruce
Noller





/s/ Hugh
G. Robinson


---------------------                 Director                       June
17, 2009


Hugh G.
Robinson




29




INDEX TO FINANCIAL STATEMENTS







Report
      of Independent Registered Public Accounting Firm
              F-2Consolidated
      Balance Sheet
              F-3Consolidated
      Statements of Operations
              F-4Consolidated
      Statements of Stockholders’ Equity
              F-5Consolidated
      Statements of Cash Flows
              F-6Notes
      to Consolidated Financial Statements
              F-7




F-1




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








The Board
of Directors and Stockholders


NewMarket
Technology, Inc.


Dallas,
Texas





We have
audited the accompanying consolidated balance sheet of NewMarket Technology,
Inc. and subsidiaries as of December 31, 2008 and 2007, and the related
consolidated statements of operations and comprehensive income, stockholders’
equity and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company’s management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.





We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of NewMarket Technology, Inc.
and subsidiaries as of December 31, 2008 and 2007, and the results of operations
and cash flows for each of the years then ended, in conformity with accounting
principles generally accepted in the United States of America.







/s/
      Pollard-Kelley Auditing Services, Inc.Pollard-Kelley
      Auditing Services, Inc.







Independence,
Ohio


June 12,
2009




F-2




NewMarket
      Technology, Inc.Consolidated
      Balance SheetDecember
      31,ASSETS
                                  
                                  2008
                                  
                                  
                                  2007CURRENT
      ASSETSCash
      and cash equivalents
                                  
                                  $
                                  4,960,868
                                  
                                  
                                  $
                                  5,202,244Accounts
      receivable
                                  
                                  
                                  17,974,496
                                  
                                  
                                  
                                  20,730,090Inventory
                                  
                                  
                                  1,874,544
                                  
                                  
                                  
                                  2,156,581Prepaid
      expenses, deposits and other current assets
                                  
                                  
                                  3,775,645
                                  
                                  
                                  
                                  3,927,010Total
      current assets
                                  
                                  
                                  28,585,553
                                  
                                  
                                  
                                  32,015,925PROPERTY
      AND EQUIPMENT, NET
                                  
                                  
                                  803,477
                                  
                                  
                                  
                                  1,012,428OTHER
      ASSETSNotes
      receivable including accrued interest
                                  
                                  
                                  4,958,456
                                  
                                  
                                  
                                  6,903,678Investment
      in unconsolidated subsidiaries
                                  
                                  
                                  1,311,229
                                  
                                  
                                  
                                  8,851,400Investment
      in restricted securities
                                  
                                  
                                  186,112
                                  
                                  
                                  
                                  0Available
      for sale securities, net of reserve of $581,000
                                  
                                  
                                  294,000
                                  
                                  
                                  
                                  875,000Goodwill
                                  
                                  
                                  15,104,379
                                  
                                  
                                  
                                  22,344,599Software
      code, net of accumulated amortization
                                  
                                  
                                  -
                                  
                                  
                                  
                                  2,840,486Intangible
      property
                                  
                                  
                                  212,277
                                  
                                  
                                  
                                  236,469Total
      other assets
                                  
                                  
                                  22,066,453
                                  
                                  
                                  
                                  42,051,632Total
      assets
                                  
                                  $
                                  51,455,483
                                  
                                  
                                  $
                                  75,079,985LIABILITIES,
      STOCKHOLDERS' EQUITY AND MINORITY INTERESTCURRENT
      LIABILITIESAccounts
      payable
                                  
                                  $
                                  8,038,083
                                  
                                  
                                  $
                                  4,178,327Accrued
      expenses
                                  
                                  
                                  2,443,885
                                  
                                  
                                  
                                  2,889,477Liabilities
      of discontinued operations
                                  
                                  
                                  308,683
                                  
                                  
                                  
                                  308,683Customer
      deposits
                                  
                                  
                                  8,909
                                  
                                  
                                  
                                  400,684Short-term
      debt
                                  
                                  
                                  2,356,322
                                  
                                  
                                  
                                  2,953,029Long-term
      debt, current portion
                                  
                                  
                                  3,247,676
                                  
                                  
                                  
                                  2,087,680Total
      current liabilities
                                  
                                  
                                  16,403,558
                                  
                                  
                                  
                                  12,817,880LONG-TERM
      LIABILITIESDeferred
      income tax liability
                                  
                                  
                                  -
                                  
                                  
                                  
                                  4,038Notes
      payable, net of deferred financing costs
                                  
                                  
                                  1,208,982
                                  
                                  
                                  
                                  2,105,202Total
      long-term liabilities
                                  
                                  
                                  1,208,982
                                  
                                  
                                  
                                  2,109,240Total
      liabilities
                                  
                                  
                                  17,612,540
                                  
                                  
                                  
                                  14,927,120Derivative
      liability
                                  
                                  
                                  -
                                  
                                  
                                  
                                  536,540Minority
      interest in subsidiaries
                                  
                                  
                                  2,711,807
                                  
                                  
                                  
                                  1,324,342STOCKHOLDERS'
      EQUITY (DEFICIENCY)Preferred
      stock; $.001 par value; 10,000,000 shares authorized;Series
      C 925 and 925; Series E 41 and 51; Series F 580 and 1,500;Series
      H 835 and 835 and; Series I 541 and 541 shares issued andouTstanding
      at December 31, 2008 and 2007, respectively
                                  
                                  
                                  3
                                  
                                  
                                  
                                  4Common
      stock; $.001 par value; 300,000,000 shares authorized;239,968,620
      and 202,993,416 shares issued and outstandingat
      December 31, 2008 and 2007, respectively
                                  
                                  
                                  239,969
                                  
                                  
                                  
                                  202,993Deferred
      compensation
                                  
                                  
                                  (226,333
                                  )
                                  
                                  
                                  (37,500
                                  )Additional
      paid-in capital
                                  
                                  
                                  53,212,902
                                  
                                  
                                  
                                  50,822,185Accumulated
      comprehensive income
                                  
                                  
                                  2,256,639
                                  
                                  
                                  
                                  1,316,126Retained
      earnings (accumulated deficit)
                                  
                                  
                                  (24,352,041
                                  )
                                  
                                  
                                  5,988,175Total
      stockholders' equity
                                  
                                  
                                  31,131,136
                                  
                                  
                                  
                                  58,291,979Total
      liabilities and stockholders' equity
                                  
                                  $
                                  51,455,483
                                  
                                  
                                  $
                                  75,079,981See
      accompanying notes to consolidated financial statements.




F-3




NewMarket
      Technology, Inc.Consolidated
      Statement of OperationsYear
      ended December 31,2008
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      2007
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      2006REVENUE
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      95,104,801
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      93,108,116
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      77,635,622COST
      OF SALES
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      74,784,778
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      67,322,978
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      55,752,439Gross
      Margin
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      20,320,023
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      25,785,138
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      21,883,183OPERATING
      EXPENSESGeneral
      and administrative expenses
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      18,958,850
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      19,836,138
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      16,635,341Depreciation
      and amortization
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      458,802
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      775,698
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      786,173Total
      expenses
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      19,417,652
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      20,611,836
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      17,421,514Income
      from operations
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      902,371
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      5,173,302
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      4,461,669OTHER
      INCOME (EXPENSE)Interest
      income
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      543,155
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      623,593
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      1,023,967Interest
      expense
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (1,125,159
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (608,928
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (503,714
                                                                                                                                      )Foreign
      currency transaction gain (loss)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (1,278
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (4,474
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      13,298Inflation
      effects
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (318,539
                                                                                                                                      )Gain
      on debt forgiveness
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      4,293,000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -Gain
      on sale of fixed assets
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      303,631
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -Gain
      on sale of subsidiary
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      625,816Gain
      on capital contribution for subsidiary
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      1,300,000Goodwill
      impairment
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (7,240,220
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (1,457,690
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -Impairment
      of other assets
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (2,852,608
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -Notes
      receivable and investment impairment
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (12,284,638
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -Bad
      debt expense
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (6,339,105
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -Lawsuit
      settlement expense
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (286,914
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (248,433
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (92,124
                                                                                                                                      )Other
      income
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      244,392
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      150,443
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      98,826Other
      expense
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (226,170
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (171,172
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (365,810
                                                                                                                                      )Total
      other income (expense)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (29,568,545
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      2,879,970
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      1,781,720Net
      income before income tax (credit) andminority
      interest
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (28,666,174
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      8,053,272
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      6,243,389Foreign
      income tax
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (286,581
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (108,665
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (55,886
                                                                                                                                      )Minority
      interest in consolidated subsidiary
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (1,387,465
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (595,775
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (300,010
                                                                                                                                      )Net
      income (loss)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (30,340,220
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      7,348,832
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      5,887,493Other
      comprehensive income (loss)(Loss)
      on investment securities
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (581,000
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -Decrease
      in value of derivative liability
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      536,540Foreign
      currency translation gain
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      984,973
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      536,391
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      728,108Comprehensive
      income (loss)
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (29,399,707
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      7,885,223
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      6,615,601Income
      (loss) per weighted-average common share-basic
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.14
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.04
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.04Income
      (loss) per weighted-average common share-diluted
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.14
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.03
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.03Number
      of weighted average common shares o/s-basic
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      217,393,093
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      193,757,301
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      158,604,670Number
      of weighted average common shares o/s-diluted
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      217,393,093
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      212,014,538
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      215,034,964See
      accompanying notes to consolidated financial statements.




F-4




NewMarket
      Technology, Inc.Consolidated
      Statement of Stockholders' EquityAdditional
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Accumulated
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Retained
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      TotalNumber
      of Shares
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Par
      Value of Stock
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Paid-In
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Deferred
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Comprehensive
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Earnings/
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Stockholders'Preferred
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Common
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Preferred
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Common
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Capital
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Compensation
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      Income/(Loss)
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (Accum.
      Deficit)
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      EquityBEGINNING BALANCE,
      December 31, 2005
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      14,653
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      108,737,365
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      15
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      108,737
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      40,482,943
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      (629,145
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      51,628
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      (7,248,151
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      32,766,027Conversion
      of preferred stock
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (9,168
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      29,589,555
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (9
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      29,590
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (29,581
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -Conversion
      of debt to common stock
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      34,010,321
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      34,010
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      4,692,447
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      4,726,457Issuance
      of common stock for services
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      1,828,043
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      1,828
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      694,289
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (661,450
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      34,667Amortization
      of deferred compensation
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      1,024,837
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      1,024,837Other
      comprehensive income (loss)
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      728,108
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      728,108Net
      income
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      5,887,494
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      5,887,494BALANCE, December 31,
      2006
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      5,485
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      174,165,284
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      6
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      174,165
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      45,840,098
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (265,758
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      779,736
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (1,360,657
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      45,167,590Conversion
      of preferred stock
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (2,033
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      6,887,227
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (2
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      6,887
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (6,885
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -Conversion
      of debt to common stock
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      20,240,905
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      20,241
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      4,339,172
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      4,359,413Issuance
      of common stock for services
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      1,450,000
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      1,450
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      543,050
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (450,000
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      94,500Issuance
      of common stock for lawsuit settlement
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      250,000
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      250
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      106,75
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      107,000Amortization
      of deferred compensation
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      678,258
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      678,258Other
      comprehensive income (loss)
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      536,390
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      536,390Net
      income
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      7,348,832
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      7,348,832BALANCE, December 31,
      2007
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      3,452
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      202,993,416
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      4
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      202,993
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      50,822,185
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (37,500
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      1,316,126
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      5,988,175
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      58,291,983Conversion
      of preferred stock
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (930
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      9,715,063
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (1
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      9,715
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (9,714
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -Conversion
      of debt and interest to common stock
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      16,625,141
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      16,626
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      1,166,675
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      1,183,301Issuance
      of common stock for services
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      8,635,000
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      8,635
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      1,035,756
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (620,000
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      424,391Issuance
      of common stock for law suit settlement
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      2,000,000
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      2,000
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      198,000
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      200,000Amortization
      of deferred compensation
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      431,167
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      431,167Other
      comprehensive income
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      940,513
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      940,513Net
      income
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      -
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (30,340,220
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      (30,340,220
                                                                                                                                                                                                                      )ENDING BALANCE, December
      31, 2008
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      2,522
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      239,968,620
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      3
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      239,969
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      53,212,902
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      (226,333
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      2,256,639
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      (24,352,044
                                                                                                                                                                                                                      )
                                                                                                                                                                                                                      
                                                                                                                                                                                                                      $
                                                                                                                                                                                                                      31,131,136See
      accompanying notes to consolidated financial statements.




F-5




NewMarket
      Technology, Inc.Consolidated
      Statement of Cash FlowsYear
      ended December 31,2008
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                2007
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                2006CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income (loss)
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                (30,340,220
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                7,348,832
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                5,887,494Adjustments
      to  reconcile net income (loss) to net cashprovided
      (used) by operating activities:Minority
      interest in consolidated subsidiary
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                1,387,465
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                595,775
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (300,010
                                                                                                                                                                )Depreciation
      and amortization
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                458,802
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                775,698
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                786,173Gain
      on sale of subsidiaries
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (303,631
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (625,816
                                                                                                                                                                )Forgiveness
      of debt
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (4,293,000
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -Gain
      on capital contribution
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (1,300,000
                                                                                                                                                                )Impairment
      of other assets
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                2,852,608
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -Goodwill
      impairment
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                7,240,220
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                1,457,690
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -Investment
      impairment and notes receivable write-down
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                12,284,638
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                1,071Bad
      debt expense
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                6,339,105
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -Stock
      issued for services and amort. of deferred compensation
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                855,558
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                772,758
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                1,037,837Stock
      issued for settlement of lawsuit
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                200,000
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                2,755,594
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (8,656,613
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                2,829,931(Increase)
      decrease in inventory
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                282,037
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (1,169,898
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                370,326(Increase)
      decrease in deposits and prepaid expenses
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                151,365
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (1,457,641
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (339,227
                                                                                                                                                                )(Increase)
      decrease in interest receivable
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (500,000
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (525,000
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -Increase
      (decrease) in accounts payable
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                3,859,756
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                689,982
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (4,355,638
                                                                                                                                                                )Increase
      (decrease) in customer deposits
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                391,775
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                210,251
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                131,763Increase
      (decrease) in deferred revenue
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (252,348
                                                                                                                                                                )Increase
      (decrease) in accrued expenses
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (445,592
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                764,593
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (1,103,815
                                                                                                                                                                )Increase
      (decrease) in income taxes and other payables
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (4,038
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                128
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (88,943
                                                                                                                                                                )Net
      cash provided/(used) by operating activities
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                7,769,073
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (3,790,076
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                2,678,798CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of property and equipment
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (35,059
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (81,012
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (315,942
                                                                                                                                                                )Sale
      of property and equipment
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                2,394,100
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -Funds
      advanced to affiliates
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (3,908,142
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -Acquisition
      of intangible asset
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (125,919
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (287,097
                                                                                                                                                                )Net
      cash provided/(used) by investing activities
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (3,943,201
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                2,187,169
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (603,039
                                                                                                                                                                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from short-term debt
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                180,815
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                1,900,000
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -Payments
      on short-term debt
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (2,368,514
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -Proceeds
      from long-term debt
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                4,000,000
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                800,000Payments
      on long-term debt
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (213,163
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (1,647,680
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (3,546,140
                                                                                                                                                                )Net
      cash provided/(used) by financing activities
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (2,400,862
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                4,252,320
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (2,746,140
                                                                                                                                                                )Effect
      of exchange rates on cash
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (1,666,386
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (741,340
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                858,032Net
      increase in cash and equivalents
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                (241,376
                                                                                                                                                                )
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                1,908,073
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                187,651CASH, beginning of
      period
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                5,202,244
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                3,294,171
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                3,106,521CASH, end of
      period
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                4,960,868
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                5,202,244
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                3,294,172SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONInterest
      paid in cash
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                1,125,159
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                608,928
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                503,714Non-Cash
      Financing Activities:Common
      stock issued to settle debt
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                1,009,608
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                4,359,413
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                4,726,457Preferred
      stock issued for acquisition of subsidiaries
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                2,700,000Preferred
      stock issued to settle debt
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                -
                                                                                                                                                                
                                                                                                                                                                
                                                                                                                                                                $
                                                                                                                                                                4,900,000See
      accompanying notes to consolidated financial statements.




F-6




NEWMARKET
TECHNOLOGY, INC. AND SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 December
31, 2008
 
 1.   NATURE
OF OPERATION:
 
 THE
COMPANY
 
 NewMarket
Technology, Inc, (f/k/a IPVoice Communications, Inc.), (“NewMarket” or the
“Company”), 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 Protocol
telephony (“voIP”), systems integration and wireless broadband
technology.
 
 
 SIGNIFICANT
ACQUISITIONS
 
 In June
2002, the Company acquired all of the assets of VergeTech Inc. (“VTI”) in
exchange for a $3,000,000 promissory note convertible into 50% of the issued and
outstanding shares of the Company as of the date of issuance. VTI was a
privately held communications industry technology services firm founded in 1997
and headquartered in Dallas, Texas.
 
 In 2003,
the Company acquired all of the issued and outstanding stock of Infotel
Technologies PTE, Ltd. ("Infotel"). The Company also acquired a majority of the
issued and outstanding stock of IP Global Voice, Inc. ("IP Global Voice") as
part of a strategy to accelerate business development.  Infotel is a
Singapore-based communications systems integration company engaged in the
business of reselling and integrating specialty communication devices to various
government agencies and commercial customers. IP Global Voice is a full feature
voIP service provider to small and medium businesses in the San Francisco,
California area.
 
 In April
2004, the Company acquired RKM Suministros, Ltd. (“RKM”), a Venezuela-based
computer systems integration company.   Additionally, in July
2004, the Company expanded its telecommunications industry strategy with an
equity investment in RedMoon Broadband, Inc. ("RedMoon"). RedMoon specializes in
the engineering and management of municipal wireless broadband
networks.
 
 The
Company expanded into the homeland security industry in 2004 with the
acquisition of a majority interest in Digital Computer Integration Corporation
("DCI"). DCI provides custom integrated technology solutions to military and
civil government agencies that include a number of proprietary IP communication
homeland security technologies. The Company subsequently acquired Netsco Inc., a
software firm with a proprietary RFID technology already trialed for military
application and marketed in partnership with Sun Microsystems, Inc.
 
 In January
of 2005, the Company partnered with with Gaozhi Science and Technology in
Shanghai China to establish NewMarket China, Inc. ("NewMarket China"), a
wholly-owned subsidiary of NewMarket Technology.   In 2005
NewMarket China formed a Chinese wholly-owned foreign entity (“WOFE”) that
operates under the name Clipper Technology, Inc. (“CLPTEC”).  CLPTEC
is engaged in the development, implementation, integration and maintenance of
technology software and supporting peripherals for computing, communications,
and data exchanges.  In October 2005, CLPTEC executed an agreement
with Zhang Wei Lin, the Managing Director and legal representative of the Huali
Group which resulted in a 51% ownership in Clipper-Huali, Ltd. (“Clipper-Huali”)
a newly-formed Chinese corporation. Clipper-Huali engages in the business of
application software development, sale of proprietary software, value added
reselling of leading business application software and the sale of system and
network software.  In
August   2006,  NewMarket China, Inc. executed an
Agreement  and  Plan  of   Reorganization   ("the   Agreement")  with  Intercell
International Corporation  ("Intercell").  The Agreement
provided for all of the issued and  outstanding  stock of
NewMarket  China,  Inc., one thousand  (1,000)
shares  held by the Company, to be  exchanged  for
two  million  (2,000,000)  restricted common
shares of Intercell.  As a result of the Agreement, NewMarket China
became a wholly-owned subsidiary of Intercell.  Simultaneously, the
Company purchased 250,000 shares of newly designated Series A Preferred Stock
from Intercell for an aggregate purchase price of $250,000.  The
shares of Series A Preferred Stock may be converted  into that number
of authorized but unissued  common shares of
Intercell,  which shall be equal to 60%  ownership of the
Company  after  giving  effect  to  such  issuance  on  and
as of  the  date  of conversion.  In
January 2007, Intercell’s name was changed to NewMarket China to reflect the new
operations of the business.
 
 F-7
  In
February 2005, the Company entered into an agreement with Defense Technology
Systems, Inc. (“DFTS”), a homeland security products company, under which DFTS
acquired NewMarket’s majority interest in DCI in exchange for two classes of
DFTS preferred stock which represent a majority voting interest in
DFTS.  The voting control of the preferred stock has been subjugated
to a proxy committee which is controlled by the executive officers of
DFTS.
 
 In 2005,
NewMarket expanded a partnership with TekVoice Communications, Inc. (“TekVoice”)
to include the acquisition of a 10% equity interest in
TekVoice.  TekVoice is a Hispanic and Latin America VoIP service
provider.  In December 2007, TekVoice was acquired by AlterNet
Systems, Inc. (“AlterNet”) through a reverse merger.
 
 In May
2005, NewMarket executed a stock purchase agreement to acquire 51% percent
ownership of Vera Technology Inc (“Vera”). In a simultaneous agreement, Vera
acquired Classified Information Inc. (“CI”). NewMarket exchanged $1.3 million in
preferred stock for Vera preferred stock of equal value that includes fifty-one
percent voting rights. CI provides a proprietary and patented, secure data
exchange solution.   In August 2006, the Company executed an
agreement with Vera under which the Company sold its majority interest in Vera
to the existing management of Vera in consideration for $5,000 in cash and a
$1.3 million unsecured promissory note. The note matures in twenty years,
however the principal repayment may be accelerated provided that Vera meets
certain financial milestones.
 
 In June
2005, NewMarket acquired substantially all of the assets of Corsa Networks
Technologies, Inc.  (“Corsa”), a five-year-old IP systems integration
firm specializing in the construction of secure communication
networks.  These assets are being operated in conjunction with the
operations of IP Global Voice.
 
 In
February 2006, the Company entered into a Quota Purchase and Sale Purchase
Agreement with the founders of  UniOne Consulting Ltda., a Brazilian
limited liability company, (“UniOne”), to acquire the founders’ 100% interest in
UniOne.  The purchase price to be paid by the Company is
$6,460,320.  The purchase price is payable in tranches through the end
of 2010. UniOne is a systems integrator, developer and business practice
implementation company, providing support for the integration and maintenance of
enterprise software applications. UniOne is located in Sao Paulo and Rio de
Janeiro, Brazil.
 
 2.   SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES:
 
 BASIS
OF PRESENTATION
 
 The
accompanying consolidated financial statements have been prepared by management
in conformity with accounting principles generally accepted in the United States
(“U.S. GAAP”), and include all assets, liabilities, revenues and expenses
of the Company, its wholly-owned or majority-owned subsidiaries.  All
significant intercompany accounts and transactions have been eliminated in
consolidation
 
 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.
 
 F-8
  PRINCIPLES
OF CONSOLIDATION
 
 The
Company accounts for its investments in affiliates and subsidiaries in
accordance with Statement of Financial Accounting Standard (“SFAS”) No. 94,
“Consolidation of All Majority-owned Subsidiaries”and Accounting Research
Bulletin No. 51, “Consolidated Financial Statements”. The Company uses two
different methods to report its investments in its subsidiaries and other
companies: consolidation and the equity method.
 
 Consolidation
 
 The
Company uses the consolidation method to report its investment in its
subsidiaries and other companies when the Company owns a majority of the voting
stock of the subsidiary.  All inter-company balances and transactions
have been eliminated. Infotel, the Company’s Singapore based subsidiary, has
been operating on a September 30th fiscal year end since its inception. The
Company elected, pursuant to ARB 51, to account for the operations of Infotel on
a matching period to matching period with the parent’s financials. This means
that  should there be a significant shift in Infotel’s operations,
positive or negative, it will not be reflected in the consolidated financials
for an additional ninety days.
 
 Equity
Method
 
 The
Company uses the equity method to report investments in businesses where it
holds 20% to 50% equity interest, but does not control operating and financial
policies.
 
 Under the
equity method, the Company reports:
 
 ·
              Its
      interest in the entity as an investment on its balance sheets,
      and
 ·
              Its
      percentage share of earnings or losses on its statement of
      operations
 
 At
December 31, 2008, the Company did not record any income or loss , nor adjust
its investment account, by the net income or loss of the affiliates, as the
actual equity percentage paid for was the investments was less than 10%, with a
concurrent de minimus net income/loss related thereto.
 
 FAIR
VALUE OF FINANCIAL INSTRUMENTS
 
 The fair
values of the Company’s cash and cash equivalents, accounts receivable, accounts
payable, and lines of credit approximate their carrying amounts due to the short
maturities of these instruments.
 
 CASH
AND CASH EQUIVALENTS
 
 The
Company considers all highly liquid investments with an original maturity of
three months or less and money market instruments to be cash
equivalents.
 
 EARNINGS
PER SHARE
 
 SFAS No.
128, “Earnings Per Share”, requires dual presentation of basic and diluted
earnings per share (EPS) with a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the diluted EPS
computation.  Basic EPS excludes dilution.  Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity.  Basic net income 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. Diluted earnings per share is
computed using the weighted average number of common shares outstanding during
the periods plus the effect of dilutive securities outstanding during the
periods.
 
 F-9
  COMPREHENSIVE
INCOME
 
 SFAS No.
130, “Reporting Comprehensive Income”, requires the reporting and display of
comprehensive income and its components.  SFAS No. 130 requires
unrealized gains and losses on the Company’s available for sale securities to be
included in comprehensive income as well as gains or losses due to foreign
currency translation adjustments.
 
 FOREIGN
CURRENCY TRANSACTION AND TRANSLATION GAINS (LOSSES)
 
 The
Company maintains significant operations in The People's Republic of China,
Brazil, Venezuela and Singapore. The Company’s operating subsidiaries invoices
its customers in the local currency, and if the Company payment is denominated
in a foreign currency, the Company translates the payment and records a foreign
currency transaction gain or loss in accordance with SFAS 52, “Foreign Currency
Translation”.
 
 DERIVATIVE
INSTRUMENTS
 
 SFAS No.
133, “Accounting for Derivative Instruments and Hedging Activities”, as amended,
and Emerging Issues Task Force (“EITF”) Issue 00-19, ‘‘Accounting for Derivative
Financial Instruments Indexed To, and Potentially Settled in, a Company's Own
Stock’’, establishes accounting and reporting standards requiring that every
derivative instrument be recorded in the balance sheet as either an asset or
liability measured at fair value, and that changes in fair value be recognized
currently in earnings (loss) unless specific hedge accounting criteria are
met.
 
 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.
 
 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.
 
 INTANGIBLES
 
 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 $18,334,707 was
recorded in conjunction with the acquisitions in 2003, 2004 and 2005. The
Company also evaluates, at least annually, for potential impairment, this
recorded amount, by means of a cash flow analysis in accordance with SFAS 142,
“Goodwill and Other Intangible Assets”.  For the years ended December
31, 2008 and 1007, the Company recorded impairment charges of $7,240,220 and
$4,049,278, respectively.
 
 In 2004,
as a result of the acquisition of Infotel, the Company recorded as an asset in
its consolidated balance sheet, Software Code. This asset is a permanent license
for “uOne”unified messaging service system. In addition, Infotel received the
underlying coding for this software. uOne was acquired by Cisco Systems from
Amtiva Technology in 1999. In 2001, Cisco sold the operating division which was
utilizing this software to CMG Wireless Data Solutions. In April 2000, Appiant,
the then sole stockholder of Infotel, purchased this license from Cisco for
$10,000,000. Appiant paid $3,000,000 of this license fee and the $7,000,000
balance was later forgiven as a result of a settlement agreement between Cisco
and Appiant as part of Cisco’s decision to sell the operating division to CMG.
Appiant had borrowed $5,000,000 from Infotel which was secured by this license
and code. When Appiant defaulted on this note, Infotel foreclosed on the license
and code. Even though this license and code were valued at $10,000,000 based on
the license fee between Appiant and Cisco, Infotel had elected to value the
license and code, on its books, at the amount of the defaulted note, $5,000,000.
The Company began  amortizing the asset over its useful life of ten
years period beginning in 2004. The Company also evaluates at least annually,
for potential impairment and its assumption of the remaining life, the recorded
value of this software license and code, by means of a cash flow analysis in
accordance with SFAS 142. Based on this analysis at December 31, 2008, the
Company elected to record an impairment charge of $2,852,608 which represented
the remaining unamortized balance for this asset.
 
 F-10
  REVENUE
RECOGNITION
 
 As a
result of the multiple acquisitions from 2003 through 2006, the Company now has
three distinct revenue streams: (1) Services, principally programming services.
This revenue is recognized as services are provided and billed to the customers.
(2) Contract, which is principally an ongoing service revenue stream, such as
training contracts, technical support contracts, etc. This form of revenue is
recognized monthly as earned and billed, and (3), Product sales, which is the
sale of hardware and software, generally installed. Sometimes the hardware
and/or software are customized under the terms of the purchase contract. This
revenue is recognized as the products are delivered and the customer accepts
said products. These revenue streams accounted for 94%, 3% and 3% of revenue,
respectively, for the year ended December 31, 2008.   Any
portions of such contracts which may include installation, training, conversion,
etc. are recognized when such services have been completed. Any ongoing support,
training, etc., is separately structured and is accounted for in contract
revenue and in accordance with the contracts.
 
 CONCENTRATION
OF RISK - GEOGRAPHIC
 
 As a
result of the various acquisitions in 2003 through 2006, the Company now has
offices, employees and customers in a variety of foreign countries. Its four
foreign based subsidiaries are located in Singapore; Caracas, Venezuela; Ningbo
and Shanghai, Peoples Republic of China and Sao Paulo, Brazil. RKM Suministros,
based in Caracas, Venezuela,  represented approximately 5% of the
Company’s total revenue and 4% of total assets; Infotel, based in
Singapore,  represented approximately 3% of the Company’s total
revenue and 3% of total assets; China Crescent Enterprises, based in Shanghai,
China, represented approximately 44% of the Company’s total revenue and 18% of
total assets and UniOne Consulting, based in Sao Paulo, Brazil, represented
approximately 19% of the Company’s total revenue and 5% of total assets, for the
year ended December 31, 2008.
 
 INVESTMENT
IN UNCONSOLIDATED SUBSIDIARIES
 
 The
Company’s investment in affiliates at December 31, 2008, is composed of a 8%
equity position in Red Moon, a 5% equity position in AlterNet, and de minimus
investments in several other companies. These equity positions do not represent
a controlling interest in these companies.
 
 The
Company accounts for its investment in affiliates, defined as those whereby the
Company owns less than 51% of the issued and outstanding common stock of the
affiliate and the Company does not exercise control over the operations of the
affiliate, by the equity method of accounting. At December 31, 2008, the Company
did not record any income or loss , nor adjust its investment account, by the
net income or loss of the affiliates, as the actual equity percentage paid for
was the investments was less than 10%, with a concurrent de minimus net
income/loss related thereto.
 
 RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS
 
 In
September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 157, “Fair Value Measurements”. This Statement defines fair value,
establishes a framework for measuring fair value and expands disclosure of fair
value measurements. SFAS No. 157 applies under other accounting pronouncements
that require or permit fair value measurements and accordingly, does not require
any new fair value measurements. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2006. The
adoption of SFAS 157 is not expected to have a material effect on the Company’s
financial position, results of operations or cash flows.
 
 F-11
  In
September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
Accounting Bulletin (SAB) No. 108 in order to eliminate the diversity of
practice surrounding how public companies quantify financial statement
misstatements.  In SAB 108, the SEC staff established an approach that
requires quantification of financial statement misstatements based on the
effects of the misstatements on each of the Company’s financial statements and
the related financial statement disclosures.  SAB No. 108 is effective
for the Company for its current fiscal year.  The adoption of SAB No.
108 did not have an impact on the Company’s consolidated financial
statements.
 
 In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities—Including an amendment of FASB
Statement No. 115”. This Statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. This Statement is expected to expand the use of fair value
measurement, which is consistent with the Board’s long-term measurement
objectives for accounting for financial instruments. SFAS No. 159 is effective
as of the beginning of an entity’s first fiscal year that begins after November
15, 2007. Early adoption is permitted as of the beginning of a fiscal year that
begins on or before November 15, 2007, provided the entity also elects to apply
the provisions of SFAS No. 157. The Company is in the process of evaluating the
impact that the adoption of SFAS No. 159 will have on its consolidated results
of operations and financial condition.
 
 In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations”, which replaces FASB Statement No. 141. FAS 141R
establishes principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, any non controlling interest in the acquiree and the
goodwill acquired. The Statement also establishes disclosure requirements which
will enable users to evaluate the nature and financial effects of the business
combination. SFAS 141R will be applicable prospectively to business
combinations for which the acquisition date is on or after January 1, 2009. SFAS
141R would have an impact on accounting for any business acquired after the
effective date of this pronouncement.
  In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
in Consolidated Financial Statement—amendments of ARB No. 51”. SFAS 160
states that accounting and reporting for minority interests will be
recharacterized as non-controlling interests and classified as a component of
equity.  The Statement also establishes reporting requirements that provide
sufficient disclosures that clearly identify and distinguish between the
interests of the parent and the interests of the non-controlling owners. SFAS
160 applies to all entities that prepare consolidated financial statements,
except not-for-profit organizations, but will affect only those entities that
have an outstanding non-controlling interest in one or more subsidiaries or that
deconsolidate a subsidiary.  This statement is effective as of the
beginning of an entity’s first fiscal year beginning after December 15,
2008. The adoption of SFAS 160 would have an impact on the presentation and
disclosure of the non-controlling interest of any wholly-owned businesses
acquired in the future.
 
 In March
2008, the FASB issued SFAS 161, “Disclosures about Derivative Instruments and
Hedging Activities, an Amendment of SFAS 133” (“SFAS 161”).  SFAS 161
amends and expands the disclosure requirements of SFAS 133 with the intent to
provide users of financial statements with an enhanced understanding of how and
why an entity uses derivative instruments, how derivative instruments and
related hedged items are accounted for under SFAS 133 and its related
interpretations, and how derivative instruments and related hedged items affect
an entity’s financial position, financial performance, and cash
flows.  SFAS 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15,
2008.  The Company believes that the future requirements of SFAS 161
will not have a material effect on its consolidated financial
statements.
 
 F-12
  In
May 2008, the FASB issued SFAS 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”) which provides a consistent framework for
determining what accounting principles should be used when preparing financial
statements under generally accepted accounting principles in the U.S.  SFAS
162 is effective 60 days following the SEC’s approval of the Public Company
Accounting Oversight Board (“PCAOB”) amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.”  The adoption of SFAS 162 is not expected to have an impact on
the Company’s results of operations or financial condition.
 
 3.   STOCKHOLDERS’
EQUITY:
 
 COMMON
STOCK
 
 The
Company has authorized 300,000,000 shares of $0.001 par value common
stock.  The Company had 239,698,620 shares of common stock issued and
outstanding at December 31, 2008.  During the year ended December 31,
2008, the Company issued 36,975,204 shares of common stock for the
following:
 
 ·
              The
      Company issued 205,448 shares of common stock pursuant to the conversion
      of 10 shares of Series E preferred
stock.
 ·
              The
      Company issued 9,509,615 shares of common stock pursuant to the conversion
      of 920 shares of Series F preferred
stock.
 ·
              The
      Company issued 1,600,000 shares of common stock to the placement agent as
      part of the fee agreement for a long-term debt financing in the fourth
      quarter of 2007.  These shares were valued at $304,000 or $0.19
      per share.
 ·
              The
      Company issued 600,000 shares of common stock to an investment banking
      firm as part of a strategic business consulting
      agreement.  These shares were valued at $114,000 or $0.19 per
      share.
 ·
              The
      Company issued 4,685,000 shares of common stock pursuant to consulting
      agreements with several firms to provide investor relations
      services.  The shares were issued at various prices with a total
      value of $451,891.
 ·
              The
      Company issued 1,000,000 shares of common stock pursuant to a consulting
      agreement with an individual to provide general business consulting
      services.  The shares were valued at $92,000 or $0.092 per
      share.
 ·
              The
      Company issued 750,000 shares of common stock to one party for payment of
      legal services rendered.  The shares were valued at $82,500 or
      $0.11 per share.
 ·
              The
      Company issued 2,000,000 shares of common stock to one party pursuant to
      the terms of a legal settlement agreement with a former consulting
      firm.  The shares were valued at $200,000 or $0.10 per
      share.
 ·
              The
      Company issued 16,625,141 shares of common stock to service convertible
      debt and accrued interest.
 
 PREFERRED
STOCK
 
 The
Company has authorized 10,000,000 shares of $0.001 par value preferred
stock.  The rights and privileges of the preferred stock are to be
determined by the Board of Directors prior to issuance
 
 The
following is a summary of the shares of preferred stock outstanding as of
December 31, 2008:
 
 ·
              The
      Company had 925 shares of Series C preferred stock outstanding at December
      31, 2008.  The shares were issued in 2003 in conjunction with
      the Company’s acquisition of Infotel (see Note 1).  Each share
      of Series C preferred stock has a stated value of $1,000 per share, has no
      voting rights, and is convertible into common stock of the Company at an
      effective conversion price of the volume-weighted average closing price
      (“VWAP”) of the common stock for the twenty consecutive trading days prior
      to the date of conversion.  The shares do not pay a dividend and
      there is no mandatory conversion
feature.
 ·
              The
      Company had 41 shares of Series E preferred stock outstanding at December
      31, 2008.  The shares were issued in 2004 in conjunction with
      the Company’s acquisition of RKM (see Note 1). Each share of Series E
      preferred stock has a stated value of $1,000 per share, has no voting
      rights, and is convertible into common stock of the Company at an
      effective conversion price of the VWAP of the common stock for the twenty
      consecutive trading days prior to the date of conversion.  The
      shares do not pay a dividend and there is no mandatory conversion
      feature.  F-13
 ·
              The
      Company had 580 shares of Series F preferred stock outstanding at December
      31, 2008. The shares were issued in 2004 in conjunction with the Company’s
      acquisition of NETSCO (see Note 1).  Each share of Series F
      preferred stock has a stated value of $1,000 per share, has no voting
      rights, and is convertible into common stock of the Company at an
      effective conversion price of the VWAP of the common stock for the twenty
      consecutive trading days prior to the date of conversion.  The
      shares do not pay a dividend and there is no mandatory conversion
      feature.
 ·
              The
      Company had 835 shares of Series H 8% preferred stock outstanding at
      December 31, 2008.  The shares were issued in 2004 in
      conjunction with the Company’s acquisition of a majority interest in Vera
      (see Note 1).  Each share of Series H preferred stock has a
      stated value of $1,000 per share, has no voting rights, and is convertible
      into common stock of the Company at an effective conversion price of the
      VWAP of the common stock for the twenty consecutive trading days prior to
      the date of conversion.  Holders of the Series H preferred stock
      are entitled to receive dividends at the stated dividend rate of 8% on the
      stated value of $1,000 on each share. Dividends are cumulative from the
      date of issue, whether or not declared, for any reason. There is no
      mandatory conversion feature.
 ·
              The
      Company had 541 shares of Series I preferred stock outstanding at December
      31, 2008.  The shares were issued in 2004 in conjunction with
      the Company’s purchase of the assets of Corsa (see Note
      1).  Each share of Series I preferred stock has a stated value
      of $1,000 per share, has no voting rights, and is convertible into common
      stock of the Company at an effective conversion price of the VWAP of the
      common stock for the twenty consecutive trading days prior to the date of
      conversion.  The shares do not pay a dividend and there is no
      mandatory conversion feature.
 
 The shares
of preferred stock represented approximately 78,972,973 shares of common stock,
had they been elected to be converted on December 31, 2008.
 
 4.  STOCK OPTIONS
AND WARRANTS:
 
 STOCK
OPTIONS
 
 The
Company maintains no stock option plan or long-term incentive plan at this
time.
 
 WARRANTS
 
 In
November 2007, the Company entered to a long-term financing arrangement (see
Note 7).  Pursuant to the terms of this financing, the Company issued
five year warrants to purchase a total of 12,173,127 shares of common stock of
the Company to two different parties.  These options are exercisable
at a price of $0.22 per share.   These warrants were valued at
the time of issuance at $536,540 using the Black-Scholes valuation
model.   These warrants had a value of $0 at December 31, 2008
using the Black-Scholes valuation model.
 
 5.   INCOME
TAXES:
 
 Deferred
income taxes (benefits) are provided for certain income and expenses which are
recognized in different periods for tax and financial reporting
purposes.  The Company has net operating loss carry-forwards for
income tax purposes of approximately $3,195,700 which expire beginning December
31, 2117.  There may be certain limitations on the Company’s ability
to utilize the loss carry-forwards in the event of a change of control, should
that occur. In addition, the Company amortizes goodwill for income tax purposes,
but not for reporting purposes. The amount recorded as a deferred tax asset,
cumulative as of December 31, 2008, is approximately $5,496,000, which
represents the amount of tax benefits of the loss carry-forwards and goodwill
amortization.  The Company has established a valuation allowance for
this deferred tax asset of $5,496,000, as the Company has no long-term history
of profitable operations at the hparent company level, in substantive amount
necessary to utilize this asset.  The significant components of the
net deferred tax asset as of December 31, 2008 are:
  F-14
  Net
      operating losses
                    
                    $
                    0Goodwill
      amortization
                    
                    
                    5,496,000Valuation
      allowance
                    
                    
                    (5,496,000
                    )Net
      deferred tax asset
                    
                    $
                    0
 
 6.   AVAILABLE
      FOR SALE SECURITIES
 
 As of
December 31, 2008, the Company owns 1.4 million shares of common stock of
VirtualHealth.   These shares have been classified as available
for sale securities in which unrealized gains (losses) are recorded to
shareholders’ equity.  At December 31, 2008, all 1.4 million shares of
VirtualHealth common stock are tradable, and based upon the closing price of
$0.21 per share, the market value of the VirtualHealth common shares at December
31, 2008 was $294,000.
 
 7.   INDEBTEDNESS
 
 CONVERTIBLE
DEBT AND REVOLVING CREDIT LINE
 
 On
November 30, 2007, the Company and certain of its subsidiaries including, IP
Global Voice, Inc, Netsco, Inc., Newmarket Broadband, Inc., Newmarket
Intellectual Property, Inc and NewMarket China, Inc., entered into a Security
Agreement (the “Security Agreement”) with LV Administrative Services, Inc. (the
“Agent”) as administrative and collateral agent for Valens U.S. SPV I, LLC
(“Valens US”) and Valens Offshore SPV II, LLC (“Valens Offshore,” and together
with the Agent and Valens US, the “Creditor Parties”). Pursuant to the terms of
the Security Agreement, the Company issued a secured convertible term note to
Valens US and Valens Offshore in the principal amounts of $1,800,000 and
$2,200,000 respectively (collectively, the “Notes”). In addition, the Company
issued a Revolving Note to Valens US, pursuant to which Valens has committed to
advance up to $3,000,000 to the Company (the “Revolving Note”).
 
 The Notes
and the Revolving Note bear interest at a rate equal to the “prime rate”
published in The Wall Street Journal plus two percent (2%), per annum (the
“Contract Rate”), provided however that the Contract Rate shall not at any time
be less than nine percent (9%) per annum.  The unpaid principal and
accrued interest under the Notes and the Revolving Note are due and payable on
November 30, 2010 (the "Maturity Date"). The interest on the Notes and the
Revolving Note is payable monthly, in arrears, commencing on December 1,
2007.
 
 The Notes
require amortizing payments of the principal amount of $133,333 together with
any accrued and unpaid amounts (the “Monthly Amount”) which are owed to the
Creditor Parties, commencing on June 1, 2008 and on the first business day of
each succeeding month thereafter through the maturity date. The Creditor Parties
may convert a portion of the Monthly Amount into shares of the Company’s common
stock provided: (A) the average closing price of the Company’s common stock
exceeds 115% of the Fixed Conversion Price of $.20; (B) the amount of such
conversion does not exceed 25% of the average dollar trading volume of the
Company’s common stock for the 22 trading date immediately preceding the due
date of the Monthly Payment. If the criteria set forth above in (A) is met but
the criteria set forth in (B) is not met as to the entire Monthly Amount, the
Creditor Parties shall convert only such part of the Monthly Amount that meets
the criteria set forth in (B). Any portion of the Monthly Amount that has not
been converted into shares shall be payable at the rate of 100% of the Monthly
Amount in cash. In addition, the Company is not permitted to make any payments
in shares of its common stock if there is no effective registration statement
covering the resale of the shares or an event of default exists and is
continuing.
 
 Pursuant
to the Security Agreement, an event of default shall be deemed
to  include: the Company's failure to pay any amount due under the
Notes and the Revolving Note where such failure continues for a period of 3 days
after such payment is due; the failure of the Company and its subsidiaries to
pay any taxes when due; any person or group, other than a lender under the
Security Agreement, becomes the beneficial owner of 35% or more of the Company's
voting equity interests or if the Board of Directors of the Company ceases to
consist of a majority of the Company's Board of Directors on the date of the
Security Agreement or the Company or any of its subsidiaries mergers or
consolidates with or sells all or substantially all of its assets; the
indictment of the Company or any of its subsidiaries or any officer of the
Company under any criminal statute or commencement of criminal or civil
proceedings against any company; and the Company’s failure to deliver common
stock as required by the warrants and the Notes and such failure is not cured
within 2 business days.
 
 F-15
  The
Company granted a security interest to Valens in each of the Company’s real or
personal, tangible or intangible, property and assets. The Company also pledged
the stock of its subsidiaries and other equity interests owned by the
Company.
 
 The
Company also issued five year warrants to purchase 3,825,840 shares of common
stock of the Company to Valens Offshore and warrants to purchase 8,347,287
shares of common stock of the Company to Valens US which are exercisable at a
price of $0.22 per share (see Note 4).
 
 In
October, 2008, the Revolving Note was cancelled by the Company and the amount
outstanding under the Revolving Note was $0.
 
 Additionally,
pursuant to the terms of the Security Agreement and the Notes, in November 2007
the shareholders of VTI agreed to forgive approximately $4.3 million of
convertible debt and accrued interest owed by the Company under the terms of a
convertible note dated July, 2002, as amended (see Note 1).
 
 For the
year ended December 31, 2008, the Company issued 16,625,141 shares of common
stock pursuant the conversion of principal and accrued interest.  The
following is a schedule of long-term debt outstanding under the Term Notes as of
December 31, 2008:
    Total debt
      outstanding:
                  
                  $
                  3,544,551(Less) current
      portion:
                  
                  
                  (1,599,996
                  )(Less) balance of
      unamortizeddeferred financing
      costs:
                  
                  
                  (735,573
                  )Long-term
      debt:
                  
                  $
                  1,208,982
 
  REVOLVING
LINES OF CREDIT
 
 As of
December 31, 2008, the Company’s China Crescent Enterprises and Unione
Consulting subsidiaries had two revolving lines of credit with two financial
institutions:
 
 Annual
                                                
                                                
                                                
                                                AmountCredit
                                                
                                                
                                                Interest
                                                
                                                Due
                                                
                                                OutstandingInstitution
                                                
                                                Line
                                                
                                                
                                                Rate
                                                
                                                Date
                                                
                                                at
      12/31/08Banco
      Itau
                                                
                                                
                                                565,400
                                                
                                                
                                                
                                                22.20
                                                %
                                                6/30/09
                                                
                                                
                                                257,039Development
      Bank of Ningbo
                                                
                                                
                                                151,041
                                                
                                                
                                                
                                                1.70
                                                %
                                                4/24/09
                                                
                                                
                                                151,041Total:
                                                
                                                $
                                                716,441
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                $
                                                408,080
 
 These
lines of credit are secured by the accounts receivable of the respective
operating subsidiaries.
 
 SHORT-TERM
DEBT
 
 As of
December 31, 2008, the Company’s China Crescent Enterprises subsidiary had
several unsecured promissory notes outstanding with two different financial
institutions:
  F-16
  Annual
                                  
                                  
                                  
                                  AmountInterest
                                  
                                  Maturity
                                  
                                  OutstandingInstitution
                                  
                                  Rate
                                  
                                  Date
                                  
                                  at
      12/31/08Shanghai
      Pudong Development Bank
                                  
                                  
                                  6.39
                                  %
                                  5/03/09
                                  
                                  $
                                  67,482Shanghai
      Pudong Development Bank
                                  
                                  
                                  8.02
                                  %
                                  11/18/09
                                  
                                  $
                                  264,060Guangdong
      Development Bank
                                  
                                  
                                  (1
                                  )
                                  2/23/09
                                  
                                  $
                                  440,100Guangdong
      Development Bank
                                  
                                  
                                  (1
                                  )
                                  5/20/09
                                  
                                  $
                                  440,100Guangdong
      Development Bank
                                  
                                  
                                  (1
                                  )
                                  3/8/09
                                  
                                  $
                                  586,800Total:
                                  
                                  
                                  
                                  
                                  
                                  
                                  $
                                  1,798,542
 
 (1) The
interest rate for these notes is variable based on an official government
rate.  At December 31, 2008, the annual interest rate was
approximately 7.2%.
 
 8.   EARNINGS
PER SHARE:
 
 The
Company calculates its basic and diluted earnings per share in accordance with
SFAS No. 128, “Earnings per Share”.  Basic earnings per share is
calculated by dividing net income by the weighted average number of common
shares outstanding for the period.  Diluted earnings per share is
calculated by adjusting the weighted average outstanding shares to assume
conversion of all potentially dilutive warrants, options and convertible
securities such as convertible preferred stock or convertible notes if
applicable.
 
 Year
      ended December 31,2008
                      
                      
                      2007Net
      income (loss), as reported
                      
                      $
                      (
      30,340,220
                      )
                      
                      $
                      7,348,832Basic
      earnings per share:Basic
      weighted average shares outstanding
                      
                      
                      217,393,093
                      
                      
                      
                      193,757,301Basic
      earnings per common share
                      
                      $
                      (0.14
                      )
                      
                      $
                      0.04Diluted
      earnings per share:Basic
      weighted average shares outstanding
                      
                      
                      217,393,093
                      
                      
                      
                      193,757,301Effective
      of dilutive instruments
                      
                      
                      -
                      
                      
                      
                      18,257,237Diluted
      weighted average shares outstanding
                      
                      
                      217,393,093
                      
                      
                      
                      212,014,538Diluted
      earnings per common share
                      
                      $
                      (0.14
                      )
                      
                      $
                      0.04
 
 8.   CONTINGENCIES:
 
 LEASES
 
 The
Company’s corporate headquarters operates out of approximately 3,400 square feet
of leased facilities located at 14860 Montfort Drive, Suite 210, Dallas, Texas
75254. The lease expires on December 31, 2009. The monthly rental payments are
$3,100. The Company has a number of additional leases for office space
associated with its subsidiary operating companies.
 
 LITIGATION
 
 From time
to time, the Company is involved in various claims and legal actions arising in
the ordinary course of business. Although the amount of any liability that could
arise with respect to currently pending actions cannot be accurately predicted,
in the opinion of management, the ultimate disposition of these matters will not
have a material adverse effect on the Company's consolidated financial position,
results of operations, or liquidity.
 
 F-17
  9.  OTHER
COMPREHENSIVE INCOME:
 
 Balances
of related after-tax components comprising accumulated other comprehensive
income, included in stockholders’ equity, at December 31, 2008 was as
follows:
 
 Foreign
      Currency
                  
                  
                  (Loss)
      on
                  
                  
                  Gain
      onTranslation
                    Adjustment
                  
                  
                  For-Sale
                    Securities
                  
                  
                  Derivative
                    LiabilityBalance
      at January 1, 2007
                  
                  $
                  779,736
                  
                  
                  $
                  -
                  
                  
                  $
                  -Change
      for the year ended December 31, 2007
                  
                  
                  536,390
                  
                  
                  
                  -
                  
                  
                  
                  -Balance
      at January 1, 2008
                  
                  
                  1,316,126
                  
                  
                  
                  -
                  
                  
                  
                  -Change
      for the year ended December 31, 2008
                  
                  
                  984,973
                  
                  
                  
                  (581,000
                  )
                  
                  
                  536,540Balance
      at December 31, 2008
                  
                  $
                  2,301,099
                  
                  
                  $
                  (581,000
                  )
                  
                  $
                  536,540
 
 10.  SELECTED
QUARTERLY FINANCIAL DATA (UNAUDITED):
 
 The
following interim financial information presents the 2008 and 2007 results of
operations on a quarterly basis (in thousands, except per share
amounts):
 
 First
                                    
                                    
                                    Second
                                    
                                    
                                    Third
                                    
                                    
                                    FourthQuarter
                                    
                                    
                                    Quarter
                                    
                                    
                                    Quarter
                                    
                                    
                                    Quarter2008:Revenue
                                    
                                    $
                                    20,922
                                    
                                    
                                    $
                                    22,769
                                    
                                    
                                    $
                                    32,379
                                    
                                    
                                    $
                                    19,035Operating
      income (loss)
                                    
                                    
                                    1,342
                                    
                                    
                                    
                                    1,235
                                    
                                    
                                    
                                    2,203
                                    
                                    
                                    
                                    (3,878
                                    )Net
      income (loss)
                                    
                                    
                                    1,161
                                    
                                    
                                    
                                    843
                                    
                                    
                                    
                                    1,754
                                    
                                    
                                    
                                    (34,098
                                    )Income
      (loss) per share, basic
                                    
                                    $
                                    0.01
                                    
                                    
                                    $
                                    0.00
                                    
                                    
                                    $
                                    0.01
                                    
                                    
                                    $
                                    (0.16
                                    )Income
      (loss) per share, diluted
                                    
                                    $
                                    0.01
                                    
                                    
                                    $
                                    0.00
                                    
                                    
                                    $
                                    0.01
                                    
                                    
                                    $
                                    (0.16
                                    )2007:Revenues
                                    
                                    $
                                    18,134
                                    
                                    
                                    $
                                    21,892
                                    
                                    
                                    $
                                    23,434
                                    
                                    
                                    $
                                    29,648Operating
      income
                                    
                                    
                                    559
                                    
                                    
                                    
                                    868
                                    
                                    
                                    
                                    1,556
                                    
                                    
                                    
                                    2,190Net
      income
                                    
                                    
                                    599
                                    
                                    
                                    
                                    589
                                    
                                    
                                    
                                    1,561
                                    
                                    
                                    
                                    4,600Income
      per share, basic
                                    
                                    $
                                    0.00
                                    
                                    
                                    $
                                    0.00
                                    
                                    
                                    $
                                    0.01
                                    
                                    
                                    $
                                    0.01Income
      per share, diluted
                                    
                                    $
                                    0.00
                                    
                                    
                                    $
                                    0.00
                                    
                                    
                                    $
                                    0.01
                                    
                                    
                                    $
                                    0.01
 
 
 11.  SUBSEQUENT
EVENTS (UNAUDITED):
 
 
 In April
2009,  the Company  entered into a
Debt  Restructure  and  Equity  Reorganization  Comprehensive  Agreement  ("Debt
Restructure")  with Green
Shield  Management  Company
("Green  Shield"),  and ES Horizon, Inc. ("ES
Horizon").  In March 2009, Green Shield purchased $1.25 million of
senior debt with a due date of November 2010, from the Company’s senior
lender.  As part of the Debt Restructure, Green Shield has agreed to
convert $750,000 of the senior debt into 750 shares of the Company's newly
designated Series J  Preferred Stock. In addition, the Debt
Restructure requires the Company to authorize and issue a super -majority voting
Series K Preferred  Stock.  Additionally, Green Shield has
agreed to sell $500,000 of senior debt ES  Horizon.  As part
of the transaction, ES Horizon will convert the $500,000 of senior debt into
5,000 shares of Series K Preferred  Stock. ES Horizon is a Nevada
corporation, of which the Company's President and Chief Executive Officer,
Philip Verges, is a 99% owner.  Green Shield  is not
an  affiliate, as  defined  in Rule 144 under the
Securities Act of 1933, of either ES Horizon or of the Company.
 
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  Both Green
Shield and ES Horizon have waived any rights to and forgiven  any
unpaid interest, fees or penalties that may be due under the Note
Participation.  In addition, Green Shield currently
holds  225, 541, and 835 shares of
the  Company's  Series F, Series H and Series
I  Preferred Stock, respectively.  As part of the Debt
Restructure, the Company has agreed to issue to Green Shield 1,601 shares of
Series J Preferred Stock in exchange for the cancellation of the Series F, H and
I Preferred Stock. At the close of the transaction, which will take place in the
second quarter of 2009, Green Shield will hold 2,351 shares of the Company's
Series J Preferred Stock.
 
 F-19